and good evening.

>> Thank you so much for watching LIFE Ahead here on PBS Fort Wayne I'm Mark Evans, your host of course this program is a weekly program we try to provide as much vital information for adults of all ages and I think you'll find this program very interesting because we'll be talking about high net worth estate planning and some of the figures that our special guest tonight will give us.

I think you'll be amazed that to be honest with you are maybe slightly down.

>> OK, but we're going to invite your questions and your comments at the phone numbers that you see on the screen if you'd like to call us and be on the air live.

We love that love the interaction you can call two six zero (969) 27 two zero or if you were too busy to get on the line with us and you just have a quick question do that by texting us and that number is two zero (969) 27 three zero.

And when you do that let us know you at least your first name and the town you're you're calling from because we'd like to do a shout out to our guests tonight.

Of course he's back again and we truly appreciate your support of PBS Fort Wayne .

My pleasure.

Brian Nugent who is a he is an elder law attorney and an estate planner.

That's right.

And you always bring very good information.

The last program we had I was just so proud of the information that we provided.

In fact I had several people come up a couple of weeks after that.

Right.

Telling me that they really enjoyed that program.

I I'd like to hear that and tonight is something I don't think that we have discussed at least while I've been the host of the show.

But the high net worth estate planning.

Right.

And let's get started by you telling us and helping us understand what it means for a household to to be defined as a high net worth family.

>> OK, thank you.

Sure.

So I think it's interesting we talk about oftentimes on the show what does it mean to have a lot of money and that's different for everybody in their mind what it means to have a lot of money.

But by the numbers if someone has a million dollars or more to invest in the stock market and in CDs, stocks, bonds, those types of things that's around two to three percent of our population actually has a million dollars that they're able to invest if we go to so that's oftentimes called that's a wealthy population if we move up to maybe five million we have more high net worth individuals.

>> They have five million dollars or more to invest and then ultra high net worth is thirty million and above which is very rare that we have those and those are the kind of people I hang out with.

>> Oh that's good.

You need to introduce so but there's a difference between having money to invest in the in the market, have cash in the bank versus someone having a net value.

That's a million dollars or more.

So when we're looking at net value someone may be worth a million dollars or more and they're thinking I don't have that much I don't have that much in the stock market.

I haven't invested that much.

But if we take a look at the value of their home so especially since covid I can tell you in northeastern Indiana real estate prices have gone up significantly so folks may be worth a million dollars or more but they don't have that much to invest in the stock market.

So folks that are worth a million dollars or more net meaning after we take all of our assets we subtract all the debts that we have from that what do we have left over?

So between 12 and 17, 12 and 18 percent of the US population has a net value or net worth rather of a million dollars or more.

So when we're looking at doing estate planning for those folks, we may use a little bit of a different technique than for those that have less than a million dollars to invest.

But our listeners shouldn't be feeling like oh my gosh, we should have a million dollars or more to invest because frankly those folks that do it's two to three percent of the population.

Yeah.

And you know there's a hundred and fifty thousand millionaires in the state of Indiana.

We went over these figures before the show and back in the green room and then we figured out in fact that it was black and white there on paper that one out of seventeen people in the state of Indiana are classified as millionaires.

>> So but that's the net.

But that's net that's net meaning all of their assets subtracting their debts and how much money is left over.

So I have my home I take my mortgage off of that.

I maybe have a 401k at work, some stock options at work, those types of things.

So I may now have a net net value of a million dollars or more but you can't invest your home.

Right?

So what you're saying is if you have a home that could be appraised for let's say five hundred thousand dollars you're already halfway there you are halfway there assuming you don't have debt OK, it's that debt then that would that would affect your net and we're not talk we're talking about a house that's paid off is that correct?

>> Yes.

Just because of net means the the gross value five hundred thousand in your scenario if you have a mortgage and let's say the two hundred thousand are mortgage I take the two hundred thousand from the five hundred my net is three hundred thousand.

>> OK so your figure saying seventeen seventeen my figures on a national level right which is 12 to 18 percent of folks are worth a net of a million dollars or more OK and we're seeing more and more that these days correct.

>> Well I think especially with real estate yeah.

Farms northeastern Indiana, northwestern Ohio, Michigan we're seeing farm prices go sky .

Yeah I did a presentation recently and someone in the audience indicated that farm ground their area is selling for around eighteen thousand dollars an acre.

So yeah, farm ground has gone well.

>> OK, well so you mentioned this earlier you touched on just slightly but what actually separates a high net worth estate plan from a standard estate plan?

Well, I think it may require a little bit more attention and a little bit more detail about how are you wanting to pass that wealth to the next generation.

You may be a little bit more able to create a legacy for yourself meaning maybe I'll create a trust that pays out over a period of time.

So instead of distributing my wealth immediately upon passing I may say I want my kids to work a little bit harder.

So in the trust I'm going to put some funds aside and I would say to my children for every X dollars you earn this trust this money I've set aside for you will match that that what you earn.

So instead of giving money outright I'm going motivate my child and say for every dollar you earn I'll give you a dollar or for every dollar you earn I'll give you twenty five cents on the dollar sometimes we also put in our state planning for folks that have a little bit more wealth more significant.

Well we want our children to be philanthropically minded so we're encouraging our children to use a percentage of the estate that the parent has and make decisions about how that should be invested philanthropy so philanthropically rather so maybe we set some aside for PBS, maybe we set some aside for another favorite charity or religious organization.

>> So within that planning are where the parents may be teaching or the grandparents may be teaching their children their grandchildren to have that mindset to give back and so they're having a cent a percentage of their estate that the kids the grandkids can make a decision about what what charitable entity receives that money.

OK, so yeah, I can see the difference there now of course when I think of a high net worth estate I'm thinking taxes.

>> I mean I'm always thinking taxes.

So how much does an estate need to be for taxes to be paid?

>> Where is the line there?

So there was a time in Indiana where estates were subject to something called inheritance tax.

We don't have inheritance tax in Indiana any longer so there's no inheritance tax that's due to the state of Indiana.

>> But when one a person passes away that's gone on the federal level so April, right when you file your tax return in April, you have a state tax return, a federal tax return, same thing in a states.

So on the federal level you would have to have if you're a single individual fifteen million dollars or more before you pay any federal estate tax.

>> Wow.

And then if you're married you can take your spouse's credits.

>> So if you have fifty million dollars worth of credits your spouse has fifty million dollars worth of credits.

We now as a couple can pass thirty million dollars or up to thirty million dollars before any taxes paid.

So you'll recall at the start of the show tonight I was talking about ultra high net worth thirty million dollars or more.

That's a very small percentage of the population less significantly less than one percent.

So it's a rarity anymore that attorneys when they're assisting their clients and they're going through the probate process and taxes being paid that there's a real concern about tax being paid.

So I like for folks to hear that because one of the first questions oftentimes state planning elder law attorneys get his gosh, I want to make sure I don't pay any tax when I pass away.

I want to make sure my kids don't pay any tax when I pass away what can I do to avoid tax?

And so the first question that you may be receiving in that meeting is well, let's talk about your net worth.

What what's the value of all of your assets?

Gross value of all of your assets?

Do you have any debts?

Let's subtract those what's the net and then we compare that to the fifteen million or the thirty million and a majority of the time people's minds are put at ease.

We don't need to worry about tax anymore.

There was a time where we would purchase life insurance policies on folks so if they passed we were sure to have enough money to pay tax if taxes do when they're passed when they've when they've passed but that that is not happening on a very frequent basis at I remember that when my grandparents passed away yeah.

There was some tax issues there could be but nowadays very rarely are folks paying tax when they pass and that's that's a good thing.

>> I just so I'm assuming that a simple will is not going to be enough for a high net worth family, am I correct?

>> Well, I this phrase simple will always confounds me because a will can be rather complicated and can be very robust.

>> I think when we're looking at doing those special things that I was referencing earlier maybe or creating trust that that last for generations or people don't get money for a period of time and you start talking about the probate process folks or maybe wanting to avoid the probate process.

They don't want to have to go to court when they pass away and go through that estate administration process.

>> So it isn't necessarily that a will wouldn't accomplish the same thing as a trust would accomplish it can accomplish the same thing.

The difference is that with Will if we're going through probate then you have personal representative fees, you have publication costs, you have the attorney fees.

>> Right.

And probate itself.

It's not hard for probate to last a year more or less and the more complicated our state is, maybe an individual has multiple pieces of real estate and they have different types of investments.

It makes more sense to use a trust.

It makes more sense to avoid that probate administration process.

It streamlines it.

It reduces your costs.

The money goes out a little bit more quickly I should say a little bit more fairly significantly more quickly to those folks that want to have in the end the beneficiaries that would be receiving it in the end.

>> So it's not that a will wouldn't accomplish what you can accomplish with the trust but as our estate grows and we're able to do some of those special things and we want to avoid that probate process, normally a trust makes a little bit more sense.

>> So I guess my next question will be you just probably answered it but when I will does fail high net worth family and if you're not using a will, what do you use?

>> Is that going to be the trust?

>> It would be the trust.

If you really don't have any estate planning in place then then we do something called intestate succession which which is a completely different discussion.

But I don't think I've ever heard that intestate succession so intestate succession is if you pass you have no estate planning in place, no will, no trust a beneficiary designations on your assets then the state of Indiana determines where those moneys go and it does typically stay in the family you know, children if you don't have children well spouse and children, parents, siblings there's a whole intestate succession determines how the money goes if you don't have a will.

>> But we're hoping that that people are organized and do get themselves structured.

So if you don't have a will we would go through intestate succession if we're looking at doing some planning to avoid that probate administration process, we're wanting to set some special things in place.

It normally makes more sense to have at least a revocable trust in place but even with a revocable trust we also have wills that are called pore over wills.

You are like lemonade into a glass pour over will which indicates there's an asset that I have could be a bank account, could be a brokerage account, could be a piece of real estate something we forgot to put into the name of the trust or we failed to put into the name of the trust during our lifetime that that poor over well would pick it up and put it into the trust at the time of our passing.

So if someone's doing a trust it would be a very rare instance that they wouldn't also have a will.

>> They should have both OK, but we hope never to use the well we hope that all of our assets are in the name of the trust so I can avoid going through probate that that poor over wills as a just in case we forgot to put something in just in case we can pick up those assets and put in the time of passing.

So and then we've had this discussion before when you were on the trust takes care of the probate.

>> Right.

You don't have probate so trust will avoid going through probate assuming it's properly funded meaning all of your assets are in the name of the trust, it's properly prepared, it's signed appropriately etc.

then yes, a trust would allow you to avoid that.

>> And so we've mentioned this before as well inside that trust we may have language that pays attention to if I have a child that maybe has a dependency issue we can include language that says if they're not doing well at that time they still may inherit.

But our trustee may manage how they're giving that money out as opposed to giving a fair amount of wealth to somebody at the time.

We also could include any of those types of language, any of that language that I was referencing before about I don't want my kids to get the money all at once.

Perhaps they get it ages twenty five.

Thirty thirty five I want to create trusts for my animals.

I have animals that I want to provide care for for a long period of time.

We can do that so that trust can take care of any of that any of that for us.

>> OK, if you're just now joining us, this is LIFE Ahead on PBS Fort Wayne.

We're talking to Brian Nugent who is actually an elder law attorney and an estate planner .

It's a very interesting conversation going on here this evening.

Please give us a call or a text .

>> The numbers you see on the screen we still have about ten minutes left in the program.

Brian, you mentioned earlier about how you can keep your kids working and have give them incentives to work and have a career.

But there's got to be some sort of a structure and I'm sure there's some writing involved and in putting this down.

But how can trust be structured to protect children without completely removing their incentive to work and to actually build their own careers?

>> Sure.

So that so trust is really just a contract.

That's how I think of it.

It's a contract and there are generally three parties to that contract.

One is that that the settler, the grantor, the trust, the person that makes the trust so that's the person that's doing their estate planning.

That's the money that has the wealth and so they're creating that contract.

The next part of that would be the trust to that that agreement that trust agreement is called a trustee.

So they're the individual that's responsible for complying with the terms of the trust, doling the money out as that has been written in the trust and then the third party would be a beneficiary and I think of lifetime beneficiaries and I think of ultimate or death beneficiaries.

So during the lifetime of that lower the grantor, the trust maker, the person that wrote the trust who gets to enjoy the wealth from that trust and then when that person passes ultimately where does the money go?

So within that agreement itself, if we were wanting to motivate our children to work, for example, I think I gave a few moments ago which would be if you earn so much money then we're going to the trust will match that or if you give money away the trusts will match that.

>> So I like to say to people they're thinking about how they want to create that legacy for themselves for the next generation or a generation after that dream.

Right.

What is it that you want to see in place?

You don't need to worry about legalize when you're speaking with your attorney.

You don't need to worry about the appropriate language you were referencing, Mark, to use allow the attorney to do that for you.

So come in with a dream.

What is it that you want to get accomplished and it doesn't have to be in black and white.

Think about here's my estate as a whole and what percentage of that do I want to go to charity?

What percentage do I want to go to my children?

What do I want to do with that wealth that I've been able to amass during my lifetime?

So dream and bring that to your attorney and allow them to put that in black and white.

And what I've often found is that when folks then see that in black and white they may change their mind.

Oh now that I'm reading it I don't really like how that is structured.

Gosh, I don't want the money to sit there for just an extended period of time.

That wasn't my intent.

So you're thinking that through with your attorney you're talking it through they should be challenging you a little bit not in a negative way but making you think about it from many different angles and so dream if you're wanting to do that legacy planning and to bring those dreams to your attorney, they'll help you sort that.

>> Oh, that's great.

That's great stuff.

We do have a text coming in right now from Rosie of Train Town Gary, Indiana.

Rosie, thank you so much for your text.

She's asking can you simplify your estate with beneficiary designations which I think is a great question.

>> Thank you, Rosie for texting that and I appreciate that question.

So yes, you can designate beneficiaries on investments that you have.

So on a checking account you can designate beneficiaries on a savings account.

You can designate beneficiaries on your IRA at work rather your for one network that may become an IRA at one point.

My only caution about using beneficiary designations as your soul means of transferring wealth is that it doesn't have any of that language that I was just referencing earlier.

So let's say that we're we're giving money to a child or to a grandchild with a beneficiary designation and at the time that they receive that wealth there are special needs child that could affect the benefits that they're receiving that could negatively impact them.

If we want to say I don't want my grandchild to get the money at age 18, I prefer them to get it at twenty one or twenty five or twenty nine.

>> Those beneficiary designations are unable to do that.

So while the beneficiary designation can work, I'm hesitant to say that that is the means of the best means of making your estate simpler or making it streamlined so that could be a part of your estate planning but I would caution against using that as your soul means of estate planning.

>> OK, are all right.

Another tax coming in right now from Tom of Columbia City.

Hello, Columbia City and Tom, he is asking is putting a family business into a trust a good idea?

Yeah, thank you, Tom.

That's a great question.

So yes, I think it's a great idea.

So you the family business depending upon how you want to handle that.

So as part of your estate planning, Tom, you could, for example, structure your family business where there are voting shares of stock and that corporation their non-voting shares of stock.

So the non-voting shares it's a way for us to pass wealth to our children during our lifetime.

They're getting some of the revenue from that business during their lifetime.

You may be the only voting member of that entity.

So your voting how the business is run etc.

So sometimes we do that during lifetime.

>> The beautiful part about using the trust with your business is we put that LLC into that trust.

We put a subset into that trust and then you can determine how the money how those shares are distributed as you put it in the trust itself.

So as you pass how the how those shares go out to your kids if you want the business to be run for a period of time and they get some of the benefits from the the income from that business but you don't want them to have the stock immediately we can control for that so you can control how the stock from that subject goes out.

The shares from that LLC go out after your passing.

So the fact that it's a family business in and of itself doesn't mean that we shouldn't put that into a trust.

Every asset I like seeing in a trust it makes sense.

It's appropriate you avoid public being able to see what's happening in your estate planning trust keep it private.

So I like putting a closely held corporations closely held limited liability companies in those revocable trusts.

I think it's a great idea.

>> All right.

And so what should we have for the high net worth estate planning once we have all that that in line or planned out?

Are you good to file it away or does somebody need to revise it from time to time?

>> How does that work so first of all, yes, you should file it away so in some place that say so but I say at home and fire retardant say for something like that oftentimes now digital copies of those things are made and maintained by your by your attorney originals.

>> You may hold the originals but the attorney has digital copies copies often but I like to see folks reviewing their estate plan about every five years to seven years.

I always find it interesting when people review their estate plan they're surprised oh we did this or gosh someone's health has changed.

Had I realized that at the time I wouldn't include them.

So I'd like to see estate plans reviewed every five to seven years.

So no, don't do your estate plan.

Put it on the shelf and never look at it again.

You can do that but it's a nice idea to be able to review it on a fairly regular basis.

>> OK, I want to talk about irrevocable trust.

Yes.

And how it can protect family assets from creditors while still benefiting the heirs.

>> OK, so irrevocable trust so an irrevocable trust is what you think of that it's set in stone can't be changed so if you don't have control over it your creditors can't get to it.

>> So we look at those trusts we are setting up who the beneficiaries are.

>> It is an income alone beneficiary or can that beneficiary get to the principal?

So if that beneficiary has creditors, if they have debt we can structure those those trusts so that the creditor couldn't get to the assets inside it.

And for the individual that's preparing the irrevocable trust, we may want to protect our assets so that if we do have litigation that that that creditor can't get to the assets that we have that trust.

So yes, irrevocable trust can be a large part of protecting assets from concerns about litigation, having creditors chasing you your children of course that's appropriate and it's used regularly.

>> OK, we only have a minute left and Rosy from is texting us again.

>> Thank you so much.

We love your questions.

Can I protect my house from deeding to my children?

I don't know if I understand that.

>> Can I protect my house by can I protect my house by beating it to my children so if you if you're looking rosy as you're aging and your concern is that if I go into a nursing home I need health care at some point in the future those out-of-pocket expenses I'm going to give it to my children.

That's how I'm going to protect it.

I'm very cautious about gifting.

Remember I said you're early in the program you can have thirty million dollars as a couple so we don't see gifting as much as we used to.

When you gift to a child it's the four days that they have debt, divorce, disability and debt.

So debt, divorce, disability forgetting my fourth but so be very cautious about making gifts to your children.

>> You can lose your home.

>> It's not a great way to protect it.

OK, they also lose a step up in basis for capital gains tax purposes.

>> Not a great plan.

All right.

Good good advice and we truly appreciate you being here again .

Appreciate it.

And we'll see in a few weeks I think.

All right.

All right.

And we hope to see you next week here for Life Head and as always we appreciate your communication with us and your viewership and we certainly hope you have a fruitful LIFE Ahead.

Thank you for watching