If you implement the strategies that we teach at the BoomX Academy and talk about on the BoomX Show, the probability that you successfully finance your retirement is much higher. And therefore the probability of leaving a higher percentage of your estate to your kids, leaving a legacy for them also increases.
But the question remains, how do we pass wealth on to our kids so that it is financially responsible. And it is a money-making machine for them. And that brings harmony to the family by structures in which conflict is resolved efficiently and inexpensively. Today, we will talk about two such very important provisions that you've probably never even thought about.
One is the trust protector. The second is provisions inside of your estate plan for trust reporting so that all the beneficiaries know what is going on and they are emotionally invested in it. These are great topics. They will bring value to your trust in the estate plan for literally generations. We have a lot to talk about.
Let's get started.
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, entrepreneurs, fellow attorneys, are you ready? Are you ready? Let's arm this bomb. Now, here's the BoomX Show, The Laws of Money.
This episode has a lot in it, but it is for anyone who is in the process or beginning to think about designing the future of their money. And I used the term family wealth just to spark a mental image because wealth is not just asset owned by the asset owner.
If you think about retirement accounts for example, if you take only two required minimum distributions And the investments inside of the retirement account, when even a modest rate of return, you're a mathematically guaranteed to have an account balance leftover at the end of your life. And although retirees worry about whether they have enough funds to finance their retirement, the question that we all wonder is will I go broke during retirement?
In most cases, wealth increases during retirement and there is substantial wealth that passes on to the next generation. Now a thoughtless retirement plan is one in which asset protection is not applied at all. Or, asset protection is only applied during the life of the planner rather than the planner's spouse and then the subsequent generation and if the wealth is large enough, the third generation.
It is my view that it is a mistake to develop a plan in which your estate is passed on outright to the surviving spouse. That's why we talked so much about the spousal protection trust. In my view, the spousal protection trust is the single most important asset protection trust in American jurisprudence.
Assuming though, that you have installed not on estate plan level 101 but in a true asset protection plan, then it's time to dive deeper into the provisions and some of the nuances of a great trust design. One such device is the trust protector. We will talk about this in more detail. Don't be discouraged.
It may feel like you're sipping water from a fire hydrant. I can see that. However, that's why we have the BoomX Academy. The BoomX Academy is meant to supplement the BoomX Show, provide additional information and resources. You can join the BoomX Academy absolutely free. There are two membership levels. One is the BoomX Citizen level, absolutely free, no strings attached. I promise you, we're only trying to get information out. If you do that, you will be automatically enrolled in the asset protection master class for free. That masterclass has resources in it. And lessons that introduces you to the concept of asset protection so you can get away from the concept and belief in things like the revocable living trust, which does nothing at the BoomX Academy.
We talk about planning for unreimbursed medical expenses. We talk about tax planning. We talk about family planning. We talk about all of those things that concern us as family leaders and business leaders. When you enroll into the asset master protection class, you will also be able to register and attend the live asset protection masterclass webinar that I hold every month.
That way you can go to the live event ask any question that you want to. The second membership level we have, of course, is the Family Leader and to disabuse any kind of myth about attorneys who charged too much, I can assure you. That it is affordable as $44 a month is a membership level and you will automatically be enrolled in the Nest Egg course.
This course, the nest egg course is so important. I dedicated, like I asked myself when I was designing it, what is a one and most important step a person could take that wasn't too difficult, but had a huge value proposition. Of course, that was a limited power of attorney that preserves the right to make a transfer to an asset protection trust later in life or upon an event.
Now, if you don't understand what I'm talking about, that's okay. That's what the Nest Egg course is about. And to help people get over any kind of fear of putting their credit card number in the very first month for the family leader, membership is only $1 and you can cancel anytime you want to. So for $1, you can join the family leaders.
You'll be enrolled in the nest state course. You'll learn about this important first step. And as part of your membership, you will be able to easily, and instantly draft a legal document that you need to implement the plan. You will also be eligible to attend office hours every single week at 11:00 AM Pacific Time. Members of the family leaders level, family leaders join me in a live session just for Q and A. And if anyone doesn't have questions, I reserve the right to make a presentation. In fact, the podcast episode that you are about to hear is my presentation during this week's office hours on two topics; trust, protector, and trust reporting.
In fact, without further ado. I'd like to launch into today's episode. That is a live session at office hours and BoomX Academy i. You can learn more about the academy by going to boomx.biz. That's boomx.biz. And here we go.
Welcome to the BoomX Show laws and many podcasts. I'm your host, Darol Tuttle. We are live broadcasting from Puerto Rico. There is no power failure today, cross our fingers. Topic, if you can see behind me I wrote on the board, it might be a little hard, but before we get into Q and a, I'd like to cover two things.
Number one, Trust Protector. That wonderful provision that can prevent a lot of problems, save a lot of money, save a lot of stress. If things go wrong with a trust now or in the future. The second topic is reporting trust reporting, and the wonderful thing that can do to prevent conflict so that you'd never need a trust protector, but let's start first with the concept of a trust protector.
The trust protector is statutory. It's kind of a new crater in the realm of trust law. And sometimes it's called a trust advisor. The Washington state statute. Most of you are from Washington, like all of you are from Washington. At this point. I hope that we will have attendees from all over the country.
So anything that I say about Washington likely applies in all 50 states, if it doesn't, I'll try to let people know, but a trust advisor, the concept of it kind of originated from litigation. So really the thing to remember is your money is going to outlast you and with luck. And it doesn't even take that much luck in today's environment.
The amount of money that you leave at the end of your life will be far greater than it is now. And so just like thinking and concept, the concept of growing and protecting family wealth. Now, because you are implementing and installing asset protection devices trust, spousal protection, trust, credit shelter, trust.
You've got your powers of attorney that have contingent plans built into them. Medicaid asset protection trust if you're single, intentionally defective grantor trust all of these things that we talked about. That means that it's more probable, that their chances of having success left during your lifetime to help pay for medical care or to reduce unnecessary taxation or loss due to family mismanagement is greater than with no plan.
And so the whole concept is, think about how it's going to pass to kids. Now, just imagine that you and your spouse, if you're married, have passed away. And now you are at the day after the funeral like, what does that look like? Kids of course are probably in shock and mourning and all those emotions that occur when there's a loss of a parent, of course.
Howeve,r if they do it the old fashioned. Rolling down to the attorney's office, where he reads the Last Will and Testament. And really, they're only asking the question, what do I get? And the answer is an equal share of the estate. And we'll write you a check. I can tell you that doesn't work very well.
That money will deplete within one generation possibly within one. What we're trying to teach in BoomX Academy it's like, okay, a trust worked well for protecting assets while we were alive. What might it look like for kids like during their lifetime? And let's be so bold as to think if we're going to leave a multi-million dollar estate and it's going to grow and grow and grow and if it's managed correctly.
It took us a lifetime to figure out that we wanted to invest in crypto, or we didn't want to invest in crypto or that we wanted this kind of money management, or we wanted this kind of portfolio. Just think about the institutional knowledge, quote unquote, that's what the army would call it.
Institutional knowledge. What you've learned with the past generation of soldiers learned pass onto the next generation of soldiers so that you have that continuity of knowledge. And that's what a trust does. It's not just money, it's money management, it's experience, it's knowledge. And so the desire and the hope is that the assets continue to grow during the lifetime of the kids.
They're drawing income, they're paying for unreimbursed, medical expenses, themselves maintenance, education, support, and health. We're trying to have help them have a much better, a richer and fuller life through income and financial responsibility. However, what happens when things go wrong? There are two things to worry about.
Number one, you have a trustee who is bad. Now it might be morally bad that occurs almost exclusively when a family member is chosen to be the trustee. And I have, I can remember the first litigation case I had. It was absolutely horrible. Every litigation I've case I've had in my career regarding a trust dispute was about a family member who was the trustee who was doing arrogant things and at worse stealing from the trust or stealing from brothers and sisters.
Now, okay, so th there's that kind of, morally bad. The second thing might be just incompetent, or not really following the intent or the letter of the trust law, but what you wanted to swim lanes that you created, the provisions that you put into the trust. The trustee is disregarding that. Now when you are deceased, you can't come back from the grave and slap the trustee around.
Suppose you appointed one of your kids to be the trustee. They're committing a malfeasance or they're incompetent. They're too busy with their own life. They're not doing a good job and he's starting to disappear from the trust and if it's your kid, normally you just slap them around and say, stop.
You have a responsibility to your siblings, the other beneficiaries, but if you're gone, what do you do? Trust protector, when a trust is created in an estate plan, either in a living trust or in a will, and then the trust creators die, that will at that point, if it wasn't already becomes irrevocable.
So the trust creators are dead. The only people that could theoretically change the trust is the trust maker, who's dead. That creates a problem because sometimes the circumstances for the trust no longer exist. For example, suppose you left millions of dollars in the trust for your five kids equally to pay out their entire lifetime and not to terminate until the third or fourth generation.
Now imagine something drastically changes with the beneficiaries. Two of them were killed in a car crash and another two are horribly injured. The entire functionality and purpose of the trust would change due to that horrific tragic set of circumstances, right? So how do you go in and amend the trust with that batch sort of circumstances when you are deceased, the trust maker no longer exists, or you have a bad trustee, you're doing bad things, and you want to remove that trustee.
Those are the common fact patterns that the circumstances no longer exist. The value proposition that the trust was aiming for no longer exists, or you have a bad track.
The law invented this thing called trust protector, and that is usually the attorney that drafted the trust or an attorney and his law firm, because, a trust might have a conflict in a trust 30 years after the lawyers dead. And so maybe the law firm, or you can even have an appraisal provision that says we're not going to appoint a trust protector at this moment, but the beneficiaries can, one of the beneficiaries can move for a trust protector to be appointed provided that person is an attorney with at least five years of experience, hopefully from the national academy of elder law attorneys or a nationally renowned association.
Now, when that trust protector is appointed, if you have authorized that in your trust, then you can have all kinds of provisions that says, look, the trust protector can step in and remove the trustee without a court order.
Because absent of a trust protector, the only way you can remove a trustee, if you can't at all is through litigation. And that's where you see these disputes in court that rack up 30, 40, 50, 60, $90,000 in attorney's fees. I've actually two years ago, I was at the lawyers convention and everybody's sitting around during happy hour talking about stuff.
And this lawyer was boasting that they had built $90,000 in a trust dispute. That was their attorney's fees. I was so offended. I almost threw my drink in the guy's face and turn around, but that's the kind of things that litigators are after. It's not that they're bad people, everybody likes to make a large fee, but something drastically went wrong.
That attorney would not have made a dime had there been a trust protector provision because he or she could have gone in and stood in the shoes of the deceased trustmaker. That's what a trust protector can do, can stands in the shoes of the deceased Trustmaker. And another thing a trust protector can be is just act as an advisor.
One thing that I've noticed is that I spent, I believe I spend more time and energy with my clients than a financial advisor does. And but attorneys like an estate planning attorneys are traditionally transactional. And so if you want it to, you could have provisions that said, look, we're going to appoint a trust protector, but we're going to look at it more as an advisory.
And every year he's going to review the performance. He's going to review what happened in the trust that year, and then he, or she can make decisions based upon what, what happened. So that if year after year after year after year, the trustee is just going along. And the financial advisor is drastically underperforming the benchmark, the trust advisor could say, can actually be given the authority to remove and change the way the assets are managed. Whereas without it, you're stuck. You might get set with a bad set of investments and then there's nothing to do about it. And so that trust advisor those provisions are extremely powerful and the world is your oyster.
You can give a trusted advisor, a little bit of authority, a lot of authority, no discretion, some discretion and you can have it collaborative with the beneficiaries. You can have it exclusive of the beneficiaries, meaning I get to decide who the replacement trustee is period. Based on my experience, or you could say, Hey, the trust advisors, we're not going to have a heavy hand here.
If there's a consensus with the beneficiaries, then the trust protector must appoint their choice. And it takes a little heavy lifting, not on the part of the drafter, but on of the family, because they have to sit there and say, okay, look, we get to decide how we want this trust to work.
And then the other thing is we'll open up for Q and A in just a minute here, just be patient. But the second thing is reporting. And so one of the things that goes wrong in a if it's going to go wrong, one of the things that happens is the trustees, especially if it's a family member becomes arrogant and refuses to provide information about what's happening to the inheritance inside of the trust to his or her brothers and sisters or fellow beneficiaries. And there's some reason for doing that. Like maybe I've seen clients express concern about a beneficiary that is just basically a troublemaker.
If you give them information, they're just going to want more information and they're gonna micromanage it and then nothing's going to be good enough. And he should have invested in this instead of that. And so sometimes privacy is good. However, if you have concerns or consider the possibility of malfeasance or fraud by a family member, and sometimes they're not bad people, but things happen in their life.
And they lose a job. Their spouse has cancer, and there's this pot of money available to them. Then what they'll do is they'll start billing against the trust in a unreasonable way, and then try to justify it by saying, oh, it was, and I've seen tens of thousands of dollars run out of a trust that way.
And it's always because of family members doing that. And. One way to prevent that from happening is a requirement that the trustee must report to the beneficiaries because they'll know, right? If every quarter they get a report and they said, okay, the stock market went up 15% and we're an S and P 500 and a bond index.
So we should be just a little bit below that. And, but we're down a total of 50K what the heck. Now just imagine you're two of the siblings, three siblings to the non-trustee siblings get together and say, whoa, whoa, whoa. Time out. And the trustee is recalcitrant about responding to their request.
Then a trust protector advisor could step in. And it's good because you could even say, look, if there's in it, like if any beneficiary of trust, the trust protector must immediately remove the trustee and put them on the sidelines and investigate, figure out what's going on. And if nothing's going on, then you can put them back in that role and explain to the beneficiaries why the loss occurred and why it was reasonable.
On the other hand, what's bad is having the trustee continue. You don't, the siblings sometimes don't get along well enough under the best circumstances, let alone, when one of the kids is managing the wealth. And so trust protector and reporting are provisions inside of the trust. That are extremely powerful.
We spend so much time talking about that spousal protection trust that we haven't been able to go on to other topics. And so trust protector and reporting super, super important. We've spent no time on that. Just think about how you want that to go, how you want it to operate so that you have a little money-making machine that's stress free.
And if your goal is a family bank for 150 years, that's the way to do it. And so that's my two important tips for office hours today. I am perfectly happy to now open it up to Q and A.
Karen, you look, I'm trying to think of, I want to ask about that. What you just said. Look, the thing is about. I throw it out and it's like sipping water from a fire hydrant, but then we can talk about it again and again and again and again, until it starts to gel, right? You guys are experts in spousal protection trust at this point, you can probably set up shop and draft your own.
If you have a management company, are you concerned about doing these things? Well, management companies, professional trust. Okay. Let's break it down a little bit. First of all, there, there's an extra layer of expense related to a trust that does not exist when you own the assets yourself. Make sense. Right?
And now my friend was office hours when we discussed trust protector trust reporting, but you could tell by the question that one of the attendees asset end ended the episode there that the family leaders who attend every week have learned quite a bit about asset protection, retirement planning, estate planning, and even investing.
In the monthly meetings, we started this fun project where we do not talk about any topic related to the law rather, we talk about the stock. And investing in general. And we have started this project in which a family leaders who attend regularly have submitted pick to their favorite stocks. And this is just for fun. If we're not in an investment club or not making recommendations, we're not giving advice.
We're just seeing if we can construct a portfolio. And then analyze its intrinsic value, its risk and so forth, and then track it's annualized an average return compared to a benchmark and see if we can beat the market. And really it's just educational and fun, but that is an example of a BoomX Academy, other than office hours, other than the podcast, other than the courses.
And that's just coming together really as equal. Is it retirees with tremendous knowledge and life experiences that they bring to the table for the monthly meeting. Monthly meeting is available only to the family leaders level of membership, but there's a reason. These are people who are committed to it, man, it's going to be fun.
Tomorrow is the second monthly meeting in which we have talked about our model portfolio. And so tomorrow we're going to put it together. And I'll present the spreadsheet and then we're going to talk about standard deviation and how to quantify risk. Isn't that fun? I get excited very easily, but that, that is an example of the sort of questions that.
You can expect if you attend an office hours and here's a little cheesy teaser for you. The rest of office hours continued for another 35 minutes. And if you would like to view the, and I mean view because it's a virtual meeting connected by Zoom. So you can become a member, BoomX Citizen level for free.
You'll be enrolled in the boom ex companion course. And you can see and listen to the questions that were asked in office hours about trust protector, and asked about reporting and then the general questions that followed afterwards about like, what is trust administration and what do trust companies charge and is it worth it?
And is it better to have an attorney act as your trustee? And the answers were based upon my experience, but meant to provide perspective based on that experience. So become a member log into your BoomX Companion course, check out the look and feel of office hours. And then you can listen to enhance content, which is includes 35, 35 more minutes of Q and A with people, the same questions that you likely have.
Thanks for listening to another episode of the BoomX Show laws of money podcast, where asset protection attorney, Darol Tuttle breaks down the complicated rules of estate retirement and even long-term care plans. You can listen to past episodes of the BoomX show by going to boomxshow.com or subscribing, right from your smart phones podcast player, to take a deeper dive, join as a free member in the BoomX Academy.
And you'll be automatically enrolled in the show's companion courses where you can find enhanced content and many of the shows important episodes. Enroll now by visiting boomxacademy.com. That's boomxacademy.com.
