A state plan very big. Yes, when we talk about wills and we talk about putting beneficiaries, doing things, things of that nature. What are some things that life insurance stuff like that. What are some things that people need to be aware when developing their estate plan.
So when it comes to your state plan, I want you to think about a will, potentially a trust and beneficiaries. Those are like the core components. So a will is like the bare bones. You don't necessarily if you're twenty five years old, you ain't got no kids, you've got nothing, you don't necessarily need a will. Right, Well, let's start even before that beneficiaries. Right, So, no matter what, even if you are twenty one years old, you got a bank account, you got in the state, you got life
insurance you have in the state. You know, So put your mama, your cousin, your best friend, your sister, your brother as a beneficiary on your bank account, on your life insurance policy if you have one. That way, if something should happen to you, that is what a state planning looks like when you really don't have much, but it's still something, But you don't want to be mindful because if someone is a beneficiary on your on your
bank account. Let's just say you put them on when you're twenty five, your sister, and then at thirty five you got kids and a and a significant other, like and you have a will and all other stuff, but you never updated that form. If something should happen to you, what's on your beneficiaries form trumps everything else. It doesn't matter what's in your will or your or your trust.
So that's really important. I remember, like, so my my husband when I met him, he had a daughter already she was seven, so he and her mother were together, and he had he has like he works for the city, so he has a pension. So the other day he was like, Babe, my friend is trying to figure out how to change his beneficiaries on his pension. And I was like, all right, well you know, let's update. Well, let me show you how to log in because I
do all of my financial stuff. So we log in change the beneficiaries and I'm like, hold up, and I'll say, tiffany on here. It's said baby momm's on here. Now. Don't get me wrong. Even baby and baby Mouse is really cool, but not that cool.
Bruh.
You what if you would have died and left your paton to her, I would have had to raise you up from the dead, kill you back dead again. So but I just say all that to say that, like, it's so, it's so important to make sure those forms are up to date. So then next level will if you have children, you have to have a will. Who do you want to raise your children. It's not enough to be like, oh that's my that's my godmother. No no, no, no, no. Legally you have to assign because you know, you.
Know us the conversation.
Yes, like, oh that's so that's your gradma. If something happened to me, No, no, no, no, and this is all we might been gigging with money, and so yes, you want to make sure that you have you know, like you legally have some papers drawn up to say this is what happens to my minor children and I'm not here because let's just say you're Muslim, right, and your your parents a Christian, and you really don't want your parents to raise your kids or your sister raise
your kids because you want your kids to be raising a Muslim household. So you really want your brother, you know, but if you want that to happen you have to put that down. So a will is bare bones. But a will is not going to save you from probate court. You know you are still going to pay them tax on tax on tax on taxes.
Right.
But I will say this, if you have a trust is not for someone I would even consider a trust because of the cost unless you have at least one hundred thousand dollars in assets, right, because twenty thousand it doesn't make sense for the cost of a trust. Now, if you have assets to five hundred thousand or over, you must have a trust because the amount of money you're going to lose in probate court plus probaate court is embarrassing. It's like ringside teeths to like, oh how
much eating got Oh? Okay, oh exactly, you.
Know what I mean.
And so that part is important.
So a trust.
What makes a trust so special is that a trust locks things away behind closed doors, so no one can see unless you decide to share, unlike a will where everybody can see. But also trust is like a person that never dies. When money goes passes from one person to another person because of death, there's a tax involved. But a trust, it's like this person that doesn't die. So money, if it's held or your assets are held there. Even if you pass, the trust stays alive. Even if
someone else passes, the trust stays alive. So you don't have to worry about the tax incurred going from person to person. But you want to be mindful. What kind of trust do you want to have? An irrevocable trust or a vocable trust, And irrevocable means that it cannot be broken or changed unless everyone who's involved in the trust says okay, right. So, for example, Kobe Bryant had an irrevocable trust right So the problem was that he so he and his wife every when their children turned one,
they added that child to the trust. But we all know he passed away when his baby was still younger than one, so she was not in that trust all of that wealth he had set aside. So she had to petition the courts to say, I know this is irrevocable, but let's be real, coll we would not want the baby not to be in here. So they granted her that. So you just want to be mindful. You know, what kind of trust do you want to happen? At state planning, we tend not to do it, but it's actually more
expensive not to you know, like it just is. So if you if you have just a little bit of something, you want to put something down, you want to get it notarized, and you want to fund it and sign it. So if something happens to you, everybody knows what your desires are.
Don't like Prince and then prevents all the fight in the three passes. I just want to I just want to add one thing to that because everything you said was right on point, and me as a financial advisor, one of the things when I first came into the industry is this guy, uh well, they was speaking and they was talking about a guy that worked the job for like thirty years, had like a big pension and all of that, and you know, he got divorced like twenty years ago and had a new wife and you know,
had like three kids and all that. And when he died, he never updated his beneficiary. And like you said, the beneficiary supersedes everything and it's no negotiation, nothing you can do about it. So it went that it went to his ex wife and she kept it.
She didn't have to give it up.
Yeah, so you have to you have to update your beneficiary, and everything should have a beneficiary, including bank accounts. And then also what you speak about as far as the trust is extremely important. The Airvocable trust we spoke about the hospital about the island before, which is the Airvocable Life Insurance Trust. And I love how you say a trust is a person that can die, because that's really true.
It's treated like an outside entity as a person. So, you know, especially when we have more advanced conversations about tax shelter because life insurance can actually add to in a state planning problem because the money goes into your state. So if your state is worth three million dollars and you have a two million dollar life insurance policy, now when you die, you're actually a state is worth five million dollars. So that can actually be counterproductive because it's
going to add to your tax bills. So that's why people sometimes people will put the life insurance in a trust because now that two million is not part is not part of the estate's out of the estate, and it still goes to the beneficiary tax free because of the life insurance to tax free. So yeah, everything that you speak about is extremely important, and like you said, it's not something unfortunately that we have really thought about
a lot. It's like, yeah, most of the time, it's just like, all right, figure it out when you die. And then you know that leads to all kinds of issues, and as you said, it's actually more expensive not to have it mentally and financially because mentally, you know, family members gotta fight. Breaks up families all the time. It's pretty common. You know, your grandmother has a house and then there's like four kids and they're fighting over the house.
So all of this stuff. We talk about stocks, we talk about investing, all of that.
The fundamentals are critical, great.
Well, yeah, you gotta have the fundamentals down. My graduates from my school being forced bad and drop drop, drop bad, drop us.
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