Mindy: Most people spend years building wealth, investing for retirement and working towards their financial independence goal. But many overlook one of the most important details of a complete financial plan, an estate plan. And Carl and I were guilty of that. We didn’t build an estate plan until our oldest daughter was 19. In this episode, we’re going to discuss why you need an estate plan and how to start the process to build yours today.
Mindy: Hello, hello, hello and welcome to the BiggerPockets Money podcast. My name is Mindy Jensen and as a special treat, I have Carl Jensen with me today.
Guest 1: Hello.
Mindy: That’s it, just hello?
Guest 1: I, yeah, that’s it.
Mindy: Okay.
Guest 1: I’m a man of few words.
Mindy: There we go. I hope you’re not. You’re co-hosting this episode with me. Today we are joined by Skipton Reynolds, who is our actual estate planning attorney. And we are excited to pick his brain on the topic of estate plans. So, without further ado, welcome Skip to the BiggerPockets Money podcast.
Guest 2: Thank you so much for having me. I’m really looking forward to joining you today.
Mindy: I am too. I’ve been planning this since we finished our estate plan at the, uh, very, very beginning of this year. It took us about six to eight months to just figure out all the things that we wanted in the estate plan. And I know why we never did it, but why do you think most people ignore estate planning?
Guest 2: I think there’s lots of reasons. I think the number one reason is people don’t want to think about not being as well as they are right now, or dying, frankly. You know, there are people that literally say, if I do an estate plan, I’ll die. And so then they don’t do it. Hard part about that is I can guarantee it’s going to happen whether you’ve done an estate plan or not. So you might as well do the estate plan and get on with living, at least from my perspective.
Mindy: Yeah, I’m going to say every single person on this call and listening to this episode will be dead in the next 200 years. I guarantee it. So, if we’re all going to die, then we need to start thinking about what we want to do with our money. So, let’s say that something horrible happened to Carl or I or both of us before we had signed our final papers with you. What would have happened to our estate?
Guest 2: It kind of depends on a number of factors. So, for example, if one of you had died and you owned joint accounts or joint assets, it would have been fairly straightforward. But where you run into roadblocks is we don’t own everything jointly. A lot of clients will say, oh yeah, I own everything jointly. And then I’m, I’m kind of a smart aleck and I’ll say, well, do you have a retirement account? Do you have life insurance? And they’ll say, yeah, I do. And I said, is that a joint account? And they’ll be like, yeah, my spouse is on there as a beneficiary. And I’m like, but it’s not a joint account. It’s in your name, right? And you guys probably talk about this, but if you don’t have a proper beneficiary on one of those accounts that is in one person’s name, or if you’re a single person, for example, and you die, there is the possibility that it goes through probate. And depending on your family structure or other factors, you may not control where that money ends up.
Guest 1: Just to be clear, I think a lot of people would assume including me that, hey, I’m married, the beneficiary is automatically my partner and that’s not the case, is it?
Guest 2: So, not necessarily, right? We, we do think that and I think it’s why people say, oh, it, it’s my money too, not realizing that whole differentiation between joint ownership and say a beneficiary. But yeah, we just assume it’s going to go to my spouse or if we have kids, it’s going to go to my kids, kind of thing. And depending on your family structure, depending on financial institutions, depending on the state you live in and their law, it can considerably change the answer to that question because you didn’t tell us where you wanted it to go. Because when you die, let’s say without a will or you die without beneficiaries or a joint owner, you could potentially lose control. It’s what we call dying intestate. I may know a semblance of an answer, but I don’t know the 100% answer. And just for my own personal perspective, I want people to know the 100% answer, not the 90%.
Mindy: Okay. So I will share then a slightly different version of this. I have a friend whose husband died all of a sudden, bicycle accident. And because they didn’t have a will, she received the first 300,000 of their net worth, and then the remainder was split 75% to her and 25% to his parents because they didn’t have children. That is not what they had planned. And if they had had a will, that isn’t what would have happened. If I look at that same parameters, and this was five years ago, perhaps things have changed, but if I look at those same parameters, there’s a lot of money that would be going to, well, we have children, so then it would go to our children, which I guess would be fine. I mean, that’s where we wanted our money to go after we pass. But would it go like that 75-25?
Guest 2: So the answer is, it depends, great attorney answer, right? Um, but the answer could be yes. And so in that scenario, that 25% of, you know, yours or Carl’s account or accounts that didn’t have everything structured properly would not have gone to one another. And maybe it went to your kids before you wanted it to or maybe they were minors and now we’ve got to go set up guardianships and conservatorships for the money. And or they get access to money, let’s say they’re 18 plus here in Colorado, they’re going to get that money right away, instantly. No rule books, no parameters, hopefully they’re a good steward of it. And another kind of unfortunate ramification of that is it’s not available for the surviving spouse to get to their end, however long that might be, because it skipped them.
Mindy: Yeah, look at that. As soon as you said that, I’m like, oh, we have, we have guardrails in place because should we pass today, our children aren’t getting the money instantly. They’ll get enough to live off of and then it’ll kind of trickle down over time. I don’t think that a 19 year old and a 16 year old are going to be good stewards of money, you know, at one point. Maybe when they’re older.
Guest 2: Yeah, absolutely. And and, this is where at least here in Colorado, the rules are kind of weird. If you had died prior to the kids being 18, we set up a conservatorship that extends until they’re 21. But if they’re 18, no conservatorship. So it’s kind of like you can smoke cigarettes and vote at 18 but you can’t drink till you’re 21. Just some of these rules don’t align very nicely. So like for example in your scenario one of the kids would get the money right away, no guardrails. The other one would have some guardrails for a period of time, simply based on their age at the time of your death. But you also may not get to pick those things. Putting in the context of your friend, let’s say they had a child that received some of this money and he had died without a will. Now there’s no potential guardrails and you don’t necessarily get to pick who’s going to be in charge. The court does. And the court could look at mom and say, you know, mom, you’re not very good with money or, you know, it feels like there’s some self interest here or whatever, and they could appoint a third party who knows nothing about the child, knows nothing about the family, and dad has no control because he died.
Mindy: Okay. So, the estate plan is for everybody because everybody’s going to die. And therefore you need an estate plan. However, I don’t really think that estate plans are for absolutely everyone. Like right now, I have a 19 year old and a 16 year old and they neither one of them have an estate plan. Neither one of them have an estate, but they will eventually. So at what point should you start thinking about an estate plan?
Guest 1: Long before we did it took us 25 years.
Guest 2: Sure, sure. This, it took us 53 years. 52 in your case.
Guest 1: Well, 25 after marriage but…
Guest 2: So to be funny here, before you die, right? But trying not to be funny, realistically, there’s parts of an estate plan because I think there’s two sides to estate planning. There’s helping us while we’re alive if we’re not as capable, through things like powers of attorney. But then there’s things that do things after we die like wills and trusts and beneficiary designations. So realistically, using the context of your family scenario, if you are 18 years old plus, you might have a bank account and you have medical needs, but you are now an adult. And so your parents are not automatically in charge of those decisions if you have that car accident or other things. So in my mind, they may not need fancy wills or trusts, to your point, Mindy, they may just need the powers of attorney. So that way, if, you know, they have that car accident and they’re out of commission for a period of time, mom and or dad can step in and deal with their accounts, deal with the doctors, and make decisions on their behalf.
Mindy: Okay, so our 19 year old now needs a medical power of attorney and…
Guest 2: And a financial power of attorney.
Mindy: Okay. So she needs two documents that are pretty easy to draw up.
Guest 2: Yeah, generally speaking.
Mindy: Generally speaking. Does our 16 year old need anything?
Guest 2: She is not old enough yet. So you can’t do that stuff until you turn 18. That’s kind of the threshold there. And and honestly just making a wide ranging recommendation, I think every child 18 and up, their parents need to make sure that they get these powers of attorney. Because a parent’s worst nightmare, I’ll give you a real story that happened in our office where their daughter was at the University of Northern Colorado and she had an accident in the dorm. I think she fell out of her bunk bed that she’d made. She broke her arm. Well she’s in the student clinic with the broken arm and they call mom and dad, but she’s over 18. And they say, we have your daughter here. And they say, well, can you tell us what happened? And they’re like, we can’t because the daughter hadn’t given them consent for whatever the reasons were. Their drive from Denver all the way to Greeley, they’re just panicking, right? Your mind goes in a million different directions, you know, what happened, kind of thing. And they show up and she just got a broken arm. But had they had a power of attorney on file or a HIPPA release, it would have been a different experience. Let’s say it wasn’t a broken arm. Let’s say she’d hit her head and she had a brain bleed and was in a temporary coma. They would have had a very difficult time making medical decisions for their daughter without going to an attorney like us to become their guardian. So not to scare you but to scare you, right?
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Mindy: Okay. So it sounds like the time to start thinking about your estate plan is when you turn 18 or now, like if you if you are like Carl and I last December, you didn’t have an estate plan. And I don’t want to make people feel bad, but I kind of want to make you like light a fire under you and get this going. If you are on the path to financial independence, I’m assuming you have some level of wealth. If you’re at the beginning of your path, you know, maybe you have a negative net worth, but once you get a positive net worth, clearly, even if you don’t have any sort of net worth, you need to have at the very minimum a power of attorney for medical and a power of attorney for financial. But once you start growing your net worth, where is it going to go? Nobody plans to die, you know, walking out in front of a bus or, you know, getting into a car accident. It’s an accident. It just, it happens. And if you don’t have your plan in place, you, you have to go through probate. Probate is a bad word to everybody who doesn’t know estate planning law, which is like the bulk of my audience. What happens in probate? Let’s use Carl and I as an example. We both pass and our no will. Now we would have to go through probate because we have kids, or do we skip it because we have kids?
Guest 2: Really what probate is at kind of a 30,000 foot level. And obviously it’s administered slightly different in different states. So obviously, if if you’re not in Colorado, different states have different rules. In fact, there’s, I think still nine or 10 states that have some form of an estate or inheritance tax. So if you live in a different state than Colorado, you might be need to be aware of your state’s rules that way. But to your question, Mindy, is probate at a 30,000 foot view is how do I take somebody’s name off of an asset after they’ve passed away? If they don’t have a joint ownership with someone else with what we call right of survivorship, or a beneficiary designation, or have a trust. If you don’t meet one of those three, and I die owning a bank account or my house or my timeshare up in Breckenridge, those things will go through probate. And what probate is trying to figure out is it wants to know who’s in charge of the estate, most commonly referred to as executor, and it wants to know who are the beneficiaries of that estate. That’s what probate is trying to do. And then it’s the paperwork process of empowering that executor to go and grab those assets that don’t have a joint owner, beneficiary or trust ownership and grab them, pay off all the debts. So there’s an attorney I know that she kind of jokes, you essentially are suing yourself for a creditor’s benefit, right? Because you’re opening the case so they can come in and make a claim, right? So credit cards and mortgages or whatever it might be out there, other claims that might be against you. Like in Colorado, we have to put something in the newspaper notifying creditors that you’ve died so that they can call your executor and make their claim. So it’s just all of these formalities to essentially open it up to the world to come and grab money from your estate. And it’s just so that they can grab those assets that got missed because your name is still on them without those other three things. And so my analogy for it is, you remember back in school days when your math teacher would say, show your work and go through every step of the process to get to the answer? That’s probate in a nutshell. It’s every step. If your family’s not fighting, it might not be awful, but it also opens the door for the fighting because maybe I don’t like it that this kid’s the executor. I want to be the executor, or mom told me I was going to get this. All of those skeletons come out in the probate process.
Mindy: So I found you through Jenny Rosell, who hosts the podcast called Legal Tea. I love that podcast. I love listening to, I’m not even a probate attorney, but I love listening to all the different things that could go wrong in an estate plan. And she has a list of elder and estate planning attorneys in all 50 states at legalteapodcast.com/seeresources. That’s SEEresources. So if you live in a different state than Colorado, we are primarily talking about Colorado law today because Skip is a Colorado attorney and Carl and I are Colorado residents. But like he said, laws may change in your state. If you don’t have an estate plan, go to Legal Tea podcast to the resources page, find an estate attorney, and start learning about the process to get yourself an estate plan because you are going to die. Again, I keep saying that. That’s that’s not a a polite thing to say, but everybody listening to this is going to die eventually. So do you want somebody else to say where your money’s going to go or do you want your money to go where you want it to go? I mean, I would be really upset if my money didn’t go where I was wanting it to go. And yet it still took us 53 years to get an estate plan in place.
Guest 1: I’m not 53 yet, you are.
Mindy: Oh, wow.
Guest 2: Well, and and kind of circle all the way back to that point, Mindy. You asked the question at the very beginning. You know, what are reasons why people don’t do it? Obviously, afraid of death or not thinking they’re going to die anytime soon, those are big reasons, but I also think life, life happens. Like if you guys were to take an honest look, you had talked about doing this many years before we got around to doing it. And then time goes by, right? You know, one month becomes one year becomes five years. And it’s not because you didn’t have the intention of doing it, you were just doing life, right? Especially if you’ve got children, doing life makes life crazy. Every day is a sprint and then a week is gone. It’s this weird dilemma of time, I feel like.
Guest 1: One other thing I’ll say about that whole thing is, I think it’s a lot more pleasant to do all this work when death is not imminent. It would feel a lot more macab and depressing if I was doing this because you absolutely had to do it because um, something has gone wrong. So, well you don’t like to ponder this kind of stuff. It um, feels good. I think I’ve got at least a couple good decades left.
Mindy: Yeah. Well, I hope so. But also, yeah, I think that that’s a really good point. If one of us had had like, let’s say a terminal cancer diagnosis, that would have made this, I mean, it was already stressful enough doing this estate plan because I’m thinking about, well, eventually I will be dead, even though I don’t want to think about that. What am I going like I don’t want to think that I’m not going to be there for my girls. But eventually, hopefully, they will be alive and I won’t. So I want my money to go to them. And you actually asked us some pretty thought-provoking questions, which was another reason why it took so long to do, you know, do we want to leave money to anybody else? I didn’t think about that. So we start going around the family tree and do we want to leave money to these people or those people? And, you know, who do we want to be in charge of our estate and who do we want to, we still have a minor daughter. So who do we want to be her guardian, should we both pass at the same time? One thing that I thought was really interesting was, okay, Mindy and Carl, you said Mindy and Carl, one of you passes, the other one survives, and in a few years gets married. How do you want your money to be handled in that case? That’s not something that I am thinking about at all sitting here in a happy marriage where, you know, we’re in our early 50s. Some of us earlier than others. We’re in our early 50s and we’re not thinking about marrying anybody else. But yeah, I wouldn’t want our hard work to be to go to your new wife.
Guest 1: No, especially if you um, well, there’s those stories in the media like who’s that? We we won’t call out names, but sometimes young people get married to old people because they have money.
Mindy: Oh, you’re going to marry a 26 year old woman.
Guest 1: No, I wasn’t saying that. But some other people make those choices and it might happen to you too. I don’t know, you might um, yeah.
Mindy: Yeah, no.
Guest 2: But to your point, Mindy, a lot of us just assume, right? Even if you haven’t done any estate planning, we assume it’s just going to go to each other if we’re married. But have we been asked the question? Even if you’ve gone through estate planning, I think that that sometimes it isn’t asked, because I mean, there’s this thing called the internet where you can go do a lot of this stuff for cheaper, right? But in my experience, it’s what you don’t know that gets you in trouble. And it’s those right questions to your point. You know, I don’t care how a client answers that question per se, I just want to make sure they answer it. Because if they never answer it, they never get to the right solution for their family. And that’s what our goal is, is to protect you, protect your family, and protect your assets in the manner in which you want to during life and after death. And if you aren’t asked the right questions, you never get there.
Mindy: I read something, I think it was this morning or yesterday where it was pointing out that you need to be very specific in your will. Let’s say I pass and Carl remarries and he and his wife have put it in their wills, oh, everything goes to the other person. Well, then Carl passes and his wife remains, she can change her will to say, I’m just going to keep all this money, or I have my own kids. All of what was our money is now going to her kids that I’ve never even met before and our kids get the shaft.
Guest 2: 100%. And where you see this the most, actually, is not necessarily death. That happens too, like you’re just describing, but it’s the blended family already. 50 plus percent of Americans are divorced. Well, if you’re coming to the party with his kids and her kids and you join your assets and you leave it all to the surviving spouse, they can leave your kids out. I call those scenarios an accidental on purpose disinheritance, right? Accidental by the individual who left it to their spouse expecting them to keep it in place, on purpose by the new spouse.
Mindy: So Carl and I have just created our estate plan. How often should we be reviewing our estate plan? Are there any life events that should trigger a review, or like once Daphne turns 18, we’re going to have to get her the powers of attorney. But what about for us?
Guest 2: You know, I think the biggest pieces, there’s three parts to an estate plan in my book. There’s number one, put in writing what you want, will, trust, whatever that is. Part two is integrate your assets appropriately. So making sure all the beneficiaries are designated correctly, etc. And then part three to your question is maintaining it. But it’s maintaining the documentation and the integration as we move forward. The kind of big triggers that I see are somebody dies, obviously, right? Whether that’s our spouse, that’s a kid, or maybe that’s just somebody we’ve named in the documents, right? To be our power of attorney or executor of our will or trustee. So that’s one. Another is, maybe like in your scenario, the kids aren’t young anymore, they’re 30s. And now you want them in control of things instead of say other family members. So that would be another trigger. Another trigger is somebody loses capacity that you’ve named in the documents as a decision maker or beneficiary. Those are big ones. Grandchildren would be another one. How do you want to care for them if at all in your planning? Obviously, if you’re a married couple and you don’t have children yet, but then you have children or subsequent children, making sure that those are all put in. But the asset piece is equally important because we move houses, we change jobs and our 401ks change. We buy life insurances, we do all of these things and the integration piece is actually where I see people miss the boat the most because they’re just not thinking about it. Like, for example, you guys have a trust. If you buy a new property, we got to make sure that property is properly integrated into your trust. If you open up a new account, we got to make sure the beneficiaries on that new account align with the trust. And if they don’t, you can have the perfect plan on paper and not full fulfillment of that perfect plan.
Mindy: And for our listeners, what is the difference between a will and a trust?
Guest 2: Great question. So many people believe that if I have a will, I have avoided probate. And the attorney answer for that is it depends. Because a will actually doesn’t avoid probate itself. It just makes probate easier. So going back to my 30,000 foot view of probate, how do we take somebody’s name off an asset? And who’s in charge of doing that and who benefits? Well, we have those ingredients built into our will. So the will really just answers the questions of the quiz called probate. It doesn’t negate it, but it’s your rule book for who’s in charge and who gets it. What a trust does is those same things. So it can create your who’s going to be in charge and who gets it and how, etc. But if we align the assets right, it skips all the steps of probate. So I used the analogy earlier of probate being showing all the steps in that math problem. The trust is, I know the shortcut. I skip straight to the answer, but the answer can be the same. So it’s one of the reasons why so many folks, if they want rule books for how they want to leave things to their family, choose the revocable trust because it gives you the flexibility to make changes while you’re alive, and it gives you the rule book after death, assuming the assets are right, outside of probate.
Mindy: Who needs a trust?
Guest 2: I get that question a lot. That’s probably the number one question that we hear when people come to our workshops or they come in and meet with us. You know, do I need a will or do I need a trust? And the answer, just being very honest, is it really depends on the family scenario. It depends on who are you leaving it to? What are their ages? What are their competencies with money in your eyes? And I’m going to jump on my soapbox here for a second. This is where it’s a really interesting, I’ll say thought experiment from my perspective. You know, especially those of us that have children. I’ve got two minor boys myself. We do whatever we can once we have those children to advise them, to protect them, to do whatever we can to make their lives better. We give them deposits to go buy their first house or go to college. We advise them how they need to invest their money and what job they should take, etc. But a lot of people look at it that when we die, let’s say they’re adult children, we’ll just give them the money. We will stop protecting them. We’re just going to give it to them. And I find it a really interesting thought experiment that it’s that black and white in so many people’s eyes. Why would we stop protecting our kids or allowing them to protect themselves potentially, assuming they’re adults, when we die? And that in my view, legal view, is where trusts have real power because I can set up protections for my kids to protect what I worked so hard for during my life for them and my family only. Not their divorces, not their creditors or their bankruptcies or bad financial mistakes that they’ve made in the past or even after I’ve died. And that’s where a trust really has power versus just naming beneficiaries. But so many people put zero stock in this and they’re like, you know what, I’m dead anyway, I don’t care. And I just find that a really interesting mind thing that that’s how we look at life. Like I’m not going to die and when I die, I don’t care because I’m dead anyway.
Mindy: I still want to have a lot of control.
Guest 2: Right. Or at least the ability to protect. Who knows what our kids’ lives are going to look like in the future. I’ll give a real example. I got a referral from another estate attorney and the referral was actually the daughter calling on behalf of her 62 year old mom. and 62 year old mom had had a stroke and was now going to need care for the rest of her life. But the day before she had her stroke, her mother’s aunt died in New York. And the aunt had just done beneficiary designations to everybody. So it avoided probate. Yay. But there was no ability to protect those assets. So now they’re exposed to the long term care risk of this 62 year old, the day that the aunt died, everything was good. The following day, everything changed, and there was no plan for it. And so that’s really what an estate plan does from my perspective, is it, it creates contingencies and protections for these contingencies that maybe we can’t totally foresee at this time.
Mindy: So a moment ago, I asked you how often people should be reviewing their estate plan, and you said, you know, there are some life changes that could happen, you know, obviously a death or, you know, a birth of another person. But you said if a beneficiary or somebody who’s named in the will dies, you need to review your documents. I don’t know that that’s always top of mind when somebody passes away. So I’m going to encourage my listeners to make it part of your annual or quarterly money review that you’re doing either on your own or with your partner, where you’re just reviewing your beneficiaries, read through your estate plan, like go ahead and like my the document we got from Skip is like this thick. But there’s, like it’s very easy to go through and just pull out all the names. These are the names of the people that are named in our will. So that is a list that I can review every quarter with Carl when we’re doing a quarterly money review. Like I would hate to have named somebody and they pass and now their role is up in the air because I didn’t review it. I mean, what’s the point of having control if you’re going to lose control because you made a mistake?
Guest 2: 100%. And one of the big mistakes, to your point, Mindy that we see. I’ve been fortunate, I haven’t had too many of these in my office, but people get divorced and forget to change beneficiaries on things like life insurance and then they die 20 years later and it goes to the ex-wife, not the new wife. And obviously, the new wife is a little steamed that the ex-wife got that benefit. And it’s simply because you failed to keep up with those kinds of reviews as life changes occur.
Mindy: That would not be fun to be the person to have to tell the current wife that the ex-wife is getting the money.
Guest 2: Right.
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Speaker 1: If you’ve been putting off life insurance, I get it. The old process was miserable. Phone calls with an agent, a nurse coming to your house for a blood draw, then waiting weeks to find out what you’d pay for. That friction is exactly why so many people who should have coverage don’t. Here’s what I believe. Most BP Money listeners need term life and the right move is to build a ladder, a few term policies of different lengths stacked together, so your coverage steps down as your mortgage shrinks and your kids get closer to being financially independent or you get closer to hitting your financial independence number. The thing that makes that practical now is Ethos, a platform that helps you find life insurance all 100% online. Same day coverage, no medical exam. You just answer a few health questions online. Up to 3 million dollars in coverage, some policies as low as $30 a month. So building a two or three layer ladder that used to take a month of appointments is something you can knock out before your coffee gets cold. Get your free quote at ethos.com/bpmoney. That is ETHOS.com/bpmoney. Application times may vary and rates may vary.
Speaker 1: If you’ve been putting off life insurance, I get it. The old process was miserable. Phone calls with an agent, a nurse coming to your house for a blood draw, then waiting weeks to find out what you’d pay for. That friction is exactly why so many people who should have coverage don’t. Here’s what I believe. Most BP Money listeners need term life and the right move is to build a ladder, a few term policies of different lengths stacked together, so your coverage steps down as your mortgage shrinks and your kids get closer to being financially independent or you get closer to hitting your financial independence number. The thing that makes that practical now is Ethos, a platform that helps you find life insurance all 100% online. Same day coverage, no medical exam. You just answer a few health questions online. Up to 3 million in coverage, some policies as low as $30 a month. So building a two or three layer ladder that used to take a month of appointments is something you could knock out before your coffee gets cold. Get your free quote at ethos.com/bpmoney. That is ETHOS.com/bpmoney. Application times may vary and rates may vary.
Mindy: So, some of our listeners have been very successful in their investing and their estates are growing while they are still young enough that their estates can continue to grow. They might be bumping up into that lifetime exemption limit, which is a great problem to have. Oh, you have so much money now you have to pay taxes. Is there anything that can be done, like now or in their planning process, to avoid paying some of those estate taxes if they get over the limit? Or is that limit like a hard and fast limit?
Guest 2: There’s actually a lot of things they can do. I mean, we can talk about some of them, but one of the easy things that you can do is you can build into your trust, say for example, that if you are at or near the threshold, so this year it’s 15 million here in 2026 per person. So if you’re a married couple, it’s 30, 15 for each. What we can do is build into that estate plan, let’s say you’ve got a couple that’s right now at 25. They’re not over the 30, but they’re over the 15. So what you can do is build into the estate plan that when the first spouse dies, we clip that $15 million coupon, and it goes down to what is often called a credit shelter trust. It’s still for the spouse and benefits the spouse, but it’s locked in that exemption. and it can now grow to infinity and never be included in the estate of the surviving spouse. And so then in that $25 million, say we clipped a $15 million coupon. Now the survivor only has 10, but they have access to all 25 still. And so there’s things like that that can be done. There’s a concept even without trusts called portability that’s been around since 2011, which is essentially the same thing. But just being very honest, I don’t trust the IRS to track that appropriately. It would be better served to ensure that it happens by having it in your estate plan. But then there’s even other fancy stuff we can do. Um, there’s trusts called irrevocable life insurance trusts where families have these big estates like that, we’ll go buy a giant life insurance policy and put it in this irrevocable trust and it’s not a part of their estate. So you got a 5, 10 million life insurance policy that’s not included in their estate and it can be used to make the estate larger for the kids down the road, pay estate taxes if there were over the 30 million. So there’s lots of fancy stuff that can be done.
Mindy: I’m glad I asked that question. And if you need an estate attorney, again, please go to the legal T podcast website, legalteapodcast.com/seeresources because that is how I found Skip. I reached out to Jenny Rosell and I was like, I need to do my estate plan. She’s like, yeah, you do. Why don’t you call Skip? And I called Skip and it was fantastic.
Guest 2: And I know Jenny.
Mindy: Yeah, you know Jenny.
Guest 2: She’s great.
Mindy: She is great. I had my friend pass away. I read an article online somewhere about a woman who was going through a similar thing. I’ve interviewed now two people who have lost their spouse with no estate plan in place. Um, I’ve had Jenny on the show talking about estate plans. This is all well past last year that this happened, and I still didn’t do my estate plan. So, if you are listening to this episode and you’re like, yeah, I should really do that, yeah, you should really do that. You need to get your estate plan in place. At least get something down so that not everything is up for grabs, and then just refine it as you go. But having something in place is better than having absolutely nothing in place.
Guest 2: 100%. I mean, we call it giving peace of mind, right? You can stop worrying about what would happen if you die or become disabled because you’ve got it set up. And now you can just get on with living.
Mindy: Skip, I really appreciate your time helping us through our estate plan and also coming on and sharing with our audience today. If somebody is in Colorado and looking to reach out to you, how can they get in touch with you?
Guest 2: So there’s a couple different ways. Obviously, we’ve got a website. So our website, my real name is Skipton, so our firm name is Skipton Law. That’s spelled S K I P T O N Law. So you can go to skiptonlaw.com and we do educational workshops in our office. So if you want to just come and meet us and you want to hear more about this stuff and how it might pertain to your family, and I tell funny stories and say stupid stuff, you’re welcome to come to that. And we’ve got those on the website. but I also got a whole bunch of other resources there as well. So that’s one way. And the other is you can call our office. And the phone number to our office is 720-440-2774. And you can call and come to one of those workshops. We do them a couple times a month, or if you just want to come in and meet us, you can do that as well.
Mindy: Yeah, I went to your workshop first and I found that supremely helpful when I then went through and answered all the questions that you had for us. You would kind of explained everything that went through. So, yeah, if you’re in Colorado and you need an estate attorney, I cannot recommend Skip enough and go through that workshop. It’s free and it’s super, super informative. Do you have anything else you want to add?
Guest 1: I think we’re good. In our plan, do I get all of your stuff should you pass before me? Just asking for a friend.
Mindy: I, uh, don’t recall. We’re going to have to review our estate plan.
Guest 1: Okay, I don’t want your car.
Mindy: Yeah, oh, wow. Okay. No, I do believe that everything goes to you if I pass first and I get all of your stuff if you pass first.
Guest 1: All right, that was Skip Reynolds and that was a super fun episode. I really enjoyed talking to him again and I’m really glad that my attorney was able to come on and have a chat with us today. Skip said it depends on this episode and during the workshop that I attended, quite a bit. And while it can sound like a cop-out, it really does depend because your estate plan is specific to you and your situation personally, coupled with the laws of your state. So if you don’t have an estate plan, you need to find an attorney in your state who can look at your specific situation and make recommendations based on where you are financially. And right now, today is the time to start getting your estate plan in place. And if you don’t have the time right now to find an attorney and create an entire estate plan, start with a will. One of our show sponsors is Trust and Will. Trust and Will offers affordable, attorney-designed estate plans online that you can create in as little as 30 minutes. Trust and Will makes the plan itself easy. Guardians, assets, health care, all documented. You can go to trustandwill.com/bpmoney to get 20% off. Okay, we have even more financial independence documents on our website. Scott isn’t here with me today. He is busy coding. He’s creating calculators and resources all over the place, worksheets, documents, everything you need to help you on your path to financial independence. And you can find them all at biggerpocketsmoney.com/resources. Please check it out. All right, that wraps up this episode of the BiggerPockets Money podcast. I was joined by my husband, Carl Jensen. I am Mindy Jensen saying out the door, dinosaur.
Speaker 1: When I evaluate debt funds, I look for things like first position loans, personal guarantees, deep experience by the fund operator, low fund leverage, fast liquidity and consistent returns. These are some of the reasons why I’m excited to partner with Pine Financial Group. Their Fund Six offers investors exposure to real estate credit, largely for construction and rehab with loans originated by an experienced originator with over $1 billion in origination volume. They offer investors an 8% preferred return paid monthly and a 70-30 LP-GP split of everything over 10% paid annually. The lockup period is nine months with liquidity available within 90 days after that nine month commitment. The fund is open to accredited investors only. The fund’s minimum investment is typically $100,000, but Pine Financial is able to reduce that minimum for BiggerPockets Money listeners to a minimum of $25,000. Full disclosure, I am personally invested in this fund through my self-directed IRA. Pine Financial is sponsoring this message and our podcast. Go to biggerpocketsmoney.com/pine, P I N E. Please note that returns are not guaranteed and may vary based on fund performance.
