[music] Welcome to Mobile Estate Planning with your host, Michael Bailey. Over a decade ago, attorney Michael Bailey turned his attention to a state 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. [music] All right, good afternoon. Welcome to Mobile Estate Planning with Michael Bailey here on 560KLZAM. 100.7 FM, the KLZ 560 Radio App. If you would like to talk to me on air, the phone number is 303-4775-6000. And once again, that’s 303-4775-6000. And my direct line is 720-3946-887. And once again, that’s 720-3946-887. And I can give that number out today because it’s working again. If you may wonder why if it was not working, but the correct answer is yes, yes, it was not. On Monday, my phone decided to tell me you needed to do a system update. Apparently, this is a system update that was released by Samsung. And so it was going to update. Well, apparently, a Samsung did not thoroughly check and vet and do all their things. So my phone updated on Monday morning. And then it wouldn’t start. It gave me some sort of computer stuff. I will call it computer guppity gook because I don’t know what all the lines meant on a black screen. And then it said, you know, you can try again or you can turn it off or you can erase data and start in safe mode. And then you can, you know, and so I was like, I don’t know. So I hit try again. It did nothing except for, you know, kind of restart and go back to the same black screen of death. And so I tried, okay, we’ll turn it off. And try to turn it off. It did the same thing with actually the black screen of death. And I’m like, this is not good, you know, it’s kind of like, it felt a little bit like getting a blue screen of death from windows, which I haven’t gotten a blue screen of death from windows for a long time. I think they’ve improved their way that they, you’re their operating systems work. But since I use my phone as my business phone, it was, it was somewhat disappointing. And so what I ended up doing is I borrowed a phone from my 12 year old, he’s got his own cell phone. So I said, hey, dude, I know you’re going off to school. I need your phone. So I borrowed his phone. I left my phone with my wife and my wife went off to the team mobile store. And the team mobile store then sent her to the Samsung authorized dealer fixer store. So when she got there, they’re like, oh, well, we need to put it and take it, we need to do this. And apparently there’s some guy who was there who was like, oh, I’ve been dealing with his own, hey, I think what I was going to do. So he took the phone and he pushed lots of buttons and did all sorts of things. And then the phone started up and it’s thinking, I mean, it had even less things on it, even less apps on it than when I got it from the store the first time. So it’s supposed to be a factory reset. I’m like, well, maybe it did reset to what the factory did. And then when it goes to the cell phone carrier, they may add some things on. But so we had this cell phone. So it was reset to factory settings apparently, which means I then got to spend on Monday afternoon and Monday evening. Lots of time trying to figure out how the heck we could get this done and put things back on it, all the things that I use. So fortunately, why I’m connected to a Google account, that’s back things up. And then also Samsung apparently, I did not know that I had opted into this, but apparently opted into some sort of backup from Samsung. So once the phone prompted me to say, hey, do you want to back these things up? Do you want to restore these things? I hit the yes button. And so my phone is now working. It’s got almost all the most important things that I need to have it work. Reconfigured a couple of things. And there were several apps on there that I’m like, yeah, I don’t think I need that one anymore. They could go away. But we kind of went through and yeah, we were able to do all of those wonderful things. So now I have a working phone again, which is super exciting. And I don’t know, it’s one of those, when people are like, oh, that’s the worst. I’m like, yeah, it’s not really the worst. It’s just inconvenient. Technology works is great when it works. It’s great when it doesn’t, it’s not so great when it doesn’t work. But that’s how things go. So we’ve got, so as we go through and we do all of these wonderful things, and we’ve got the phones that we use, and we’re trying to keep track of everything. When I got my phone back, I had like 14 different phone calls that had been placed to me in the people left messages for me on Monday morning. Because you know, Monday mornings, just everybody who’s been thinking about something over the weekend, they call on Monday morning. And if I had had my phone, I probably would have tried to answer them and answer their questions. But instead, I slowly and methodically worked my way through all those phone calls the last couple of days. So by the time Tuesday evening hit, I’m like, well, I’m all caught up on phone calls. So that this morning, I could have more people call me and keep getting, it’s the never ending cycle, right? Yeah, you’re like, I’m all caught up for the moment. I wonder how long this will last? Five, six, seven, eight minutes, if we’re lucky. And then somebody else will email or somebody else will call. And there’s somebody else to help. And I’m happy to help as many people as I can as quickly as I can. But it is, it’s just the enlecicle things. And one of the phone calls I got today was from somebody who let me know that a client of mine apparently has passed away. And this particular client, I wrote them a trust and I wrote a joint trust between the mom and dad. So I wrote a joint trust for them, which means when one of them passes away, the trust kind of continues on, keeps doing the same thing. And they don’t need to have, they don’t have, so when one or both of them are alive, the trust continues on. So this client’s like, well, what do we need to do? I’m like, well, you might want to call and tell them that if the husband shows up at the bank saying he needs to take out some money, it’s a fake husband. So we’ll call them Jack and Jill because that’s not their real names. But so if Jack shows up at the bank, they can know that it’s not fake Jack. It’s not a real Jack, you know, and because Jill is still alive. So everything’s still going for Jill. And so as we go through, and then they were concerned because apparently one of the cars was in Jack’s name only. So I talked and they said they’d called the DMV and the DMV was like, oh, well, you need to do. You have to go through the probate process. You need to bring us this paperwork. We need to do this with the trust. They’re like, yeah, they, I don’t know. We weren’t even sure what was going on there. They’re like, okay, cool. So we talked to them. And I said, well, the nice part is for you. There’s a one page form from the DMV that, well, that you can use to transfer ownership of the car because everything else is inside of the trust. So it’s not subject to the probate rules. Now, part of my intro talks about how I can give you the information to avoid probate. Whether you know whether or not that’s something you want to do is a whole separate question because some people may want to avoid probate. Other people, it’s not a big thing for them. So it just depends on what you want to do. But as we had the so this as it was, so you know, in this case, we had set up the trust so that they didn’t have to go through probate either when one of them died or when both of them died. It just didn’t need to happen. So, that’s kind of a fun thing and it made life easy. And the rules, you know, so in Colorado, if you have less than, so if you have less than $82,000 in assets that would be subject to probate, there is a two-page form that the Colorado Judiciary publishes that is an alternative to going through probate. So you are listening to mobile state planning with Michael Bailey here on 560 KLZ AM or 100 points 100 to 0.7 FM or the KLZ 560 radio app. Phone number to talk to me on the air is 303-4775-6000. Once again, that’s 303-4775-6000 and my direct line is 720-394-6887. And again, that’s 720-394-6887. So as you’re going through, when you’re trying to figure out, you know, what are we going to be able to avoid probate or do what we need to do, we start talking about that $82,000 rule. And so the $82,000 applies to assets that are probatable assets because not all assets need to go through probate. So if you have an asset like an IRA or a 401k, an IRA or a 401k or, you know, if you work for the government at TSP, all those types of things, those are those are set up so that the they have a beneficiary designation and a beneficiary designation allows assets to be to transfer according to what is referred to as the contract is opposed to needing to go through any other type of distribution. So if you say that you have an IRA, well, when you set up the IRA, they will ask you to put a beneficiary designation. And the name, the individual or the entity or the trust or whatever you name as the beneficiary, that is to whom that money will be paid once you pass away. So if you have an IRA, you’re like, okay, or a 401k or a TSP or whatever it is. So okay, well, I’m going to contribute my retirement money to this. And then when I die, I want to pass on to my spouse or to my kids, or if you don’t have a spouse or kids, to my nieces or nephews or to the American Red Cross or wherever it happens to be. So you have these, you know, transfer of things and transfer of ownership and transfer of assets. And so you have a beneficiary designation on an IRA or a 401k or a TSP. And that transfer, so if, so if you’ve got a company that’s administering the IRA, let’s say that your IRA is administered by empower. Empower is a big retirement company. You may recognize them from being Empower Field at Mile High. They sponsor the stadium, the Denver Broncos Plan. So let’s say that empower is administering your IRA or 401k. And then you pass away. Well, there’s a whole department at Empower that’s the beneficiary department. So if your, let’s say your parent has an IRA or 401k and they pass away. So then you call Empower and the beneficiary department. You say, hey, my mom or dad had a IRA or 401k with you. They’ve passed away. You know, I need to claim those funds. And so to claim those funds, there will be paperwork to fill out with the company. They’ll probably want a desk certificate. And then they’ll say, okay, well, you’re the proper person that is listed here to be paid to. You’ve got, you filled out the paperwork. You’ve got the desk certificate. So they’ve passed away. We can tell that. Now we’ll go ahead and issue a payment to you for the amount of the IRA or the 401k. And then it’s your money. Well, with IRAs or 401k, you want to be a little bit careful because as that money pays out to you, it’s going to be taxable income to you. And so if your parent had $1.5 million remaining in their IRA or 401k when they died and you say, I don’t want to take a lump sum payment. So you get paid $1.5 million. The IRS is going to say, ooh, that’s so exciting. We’re so happy for you. That is the coolest thing ever that you got paid $1.5 million from the IRA. Now at $1.5 million, we would like 40% of that in income tax. And since you are not over 65 years old, we also need a 10% penalty because it’s being paid out to you early. So we would like 50% of that. So then you go, okay, so you’re expecting a $1.5 million payout. You’re like, cool, I got $1.5 million. Now I have to turn around and pay $750,000 to the IRS. So now you got a $750,000 payment. Well, you know, we’ve to, so being concerned about taxes and income taxes because that’s not in inheritance tax. That’s not a death tax. That’s the income tax rules. We always have to be concerned about income tax. Now I know Al Smith and Golden Eagle Financial who are on right before me. He does a lot of tax planning to how to get your assets in a spot where they can transfer to you in the most tax-efficient manner. So we’ve, you know, that’s something just to be, to keep in mind, I don’t always have, you know, because I’m not a licensed financial person. I don’t always have the most tax-efficient manner to do things and sometimes I can say, hey, if all of your money’s in this IRA or 401K, you may want to talk to a financial planner about how to reposition assets so they’re not coming, they’re not, you’re not, everything’s giving tax, but you have to be concerned about that. But an IRA 401K that has a beneficiary designation, that will pass outside of probate. The same is true of something like post tax investment account, like in just, you know, you buy stocks and bonds and invest them or a bank account. So stocks and bonds, you know, let’s say you have an investment account with a fidelity. They’re like, okay, every month that I get paid, I put $3,000 in an investment account and then I just let it grow and my advisor at Fidelity who tells me, you know, what looks good and we meet regularly and you know, we say, hey, well, you know, right now it looks like, you know, oil stocks are going to be up. So we’ll buy some oil stocks and then they can grow and, oh, now they’re falling. So we’re going to sell the oil stocks and we’ll instead purchase stocks in, I don’t know, high-end cheeses because apparently high-end cheeses have been really cool and they’re at all of the coolest parties and so everybody wants to now buy high-end cheeses to show how awesome they are. So they’ve, so suddenly you get stock in high-end cheeses and high-end cheeses, the high-end cheese trend lasts for three months. And then suddenly high-end cheeses aren’t cool anymore, but rather it’s high-end sausages. So I move from cheese stocks to sausage stocks, you know, and so all of these things, you know, you’re trying to invest in learning grow and try to become the next Warren Buffett and a multi-billionaire because you invest in the right things and it all grows. Well, that sounds great. Most of it, ours aren’t quite as good as investing as Warren Buffett is, but, yeah, you get the idea. So if you go, if you do that and then when you pass away on a brokerage account, you can put a beneficiary designation or a transfer on the death designation, whatever it’s called, and then that can be, hey, whatever whenever you pass away, it’ll transfer to the named person as the transferee or the beneficiary. Now with post-tax accounts like that instead of IRAs 401Ks and retirement accounts, you just inherit the money. It’s an inheritance. It’s not income because it wasn’t tax-advanced to start with. So it’s just income to you and you don’t have to pay income tax on it, and if you are below the estate tax amount, which currently is $13.6 million per person, that schedule would be cut in half to be $7 million per person at the end of 2025 unless the tax cut gets extended or the rules became become more permanent. But most people I know don’t have more than $7 million, more people that I know don’t have more than $13.6 million. I fall in that category of not having more than either of those. So I mean, I suppose if you count the fake money that my children have drawn over the years, there might be more, but that doesn’t count as real money, so it doesn’t work. But those can also pass outside of the probate process. You just have to set it up properly. So you are listening to mobile estate planning with Michael Bailey here on 560KLZ 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. Once again, that’s 303-477-5600. And my direct line is 720-3946-887. Once again, that’s 720-3946-887. So these are different types of accounts. We go to bank accounts. Now a bank account, you can put what’s called a pay on death designation. A pay on death designation, a transfer on death designation, a beneficiary designation, they’re all the same thing. They just get different names for different types of accounts. But the idea is that when you die, money will pay out to the person you designated to receive that money. So a bank account, you can go into a bank account and say, “Hey, when I die, I want my assets to pay out to this place or that place.” Okay, well we can do that. That’s perfectly fine. Most people, when we create trusts, I will have them put the trust as a pay on death, “designee on a bank account.” Because a lot of times, if you have a bank account and you’re like, “Oh, I’m going to put my bank account inside of the trust.” That sounds great. Except that the bank is going to be super kind and super awesome. They’re probably going to give you a new account number. In that new account number, then would be a bank account number for the trust bank account, as opposed to your own personal bank account. Well, for most of us who have automatic deposits and automatic withdrawals that go into and out of our bank accounts, having that automatic, you know, switching the account number means that we then have to switch all the automatic things. Now, I’ve only had a bank account get compromised once, so I had to switch things around. But I think most of us can relate to how that works if you get a new credit card or your credit card gets compromised. If you’re like us, we have milk delivered to the house by Longmont Dairy. We have a, our streaming service is tied to the credit card and the cell phone automatically builds the credit card. All of these things automatically hit it. So when you get your credit card compromised, you know, my wife and I spent a couple hours logging on to all of the websites that we could update our credit card information. We spent, or some of them we had to call and you know, do those type of things. And so with that, you know, if you have to do that for your bank account, that’s what you have to do is you go through and you, so all your automatic things, you get to redo. So it’s, oh, if you, if you’re just creating a trust and you don’t want to create more work for yourself, it’s usually simpler and easier just to go into the bank account and say, okay, when I die, please have whatever’s left over, whatever balance there is, pay it out to this trust. All right, cool. And now, now we’ve got all of these things that will transfer according to the beneficiary designations. Now, a normal, everyday run of the meal person would say that happens automatically because I do estate planning, the word automatic really does not exist in my vocabulary. So because automatic would mean that, you know, you don’t have to do anything. Well, with all of these, you have to go and you have to submit the proper paperwork and go through whatever process they have. It’s going to be a lot quicker and easier than going through the whole probate process, but there still is work to be done. So automatic is, I suppose in the eye of the beeholder, it’s just not the word that I use for it because automatic to me would indicate that you don’t have to do anything and it just happens. I’m like, well, that’s not true. You have to, there is still work to be done. And so, those types of accounts you can do that on. There is such thing as a beneficiary’s deed, which is essentially a transfer on death deed. You can prepare that for your house, you record it with the county. And then when you die, your kids have to take a death certificate to the county and possibly an affidavit to tie the name on the deed to the name on the death certificate to make sure that they match, you know, that they’re the same person. And then ownership would transfer via the beneficiary deed to the named beneficiary so that then they would own the house. There’s also a similar thing you can do with the car. There’s a one page form from the DMV that says, hey, when I die, ownership transfers to this person. And, you know, all of those are options of what you do. Now, if you’re trying to do every single account in every single type of assets you have, that can be a little bit daunting, a little bit overwhelming to deal with every single asset that you have. So, some people will choose to create a trust. If you create a trust, you can put your assets inside of the trust. And when the assets are inside of the trust, then those assets inside of the trust, when you die, the trust is not die with you. But rather, the trust continues to exist and we’ll say, hey, here’s where we’re supposed to distribute things. And if you are the trustee while you’re alive, you can set up a successor trustee who will take over the trust after you die. And then that successor trustee would have the legal authority necessary to transfer assets and send them on to whatever they’re supposed to go. Now, if you just have a will that goes through the probate process, then your will says where things are supposed to go. So, when somebody dies, you take the will to the probate court, you get legal permission from the probate court to be transferring assets. And then you can go and you can claim the assets of the deceased individual and get them paid out to the name to benefit shares of the heirs. So, it’s just different methodologies. So, probate and Colorado isn’t nearly as terrible as in some other states, you know, somewhere like California or New York or oddly enough, Louisiana, really are, you know, very obnoxious for trying to transfer ownership. I haven’t looked completely, but I hear that the probate fees in California are like something ridiculous like 30% of the assets in the probate estate. So, of your assets, you have their subject to probate 30% of those go to the state as probate fees. Yeah, here in Colorado, the probate filing fee is $199, which is usually less than 30% of someone’s estate. You know, I don’t know a whole lot of people who have a state that exceed the $7 million or the $13.6 million mark, but if it’s 30% of $100,000 that you have in your estate, well, that’s $30,000. That’s significantly more than $199. So, most people that I know have more than $100,000, but less than the $7 million. So, as we look at trying to avoid probate, there are several different strategies available. We just have to pick the one that would work for you. And if that’s something that’s important to you, if it’s something that’s less of a thing because you think your kids can handle going through the probate process, we just create a will. Either way is fine. We just have to go into it with eyes open and knowing what we’re doing. So, thank you so much for listening to Mobile Estate Planning with Michael Bailey. The music tells me my time is almost up. So, stay tuned for John Rush in Rush in Reason, and I will be back next week. Thanks and have a great day. Bye-bye. [Music] Mobile Estate Planning with Michael Bailey will return to ATX next Wednesday at 230 here on KLC 560, AM 560 FM 100.7 and online at kelzradio.com