In this episode, we review a little bit of the “Three Lands of Estate Planning” discussed in the previous episode. Then we transition into an introduction of trusts. We go over the dishonest practices of some attorneys with regard to trusts, what trusts are and what they do, and a few types of trusts such as testamentary trusts, revocable grantor trusts, and irrevocable asset protection trusts. We will go more in depth with trusts in future episodes, so stay tuned!

Key Takeaways 

Takeaway 1: There is no perfect answer 

• When evaluating the “Three Lands of Estate Planning,” there is no perfect answer or exactly right way to make a determination. 

• The fact that we take different roads doesn’t mean that somebody is wrong.

• A family will evaluate their opportunities, their risks, and the three lands. All they have are the facts at the time, and the facts might turn out differently than anticipated.

Takeaway 2: Trusts can be a trap, but they’re not all bad 

• Trusts can either have a very good or very bad reputation.

• Some attorneys run “trust mills” and have dishonest practices meant to just trap people into buying their services. This, however, does not mean that all trusts are bad.

• Trusts, in reality, are a tool for protecting your assets.

• The big 3 types of trusts we utilize are irrevocable asset protection trusts, revocable grantor trusts and testamentary trusts. 

Takeaway 3: Testamentary trusts 

• Testamentary trusts are in wills. It can be a trust for the benefit of a child or it can be used to protect spouses. If one spouse dies and the other spouse goes into long-term care, we are able to protect the money of the deceased and transfer it to the living spouse.

• We have protected millions of dollars for after death using testamentary trusts.

• A problem as of late is that investment companies and financial institutions will not allow us to fund testamentary trusts or to name a beneficiary of an asset to be a testamentary trust. They want the trust to be living. 

• It looks like the pendulum is changing significantly and more companies are not letting us name beneficiaries in this way. 

• We are going to have to start using trusts on a more regular basis if we want to protect future generations and spouses. 

• We might just have to use trusts created during life now instead of last will and testaments, which means a 5-year lookback period will be in effect, something that is avoided with trusts at death.  

Takeaway 4: What is a trust? 

• A trust is a contract between 3 parties:

1. The grantor - creates

2. The trustee - controls

3. The beneficiary - receives

• When asked initially, nobody wants to be the grantor, but the grantor gets to pick when the beneficiary gets the money or what they get, and also what the trustee controls.

• You want to be ALL THREE, not just one. 

• In tax trusts, you cannot be any of the 3 parties.

• Grantor trusts allow you to be all three parties. We teach this concept through the red wagon.

1. In the wagon we have whatever properties we own.

2. If you own a house, you have the right to live in it, the right to sell it and the right to buy another house. The trust owns the house, but you control the trust.

3. If you own a house outright, you are out of the wagon because creditors have access to your home, but if you keep everything in the wagon, you can get full asset protection after 5 years. This is where we get into revocable grantor trusts vs. irrevocable asset protection trusts.

Takeaway 5: Revocable grantor trusts 

• You are able to empty the wagon and access everything. 

• You can be all 3 parties but you do not have asset protection because creditors can access your assets.

• These trusts are great if you have multiple properties across different states because you avoid probate fees in each state.

Takeaway 6: Irrevocable asset protection trust 

• With irrevocable asset protection trusts, the only thing we can’t do is give the assets back to ourselves. 

• Assets are fully protected.

• You can change who gets them, when they get them, and how they get them. You remain in control.

• You will pay an inheritance tax, but that is a good thing because the beneficiaries will be well-off and not have to pay much in capital gains tax. 

Links and Resources Mentioned

Bellomo & Associates workshops: https://bellomoassociates.com/workshops/ 

Connect with Bellomo & Associates on Social Media

Twitter: https://twitter.com/bellomoassoc 

YouTube:  https://www.youtube.com/user/BellomoAssociates 

Facebook: https://www.facebook.com/bellomoassociates 

Instagram: https://www.instagram.com/bellomoassociates/  

LinkedIn: https://www.linkedin.com/in/bellomoandassociates 

Ways to work with Jeff Bellomo

Contact Us: https://bellomoassociates.com/contact/ 

Practice areas: https://bellomoassociates.com/practice-areas/ 

Episode LInk

https://sites.libsyn.com/420320/protecting-your-assets-with-the-three-lands-of-estate-planning