Welcome, BoomXers. Let's throw out the old playbook. It's time to tear down the traditional way of looking at your life and money. And leverage the laws of money to our advantage. That's right. There are laws of money and those who learn and leverage the laws of money win. And sometimes win big. Stay tuned as asset protection attorney Darol Tuttle, educator, and leader of the BoomX Nation shows us how.
Beginners, investors, fellow attorneys. are you ready? Are you ready? Let's arm this bomb. Now, here's the BoomX show, the laws of money.
Now, what are your questions?
Okay, so another instance where we use a spousal protection trust is when we have the disability part right before death. Is that the same kind of trust? No. There's no panacea. I love that word panacea. There's no trust that solves all problems. Now a spousal protection trust is created. It springs into legal existence by a will.
That's what the law says. Now, the only way a spousal protection trust can spring into existence then is if the person that made the will is dead. That's what a will is. It's like, look, I wanna create this trust while I'm alive. I want it to be legal effective, but it does not spring into existence and not funded until my death.
It will be for the benefit of my spouse. Now, your question as I understood it, is okay, Darol, but that benefits my surviving spouse. What about me during my lifetime? Which is a, no, much more important question. That's not your question? My question related back to the limited power of attorney and the trust that was created by that.
Yes. Okay. That was the next thing I was gonna say. Okay. So what you're talking about is, and if anybody on YouTube watches this, Susan is talking about a nest egg trust as compared to a spousal protection trust. A nest egg trust is, in the BoomX Academy, we acknowledge that there are different kinds of Medicaid asset protection trust.
So we can, as Americans under 42 USC, we can make a transfer into a trust. And those assets will not count as assets for Medicaid purposes. There's two kinds, and all of these trusts are covered in the nest egg course. If you become a family leader, you're automatically enrolled in the nest egg course. And I go through them.
I remember where I was, cuz I was in Bonner. Remember I was in Bonners Ferry, Idaho, remember that beautiful park behind me? Mm-hmm mm-hmm yeah, I was. Yeah. And I talk about the trust, all these different kinds of trust, but the one that you're, the nest egg trust is a five-year transfer trust.
And so during our lifetime, we're like, okay, look at this point in my life, like Shannon does not need a five-year trust. Right? She's 12 years old. She's young. Anybody that's younger than 40, I always say they're 12. She's. Yeah. Yeah. She's just young right?
Now, I mean like I'm 58. I'm just, it's getting time. Actually, I'm setting up a nest egg trust now. And what I'm doing is I'm like, okay, look, I'm single. Every day, something hurts more than it did the day before and you know, I'm just as mortal as the rest of y'all. But in my case too, I've got a good relationship with my son and I want to finance his life. Because he's an artist, and so, he and his sister. And so transfer money into this irrevocable trust and it becomes family money. Now I don't have any control over it anymore. But in the event that I get sick, the family has money to take care of me. Right? Like you, you gotta have a family that has those values.
Now I am taking a risk. I'm taking a risk that they don't like the old man they just put him out on a raft, you know? And Darol, do you, you said you still have control over the money. You don't have control over the money? No. Do you pay your own bills still? Well, that's my point. Okay. So this is a critical distinction.
It has to be a nest egg. That's why I call it the nest egg course. Oh, that's right. Okay. Yeah. It's not pay your bills money. I remember that. Okay. Yeah. Nest egg. I don't know how else to emphasize. It's just for the nest egg and the nest egg is that pot of money that in old age, I'm not using like I'm slowed down a little bit.
I've got everything paid off and my income is greater than my monthly expenses or pretty damn close, but I've got this chunk of money that is just sitting there doing nothing. And the reality is at a certain point in my life, that money will do one of two things. It will either go to a nursing home expenses, or if I'm lucky enough, just to die.
Like just wake up dead. If that happens to me. Yay. It goes to my kids. That's the only purpose of the money and people, I think so few people like even wanna learn about a nest egg trust. They just don't want, they just don't believe that will happen. But statistically, if you're female over the age of 65, it's more likely than not that it will happen.
And let's be realistic. So you make a five-year transfer, wait out the five-year look-back period, all the money in that trust. Actually, that's not even true. The Medicaid law and regulations, specifically state, it only transfers that is made for Medicaid eligibility purposes.
So if you're not even sick when you make the transfer. Like I'm gonna make a transfer into a trust for my grandkids' education. Then a month later, you fall and break a hip. That transfer is not subject to penalty because it was not made for Medicaid purposes. It was made to finance grandkids' education, however, Medicaid, those guys they'll deny the application, but you gotta bring it up on appeal. You'll win on a appeal because they're just denying the claim without following the rules. But if you are making it for Medicaid eligibility purposes, Medicaid says five years. It doesn't say six or seven or eight, it says five, which implies that basically, Congress is okay with you waiting out the five-year look-back period.
I don't how else to say it. So when you make that trust, your in with your nest egg, what do you have to say, it's for Medicaid purposes you have, you don't have to say it's for your grandkid's education. Do you have to say it's for something?
What'll happen is a lot of people make transfer. Like you can, you have a constitutionally protected right. I'm gonna pause for just a minute. Puerto Rico's really loud. And so there's a bunch of music. Can you hear it? Mm-hmm yeah, a little bit. My door's open, so I'm gonna shut it. Hold on.
I thought that was a TV. No, they're going down the street with their big speakers blasting on the top of their trucks. Oh, really? Yeah. That's what he says. Yeah, but this one is actually from the quioscos. I live in a town that's really poor and there's a little, but Puerto Ricans are very family and social community-based.
And so there's this, it's like permanent food trucks. And there's about five of them. One serves pizza. It's like a little small building and there's a little square and a gas station. Puerto Ricans drink alcohol until two o'clock in the morning at gas stations.
I'm not kidding you. I don't know why. And so people will literally go to the gas station, buy beer, and then sit in chairs outside of the gas station until two in the morning, three in the morning. That's downtown Spokane. It's okay. Yeah there's a festival going on here, so the fiestas have just been going ape.
And so they start music, you know, live music down at the quioscos. It's only the block and a half from here. So I actually went, I avoid it cuz I don't know Spanish, but a buddy of mine went with me. And so he interprets for me. And then I find out that there's a blue haired girl that has a crush on me down at the quioscos. That's okay. Now there's a reason to go.
Anyway, what were we talking about? The five year look back. Oh, the, yeah, It's astounding to me. There's some good. There's some good. Like one thing that bothers me is I'm going through this right now actually. The law says that you can use, a trust can be a beneficiary of a retirement account without it triggering the non-natural person rule.
We covered that last time, that video. Don't worry. It's gonna be posted as a separate article on BoomX Academy. So everybody will have, can watch that video with some additional content here next week. But we went through that for an hour really, at last office hours. A trust can be the beneficiary of your retirement account.
However the financial services industry, financial advisors do not have any training or education. They have to take a, like a two week course and pass a test. Now they're financial advisors. And if they're good salespeople and they're good with relationship building, they can be very influential with clients.
However, they have no training or education. I think that just by observation, most financial advisors that I've met used to be school teachers. Like school teachers, like they retire from school teaching and then they become financial advisors. It seems to me. Yeah, man, I don't have any statistics on it. And so when it comes time to change the beneficiary designation of the retirement account to the specifically named trust, they come back and say, you can't do that.
It's against the law and we'll issue a 1099 at death. Which means they're gonna report it as a full transfer. Now Medicaid's not that different. A lot of the social workers who take that claim just don't know the rules very well. And so when you come to that five-year lookback period they will actually, I've had Medicaid social workers tell my clients, you cannot make a transfer. You need to give that money back. I'm like, okay, I'm gonna I'll bite for it. I'll bite on that. If we can't make a transfer, why didn't, why does Congress have a five-year rule? And they're like, huh? A five year rule implies. You can make a transfer after five years, right?
I mean, like, right. And they're like, well, yeah. Okay. Well, then approve the application. Now there's another rule that says only transfers made for Medicaid eligibility purposes, invokes a penalty. That implies that you can make a transfer within five years. If it's first another reason and a great argument to support your argument that a penalty does not incur is because you weren't even sick.
Like the judge would say, would sit there and go you did for eligibility. No, I didn't. I was perfectly healthy when I made that transfer. I'm not that, I can see there was a possibility I could get sick, but isn't that true of everybody? I made it for family planning purposes.
You cannot penalize me for that. That's what the law said. But people don't know that. And Medicaid officers don't know that. So if you're admitting a transfer within five years and asking and arguing against a penalty, you're gonna have to do that in administrative hearing. So you just appeal it.
And a couple months later you have a hearing in front of a judge and usually you'll win. And in VA benefit law and Medicaid benefit law it's appeal until you win. You gotta know the rules, you gotta be right. But eventually you'll win. Now you can encounter claims officers, claim social workers that know the rules.
I'm not trying to disparage all of it, but, was that responsive to your question?
Yes. Thank you. Five-year transfer, the nest egg course, I think is good. And Shannon, the nest egg course, it is actually the easiest thing that you can do, but it has some moving parts to it. And the reason I structured it the way I did is because probably you're not gonna remember, like you, you can learn this rule and understand the difference between estate transfer and asset protection and see the value of asset protection.
But if you're young, and haven't created the trust and move money into it. Probably what happens is as you age, I gotta turn this off for a minute. Can you hear that beeping? My, my buddy's already texting me about boating. He'll just keep up. Ding, ding, ding, what time are we gonna go? so I had to turn that off, but you're gonna forget.
Shannon, you're you'll become old like I am. And pretty soon it's gonna start with, like, you start leaving the water on that thing. I left the water on the kettle outside and burnt the hell outta my cuz I forgot. I was distracted. And then I'm gonna forget tort law and then property law. And then I'm gonna forget that I'm supposed to make a transfer to this trust, right?
And so what we did instead was say, look, where is a place that we could put our plan and our desire and our knowledge that has a higher degree of likelihood, of not being lost, not being forgotten and being followed to the letter, power of attorney. Like there's no better place. That's why I object to financial services because they think a retirement plan is a spreadsheet.
It's not. Nobody gives a shit about the spreadsheet. They do care about a power of attorney because the agent has a statutory fiduciary duty to follow it. And my clients lose their legal documents all the time, but probably there's at least a better chance that you're not gonna lose the power of attorney.
So when mom has a stroke, hopefully son will pick up the power of attorney and say, oh, wait a second. It says right here, if mom has a stroke, create a Medicaid trust and move money into it. And here's the assets we wanna move to it. That's brilliant. Like that is brilliant because what you're doing is when you have capacity, when you have your marbles, when you have that knowledge, you're laying out exactly what the steps are to follow it.
You're designating the person that has to follow it. And you're helping them by saying, look, here's the trust. Here's the assets; move it. Even though you're gone. Because that's what goes wrong, man. I'm an older law attorney. So tell me, when it goes wrong, it goes wrong, bad but it's the nest egg, Shannon.
It's not the money that you're using for your life. You still have to pay your bills. You still have to, if you have a budget for taking the grandkids to Disneyland every year, I guarantee you eventually you'll stop doing that. It might be fun the first couple years, but after a while, Disneyland gets to be a pain going down splash mountain with screaming grandkids.
One more year it's not what you're gonna do, but if you have a budget for that, that money does not go into the nest egg. The nest egg is that money that you're not using, that's just sitting there. That's really just gonna pass to the next generation anyway.
Darol, I keep coming back to probate in my mind about where probate got such a bad wrap. Because I know, I don't know where it started with me, but I know in my mind, it's like you wanna avoid probate at all costs it's why I have this in my head. But why, what is it about probate that, that scares people so badly?
I think it's because of financial services industry. A lot of the living trust seminars are being conducted by financial advisors. And if you think about financial advisors, they really don't do anything, right? Like you, you give them your money and they put in some mutual funds or something with a portfolio. They make 20,000 bucks a year on fees or whatever.
Or if they're selling in annuity, they get big fat commission, but they don't, they, they have no education, no training. They don't really don't know anything. And so what they started doing is like, oh, well, living trusts are really easy. We'll just hire some lawyer to do it for 500 bucks because they're desperate.
And then we can sell a new, we can like if they meet with us to talk about the living trust. Then they have, they'll give us all their financials and then we can magically say, oh, you might wanna consider an annuity. It got so bad, Shannon that about 10 years ago, maybe 15 years ago, time flies, man. The state of Washington passed a law against living trust mills because it was so fraudulent.
And, but they're still out there doing it and so they're the culprits like they're doing these dinner things and they're railing about probate. The other thing to know about probate Shannon is that probate is the only way to permanently bar creditors. Like the danger of transfer on death and living trust, just imagine a lot of my clients are private people, their kids have no idea how, what they own. No, none. And then the person becomes demented. And when they pass away, the kids have to go through the binders and try to find stuff. Annuities only have an annual account statement, very easy to miss. There's 65 billion in unclaimed property in America.
And it's from old people forgetting what they owned. And that's the problem which like transfer on death as and living trust is like, it's just, you're out there. And just imagine how messy your death could be. The worst experience of my life was in Spokane. I was in a car or a bicycle accident.
And they had to, my face was messed up and had to have plastic surgery. You think I'm ugly now you should have seen me but I could have died. And then there would've been all of these medical expenses out there. I'm in a different city. Some guy died, ambulance, heart surgery, whatever it was. Then my son steps in and he is a living trust.
So there's no probate and then he's doing the best he can. Then finally, three years later, the medical ambulance driver figures out I'm dead and tries to get their bill paid for 25,000 bucks. My son Ben paid it all out. He doesn't, it's not, he doesn't have any money anymore. He's personally liable for that with a living trust.
He's personally liable that for that, if you use transfer on death designations. If you use a probate and publish in the paper. They have four months to respond. And if they don't, they're permanently barred forever. But have you ever heard a financial advisor say that? No, because they can't sell a living trust and get your financials with a will.
The other reason it's so prevalent is because living trusts are very easy and lawyers charge $10,000 for sometimes for those packages. So it's not just financial services it's lawyers too, doing that. And so probate kind of expedites all that right. Gets it all out in the open, knocks it all out four months, and then you can move forward with the estate and you're, it's closed, man.
When it's closed, it's closed. That is settled cuz the law wants it to be settled. Like the law does not like questions that linger for three or four years. And so the rule is. And here's a trick, if you're on YouTube, don't listen to this, but lawyers are tricky. So the rule is four months probate.
The rule is not four months of notice. It's like give notice during the four month time period. After four months, close it. And good probate lawyers they give notice out at the three month mark. And then they closed it at the four month mark. There's like a little hiccup in the law, at least in Washington.
That may not be the case in other states, but you see what I'm saying permanently, like big value probate is permanently bar. Another thing too is you're not really spending anymore. Like you do have to hire a probate attorney. I charge 3,500 to 5k for a probate. If you're existing client 3,500, if you're new 5k, just if it gets tedious I'm out.
Now you still have to go through a bunch of stuff with a living trust. In fact, in some ways it's worse because you're not doing it right. And so stuff could come up later. But you still have to change the titles. You have to contact the bank. You still have to record deeds. You still have to do all of those things.
Why not just pay the lawyer to do it for you and have it settled for good. Now I don't think that probate's appropriate in, in all cases. In fact, there's we share on this call, but there's one person in this call where we are avoiding probate. Like that's the strategy is to avoid probate.
There's no reason to go through a probate. However, for married people, you have, it's like you have to have a spousal protection trust. So you have to do a probate and don't feel bad about it. Feel good about it because it's a good thing, everybody's different. Every family's different.
And probate is attached to the Last Will Testament, correct? So if you have a last will and Testament, you are going to go through probate. Yeah. Okay. Did you watch my video on the Vikings? No, that doesn't ring a bell. Susan's like, oh God, here we go.
Okay. She hasn't heard it, Susan. I'm gonna do it in two minutes. Okay. You can just leave the call if you're gonna have me gimme that attitude. I know what you're thinking. Okay. You tell a story if you know it so well. No, no, I don't know it that well, you go right ahead. I just, I'll mute cuz my little dogs have a little barky thing going here.
Yeah. The roosters are starting up out here. So thinking about your raft comment earlier about your son putting you out on a raft. I was thinking of the Vikings funerals, right? Yeah. Light you a fire and send you out there? I thought of that too. I thought of that too. There was a Viking. His name was, in Normandy.
So Normandy is in Northern France, like invasion of Normandy. So it, but it means land of the Norseman. And what happened was a guy named Rollo, a Viking who's depicted in the movie or the history channel show Vikings. He's one of the main characters, but the real Rollo, sack Paris. And they bought him off.
I said, okay, look, if you just leave, we'll give you your own kingdom. It gave him a kingdom in Northern. So he brought all these Vikings there. And from about 1066, not only did William, The Conquer who was a descendant of Rollo cross the English channel and conquer all of England, other people from Normandy started the crusades.
Like the first crusades were like the ones that worked. And it was just because it was a bunch of Vikings trying to take over the middle east, which they did all at the same time. These were amazing people, but William, The Conqueror took over all of England. He's French man. He doesn't care about English Anglo-Saxon crap.
So he just brought French law and there's this concept of the, a low GL title. I'm the king and I own everything. And what he did was he parceled out new estates. He kicked the English people out and he put his French buddies as the new Lords of these estates. But he did something that had never been done in the law before it used to be land was land.
And that was it. He created property interest. So he unbundled property interest. He gave the land on conditions. The condition was you kept paying fielty. You've supplied troops during war and you paid tax and you could pass it on to a qualified male heir. If you didn't have a qualified male heir, it reverted back to the king.
That's how we can create trust because we can parcel out different interests like that concept still exists today. Now he had a problem, didn't he? His problem was how do I know when an estate owner dies? If we don't have Google I can't just, Google it and how do I know it was a qualified male heir that got it.
And so he was like, okay, I gotta find that out. And he was so smart. He created ecclesiastical court, which is a court inside of a church. Because the local parish knows when somebody dies. Brilliant, right? And so he created a system where you had to prove that there was a death, there was a will and a qualified heir, and they conducted jury trials every time estate owner died.
And then they reported back to the crown. If it was thumbs up it title passed. If it was thumbed down, the king, took it back. That's probate. It still exists today. Now, today we don't use jury trials. We use affidavit and in Washington, it's a non-intervention state. So the court's just here, I'll appoint you as personal representative.
Go do your thing and then close it. After four months, don't bother me. That's why it's so easy in Washington. Some places, I guess it's more complicated. In Florida, there's a requirement for inventory. So you gotta file an inventory. Here in Washington, we're more into privacy out here. So there's no requirement.
How'd I do Susan? I think you left something out, but I don't know what it is. Oh, I left a lot out. Well, the part that I find fascinating is in fact I don't know what's I got a problem, man. I love history and I spent a lot of time thinking about stuff and I've always been interested in plagues even before COVID broke out and COVID is nothing, man. On the just Indian plague.
Cool man. Marcus Aurelius died, the emperor of Rome, died from plague. So the bubonic plague has been around for a while. But the, when it broke out in the middle ages, oh my God. It was, you know, how it spread? One army chased some folks into the city of Coffis, which was right on the, I think the black sea and the Targus army started dying of the plague.
So healthy people are on the inside and people dying army with the plague are dying on the outside. So the people inside are like, this is awesome. Well, the Targus army was so desperate. They started catapulting corpses. Oh. Of plague victims into the city. They did that for two weeks straight. Of course, you know, what happens, plague broke out in the city and they were Italian merchants basically.
So they got on ships and they sailed to every port in the Mediterranean. And so it just spread all over from the plague incident there. And to me, I, the mental image of corpse is flying through the air and exploding is just awesome but the plague started killing all the state owners, Shannon. So if you know that you're gonna lose your estate if you die and don't have a qualified male heir and your heirs are already dead from the plague and you have bumps on your body, you got a problem.
So all this land started reverting back to the crown. And so lawyers stepped in and created the very first modern trust because of the plague. And what they did was they transferred title to their law firm because William parceled out interest. And so the lawyers held legal title. The estate owners kept beneficial title.
And because of that, there was never a triggering event. There was no need for probate. It was the first probate avoidance trust. And that trust exists basically in the same form today. And it was no kidding legal invention by law firms to save land for asset protection purposes against the ravishes of the plague.
Pretty cool, right? That's what I left out, Susan. They use like herd immunity to get all their land back. Yeah. But you know, something, the government's always been trying to take land and the rich people have always been trying to prevent the government from taking it. That's why in America, well you think about it, the Biden administration wants to tax unrealized gain because rich people buy property and they don't sell it.
They get dividends off of it. Dividends are tax less than income. Like Warren Buffet is famous for saying his secretary paid more in taxes than he did last year. Let's get all his wealth.
He pays himself a low salary. Everything else is dividends. It's taxed at a lower rate and there's no tax on unrealized gain when he passes away, and get a step up on basis. He'll avoid capital gains tax at all. Warren Buffet's 92 years old, the rich pay far less than tax than the poor in America. Period. And man, that goes back to the beginning of government.
Okay. It's 1103. I talked enough. Any other questions? Not today. Okay. So get on YouTube and start watching videos about William, the Conqueror and we'll pick it up next week. Bye. Bye.
Thanks for listening to another episode of the BoomX show laws of money podcast, where asset protection attorney, Darol Tutle, breaks down the complicated rules of estate, retirement, and even long-term care planning.
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