021 | How to Protect Your Assets and Build an Estate Plan with Attorney Kyle Irvin

Do you want to ensure your assets are shielded from creditors and legal liabilities? Learn how to legally avoid paying the federal estate tax which is 40%. Join us for an insightful discussion on asset protection and estate planning with Kyle Irvin. 

In our most recent episode, we sit down with Kyle Irvin, an expert in asset protection and estate planning. I have worked closely together with Kyle for years. He brings practical wisdom to the table, unraveling the complexities of asset protection strategies and legal nuances across different states. 

In this episode, Kyle explains the various levels of asset protection, from safeguarding your home and retirement accounts to navigating the intricate laws surrounding LLCs and corporations. He sheds light on critical components to ensure solid asset protection, including the importance of annual meetings, maintaining corporate records, and treating LLCs as bona fide businesses. 

Unlock the secrets to securing your financial future and leaving a lasting impact for generations to come. 

Key Takeaways: 

  • Comprehensive asset protection strategies 
  • Key components of asset protection 
  • Leveraging LLCs and corporations 
  • Advanced techniques like siloing assets and series LLCs 
  • Utilizing trusts for estate planning 


Visit www.vitalstrategies.com to download FREE resources    

Listen to the podcast on your favorite app: https://link.chtbl.com/vitalstrategies   

Follow on Instagram at https://www.instagram.com/vital.strategies     

Follow on Facebook at https://www.facebook.com/VitalStrategiesPodcast    

Follow on LinkedIn at https://www.linkedin.com/in/patricklonergan/    


Sponsored by Vital Wealth   

Music by Cephas   

Audio, video, and show notes produced by Podcast Abundance  

Research and copywriting by Victoria O’Brien 


00:01 – Patrick (Host)
Welcome everyone to another episode of the Vital Strategies Podcast your go-to resource to pay less tax, build more wealth and live a great life. I’m your host, patrick Lonergan, and I’m thrilled to bring you today’s discussion. Joining me is an expert in the field of asset protection and estate planning. He’s someone whom I’ve had the pleasure of collaborating closely with for many years attorney Kyle Irvin. Kyle brings a wealth of experience and expertise to the table. Together, we’re diving deep into the intricacies to create a robust asset protection strategy that stands the test of time.

In this episode, we’ll explore asset protection from basic principles to advanced tactics. We’ll be navigating state laws and discussing safeguarding assets like home and retirement accounts. Kyle will outline the key components for a solid strategy, from corporate governance to utilizing the flexibility of LLCs. Speaking of LLCs, we’ll dig into the versatility of LLCs and their potential benefits, and how trust play a crucial role in estate planning. Trusts are great tools for facilitating wealth transfer and avoiding unintended consequences. So join us as we walk through the intricacies of asset protection and estate planning, where every decision is a step toward protecting your assets and being able to leave a lasting impact. Stay to the end to hear about how to protect your hard-earned wealth from Fabio or Lady Gaga. It’s an interesting discussion. Welcome to the Vital Strategies Podcast. Let’s dive in in. All right, kyle, I’m excited about the conversation today we’re going to get into we’ll call it asset protection some estate planning, how all of those things fit together. We’ve worked together on cases for a long, long time some pretty interesting opportunities, so I’m looking forward to this conversation today.

01:45 – Kyle (Guest)
Thank you very much for joining us. Yeah, thanks so much for having me, pat. It’s a pleasure to talk with you about one of my favorite topics. Very good.

01:52 – Patrick (Host)
So I think as entrepreneurs we get started, we’re excited about our business and that business can take us in lots of different directions. We generally have the business, we might acquire some real estate, that type of thing, but at the end of the day, if we don’t own all those things personally, that can be a problem. So we think it makes a lot of sense to have some entity set up to start to separate out some of that liability. That creates some creditor protection. So can you just walk us through, maybe like some base level 101? What is some asset protection look?

02:22 – Kyle (Guest)
like yeah, and so when we talk about asset protection there’s kind of a number of different levels. When we sit down with somebody to kind of go through what’s out there, what’s protected, what’s protected well, what could be protected better, what’s not protected at all, how is it protected? There’s a whole host of levels of kind of protection that somebody wants or needs and one of the first places that we start is what state are you operating in and what state is your residence? Because there’s different states that have different laws about what they protect by default, and so every state has statutes that say these certain assets are exempt from creditors or they limit creditors to a certain amount of certain assets. So, for instance, in Iowa, where I live, your homestead is exempt from creditors. So unless you agree via a contract with the bank to put a mortgage on your house because that’s what you’re using to buy it, If you had a judgment against you, whether you didn’t pay your credit card or you hit a doctor in a crosswalk or something like that, there’s a big judgment out there.

That judgment creditor can’t force the sale of your house to pay their judgment. So at a very basic level, the statutes of Iowa protects that your house. So when we look at the asset list and we see your house on it, we look to see what state you’re in, because not every state is like Iowa. Some do protect a homestead completely. Some states protect it up to a certain dollar figure. So it’s a little bit different for each state and so we analyze that for folks and say, starting with your house, just how protected is that?

Then we look at things like retirement accounts. So in a lot of states they’ll have state statutes that say IRAs or 401ks might be exempt from creditors. So again, if you have that judgment against you, you got sued in court and you lost and there’s a judgment out there. They shouldn’t be able to go in as your judgment creditors and grab your IRA or 401k because there’s a state statute that protects it. So we look at that level of analysis and that’s a general overview. Every state is going to be different. In Iowa, for instance, again, a lot of protection of farm equipment and other things that are unique in the state. Other states have other protections and so we look at a state statute to begin with for just some base level protection.

04:53 – Patrick (Host)
Yeah, that’s great and it’s an interesting point because we’ve got clients all over the US and we were looking at the homestead rules in California. I’m not remembering this off the top of my head, but I think there was about a half million dollars of equity that were protected. Then everything above that was exposed to creditors and the real estate’s appreciated out there. It’s like, wow, we had some clients that really had some exposure on that side of things and it’s like, well, we better look at opportunities to address that. So that’s a good point.

05:19 – Kyle (Guest)
Yeah, that’s a really good example, because if that person sat down with you or I, we’d start strategizing and saying what else can we do or should we be doing? Because that’s an asset that’s maybe not as protected as we would like it to be, and I think, too, there are certain states. We’ll talk about trust and entities here for a little bit. If you’re an entrepreneur and you started a business and you may have a very basic LLC and that LLC may not have all the provisions in it and you may not be following all of the formalities that you need to, it sounds kind of silly to follow through on things like making sure your state filings are up to date, making sure that all of your business is run through the LLC and you’re not running your personal groceries through the LLC.

When we get down to people attacking an LLC and saying it doesn’t actually protect the assets your own personal assets from coming after it those kinds of things are you treating it as a business or just another checking account that you run your groceries and other things out of? If you’re not treating it as a business or just another checking account that you run your groceries and other things out of, if you’re not treating it like a separate business, then that’s when courts and other places start to look at it and say well, you’re really treating this like another personal account, so we’re going to also treat it like another personal account. And then all of a sudden, that wall that you want to build up whether it’s debts from the business to your personal checkbook or debts from your personal checkbook to the business that wall between there that you were trying to create when you created a corporation or LLC or what have you that starts to get some chinks in the armor. So we look at that kind of stuff too Great.

07:01 – Patrick (Host)
And I think there’s, on one hand, the example of I’m using this as another bank account, but then there’s other administration things that you touched on Having my secretary of state filing fees all paid up and done on time. That matters. How about books and records and that type of thing like annual meeting minutes? Are those important pieces of the equation as far as making sure that our asset protection is rock?

07:24 – Kyle (Guest)
solid the equation as far as making sure that our asset protection is rock solid. So this is where LLCs and corporations differ a little bit, and this is why LLCs have become so popular, because with corporations that is absolutely true. So when you have an S-corp and that’s an incorporated corporation or a C-corp if you have a C-corp, that’s out there. Things like having an annual meeting, having annual meeting minutes and having resolutions passed, having your corporate record book current and also frequently visited and updated, that becomes very important when you have a corporation in place With an LLC.

Llcs in most states are not required to have annual meetings. That doesn’t mean that you should just have a really sloppy corporate record book with an LLC too. The same concept still applies, just with the exception that we don’t have to worry typically about annual meeting minutes for an LLC. But you will still want to have meetings for an LLC. You’ll want to write them down and it’s just the best practice to sort of have minutes for when you’ve gotten together to talk about especially big LLC things. Having those minutes will again, even if it’s in an LLC where it’s not required it’ll show to the core that you’ve really treated this as a separate business and you’re running it like a business. I don’t think my wife would appreciate me taking meeting minutes when we sit down to do our budget for groceries or something. That’s how we run our personal stuff, so you don’t have to do that in your personal life. But when you’re running a business, even if it’s a small business, having those details covered can go a long ways towards protecting assets on both sides of the wall.

09:03 – Patrick (Host)
Yeah, that’s great and I don’t want to get too deep into the tax side of things. But if I have an LLC that I elect to have taxed as an S-corp, does that put me in the S-corp rules or do I still fall in the LLC rules?

09:17 – Kyle (Guest)
If you elect into an S-corp, then you’re in the S-corp rules rather than in the partnership rules. So an LLC by default unless you elect into the S-corp rules rather than in the partnership rules. So an LLC by default, unless you elect into the S-corp rules, is treated as a partnership, which is always a little confusing to folks because it says well, when I filed it it says it’s a limited liability company, so it seems like it should be a company. But the default treatment under the tax code and in most states is to treat LLCs like partnerships. So the default tax treatment, especially for a lot of other things, is as a partnership. But, as you said, you can elect. That’s why LLCs are also popular because they’re called the chameleon entity. You can elect in the S-Corp status, you can elect out of it and you can kind of make it how you want to. It can be whatever you want. But if you do elect in the S-Corp treatment, then you’ve got all the S-Corp rules that you need to be thinking about.

10:09 – Patrick (Host)
Great and I don’t want to get too deep into the weeds of LLC and corporate administration, but I think those distinctions matter because sometimes we run across folks that think I’m just going to go do this on my own and that’s okay.

But right now we’re dealing with a case where I don’t know how much money the guy saved it was probably a few hundred dollars Did some of his own work, didn’t realize he had an entity set up as a flow-through entity owned by an S-corp and it’s caused a $2 million tax problem that we’re looking at private letter rulings to resolve. And it’s, like man, we missed out on an ounce of prevention for, in this case, a ton of cure. If, like man, we missed out on an ounce of prevention for, in this case, a ton of cure, you know, if we just would have spent money working with somebody like yourself to get these things set up, we would have avoided all sorts of problems. So that’s good. The administration really does matter and I think having professionals in your lives to make sure that all the I’s are dotted and T’s crossed properly makes a big difference.

11:01 – Kyle (Guest)
You know one of the big deals in estate planning between an LLC and like an S-corp. There are huge consequences and if you don’t really know what you’re doing you really need some expert help to really gain some of those advantages. And one of the biggest things that we see is for property that’s in an LLC where the default is a partnership, especially for step-up and basis purposes, to avoid capital gains tax at death. For an LLC you can file what’s called a 754 election when somebody dies, which steps up the inside basis of property in an LLC. And that’s huge for people that have an entity which you don’t get that opportunity with an S corp. And so the difference is if I have real estate in an entity which you don’t get that opportunity with an S-corp, and so the difference is if I have real estate in an LLC and I pass away, and when I bought that real estate, let’s say I paid a million dollars for it and then when I die it’s now worth two and a half million dollars With a 754 election the real estate stays in the LLC, but the inside basis, so the actual value of that ground inside the LLC gets a step up in basis to $2.5 million, whereas with an S-corp I get to step up the stock value.

So the stock value that I’m going to have in that same $2.5 million real estate, the stock value’s obviously gone up because the real estate’s gone up, but I don’t get a step up in basis on the underlying real estate. That’s there just because it’s in an S-corp. And so to your point about an LLC could elect into an S-corp status. It might make sense for that to happen in one year. But if the folks are towards the end of their time here on earth, right, we really want them in partnership status because if they happen to pass away with some low basis assets in that LLC as a partnership we can step up the inside basis in most cases and really eliminate capital gains for a lot of purposes. And that’s one of those where it’s just the type of entity and the plan that’s put in place can make all the difference between a huge tax bill or avoiding it for your family down the road.

13:09 – Patrick (Host)
Yeah absolutely so. Just to recap that with dollars and cents if I’ve got a $2 million step up in basis that I don’t get to take because of the S election, at 20% capital gains rate, there’s $400,000 of tax that I would pay if I had an S-Corp versus an LLC. Am I understanding that correctly?

13:28 – Kyle (Guest)
Right, because the thing that happens a lot when there’s sales from corporations not a lot of people want to buy somebody’s actual stock in their own S-Corp. So if my sister God bless her has her own S-Corp and that S-Corp owns a strip mall I don’t know all the skeletons that are potentially in the closet of my sister’s own S-Corp, right, she’s been running it. However, she’s been running it. She’s been complying or not complying with certain things, but I know that I like that strip mall. That’s what I really like about it. I could care less about the way she’s run her own personal S-corp. So for a lot of folks when they do sales like that, especially after death, what’s actually being sold is the piece of property itself.

So I’m buying the strip mall. I’m not wanting to buy my sister’s S-corp stock, right? So if that same hypothetical happens and my sister’s got that in an LLC, and again I don’t want to buy my sister’s LLC because I don’t know the skeletons that might be in the closet about how she ran her LLC for the last 10 years, I want to buy the asset. And so if I buy the asset and her LLC sells me the asset, we’ve been able to step it up at her date of death with the inside basis. Now, all of a sudden, her beneficiaries don’t have capital gains tax to pay and that’s just again simply the type of entity that was in existence there. Because, while the S-Corp stock does get a step up in its value, not a lot of people in these transactions I’m describing really want to buy into a closely held S-Corp entity that’s been run by somebody, just because they don’t know what skeletons are in there.

15:07 – Patrick (Host)
Absolutely, and just to take that out a little further. So if I buy the stock or buy that corporation S-corp, c-corp, what have you? There’s potential litigation that’s hanging out from five years ago. That isn’t past any statute of limitations and again I could be totally outside of my understanding on some of those topics. But if I buy the stock, I now take on that liability where if I just buy the asset and somebody sues that entity, I don’t have to worry about that lawsuit. Is that a fair statement?

15:36 – Kyle (Guest)
Yeah, it can take a lot of different flavors.

If the entity sells a product of some sort and there’s no issues that are known or at least disclosed when the company is sold, a lot of times your attorney should be thinking about those things and try to protect against those things. But whatever those things may be down the road, they’re going to be the new buyer’s problem. So if ABC Corp sells beef jerky and there’s no problems up to the point of the actual closing on the sale, but then two years into it the new buyer of ABC Corp someone got sick from the beef jerky sold within the statute of limitations that you mentioned, they’re going to sue ABC Corp. And your argument that well, hey, I wasn’t the owner of ABC Corp, when you ate the defective beef jerky, that’s not going to cut it, because it’s like, well, we don’t care who the owners of, whatever business they are, now I care that this is the business that harmed me and it armed me. Then I’m able to sue and that’s who I’m going to sue. So yeah, that’s a really good point.

16:37 – Patrick (Host)
Got it Good. So, if it’s okay, I’d like to maybe expand out this idea of liability and the entity. So I’m going to use an example of, let’s say, I own that property, that strip mall we were talking about that your sister owned, and I actually own a few other properties also in that entity and I sell the strip mall and then a few years later there’s a discovery that there was a problem with the foundation. Part of the building starts to collapse and now the buyer of that property sues me and I bought some more real estate in this entity. Would it be fair to say that, because I owned that property in this entity, that it’s exposing everything else that I own to some liability there? Yes, okay.

17:19 – Kyle (Guest)
So when they sue the owner of the property for the defective foundation that you were just mentioning, they’re suing that entity and so we’ll use my same ABC, we’ll make it ABC LLC and they’re going to sue that entity. If they are successful in suing that entity and getting a judgment against that entity, they can take the judgment and execute against any assets of that entity. So if you have other properties, like you said in your hypothetical, every property that’s not the strip mall that’s in that LLC is another asset that is subject to being affected by this judgment and being executed on by this judgment. So that’s where a lot of times people will get sick of lawyers saying, well, maybe think about doing a separate LLC for that other property. And folks are kind of like, oh well, geez, you’re just trying to raise your legal fees or something. I don’t want.

10 LLCs, my goodness, and a lot of what we’re doing and the way to think of it is siloing.

So whether you say silo or building the wall or what have you, what you’re trying to do is kind of wall off different assets from being infected by liability that’s coming from another piece it’s easy to think of when it’s your own personal checkbook. So that’s why I did an LLC in the first place and ran my business out of that, Because if my business got sued I didn’t want my own assets and my own checking account in my house to be subject to any of that stuff. That’s all going to just hit on what the business has. Well, in your hypothetical, if I’ve got other things besides the strip mall in there, I’ve got another business that I’m running out of that same entity, Now I’ve potentially infected all of my other things with that one lawsuit and if I can kind of segment those things and silo them out now, I’ve made it less likely that risk is going to sort of jump from one place into the other place and cause a real problem for all of my assets.

19:15 – Patrick (Host)
Yeah, that makes a ton of sense. So if I take that one step further, and again, if I sell a property, I should probably discontinue using that LLC for anything else. Right, Just purely from an asset protection perspective. Like that, one property was owned by that one LLC, I sell it. Now I’m done using that entity and the new property I buy gets a DEF LLC instead of ABC. So would that be a fair assessment in limiting liability.

19:44 – Kyle (Guest)
Yeah, I think it makes a lot of sense to do it that way, just because you can kind of close the books on one and then you’re not again worried about something from the old asset or the old transaction popping into the new thing. So I think it’s always best to sort of start fresh.

20:00 – Patrick (Host)
Yeah, so is there a good way to administer all of that? Because we started thinking about like, oh goodness, I’m going to have you know as my real estate empire grows. Right Now I’ve got 50 checkbooks that I need to manage and how do I keep track of all of that administration? Is there good ways to do that?

20:17 – Kyle (Guest)
When you get to multiple LLCs and you’ve got a lot of different entities, you start to look at okay, well, can we start to incorporate things like a series LLC or a holding company, and those are things that are kind of built more to organize than anything else, and so you might have 10 LLCs rather than being in those owned by Pat personally, they’re owned by the Pat Lonergan holding company, llc, and that’s really just to again centralize ownership so that the holding company is maybe the one that actually does most of the check writing and everything else, because it’s sort of all tied into all these other different entities. So there’s a lot of different options that folks have once they get multiple entities going, that we can kind of centralize and organize things so that it makes it a little bit easier.

21:09 – Patrick (Host)
Perfect, that’s great. Thank you for all that clarity, because I think that it really does matter and you know when we’re looking at, I’ll say, these really valuable assets, like spending the time to do it properly makes a huge difference. So it would be fair to say whether we’ve got real estate businesses that same methodology applies, right, Like each business should have its own entity. So I’m sort of segregating out the risk that could come from those pieces. Now there’s a whole different discussion that we could get CPAs involved in how those entities should be taxed. We touched on that. We can make some elections there on the tax status. But is there many scenarios that you see where people are actually starting an S-corp or a C-corp, or is everybody doing an LLC now and just picking different tax elections?

21:55 – Kyle (Guest)
Yeah, it comes down to the individual situation. The vast majority of folks and type of entities that are formed right now are LLCs, but by far that’s the most common type of entity that is formed, With S-Corps, especially long-term companies. So the only type of company originally was kind of the C-Corp status and then a lot of those have now become S-Corps, so then they’ve sort of converted from a C-Corp to an S-Corp. So you see a lot of those that are out there. So the S-Corps are still around and we still create them once in a while too, but LLCs are by far the most popular.

22:32 – Patrick (Host)
Yeah, and it’s pretty easy to go from an LLC to an S-Corp or a C-Corp. It’s really hard to go back. Like, once you make those elections I can go C corp to S corp, like you mentioned, but I don’t really ever get the choice to go back to that partnership status if I want to in the LLC, do I?

22:50 – Kyle (Guest)
It’s really hard because a C conversion to an S typically takes about five years and you can’t sell much during that five years because then otherwise your gain is kind of messed up and you’re paying two taxes in that same timeframe. So conversions from C to S take a while. It can be done. It’s just that you’re a little bit handcuffed during that timeframe. You’re not as flexible as maybe you’d want to be. Same with S-corp stuff Distributions out of that can be taxed as well. So it’s very hard to go from an S-corp down to a partnership. But to your point it’s easier to start at the LLC status and then go up to what you would need. So a lot of the big high-flying tech companies started out as LLCs and then the bigger that they get, the more shares they’re issuing. Then C-corp status makes more sense once you get to be really big.

23:48 – Patrick (Host)
But initially a lot of them are formed as LLCs. Yeah, that’s fantastic, and I think just a general disclaimer is before you elect an S or a C, especially a C man, I feel like we’ve got a few clients trapped in C corporations. They never wish they would have ended up there. I think, before you make that election, really spend time connecting with legal and tax counsel before you make those decisions, because it can be a problem if you have a highly appreciating cash flowing business inside of a C-corp. It’s a pain in the neck Absolutely. So I’m just thinking of a liability perspective.

We’ve talked about an entity and being able if the foundation gets messed up, and now creditors are sort of limited to that silo. Can we look at the top of that silo, like that top of that structure where I own it? Okay, and let’s say you mentioned I’m driving through a crosswalk and I hit the doctor. Okay, if I own everything, is all of that exposed to creditors? If Pat personally is getting sued for some action, are all of my assets exposed there? Is there some things I can do to protect myself?

24:45 – Kyle (Guest)
That’s a good example. So let’s use the doctor on the crosswalk. So you hit a young doctor in the crosswalk, you kill the doctor. The doctor’s family sues you because you’ve just now taken out a great servant to mankind and they would have made a lot of money over their career. So they win a judgment against you because you were texting while driving and you had the doctor and his millions of dollars he would have made is gone and his family wants compensation for that. So it’s a huge judgment.

The plaintiff in that case now has a piece of paper that says they’re owed $10 million. But just having that on a piece of paper one of the things that we review on the litigation side of law is just the economics of a lawsuit. So you may sue the person who did something really bad to the doctor, but that person doesn’t have any money. So it doesn’t really matter that you got a $10 million piece of paper, because that person literally has no money or assets to pay that piece of paper off. That person literally has no money or assets to pay that piece of paper off. So it’s kind of as good as the paper that it’s written on, even though it says I’m supposed to get $10 million. You can’t get blood out of a turnip kind of thing.

But in the hypothetical you were sort of building out was, okay, the person that hit him in the crosswalk actually has a lot of stuff. They’ve got a bunch of LLCs and a bunch of other assets that are out there. And we are thinking about that hypothetical when we sit down and do the kind of the asset protection analysis. So it starts out is the homestead protected, right? Are the retirement accounts are protected? Now, if the assets are in the LLC and you’ve sort of followed these corporate formalities, then the doctor’s family shouldn’t be able to take the $10 million judgment and go and assert it against the assets of the LLC. So that’s separate.

Now what they can do is if the LLC is distributing income to Pat’s personal checkbook. Once it hits Pat’s personal checkbook, that’s when they can use the judgment against Pat’s checkbook. But what happens a lot in those circumstances is, instead of distributing income from the LLC to Pat, the LLC just holds on to its income. It doesn’t make that distribution. It reinvests in the assets of the company so that there’s very little income actually hitting Pat’s checkbook and that’s how the assets of the LLC don’t get subject to the claim and also how the income doesn’t get hit with that either. So that’s sort of how they’re protected. If the entity has been run correctly, then it puts the wall up between liability that’s coming from Pat personally, from hitting him in the crosswalk to getting at Pat’s LLC assets, and the same way of one of your drivers of your business in the LLC hits somebody. Well then you’re protected on your own personal assets. The other direction, because it’s limited to just the assets of that business and the LLC itself.

27:35 – Patrick (Host)
Yeah. So in that scenario, let’s say I need the income that’s coming out of those businesses to pay my bills or sustain my lifestyle. The whole reason I like to put all this asset protection stuff in place is to protect my lifestyle. I don’t want somebody taking my assets that I’ve worked hard for. Now I’m not trying to say don’t pay the person that was injured. A lot of times we use umbrella policies and that type of thing. But if we’re just talking strictly from an asset protection perspective, is that some exposure that I have there Like, okay, hey, I need a half a million dollars from all of my business entities to just support my lifestyle? Am I going to have to go live in a van down by the river? Is this creditor going to get my income? Is my, I think, my question there?

28:15 – Kyle (Guest)
I mean, the retirement accounts thing is a big, important piece of that. So just imagine if the state exempts 401ks, let’s say, for instance, and I have a profit sharing plan between a bunch of my own businesses to where I’m able to contribute significant amounts to a 401k plan that I have or some other retirement plan, whatever it is non-qualified deferred comp. You can come up with all kinds of different things that maybe get to that point. But then I’m able to use the exemption of the retirement accounts potentially as some leverage in that situation so I can still get assets. Now you got to be careful, because whatever hits the checking account, that’s when it’s subject to that stuff, but there’s distributions made directly towards exempt property or exempt expenses.

You get really, really focused in on those state statute exemptions and how to operate underneath those, and that’s where the lawyers make their money. When you get in a situation like that and you’ve got to start to sort of strategize for I’ve got this huge judgment and I’ve got all this stuff how am I going to live now? Well, we get very focused in on okay, well, these are the exemptions that we can work with and these are the assets that you have, and so that’s what I can use to live off of.

29:28 – Patrick (Host)
Yeah, no, that’s great, and we really do think asset protection is a multi-step process. It includes insurance and entities and jurisdiction and all of those things making sure that they’re all in alignment, and so that’s really good, thank you, I appreciate you sort of entertaining my example there.

29:45 – Kyle (Guest)
No, can I throw the trust thing in there on top of that? Yeah, I’d love that, that’d be great. So then the other level of analysis. So we really talked about, like, at the entity level, you own these LLCs in your name and here’s the statutes and the exemptions that you can utilize. But there is also the notion of what’s called a domestic asset protection trust.

So now just imagine that you’ve created a trust and there are certain jurisdictions not all states, but a number of states have this type of legislation which says I can create a trust they can be for my benefit and I can have a separate trustee. It shouldn’t be you as the trustee and I can have a separate trustee. It shouldn’t be you as the trustee, but I can have a separate trustee that can make distributions for my benefit, and these distributions can take a number of different avenues. But if I own my LLCs and a domestic asset protection trust, then whatever I have in that trust is protected completely from creditors.

Now there is a two-year waiting period for a trust like that in South Dakota, so you can’t hit the doctor in the crosswalk day one and go day two and set up the trust. Ah, I got around it. So there are limitations. But if you take that next level of kind of protection and you wrap a trust around all of that and it’s an asset protection trust Now all of a sudden you can make distributions from that LLC to the trust. Now the income’s been taken out of the trust and it can now sort of operate and work towards your benefit without ever actually hitting your own personal checking account.

31:15 – Patrick (Host)
Yeah, that’s fantastic. I love where this conversation is going, because I think there’s something that we also like to acknowledge with our clients too. Sometimes clients come to us and they’ve started on the journey of being a business owner, maybe acquired a few assets, and they’re worried about this super complex trust structure. Actually, we feel like there’s some levels to this process and you move up the levels as you go. First we got to figure out your cashflow situation, then we move to some tax planning, then it’s like investing and then it’s protection. Sometimes people get awfully worried about protection when they haven’t built anything yet, and it’s like build the assets first and then we can continue to move up and sort of layer on these different structures. That, from my perspective, like get an LLC set up, get started, then we’ve got a holding company, like you discussed, and then now we can layer on a trust and then the trust structure can continue to build out. And I think we’ll probably touch on some of those things. But I think this is really good and I think there’s also a planning tolerance too.

How much time, energy, money am I willing to put into this process? Am I willing to invest many hours of my time figuring out what the best way is to put the trust and all these things together, because it really does take time and there’s lots of decisions that need to be made and documents that need to be reviewed, and so I think that’s a consideration too. But again, if I’ve got millions of dollars, hundreds, tens of millions of dollars, all of this stuff, again an ounce of prevention is worth a ton of cure on the backside. So that’s great. And I think another thing that a trust does and you can correct me if I’m wrong here let’s say I’m somewhat generic in my naming let’s say I get into that accident.

Okay, I think we might be able to head off a few lawsuits. And here’s where I’m going. So I go to sue somebody, I walk into the attorney’s office and I’m like, hey, I was injured, I want to go collect on this. And they go, yep, let, I was injured, I want to go collect on this. And they go, yep, let me go do an asset search. And they’re like, yes, we’d be happy to do this contingent fee, it’ll be great. And they see that Pat Lonergan owns all sorts of stuff, versus. They come back and they do a search and nothing comes up and they’re like, yes, we’d be happy to take this case. It’s just going to be a $15,000 retainer because they have no idea if I own anything, because the trust kept me anonymous. Does that come into play very often? Do you feel like that’s a part of asset protection in this bigger picture discussion we’re having?

33:25 – Kyle (Guest)
Yeah, I think it comes into play maybe in a little bit different way, just from the information gap that you’re sort of hitting on. Like, well, the trust is private and we’re not seeing that it’s coming up with much stuff, because certainly with something like real estate, real estate’s going to be recorded publicly and have a title to it and that kind of thing. So you’re going to still see the name of a trust that’s in there. The thing is there’s all kinds of different flavors of trusts and some your garden variety revocable trust will not protect from creditors during your life, while you’re still alive, and it’s your own revocable trust. It provides protection for your family members after you’re dead but not during your life. And so if that same lawsuit happens, where the protection comes in and where it sort of grinds to a halt is eventually in the discovery phase of a lawsuit. So you may not be able to just dismiss it right off the hand or prevent it from being filed, but eventually the lawyer for the plaintiff will say, okay, well, we want to know all about these different assets that are out there. We want to know how they’re titled, where they’re at those kinds of things, and if those are titled in a domestic asset protection trust or in a trust that your parents set up or something with a spendthrift clause, then eventually they will talk to their estate planning partners and the estate planning partners are going to be like I don’t see how we can get at those assets. I think those assets are protected under state law by that provision of the trust. So even though you have a lot of assets in the trust, if it’s a domestic asset protection trust or someone else set it up for you with a spendthrift clause, that’s kind of like that earlier example where you’ve got the $10 million piece of paper but because everything is protected on the other side, there’s really nothing for them to get at with that piece of paper.

And I’ve seen this work out in real life where there was a very aggressive plaintiff who, despite those kinds of provisions in the trust, tried to go to court and try to argue that the trust was subject to pay off a huge judgment and the court came back and said what it’s not subject to your judgment, I’m sorry, and they couldn’t believe it. They couldn’t believe that millions of dollars could not go to satisfy this piece of paper that said the person should get millions of dollars just because of one paragraph put into a document. But that’s how important this kind of planning can be. By just sort of thinking through those things and really planning through each asset and how it would be protected or not down the road, that one paragraph saved this person millions of dollars because this was a trust their parents had created. But because their parents’ lawyer put that one paragraph in that trust and had the foresight to put it in a trust for that person, it protected them from this huge judgment. Yeah, yeah that’s fantastic.

36:07 – Patrick (Host)
So we’ve opened up the door on estate planning. So let’s talk a little bit about. You mentioned a revocable trust. We’ll probably talk a little bit about irrevocable trust here in a minute. But from my perspective anybody that’s got any kind of wealth, I’m going to argue probably a half million dollars and up we should probably have a revocable trust and start moving some assets into that. Just for a number of reasons, and I’ll let you touch on those. But can we talk a little bit about revocable trust and then get into irrevocable trust and maybe the difference between the two?

36:36 – Kyle (Guest)
Yeah, you’re absolutely right. The typical selling points for revocable trust, and why they’re a really good idea, is you don’t have to go through probate. So if somebody dies and they just have a will in order to transfer property under that will, we have to submit the will of the court system and submitting it to the court system and then getting authority to transfer assets to somebody else that’s what’s known in common language as a probate. So a lot of people will say that’s a nasty word and the challenges with probate are. It’s very public, so you’re filing everything in a public record with the court. The court has a long list of things that they want to see done and certain timelines that they want to see them done in. Or else you’ve got to go get a special order from the judge and so you’re heavily supervised and it’s heavily visible, and those two things turn a lot of people off. So the reason why revocable trusts have become so common is that the trust really takes care of those two things. So if you set the trust up correctly and fund it with the assets that are necessary to make it work after somebody dies, then you stay out of the court system.

You are on your own timelines. For things like sales of assets or other stuff. There are certain IRS regs that are going to apply whether you’re in a probate or a trust. But the trust is going to be more flexible than what the court system says. Well, you’ve got to file this within 90 days. A good example is a court will say you’ve got to file an inventory of all assets the person owned within 90 days of opening the estate in a lot of states. Well, you can’t even get an appraisal of real estate within 90 days because appraisers are so backed up with a lot of work, so those timelines just don’t work. And with the trust you just have a lot more flexibility, a lot more privacy and the length of things and the list of things you have to do is a lot less because you’re not working with the court system.

38:30 – Patrick (Host)
Yeah, that’s great, and I think there’s a few things there. We’ll call it estate planning in general is one of those things that is important but not urgent. It seems like it gets kicked down the road. And then also, we think funding the trust is super important. We’re doing estate audits regularly with our clients to make sure that, hey, what we’ve got set up and what we want to have happen are going to be the same we talked about earlier. There’s generally three plans that people have when it comes to their estate plan it’s the one they want, the one they think they have and the one they actually have, and so it’s like we want all of those to be aligned in the same, and so we pay a lot of attention to that.

And I think there’s also another piece there that is important, like the cost, the cost to probate an estate. I think in Iowa you can charge up to 2%. Attorneys can charge 2% to probate the estate, and if you’ve got a few million dollars, there’s $40,000 in fees where you could have avoided all of the things you were talking about the publicity, the speed at which you transfer assets and a bunch of costs just by setting it up properly on the front end. So those are all the arguments we’re making with our clients, Like, hey, let’s get this in motion and it may not be perfect, but it’s way better than what you currently have. So that’s good. Yep, those are great points.

So one of the things that we talked about was revocable versus irrevocable. A revocable trust correct me if I’m wrong here I can put an asset in and then I can decide to take it back out, Like that’s not a problem. An irrevocable trust has totally different rules as far as, like, putting assets in and taking them out. Why would anybody can you talk through what those rules are and then why somebody would pick that route?

40:01 – Kyle (Guest)
Yeah, you’re right on the revocable trust. So the term revocable is just what it sounds like. You can revoke it or cancel it out and take things back out. You can change it around and rewrite the terms as many times as you want, so it’s a really, really flexible thing. Because you have so much control over it. It’s not considered to be a separate tax existence from you individually, so you don’t have to go get a separate tax ID number or anything like that. There really isn’t a separate kind of entity existence considered for a trust.

When I’m alive and I have a revocable trust, with irrevocable trusts it’s very different, and so with an irrevocable trust, we’re often doing very specific planning purposes that are really designed for when assets are going to be controlled and owned by whom and what the impact about that is. On my overall asset list before my passing. So, as an example, with Congress, the law set in 2026 to go back down from 14 million plus to you know we expect it to go about down in half to 7 million per person. And that’s for estate tax, right? Yeah, for federal estate tax in 2026, you have 14 million plus right now that you can give to somebody during your life without paying any gift tax or estate tax, but then in the beginning January 1, 2026, that goes down to what we estimate to be about $7 million at that point.

So the gifting piece I could gift into an irrevocable trust now and one of the most popular is what’s called a spousal lifetime access trust. So I could gift into an irrevocable trust for my spouse. Now it has to be a big gift. It has to be the maximum amount of my credit because of the way they’re going to count the credit once it goes back down. But if I use the credit now into an irrevocable trust, that counts as using my credit now, before I’ve lost it and I’ve been able to shelter a lot more assets before that I turn into a pumpkin at midnight on the end of 2025.

42:06 – Patrick (Host)
And just to touch on that real quick. So when we lose $7 million potentially in estate or gift tax credit, the tax on that estate tax is 40% Correct. So there’s $2.8 million of value that I sort of lose overnight in the form of giving it to the IRS. Because we’ve had conversations. We generally have three choices as to who we’re giving our assets to we can give it to our kids, we can give it to charity or we can give it to the government, and it’s like I prefer not to give any of my money to the government if I don’t have to. So let’s just be really intentional on our planning and go that route.

So the irrevocable trust is a tremendous asset for helping us protect against having to pay huge estate tax bill down the road. So if I make those gifts into the trust before January 1st 2026, and the estate tax is that one tax, that’s been all over the board. There’s not been an estate tax, then there’s been a million dollar exemption, then there’s up to 14, like we have now, and a husband and wife can both use that 14. Is that correct? Yep, 14 million per person, yep. So we got 28 million that we can sort of shelter from estate tax. So a lot of people estate tax is not a concern, but it may affect a whole lot more people here in short order if the number gets cut in half.

43:21 – Kyle (Guest)
So that’s totally true.

And then the other thing, the asset protection trust that I mentioned earlier.

That’s an irrevocable trust, because if I put something into a revocable trust and I can take it back out of it if I have a judgment against me, a creditor is going to say well, you can take it in and take it back out, so I get to stand in your shoes. That means I can take it out as a creditor. Versus if I put it into a domestic asset protection trust with a separate trustee and the creditor tries to stand in my shoes, that creditor can’t force it to come back out. Because I can’t force it to come back out, the trustee may have discretion to give it to me if the trustee wants to or not, but the trustee could just say I’m not going to make a distribution to you while you have that huge judgment on you and those kinds of things. So we use it for estate planning, asset protection. The Eurovocal Trust can really shift assets into a different bucket and yet still provide, within the overall plan, a lot of really strategic tax and asset protection advantages.

44:20 – Patrick (Host)
Yeah, absolutely. And I think another thing that we shouldn’t discount with trusts either is, I’ll say, control that we can have down the road. There could be some unintended consequences. For example, I pass away without a trust. I’ve got three young kids. My wife and I both pass away Right now. Those assets would get distributed to those kids when they turn 18, when they’re age of majority.

It’s like that concerns me right, like I don’t know if I want my kids having millions of dollars at an early age. I’d much rather have a trust set up and go, okay, cool, we’re going to have a trustee that just manages this trust, and I think I’m taking this idea from you and some of the previous work we’ve done. There’s going to be a trustee that manages the trust. Then they hit a certain age, we’re going to be co-trustees and then at some point they become their own trustees. Hopefully they learned along the way how to manage the assets and if they didn’t, I guess that’s their own issue. But the trust can really help us sort of plan long-term for good outcomes versus again some of those unintended consequences that we don’t want to have happen. Can you give us some other examples of what kind of planning a trust can help us with on that side of things.

45:22 – Kyle (Guest)
Well, yeah, and picking off of one of your points is I think this has become more important than maybe I realized was that notion of kind of the staggered control for your kids. So, as an example, one of the things that I think I’ve really seen clients really hunger for is that education piece of investments. So if we take kind of your example and we say, okay, well, a trustee is going to manage it until the kid turns 35, let’s say, well, what’s happening between when they’re like 18 and 35? Well, what should be happening is they’re having regular meetings with folks like yourselves where you’re sitting down with them and you’re saying, hey, I’m doing the investments and we’re working with your trustee. Here’s what we’re doing with your investments. We have this much in kind of growth stocks and we have this much in bonds to provide kind of some downward protection.

You know, for an 18 year old, I can speak to myself. My parents are very intelligent people but they couldn’t have told me what a good investment strategy was, much less for me to think it was interesting and to comprehend it. But if you think about it from a planning perspective, if they’re able to sit down in that timeframe between 18 and 35 and really kind of get investment one-on-one for 17 years by the time they turn 35, they’ve learned the importance and the value of doing what folks like yourself do in terms of sort of building and protecting wealth. And so now at 35, they become co-trustee and they’ve gone to 101, but now they get to have a little bit more say in the type of investments. But you’ve taught them kind of how to think about it and so again, you’re not giving them over to control at 35, you’re co-trustee with maybe another family member or a bank or something like that at that point. And again they’re learning more what it means to make distributions and why we would try to estimate out how long this money can last based on the budgets that are there.

And then at some point you pick an age when you let them out of the nest and they get to decide that. But hopefully in that process they’ve become educated on why it’s so important to do the kind of investing that they need to do, so that when you turn it over to one, maybe at 50, they can take it out of the trust or they can leave it in the trust. Now they’re seasoned, they’ve been educated that entire time as to why it’s important to do that kind of investing. They’ve not made those bad choices because you really put them on an education track more than anything. Right, you protected from them but you got them exposed to professionals that are going to do a good job for them and I think I discounted that education piece early in my career.

You obviously don’t want the kid going and blowing it on the Ferrari and stuff when they’re 18, but if they’ve learned from the trust side, hey, I should really be investing this. I shouldn’t be blowing it on this or that or the other. It’s really important to invest it and protect it and see it grow, because I sat down with these trust people when I was 18 and they talked to me at the importance of this. That’s going to bleed over into how they manage their other assets and you’ve kind of given them the best opportunity to sort of succeed and have success.

48:30 – Patrick (Host)
Yeah, that’s fantastic, and I think there’s an important distinction that we should just clarify too. So when I have a revocable trust during my life once I pass away and that becomes irrevocable, now, right, Right. So the trustee is now involved and we can definitely set it up to distribute assets out of the trust. But I think that piece matters because it’s like okay, no, we sort of locked in all of the things that we said we want to have happen and we can’t undo those without pulling the assets out of the trust.

48:57 – Kyle (Guest)
And if we set it up where you can’t pull the assets out of the trust, like this thing’s going to keep going and make sure that all of the things that I’m enjoying and using more and more is, instead of saying in a trust that once I hit the magic age of whatever somebody picks for me, that I just get the assets and the trust terminates.

One thing that I’m putting in more and more trust is I’m saying the beneficiary has the right at that point to withdraw if they want to. So I’m not forcing it out of the trust so that they have to take it out. I’m giving them the right to withdraw 100% if they would like to, because they may, by that point, say, because of these asset protection pieces that we went over before and because of the investment benefits, I don’t want to take it out of trust and I don’t want to put it in my own checkbook. I want to keep it where it’s been. Now I’m in control of it because I’m in the trustee and I could withdraw it if I want to. And you’ve given them the flexibility and you’ve not tied their hands. We use the dead hand control that we talk about to tie it up for their entire life, but you also haven’t terminated something that they could actually want and benefit from.

50:04 – Patrick (Host)
Yeah, and this goes back to your point earlier about that one paragraph that was in that trust that those parents set up, that protected those assets from that creditor that was trying to get to those millions of dollars. Right, it’s like this is the reason why we want to keep that trust in place. There’s really no benefit to distribute it to my personal name when I’ve got this protection wrapper around it, because I can still control those assets, but now that there’s protection there, so I think this protection piece matters. You know, when we think about we’ll call it keeping wealth in the family line. Unfortunately, the divorce rates are higher than we prefer them to be. So if I’m thinking about I love my daughters, my wife and I pass away and we decide we’re going to pass wealth onto our kids, but if my daughter gets divorced, I don’t necessarily care for her divorcing spouse to take half of the assets I gave my daughter. Is that something we can protect against with a trust?

50:54 – Kyle (Guest)
Absolutely yeah. So what you can say in there is first off, inherited assets are typically not part of a property settlement and a divorce. So those are usually considered to be separate property of whoever inherited it, of the spouse that inherited it. But again, if you’ve kept it in trust or you’ve given the ability for your child to say, well, I’m not going to withdraw it, I’m just going to keep it in trust, then at that point again, if something would happen to your daughter in this hypothetical it’s going to go down to their kids. So your grandkids from that daughter are going to inherit it rather than it going to the surviving spouse who, again, the remarriage piece too.

It may not even be divorce, but if you gave it to them outright, so in the hypothetical you’ve passed on, you’ve said at my death, just give it to my girls. And then what they do with it? They do with whatever they do. But then when your girls passes away, well, their will is probably going to say give it to my husband. And so now that guy’s got the money, well, what if he remarries and it leaves it all to their spouse, right? Well, now your grandkids have been completely cut out, and because he’s given it to spouse number two rather than down to your grandkids, or spouse number two finds a way to get at the assets, or something like that, whereas if you had said in a trust that if my child passes away before, they get full value of the share, now that share goes down and stays in trust for my grandkids and they’re the ones that are gonna get these same benefits, now you’ve sort of bypassed that problem entirely, whether via divorce or death, and remarriage yeah, no, that’s great.

52:33 – Patrick (Host)
I’m actually a little disappointed that you didn’t use the Fabio and Lady Gaga clause language.

52:38 – Kyle (Guest)
I don’t want to offend Lady Gaga fans that are out there. I’m concerned how far this podcast is going to go out to the interlands and, yeah, I don’t want to show up on a Lady Gaga hater site or something like that. No, that’s great. Fabio is kind of getting long in the tooth. There’s not a lot of folks under 40 that remember who Fabio is, so that one plays well with the older crowd. It still hits for those remembering and were competent in the 80s. If you weren’t around back then, fabio is kind of far from your mind. So I might have to update it.

53:10 – Patrick (Host)
Yeah, that’s great. I just remember the first time we talked through this with a client you brought up, like, yeah, this is sort of the Fabio clause If X passes away and gets remarried to Fabio, fabio can’t run off with all of your assets. That’s great. So we’ve talked about revocable trust, irrevocable trust. We’ve talked about entities. Let’s sort of bring some of these things together, because one of the things that we’ve worked on is some estate planning that allows us to take that estate tax exemption, gift tax exemption and sort of apply a little bit of leverage to that. So we’re going to have to go back to the entity setup for just a second and touch base on that. So I own an entity, okay, and I’ve got controlling and non-controlling interest to this entity that we sort of decided makes sense to set that up. Can you walk us through a? How do we do that?

53:56 – Kyle (Guest)
what does that mean and then where it takes us on the estate planning side so a lot of times when we’re working with entities and working with trust, we’re trying to harmonize all that stuff together and making sure that it’s all going to work together in a seamless fashion. And part of that involves valuation and that’s kind of an undersung thing that I don’t think a ton of folks think about. State planning attorneys think a lot about it and what that comes down to is let’s talk about the strip mall that we were getting at before. So let’s say that strip mall is worth a million dollars that strip mall on the outside, not within an entity, not an LLC, not in anything like that. If I die owning that strip mall, they’re going to appraise the strip mall and it’s going to be whatever the appraisal said it was, because on the deed it says Kyle Irvin owned the strip mall. So if we take a step back and we say, okay, well, for all the reasons we mentioned earlier, it makes more sense to have that strip mall in an entity from an asset production standpoint. There are also some really nice advantages from a valuation standpoint through some discounts that I’ll talk about. So the way that works is if I have that same strip mall in an LLC and let’s say I bought the strip mall, I put it into an LLC. Let’s say I was the only owner of the LLC. So when we look at the back end of the LLC about percentages of ownership, it says 100% owned by Kyle Irvin. And let’s say I bought it at a million bucks and it’s continued to appreciate and now it’s worth 10 million bucks. Okay, so now I’m up in the range where I need to really do some asset protection and some estate planning for the federal estate tax, because I’m starting to get up there at a number that where I’d have to pay the 40% tax that we talked about.

Well, I’m 100% owner of the LLC, but what I can do is one of the simplest moves is to try and get me under 50%, and I’ll talk about why that’s important in a minute. How do I get to under 50%? Well, one of the easiest moves that we’ve done a lot is to say well, I’ve got 100% of that LLC, but I don’t really need 100% to still run the LLC and have control over it like I want to. I’m named the manager of the LLC so I can manage the LLC and have control over it like I want to. I’m named the manager of the LLC. So I can manage the LLC and have day-to-day control over the LLC, even if I’m not a controlling owner.

So what I do initially is then to say well, you know what my spouse is around, so why don’t I give my spouse the other half of the LLC? So now I’ve taken myself down from 100% to 50%. So 50% to Kyle, 50% to Kyle’s spouse. Now I’m all of a sudden at 50%. A gift between spouses is not a taxable gift, so that didn’t cost me any money and it’s a very simple transaction. Now the trick is now that I’m at 50%, I really need to get under 50%. Well, how do I do that? Well, if I give just 1% and I would do this on both my side and my spouse’s side. So let’s say I take 1% and I split it amongst my kids and I give my kids 1% of my LLC. So now I’m at 49% and my spouse is at 49%.

Now circle back to that same appraisal.

So I pass away and I die owning 49% of that same strip mall in my LLC.

What the appraisers are allowed to do in that circumstance is then to take a significant discount off of the value of that same strip mall and garden variety up to 30%.

So if you think about that, I said the value of that strip mall was $10 million. But just because I did that simple transaction, I put 50% into my name and my spouse’s name and then I gave 1% to my kids, which I typically gets me under the 18,000 per kid exemption that I don’t even have to file with the IRS. Now I’m at 49% and the appraiser can then take up to a 30% discount off of my half of the LLC. So now I’ve shaved millions of dollars off of what I own by simply doing that transaction and that’s a big transaction. But if I keep doing that 1% to my kids too, that 1% to my kids also gets a discount. So I’m not sort of using the full value of things and if you really leverage that discount gifting either during death or gifting during life you can save millions of dollars and really make a plan work for tax efficiency.

58:24 – Patrick (Host)
Yeah, absolutely so. Just to clarify, when we take a 30% discount on a $10 million asset, there’s $3 million that I sort of wipe off the estate tax bill, which means I save $1.2 million in estate tax when we apply 40% of that, and it’s like that’s a significant savings. We really did move some dollars in a positive direction there, so that’s fantastic and one of the interesting things I think this is probably a discussion for another day but we’ve talked about how to get all of the appreciating assets into the trust. So all of that appreciation is not taxable either, because even though I do some discounting, like every dollar that that thing goes up still could be exposed to some estate tax, and so there’s ways to freeze that. That’s the beautiful thing about, I’ll say, estate planning in general is like there’s so many tools out there that are available to us.

We do feel like estate tax is the only voluntary tax. If you’re paying it, it’s because you either had an unforeseen windfall come or you just failed the plan in general, and so we think that’s one of those that let’s work really hard to get rid of that estate tax, cause we just look at all the wealth that people have built, it’s like. You’ve paid income tax. You’ve paid all sorts of tax along the way. We don’t need to layer another estate tax on, so let’s get that number driven down as low as we possibly can. So that’s great.

59:38 – Kyle (Guest)
Oh, absolutely. And the charitable piece too. We see more and more people saying to your point about well, you can pay it to the government, you can pay it to your family, or you can pay it to your family or you can pay it to charities. A lot of people are creating their own charitable foundations and charitable trusts and saying, rather than writing a big check to Washington, why don’t I keep it in my community and then my family runs this foundation for the betterment of my community. We keep the cash here and we can do incredible things legacy-wise in our community. So, yeah, that charitable piece. We see more and more people wanting to say I may have to pay tax, but it’s voluntary. Why don’t I just create my own charity with my family involved over the long term? It creates those kind of beneficial desires within my family. Long to donor advice funds Like.

01:00:21 – Patrick (Host)
I think there’s lots of opportunity there and when I started thinking about my own estate planning, I’m like I don’t think I like the idea of giving my kids millions of dollars. Personally, I think I would rather have a charitable impact. If I have a thing to give to my kids, between wisdom and money, I would prefer to try to pass on some wisdom and they can go create their own wealth. You know, versus like hey, here’s a bunch of money. I think we’ve seen too many examples of we give a bunch of money away, thinking it’ll make life great for people, but it doesn’t necessarily have that impact. I can take a lot of friction out of life that really causes us to be resilient. That is problematic and again, that’s a whole different conversation. But I don’t know.

That’s been my thinking and I think some of our clients have been coming along that direction. To go on, I think I’d rather have more charitable impact than just millions of dollars on top of my kids. So Absolutely All right. So we’ve covered a lot today. Is there anything else, from either an asset protection perspective or trust estate planning perspective, that we should touch base on before we wrap up?

01:01:26 – Kyle (Guest)
No, I don’t think so. I just think, from an estate planning standpoint, bringing this all together and really harmonizing it is an undersold process. So we often talk a lot about taxes, but just organizing it all to say, okay, I’ve got all these LLCs, I’ve got trusts, I’ve got retirement accounts, I’ve got life insurance, I’ve got other things that I’ve got going on, how can we make sense of all of this and really have a plan for all of it and know what each tool is doing, when that’s the real secret of what a good estate planning does, because it’s not use one tool to fix everything, it’s recognizing the value of a whole bunch of different tools to get the job done.

01:02:05 – Patrick (Host)
Yeah, absolutely, and as our client’s wealth grows, so does the complexity, and it would be great if it was just like hey, here’s the one magic solution that just fixes it all. But that’s unfortunately not the case, and so we just love having you on our team to help resolve some of these problems. We were just talking about a case we’re working on right now. It’s like the guy’s got all these things going on, he’s got partners involved, and if you were to pass away, it’s going to be an absolute mess for his wife, and so there’s some things that we can do there from an estate planning perspective, that you know what she doesn’t need while she’s grieving is figuring out this super complex estate mess that she was left with. That generally doesn’t produce very good outcomes. So, yeah, kyle, this has been fantastic. I appreciate all the wisdom and insight, and we’ll have to have you back. Continue this.

01:02:51 – Kyle (Guest)
This was fun, Pat. It was great to talk about these things. You could tell I love talking about this stuff and it’s fun to help people through those different challenges.

01:02:59 – Patrick (Host)
Yeah, fantastic. Thanks so much, Kyle, appreciate you. You’re welcome to the problem. Take care, all right, bye-bye. Thank you for tuning in today. We hope our conversation has provided you with actionable insights and strategies to pay less tax so you can build more wealth and live a great life. Don’t forget to visit vitalstrategiescom forward slash episode, forward slash 21 for additional resources and links related to today’s discussion. If you enjoy the show, we appreciate it when you rate, review and share with your friends. We’re on a quest to help listeners save $1 billion in tax and we appreciate you helping us spread the word. Thank you once again for joining us on the Vital Strategies podcast. We look forward to having you back next week when we interview David Greer and discuss how to break through plateaus in your business. Thank you.

Consulting Clients Have An Average Tax Savings Of $280,000

Access Now
  • Apple Podcast
  • Spotify Podcast

Take Your Tax Game to the Next Level! Listen Now on Your Favorite Platform!