In a world where misinformation is rampant, Michael Bailey provides clarity on the crucial aspects of estate planning. This episode navigates through the changing landscapes of tax laws, the significance of adjusting old estate plans, and the critical importance of choosing the right professional for large estate management, ensuring your legacy is well protected.
Welcome to Mobile Estate Planning with your host, Michael Bailey. Over a decade ago, attorney Michael Bailey turned his attention to estate law after he recognized the unacceptable number of adults without proper end of life planning. Michael recognizes that many of his clients have difficulty finding the time for making a proper estate plan. That’s why he became the Mobile Estate Planner. He will go to wherever you are to assist you with your estate planning, including writing wills, trusts, and giving you the information you need to avoid probate. Now, ATX, Ask the Experts, presents Mobile Estate Planning with your host, Michael Bailey.
SPEAKER 02 :
Good afternoon, and welcome to Mobile Estate Planning with Michael Bailey, so we can leave your family something besides just alone. You are listening to KLZ 560 AM, 100.7 FM, possibly on the 560, or sorry, the KLZ 560 radio app, not the 560 KLZ radio app. I don’t know if you type it in, type it into a search bar, they’ll probably find it either way, but I believe it is the KLZ 560 radio app. And phone number to talk to me on the air is 303-477-5600. And again, that’s 303-477-5600. And my direct line is 720-394-6887. Once again, that’s 720-394-6887. So there appears to be some person or entity or something out there that is using my name but is not me. And apparently they are sending out emails. emails to people telling them that they’re entitled to get something from an estate and then it has my name and I had somebody send me one. It’s a completely different law firm. There’s no contact information listed, but it says contact them back immediately via email so that you can inherit some sort of money. Now, this is kind of like the latest version of the Nigerian Prince scam. If you know the Nigerian Prince scam… Nigerian prince is that, you know, a Nigerian prince died and, you know, left all of this money. But, you know, we need somebody in the US to claim it. Otherwise, it will all go away. So if you help claim them, claim the money. then you will get to keep 10% of whatever it is. And of course, it’s something ridiculous like $350 million. So they’ll send you a check for $35 million or something like that. And, you know, there’s kind of, there’s lots of email scams out there. There’s lots of things that are untrue. And so I’ve gotten, I’ve had three separate people call me saying that they got an email from me. I’m like, no, you got an email that has my name at the bottom of it. But I guess when they type in Michael Bailey lawyer or Michael Bailey estate planner, Michael Bailey estate, maybe my web marketing guys have done such a good job that I show up at the top of the list. I’m like, hey, cool, look at me. I’m at the top of the list, yay. But it’s, so I will call them back and I’ll say, hey, you know, that’s a spoof email. It’s not true. I don’t have, you know, I do estate planning, yes, but I don’t administer estates. So I’m the wrong type of attorney and the wrong type of person to help you with that. And, you know, I hate to be the bearer of bad news, but no, there’s not any extra money out there that you are getting that you didn’t think you were entitled or you didn’t know about. And the email is not from me. It’s from a fake me. I don’t know who this fake me is. And realistically, I don’t know how to stop a fake me from sending such emails. I’m not tech savvy enough to try to chase down where this email is coming from or who it’s coming from. And I mean, I suppose if it became more widespread or something like that, I could put like a disclaimer on my website. I do not handle estate planning matter or I do not handle estate administration. If you received an email from me that came from a different law firm than the Michael Bailey Law Office or somewhere else, then, you know, it’s not real. And You know, don’t plan on it. So it’s just one of those weird things that you get. And you go, okay, well, this is going to be an interesting one. You know, how could it possibly? Yeah. So it just kind of got me thinking about, you know, not everything you think is true. Not everything that you hear is true. I mean, I remember years and years ago when there was a Garfield cartoon on TV. And I don’t think that Garfield, the cartoon on TV was a long lasting cartoon, but I remember there was an episode where where they kept having, you know, they would say things and there’d be like a person in an announcer voice and be like, and if they said it on TV, it must be true. And so, you know, there are all sorts of ridiculous claims of whatever they were, you know, oh, you know, aliens are, you know, have infiltrated the world and are, you know, they’re all of the, all of the leaders of the world leaders are actually aliens and they’re going to, take over and harvest us for our teeth or our bones or whatever it is. I don’t know what aliens would want from us. Maybe they want their… I don’t know if they even want our teeth or our bones. It’s hard to tell. I’ve never met an alien, so I wouldn’t know. And, you know, but so if they said it on TV, it must be true. And then, you know, more recently, there was a state farm commercial where this gorgeous woman was getting prepared for a date. And, you know, she’s getting ready and she’s on her way. And she’s like, well, you know, I met this guy. I met him on the Internet. And, you know, he’s a French model. you know, they can’t say it on the internet if it’s not true. And I think it was like State Farm saying something along the lines of, hey, don’t believe all the internet, all the price quotes you get on the internet, they may not be true. It’s like, you want to be a person. And so you have this gorgeous woman’s getting ready to go on a date. And this guy kind of walks up, he’s overweight and unshaven and wearing a sweatpants and a t-shirt. He walks up and he’s like, bonjour. Yeah. So I don’t know that he’s actually a French model, but you know, if If they said it on the internet, then it must be true. And also that TV commercial was on TV. So it was on the TV and on the internet. So it must be double true. Because if something’s true, I don’t know what double true means or triple true. I’m not sure how you… Are there degrees of true? If it’s only true but not double true, does that make it actually true or does it make it slightly false? It’s hard to know. There’s true, there’s false. I realize there’s degrees in between. But, you know, half the truth and half a lie is still all a lie. I mean, all those kind of things. But, you know, not everything that we not everything you hear about estate planning is true. Not everything you hear about Michael Bailey is true. I mean, I tend to say true things about myself, but, you know, sometimes we can. what is it in sales it’s called puffery where you kind of puff yourself up just a little bit you know somebody told me well you know i just need the best possible plan i need everything to be right and i said okay i may have trouble living up to your standards of having everything be the perfect plan and always be right because from time to time things change and that means that what was the perfect plan may no may no longer be the perfect plan i had two clients earlier this morning who they’re both doctors and they thought they might want to put everything into an asset protection trust until i explained the trade-offs of not being in charge and not being able to control their own assets like oh well that i’m like you’ve got a five-year-old and a three-year-old you might have things that change in your life so you might want to keep that avenue open so that if you were to change something in your life you wouldn’t have to change the entirety of your estate plan and go to the court to change a trust because you had an asset protection irrevocable trust. Fortunately, they agreed with me that that might not be the right time to do so. And so with that, we could, you know, get their estate plan set up. That would be what would work for them because you are listening to Mobile Estate Planning with Michael Bailey here on KLZ 560 AM, also heard on 100.7 FM or the KLZ 560 radio app. Phone number to talk to me on the air is 303-477-5600. And again, that’s 303-477-5600. And my direct line is 720-394-6887. And once again, 720-394-6887. So because of how things go, because there is plenty of, not all the information out there is disinformation or trying to deceive you, but some of it may be old information. I read a lot of trusts for people who come in to me and say, oh, we need to update our trust. And I say, okay, so we’ll take a look at it. And it’s got what we call AB trust planning or marital and disclaimer trust planning. And, you know, I’ll explain to them, okay, so you have all this stuff. It’s kind of how we did under an old tax regime because the current tax regime is very different from what it has been in the past. And, you know, people, you know, they’re trying to, well, what do you mean? Well, the current estate tax limit is $13.99 million per person, which means if you have less than $13.99 million or $27.98 million per couple, then you’re not going to be subject to estate tax. at least on a federal level. Here in Colorado, we don’t have a separate estate tax. In other states, that’s just not true. I know Pennsylvania, I believe New York, they have estate taxes. So if your estate is above a certain amount, you’re going to pay some to the state without, there’s probably planning ways around them. I don’t happen to know them because I’m not licensed in New York or Pennsylvania, and I only practice here in Colorado. And so if if you’re looking at something that was, you know, the estate tax limits used to be as low as, oh, they’re lower than this. But since I’ve been practicing, it got down to as low as a million dollars or, you know, 1.5 million or $2 million. So lots of people, they’re like, OK, well, you know, it’s a million dollar estate tax. Cool. Well, you know, we’re below that. I’m like, are you, though? how much is your house worth? Well, you know, we bought our house for $200,000 and now it’s worth $600,000. Okay. And now we have, and we have, we’ve saved. So we have an IRA or a 401k that’s worth $300,000. All right. And we have, you know, a life insurance policy that’s going to pay out. That’s worth $300,000. I’m like, okay, let’s stop for just a second. So we go 600 plus 300 plus plus another 300. Now we’re at 1.2 million. So that’s not exactly a huge number. You know, $600,000 worth of house is not a huge house. You know, I mean, here in the Denver area, it’s probably a three or four bedroom house. You know, if it’s in Cherry Hills Village, it’s a one bedroom studio apartment for $600,000. You know, this Cherry Hills is a nice area and their houses tend to be expensive. But with a $1 million estate tax limit, a lot of people who, like my parents, paid $104,000 for their house, which is now worth somewhere in the $600,000 or $700,000 or $800,000 range, depending on the day and the time and market conditions. Well, the $100,000 house that they paid $100,000 for in 1984 hasn’t gotten any bigger. It hasn’t gotten any nicer. It hasn’t gotten any, oh, wow. People are going to be like, ooh, that’s nearly a million-dollar house. That’s cool. A million-dollar house isn’t quite what it used to be. It used to be like, ooh, you have a million-dollar house? That’s a mansion. Well, you know, now, if it was a billion-dollar house, I would agree. It would be a mansion. It would be a very nice house. But, you know, so a lot of kind of normal people who didn’t necessarily have, you know, I mean, a million dollars still does seem like a lot of money. And if I had a million dollars cash, I would probably feel very rich, right? But a house worth $600,000, a life insurance policy that’s gonna pay out worth 300,000, neither of those assets are things that you’re like, well, hey, I can just take my $900,000 worth of equity I have in my house and my $300,000 that I’m gonna get paid and just, I’m like, hey, Luke, I owe you 100 bucks, right? Here, have some shingle from my house or have some paint that I scraped off the wall. Or here, here’s a future interest in my life insurance policy that when it pays out, you can have 100 bucks. It’s hard to pay people like that. It doesn’t go so well. Now, if I had a million dollars in cash, I could probably take a $100 bill and say, here, Luke, here’s the 100 bucks I owe you. By the way, I don’t actually owe Luke any money, lest he get all excited. That is also a non-true. It was just an example, not a true statement that I owe Luke money. I don’t think I owe Luke money. I’m pretty sure, Luke, you don’t owe me any money. There’s no money-owage here. Not that I’m aware of. We can see each other across the glass, which is always nice. Not that you’re aware of, huh? Not that I’m aware of. So there might be unknown money-owage.
SPEAKER 03 :
Yeah, I’ll find it in an old pant pocket and I owe you for 27 cents, something like that.
SPEAKER 02 :
Yeah, see, 100 bucks would be way beyond what either of us could afford, huh?
SPEAKER 03 :
Yeah, that’s just out of my price range, unfortunately.
SPEAKER 02 :
This is why we try not to borrow money from friends and family, right? The interest rates are ridiculous. That’s true, that’s true. So you don’t necessarily feel rich, even though you start adding things up. And I’ll do it with people. I’ll be like, okay, well, let’s go through your assets. I’m like, oh, congratulations. You’re worth $1.2 million. You’re a millionaire. Yay. Do you feel rich? And people are like, no, I feel like a normal person who paid on my house for a long time and just Colorado housing prices have gone up. I’m like, yep, that’s where most of us are. You know, I bought my house and I pay on it and it apparently gets more valuable over time, you know, not necessarily from one week to the next. But, you know, there’s, you know, during COVID when housing prices were way up and now they’ve gone, they’ve come down just a little bit. Not as much as a true housing crash or anything like that. But, you know, as one who owns a house, I’m like, hey, I’m happy that it’s not, you know, gone from… Because I did have… My first house I bought was at like the height of the housing boom. And, you know, I paid $175,000 for it. And then five years later, I went to move out of it and it was only worth $150,000. And I’m like, okay, so I still owe $170,000. Now I’m 20,000 upside down. I’m trying to buy a new house. I don’t have $20,000 in cash lying around because I didn’t get that million dollars in cash that was just going to magically appear. So I was upside down in that house. Well, I had somebody who needed to rent a house and I had a house to rent. So I rented the house to them and they’ve been happy about that. And I’ve been happy to have them there because they pay me rent that I can then use to pay the mortgage. So I still own the house. I’m like, woo, go me. But If you add that house, if you add the two houses together, they do have a value of more than a million dollars. And I’m not rich by any means. I just, you know, because it’s not that I could, if I went to sell the houses, I would not get a million dollars because there’s still a loan hanging out there that I have to be paid off and all that kind of stuff. You know, that’s how loans work. Oh, I have to pay on them over time. Okay, cool. We’ll do that. But As we’re making, you know, the payments and everything, you know, a million dollars isn’t what it used to be, so to speak. And so the tax regime that used to say if you had more than a million dollars, you had to move assets. And it was a million dollars per person, but you couldn’t move from one person to the other or one half of a marriage to another person. So it was a million dollars for a husband and a million dollars for a wife. And so you had to like split assets. You’re like, well, I’ve got one point two million dollars. We’ll put six hundred thousand dollars in the husband’s name and six hundred thousand dollars in the wife’s name. And we’ll create separate trusts so that when they die, it won’t spill over to be the other person’s money. It stays in the trust so that we can then. get up to $2 million that we could move, you know, we could pass along without needing to pay estate tax. Well, that’s cool. You know, most people don’t have more than $2 million. But, you know, if you have, you know, a house and maybe another house, or you got married later in life, and each of you had a house that is worth, you know, one point, you know, that’s each one’s worth $600,000. And you each have a life insurance policy worth $300,000. And some savings, you’re like, okay, now we’re above the $2 million mark. Okay, great. So that was a very common and very sound estate planning technique was to split things into different trusts for different spouses when the estate tax limits were lower than they are now. But now somebody will bring that in and they’ll look at it and be like, okay, so this is going to be a completely different way. There’s nothing wrong with it. It’s just more complicated than it needs to be under the new tax rules. because dealing with the tax rules are an important part of estate planning, and you are listening to Mobile Estate Planning with Michael Bailey. Here on 560 KLZ AM, also heard on 100.7 FM, or the KLZ 560 radio app. Phone number to talk to me on the air is 303-477-5600. And again, that’s 303-477-5600. And my direct line is 720-394-6887. And once again, 720-394-6887. So as you’re, so current with almost $28 million and it’s supposed to go up to, it’s gonna go up to $15 million next year. So that’ll be $15 million per person or $30 million per couple because the new rules are that if somebody dies, and they don’t use their $13.99 million, that can transfer to a spouse. So really a spouse can have up to almost $28 million or starting next year, $30 million before any estate tax would be due because it transfers between spouses. And that transfer between spouses wasn’t available until just a few years ago. And you know, now if we get people who were like, oh, you know, I’ve saved all my life, I’ve invested, I’ve had this, we’ve got three and a half million dollars. I’m like, cool. We don’t have to try to split that between two separate people. We don’t have to try to have to try to split that between two separate spouses. We can just set it up where as a couple, you can create a trust and then you’ll have money that will pass along to kids and you know, you’ll be all right. So the old, the old way of doing things was perfectly great and perfectly acceptable. And exactly what was the latest and greatest estate planning technique when things were established. But under the current tax regime, it might be more than is necessary. It might be more complicated than is necessary. And so we don’t necessarily need to do that. Now, there is plenty of reasons to have separate trusts and there’s plenty of reasons to have different estate planning techniques. But just because you just for estate planning, estate tax planning isn’t necessarily one of them anymore. So when I get people who come in and they will say to me, oh, well, we need to do a trust because we can save taxes. And I’m like, let’s talk about that and how it may not actually be true that a trust will save you taxes. You know, that may have been true in the past. But under the current tax rules, I mean, so there are ways that trusts can help save taxes. Like you can, if you create an irrevocable life insurance trust and put your life insurance policy into an irrevocable life insurance trust, then that can remove the life insurance proceeds and the payout of the life insurance policy from your taxable estate. and in doing so you can then bring your taxable estate number underneath that 30 million dollar number and because of that you could have you can save on taxes i know there are other types of um estate taxes that are out there there’s other types of um trusts out there that do have some sort of estate tax planning and you know tax reduction things like that And so I have a So the tax planning world is not necessarily a place where I spend a lot of time. I do the estate planning part of things and plan for taxes, but for people who have more than 28 or more than $30 million, there are other tax planning techniques that exist that I don’t do a lot of and I’m really not all that familiar with. So somebody who has more than $30 million who comes to see me, I tend to refer them to my friends who are who plan for taxable estates all the time, simply because it’s just not a world that I play in. And for something like that, where the estate tax limit is $30 million, but above that it’s taxed, I believe, at 40% or 50%, depending on the level. So if you’re going to lose half of anything above $30 million to tax, it kind of behooves you to go talk to somebody who does estate tax planning. I’ve had a couple of clients come to me, you know, one, he was referred by another attorney, and I was talking to him, I’m like, so how much would you say you’re worth? He’s like, oh, I don’t know, we’re probably in the neighborhood of $130, $140, $150 million. I said, okay, we might want to have you go talk to my friend who does estate tax planning, because if you have $150 million and the estate tax limit is $30 million, that means there’s $120 million that’s going to be subject to estate tax. And we don’t want your $120 million to be subject to a state tax so that you have to pay $60 million, so half of it, to the United States government because you managed to die and didn’t plan ahead. So, you know, there are techniques, there are ways, there are, you know, things that are set up and done. so that you can try to take that $120 million and plan for it so that you’re not going to get hit with $60 million in estate tax. And people who deal in the estate tax planning world, that’s what they do all the time. It’s not necessarily what I do. And I told that guy, I’m like, well, hey, I could try and figure it out. I could try and do it. But I don’t think either you or I would be comfortable with me having my first try on yours so that if we make a mistake, your kids suddenly have $60 million less to live on. He’s like, yeah, I can see how that could be a problem. So I’m like, let me get you over to my friends who… handle that type of thing and who know what they’re doing there because they do it all the time. So, you know, the, the pitfalls and the, you know, possibilities that could go into, and you could become problematic, won’t be there with what they can see, which, cause I may just not be aware of all of the rules or all of the pitfalls or what might change or what might work going forward. And because of that, it’s the same sort of thing of in setting up a will or a trust or an estate plan as an estate planning attorney. I work in that world all the time. So I tend to know what some of the things are, the pitfalls or the potholes along the road, along the way. I’m like, okay, here’s, you know, I’m like, we’ve already built in how we can avoid those problems because of the experience that I’ve had and what I’ve seen go on. So estate tax planning, they can see that in the estate tax planning world. I may not see it, even though I’m an attorney and I’ll do all the research that I would need to. There may be something that I miss. And so it’s much better to have somebody who knows what they’re doing do that. So, you know, when you’re looking at estate planning stuff, you don’t necessarily want to have things that are incorrect or things that are off. Rather, you want to do it right and you want to get your information from a good source, someone like me. So thanks so much for listening to Mobile Estate Planning with Michael Bailey here on 560 KLZ AM. Stay tuned for John Rush and Rush Reason next, and I will be back next week. Thanks and bye.
SPEAKER 01 :
Mobile estate planning with Michael Bailey will return to ATX next Wednesday at 2.30 here on KLZ 560, AM 560, FM 100.7, and online at klzradio.com.
