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Do I need a trust in my estate plan?

Finishing Well / Hans Scheil
The Truth Network Radio
June 6, 2020 8:30 am

Do I need a trust in my estate plan?

Finishing Well / Hans Scheil

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June 6, 2020 8:30 am

Hans and Robby go over Revocable Living Trusts, who they are good for and who they are not on this week's episode of Finishing Well! 


Don’t forget to get your copy of “The Complete Cardinal Guide to Planning for and Living in Retirement” on Amazon or on for free!


You can contact Hans and Cardinal by emailing or calling 919-535-8261. Learn more at 

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Hey this is Mike Swick from if not for God podcast our show stories of hopelessness turned and I hope your chosen Truth Network podcast is starting in just seconds. Enjoy it, share it, but most of all, thank you for listening and for choosing The Truth Podcast Network. This is the Truth Network welcome to finishing well brought to you by Cardinal guy, certified financial planner belongs Shiloh best-selling author and financial planner helping families finish well over 40 years on finishing well will examine both biblical and practical knowledge to assist families in finishing well, including discussions on managing Medicare IRA long-term care life insurance and investments and taxes. Now let's get started with finishing well, finishing well today show is do I need a trust cannot do. I trust do I need a trust which is a legal instrument and you know we were thinking that it kinda lines up with this proverb. Just the simple answer is wealth gotten by vanity shall be diminished, but he who gathers by labor shall increase. In other words, if you really are understanding what the value of trust are with me to happen and you're not using this as a tool to puff yourself up somehow. Then you know and and and exit the tool properly used, it actually is quite helpful in certain circumstances will get to know the circumstances.

So here's my rules. Trust is I need to see a clear purpose behind the trusts that it's serving because trusts very expensive to set up there expensive to maintain in their create possible hassles, even to you while you're alive, of getting or using your assets doesn't mean they're bad because of all those things. They're wonderful.

They're great when there's a clear purpose behind when there's something specific that the trust is let us do that we could do without the trust I can't help but think of my own story because I know less about trust and profit any human being out there, but I found out all too quickly. When my father passed away, but not unlike. We talked about often on the show of going back and look at things that have been outdated because people set up things years and years and years ago based on the way they think things are going to happen and they never update them like the beneficiaries on your life insurance policy or on your IRA and those kind of things we always talk about get those up-to-date when it comes to trusts yeah is really helpful to keep up-to-date on those kind of things to mess with my father had set up one that really had to do with his business and his business didn't end up going the direction that it he thought it was going to go so the trust wasn't actually necessary anymore. However, he never change the beneficiary of his life insurance policy so when he passed away, which he never dreamed common the way it would come because his wife preceded him in death. He was 17 years younger than him, and so the trust was set up that if she passed away then it went to all the kids which created this huge like since there were five kids involved. There were five trustees on the trust in his life insurance was listed on this thing and the trust had never been opened.

Because no money ever gone into it. But now the beneficiary of life insurance policies itself.

I say all this not to complicate anybody's mind for a minute but to say wow what looked like a great idea 30 years ago when attorney was looking at his overall estate you know as things change those things change and that's part of the planning of using a trust and part of why you like you say their son to maintain sure so I'm guessing that a number of our listeners have been exposed to the classic revocable living trust that you just got a ham and you can't live without this either being promoted at a seminar you got mail and a lot of times the mail you get promoting these things is like six pages long of material explaining this type thing or somebody you know or somebody related to his gone to one of the seminars and I have a bit of a problem with that the trust mills in the sense that the general idea is this is one type of trust in whatever state you're talking about is going to work for everybody, just everybody intends as a seminar has got all this list of problems and purposes for trust and that the that the trust is, that they are recommending is going to clear up all those things and so we weep. We literally have clients that come into us that say I want to trust and then you know I get a sense many times that they don't thoroughly know what a trust is amended just know they won't. Sometimes they do sometimes they don't and so I'm always going to dig into like why you while you will and trust and we want to stress to do what's going to the purpose and use this convenient air revocable trust resisting of your revocable trust in you know what is it were trying to accomplish and many times people can answer to any of those questions are, they can you know that that that the adjusted just boils down to why I just know that I need one.

There also people that will confuse a trust and a will. Those are in a last will and testament, and those are two different things entirely different things and so some people to tell us that they want to trust her. They need to trust they're really talking about. They neither will they need a last will and testament in a course we don't do those were financial planners, but we we provide the service of referral and we have an attorney that works in conjunction with this lease. Our clients in North Carolina were she's able to if somebody truly wants to trust and they can give us a clear purpose for some direction. She can actually put one in place for them now when we talk about the revocable living trust that are in agreement sold by the trust mills with their going to teach you the seminar is you know is like probate or the process of know that happens after you dive the court distributing your assets according to your will is is almost like an evil process or something and you just you want to avoid this at all costs and you know it's it's slow there can be slow in his expense. So why wouldn't I want to avoid something that slow and expensive.

When I could have this trust that is going to for that entirely okay and the weather trust avoids it entirely as you put all your assets in the trust and that's part of the problem is is that you now don't directly own anything you have its own by the trust which you control because it's a revocable trust and by the way, Mike.

My sense is that most people are asking for trust command do not necessarily looking for this kind of trust that I'm describing here, but that's where the idea of the trust originated is that they don't really should totally understand all these things and having a trust in place were all your assets were in there and then you die and then having the trust distribute the assets that can be smoother than probing and it can cost you less than probate book, but I would say that you spent more on that trust. Having it over the years, and then maintaining it is in any amount you're avoiding after death by avoiding the probate process, which was clearly unbelievably the case of my father's like oh my goodness, no. What he's been on that trust was unfortunate huge waste of his assets because event which is made actually probate process little bit more difficult rather than easy, which itself was not expensive for us. So if your main purpose is to avoid probate. If that's what you leave the seminar with and you want that to me that's not enough reason to set up a trust, but that's my opinion. You may differ, and if you differ you still want it. What we will be glad to prove the attorneys set one up 40 probably less expensively than the people sell the boilerplate deal. This more reasons that they're talking about in their sites want to come and go through this stuff because I'm guessing that a number of people of Artie been exposed to this moment to give a little contrary opinion to what they're hearing in their the second one is a trust is going to keep things out of the public view. So when you go through probate and that's not a huge concern for a lot of people and there's not that many people interested in what I had. After I die. I am thinking in and even if they were I could care less just and but I'm not everybody in now and I also don't have $100 million or some huge amount of money in have bunch of public notoriety as it is, there's reasons that people would want to keep their estate settlement out of the public view.


And so that's a valid reason for having a trust, but if you had that much money and that much thing you definitely don't want to be buying one of these boilerplate trusts. Okay, that was a thing of creditor protection and this is where I think that they are at noon on the question the effectiveness of this by putting all your assets in the trust. You no longer own okay you control the trust so you can it's as good as owning them. As you can do things with them just like he always did, but there technically they're not owned by you. There owned by the trust and then you're the trustee. So if you can use this like him. Many doctors are concerned about people suing them for malpractice lawyers. People in my business and you know, a trust can be can be one way to protect it from creditors. But it's pretty easy for a court or an action to force right through the trust, especially if you're the trustee, or in other words, for them to just deem that as a way you're hiding your assets and you still get to pay your debts, so enough about that.

I may have just gone over some of the negative connotations of the revocable living trust.

They still have a place and they have a purpose now I'm going to just talk about some of the reasons that you would want to trust okay and I think that were coming up on break. I do want to let everybody know that Cardinal advisors the firm that I run and founded were available in all 50 states in the United States were were were licensed and were home right now with the pandemic were staying very busy, but certainly not too busy to talk to you and I've written a couple of books to complete Cardinal guide to planning for living in retirement and the workbook addition of that which is a separate edition and if anybody is really interested in reading my book.

If you just send me going to our website Cardinal and you send me an email or in a message on their give us your address will send you the book for your email address will email it to you. You can also buy them on Amazon or you can get them right from our website so want to let you know that Course today show is proctored by Cardinal or you can find out all about that and forget the guide. After Cardinal and the seventh grade status.

There is well which today's show. Essentially you didn't put this on trust in the in the seven worst absent. Where would you place it is farmers probably it is based on their estate planning and lamps are you okay we come back finish is why you let me trust we go I need trust today Hans and I would love to take our show on the road to your church, Sunday school, Christian or civic group. Here's a chance for you to advance the kingdom through financial resources and leveraging Hahn's expertise and qualified charitable contributions veterans aid and attendance IRA Social Security care and long-term care. Just go to Cardinal and contact Tom to schedule a live recording of finishing well at your church Christian or civic group. Contact time that Cardinal that's Cardinal welcome back to finishing well today show or talk about why would I need a trust and Zoe talked about some of the reasons that would perhaps not hold a lot of sand that there is the places where the balance of law would be that this would be a really good time to have a trust, you mean the trust as opposed to programming what probate is in the do is through a will and the last will and testament is it's going to distribute your assets to who you intended your assets are to be distributed to your children or spouse or relatives or the church or have you name things and then you can have an executor and the whole emphasis here is on distribution and it could be that you don't want your assets distributed after your death that you want something different to be done and you want to be able to lay out what that is like I gave you the example. As I considered it one time when I own a beach home to put it in a trust revocable living trust so that the revocable so I could later revoke it and sell it which I end up selling it anyhow. But I had this vision of my family using it and having it beyond my life with my wife's my life and so it would be pretty simple to set up a trust deed. The beach house into the trust and then put some source of money in there to pay the upkeep in and then lay out the rules for my kids and grandkids to use the thing people that own a farmer. They own a business or they own something precious that they collect family heirlooms. They may want to say not only kudos go to but what they do with them before they're given clear title to them. Just the other just an infant. As long as it's lawful which are doing. You can write that into a trust and then the trustees are responsible for carrying out your wishes. I like that video. There was a lady who was name was Rachel and she had this confidential find it unchristian car guy that she had. It was 1963 up Plymouth valiant that she called and offered up name should call the carpet she it had over like 480,000 miles on in the car was famous.

I mean it with.

She did this whole bit would drive all over this this card because she bought it new and kept all these years. The car was just fabulous. Well she wanted that car to end up in a museum that was wet at and so that she actually had a trustee of this trust for the car's name was Sherry. It came to me and it was really cool. From my standpoint as a car guy. What here was a son like you said is very precious to her.

She wanted chariot to find the kind home you knows where everybody could enjoy chariot for you know and and and she set this perfect and and the deal was that the trustee took the car to a museum in Minneapolis and and there it sits under this trust, knowing for all time.

We you can have an irresponsible beneficiary, or at least nobody has to get them deemed irresponsible. If you think there are responsible.

This is you know your money that you're putting into this trust. Yet you care about them and you want to make sure they don't squander the money you can set up. There was rules appointed trustee and then give the just-released trustee some discretion and it was going to prevent an irresponsible beneficiary from receiving a large amount of money and squandering another heart have been for their own home and obviously sure so there's all kinds of before. For pre-wealthy individuals you could have a family farm which is worth a lot of money. Maybe it was worth a little bit. Four years ago, but you know 20 years from now. It's going to be worth 20 million guy and you know it subject to estate taxes and then it's a subject to breakup.

I mean if you leave this to three or four beneficiaries and we got up some of want to cash out some of them want to run the farm you want the farm to continue America think of just an infinite number of reasons that we would want to set up a trustee, you may have something that you own or a lot of somethings that when you die you want to be able you want the people that are handling your state to be able to tell the IRS you didn't own it kinda manages CEC that beach house up there, no, no, we we don't own that that that one is so if you can try to pull something like that. Through trust ownership. You really have to be very, very smart, but that that those things can be done in other words, trust can be used here. Revocable trusts can be used. To hold things that you don't want counted in your estate but yet you want beneficiaries of them to have the use of them throughout your lifetime, and so I don't really want to get into a lot of complicated trust law on trust. Talk to keep the show simple but I want talk about some of the reasons just generally why you would need a trust and then you know I think the reasons why you wouldn't want to trust is number one. They're expensive to create just go pay the lawyers a good bit of money they're expensive to maintain. Where you gotta keep ongoing expenses you really need to fund them unless there a testamentary trust you got up put money in there, and once you put money in their and you gotta manage it, and that creates more expense and then furthermore is as if you wanted to break them up one to break through a trust that can be done but you could put something in there now and then 10 years from now you could say I wish I had that done that I really want to get that out of the trust. The trust could create some hassles for you to even get your own money.

So there there's plenty of reasons to not do it, and I've got a client right now that is pretty adamant that he wants.

Trust okay and he's working with the attorney and his rationale for wanting a trust is really just because his natural advisor told that you have one okay and the I get stuff out of his names because it's a scam to create bad things for him after his death and I really think that were going to work through that.

But you were in the business of given clients with a want and were to give them all the advice that we you know, disagree with and this is an absolute because I want to give some credibility dollars reasons but in the end words can you give them what he wants but I really with this particular guy on really working at talking Martin says the attorney and she's can earn fees, setting up the trust but she still not recommending it because it is just better ways to avoid probate and the other client that I want to mention is a client that's been with me a couple years he actually learned about us up in Indiana through the show and he we're managing his money. We've he's got some insurance with us. We've worked out his health insurance is not yet 65. But he came to me in the middle of the process and he had been to a seminar just like we talked about it. He was somewhere between really want in this trust and adamant that he's going to have a you want to know what I think about it and it was just is trying to I didn't open up within like I opened up the show, but I needed to get across to them that his points have merit and you know he could do this but one of the fatal flaws in the whole presentation because he sent to me went to a group presentation but then he sat down with the guy and showed him all his assets in the sky had them moving all his IRA month which the sky most of his money is in an IRA over a million bucks into the trust in you just can't do that mean IRAs as long as you're alive so I can talk to anyone listener out there you I'm talking to.

If you have an IRA or you have a 401(k) that you enroll into an IRA that has to be in your name under your Social Security for the rest your life.

You can't be in your wife's name. It can be in a trust name and it exists that way because if there's one dollar pulled out of their alone 100,000 or whatever amount of money pulled out of their you know, taxes for the very least, it was a rough year to be accountable for the fact you don't owe taxes so you can't put IRA money in a trust and that's where the flaw in this whole trust thing was in so this was a real logical guy was an engineer is an engineer and he's become a friend of mine, and that's really the point.

There were many points that this was just not right for him to open up a trust, but this one was so glaring I just pointed that out and then I found them in attorney that was right there in Indiana for him to do all the stuff that he did need and it just worked out great when they work over the phone and their happy clients right now. No trust you can apply for a tax ID number and that if it's in your revocable trust you to file a tax return every year.

Once you folks don't know that in the trust is gotta pay taxes on any earnings, even if it was $20. You gotta file a tax return and knows. 1099 come out of that thing if it's a revocable trust.

That's one of the benefits is that you can revoke the thing during your life. You also can pull any earnings out or you have to and they show up on your personal tax return. By the way, that's how they find the money when the creditors are looking for.

They want to bust up the trust so trusts are not generally to effective in warding off creditors of the IRS love people want them. A lot of people been told they want them.

There's a lot of people in the brother-in-law theory that your brother-in-law's been a seminar he's all you help with this stuff and now he's convincing everybody he knows to do this and then you come in to see me and asked for Roy's things and it's fine to just be asking questions, but it'd be nice if the brother-in-law just got disclose that you don't have necessarily a first-hand source of the information. I like it better if you went to the seminar and you actually had the books that kind of thing because it's theirs and this is a lot of misinformation in this whole trust concept that develops throughout that applicant will get back to what we talked about last week that I will want to have fun with the stuff.

Like the man I'm excited about this. Using this trust is understand what's real purposes, and how it's gonna benefit the kingdom, and all those kind of things they have their purpose and and and we want to have delay in using them. So thank you for listing today again shows brought you by Cardinal will forget the guide. After Cardinal and there you can just email Hans if you want his book the complete Cardinal guide to planning for and living in retirement. If you like to just one of Ben's listen to finishing well you can get us on iTunes modify iHeartRadio all those your favorite podcast out letter. Just tell Siri I want to hear the finishing well podcast a million a solicited episode after episode. Thank you for listening to them. Thanks. We hope you enjoyed finishing well brought you by Cardinal visit Cardinal for free downloads of the show or previous shows on topics such as Social Security, Medicare and IRAs, long-term care and life insurance, investments and taxes as well as constant best-selling book, the complete Cardinal guide to planning for and living in retirement and the workbook once again for dozens of free resources past shows when you get Hans book go to Cardinal if you have a question, comment or suggestion for future shows.

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