Leah Woodford
00:00
Welcome to Retire Smart Austin. I’m Leah Woodford, and with me today is Phil Capriotti Sr., of Empower Wealth and Tax, and today we’re talking everything trusts. Welcome back.
Philip Capriotti
00:43
Leah, it’s a pleasure to be on set with you. How is everything going? You know, it’s, how do I want to put this? It’s a refreshing change to be doing new shows each and every week. And I had folks call me up and they’re like, doesn’t Cynthia do the shows anymore? We like the new gal, but doesn’t she? And I’m like, no, Cynthia just can’t do 52 shows a week.
Leah Woodford
01:10
She’s a busy girl.
Philip Capriotti
01:11
She could do about 25, 26… So at any rate, it’s a pleasure now to have you as part of our team, and we’re really working well together. So with that being said, today’s show is… You know, I have a lot of folks ask me about trusts. Okay? Now we have our own trust department. We have our own board-certified attorney that handles specifically our clients, and his name is Chris Carns, and so today’s show is going to talk with folks about the 12 top trusts and why we use specific trusts for specific instances. This is not designed to be a law class, folks. Basically, what we’re going to do is dance around the edges. We’re going to talk about the name of the trust, who needs them, why they need them. And then your call to action would be to pick up the phone, dial 888-818-6557, and we will set up your consultation. Now, basically, the consultation works this way. You call up. Let us use the Fast Track form. We’ll run a morning star report on your portfolio with, along with an executive summary to help you determine exactly what type of assets we’re talking about, how to distribute them through your retirement, and what type of trust you would potentially need. Folks with businesses need different types of trusts. So we’re going to talk about all these different items, and it’s very interesting, and I’m excited to do it. So we’re going to try to squeeze it into one show, but I think we’re going to need two shows. So at any rate, Leah and I are going to deal with this. So remember, click the QR code, dial, 888-818-6557, you’ll be surprised that just about everyone in our viewing audience needs one sort of trust or another. And by the way, they’re not expensive. I’ve seen trust attorneys charge 12, you know, 10 grand, 15,000. We don’t have that. We’re, we operate more in the 2- to 3500 range. You know, 2000 to 4000, under 5000 for these trusts. Well, you know, we do a lot of things, and the idea is to get help for the clients, not just with the retirement planning, but how to distribute the assets and so forth. So let’s go ahead and jump in there and get started.
Leah Woodford
03:41
But before we do, Phil, can I just ask you, what does a trust do to protect our viewing audience? Why do they need one?
Philip Capriotti
03:49
Okay, so a will basically tells you who gets your assets upon your demise, and if you’re married, the second spouse. A trust is interesting. A trust says how, when… how, when, who and where. So the will directs the trust. The idea behind the trust most important for me, the most important part of the trust is you—when we set up the trust properly, the will does not have to be probated. And what that means in English is all of your business isn’t out in the street. When you pass away with just a will, you have six to nine months where folks could come and claim that you owe them assets, you know you owe them bills and so so forth. This is called probating the trust. Normally it takes six to nine months to do it. I mean, probating the will. When we have a trust, it goes directly to distribution, so it keeps all of your private information private. And so there are other reasons for the trust, but that’s one of the primaries. Most folks will say, “No, when I pass away, when my wife passes away. No, we don’t want… we want it to go straight to our children or our grandchildren.” So we’re going to talk about different types of trust. If I pass away, how does my business transfer? That type of thing. So there are all different types of trust. So basically, your will tells up, tells us, or tells the government, who gets your assets? The trust tells how, when, why, and with how much tax you’re going to pay on the assets.
Leah Woodford
05:28
There you go.
Philip Capriotti
05:29
Okay, so it’s all part of the retirement planning and tax planning. And again, many folks, when we built this company, it was designed to be holistic, and I like to call it basically the four pillars of retirement planning, okay. The first pillar is retirement planning, tax efficient retirement planning. That’s number one. Number two is social security planning, how to, how to structure Social Security. Number three is your trust, your wills. And number four is your taxes. So when you come into our office, we have licensed accountants, licensed tax professionals, the CPA that runs the practice. We have our own legal practice. So when you come in, I’m not sending you to the attorney down the street. We have our own in-house attorney who, by the way, has been working with me for about 10 years. We take care of the managing of your assets. Okay, tactical asset management, as you probably know. And then, what type of insurances do I need? Medicare insurances—if I’m if I’m not on Medicare, can you help me with that? So we look at insurance, long term planning, taxes, wills and trusts, portfolio management, the four corners. Think of a baseball diamond, first, second, third and home, all together on the same playing field.
Leah Woodford
06:50
Amazing, amazing, and you have it all in one place, one spot.
Philip Capriotti
06:54
We have it all in one spot. Yup. Yup.
Leah Woodford
06:55
Love that.
Philip Capriotti
06:56
Yeah. Thank you.
Leah Woodford
06:57
So oh, what is a revocable living trust? And why do we need one?
Philip Capriotti
07:02
Yeah, so the revocable living trust is the most used. That’s the most common. And basically, this is for not only middle class households, but also affluent households. It’s, you know, it’s, it’s heavily used in Texas, Florida, California and New York. All right, with this, how is it best applied? It’s really simple. It avoids probate. So this is really number one. It also allows you to manage assets during, in, if you’re incapacitated. So for instance, in a trust like this, if, God forbid, you come down with Alzheimer’s, or, or you’re physically or mentally… This already, what it does is it points out who does what. So for many of our clients, we manage, as you know, hundreds of millions of dollars in assets, but many of our high-net-worth clients want us to actually distribute the assets, and this is why we have our own legal arms. So again, they want us to act as a fiduciary with their assets—number one, while we’re working with them, but they also want us to work as a fiduciary for their children and grandchildren, making sure that they receive the assets and in the timeline that’s specified. So with that being said, many financial advisors simply just don’t do that. You have to hire an attorney, and then they want a percentage of the estate to distribute the assets. And again, there’s nothing wrong with that. Don’t get me wrong. There’s nothing wrong with that. We just make it easier to tie it all together into our office. It also keeps your estate private. That’s the number one. I mean, as far as I’m concerned, Leah, I want all of my information private. No one needs to know how much I’m worth. They don’t need to know how much the company’s worth. They don’t need to know what my children are getting and how much and when, where and how. And so, go, taking it a step above the will and moving it into the trust, the irrevocable trust, it also allows us to make changes in it anytime we want. So normally, we’ll have the trust reviewed every year to, at the very minimum, once every three years. And again, we’re not charging the client outrageous fees to do this—it’s a part of regular maintenance, because things happen. New children are born, new, new grandchildren are born. New things happen. We have deaths in the family, right? We have divorces, okay? So we want to keep everything in line, and we want to review it and update it on a regular basis. And so I would say number, the four top reasons is, number one, it avoids probate. Number two, it manages assets during incapacibility. Number three, it keeps your estate private. And number four, it coordinates with the best, with the beneficiary designations. And years ago, it was taboo to put an IRA in a trust. Now with the new changes in the IRA laws, it’s important to have your IRA in a trust. So again, this is why it’s important every year when they change these laws, Leah, we have to make changes for our clients.
Leah Woodford
10:23
We do. We have to cut to a real quick commercial break. But if you were getting some great information—I know I am with Retire Smart Austin—make sure you tune back.
Philip Capriotti
10:40
You know, folks, when interest rates are low, you might be able to refinance your home, your car, and even your credit cards. However, when interest rates go up, it may make sense to refinance your retirement. Higher interest rates could provide income opportunities you may not be aware of. What worked for your portfolio during a low-interest rate environment may not work for you when interest rates are high. Find out if refinancing your retirement should be part of your financial plan. So call us now and see how we can help you refi your retirement. Thank you very much. God bless you and have a wonderful day. You know, folks, your family’s financial future is too important to leave to chance. At Empower Wealth and Tax, our estate wills and trust planning services are here to help you simplify the process. Together, we create a personalized plan to ensure your assets are protected and your legacy is secure. You know our number one priority is peace of mind in knowing your loved ones will be taken care of and your wishes will be honored. Schedule now and let’s secure your legacy together.
Leah Woodford
12:04
Welcome back, Austin. We are with Retire Smart Austin, and we are talking about trust today, and now we are talking about revocable trusts. Welcome back, Phil. This is such a great topic.
Philip Capriotti
12:17
Yeah, so just about as you could probably figure, just about everybody could use a revocable trust, especially if they have assets and they want to keep their estates private and protected. The next trust I’d like to talk about, number two, is an irrevocable trust. What’s the difference between revocable and irrevocable? Well, the core purpose of an irrevocable trust is taxes, and it’s also a protection tool as well. All right, so they’re getting ready to hopefully eliminate the federal estate tax, but again, another administration can come along and reinstitute it. So, this is used for primarily high-net-worth clients. Okay, high-net-worth families. What we want to do is we want to protect against Medicaid and asset protection planning against Medicaid spend down. So how is it best applied? So first of all, folks, it removes your assets from your taxable estate. Basically, you’re saying, this part of my asset, I want to give up to this particular individual, or even we’re going to get into grandchildren and so forth. But it removes assets from your taxable estate. That’s number one. Number two, it protects your estate against creditors and lawsuits. You know, sometimes these lawsuits come out of the blue, and we want to protect them. So if someone tries to sue you, any of the assets that are in an irrevocable trust are off limits. Cannot be touched, okay? And it preserves government benefit eligibility. So for instance, give you an example. I think we last week, well, I think we had John Solyman on the on the on the set with us, and I was talking about a client whose husband didn’t get long term care protection, and he also wouldn’t want to get the trust. He didn’t want to get the trust either. So normally, when you put these assets in a trust, we have a five-year rule: once these assets are in five years, like, for instance, when he went into the nursing home, if these, if this 401(k) was in the trust, she would have not had to spend it down.
Leah Woodford
15:36
Wow.
Philip Capriotti
15:37
Okay, so he would have been eligible for Medicaid benefits along with Medicare, and they would have paid the majority of the bill. So again, this is also, what do we want to do? We want to preserve the estate. So the key takeaways, really, with a irrevocable trust is you want to trade for protection and tax efficiency. I want to protect my assets against unintended beneficiaries, and depending on when tax laws, if and when tax laws change, I want to protect my beneficiaries, my beneficiaries from excess taxes. So with that being said, irrevocable trusts are used specifically of high-net-worth, or folks that think that they may have some sort of excessive medical because of, I would say, excuse me, diminished mental capacity.
Leah Woodford
15:27
Okay.
Philip Capriotti
15:28
All right, and protected against the Medicaid spend down. Literally you have to spend down to your last 2500, $3,000 before Medicaid kicks in. In that situation with that client, she literally spent– he had 1.4 sitting in the IRA. They were the primary assets. She spent close to 800,000 of it in the IRA. Had that IRA been in this trust, he would have qualified for Medicaid, because this happened more than five years after I had the discussion with them.
Leah Woodford
16:00
Phil, how often does this happen? How often do you see this where you have the discussion and they don’t do it, and then they’re in a world of harm later?
Philip Capriotti
16:08
I see it frequently, but from what I understand, it happens on a regular basis. And normally what also happens is your children. Let’s say you’re the last, you know, let’s say I passed away, and it’s my wife, my bride. The kids have to come in and sign financial responsibility, okay, if you don’t have the proper coverage. Now, number one, I want you to have the proper coverage. That’s part of the retirement income planning. But if, for some reason you can’t afford it, or some reason you have issues, this is the next level of protection against Medicare spend down. So with that being said, call our office. Give us a call. 888-81… I think it’s 818-6557. You can also go to empowerlegacyquiz.com, that’s empowerlegacyquiz.com. We’ll be back shortly. We have a couple, I guess we have to pay the, pay the bills, but when we come back, we’re going to talk about testamentary trusts, and we’re going to talk about a lot more. I believe we have the 9 or 10 more different trusts to talk about. If, for,,. you’ve been watching our program for quite some time, my recommendation, because we normally get somewhere around a dozen, 15 folks call in to set up our complimentary appointments. Remember, now, folks, just an FYI. We have six, seven licensed fiduciary advisors in the office. It’s not just me. When you go to empowerlegacyquiz.com, fill in the information. You’ll get a call from my staff tomorrow to determine what level of assets you have and what level of planning you’ll need. And remember, as always, this is always complimentary. This is an opportunity for you to get professional advice, be professionally guided without having to worry about spending an arm and a leg. This is complimentary. We’d love to work with you, and we want you to have an understanding of the type of firm that, that we are.
Leah Woodford
18:06
That’s true. We’re going to cut to commercial break, but call 888-818-6557, and we’ll be right back.
Philip Capriotti
18:14
You know, folks, you worked hard to build your legacy, but without a clear estate plan, everything you’ve built could be vulnerable—delays, legal battles and unnecessary taxes. You know, probate can take months or even years, leaving your family with added stress during an already difficult time. Many people think having a will is enough, when it’s really only part of the picture. That’s why we created the estate planning readiness quiz. It walks you through key areas like powers of attorney, health care directives, trusts, tax strategies, and so much more. It just takes minutes to find out how prepared you are and where you may need assistance. It’s not just for the wealthy, it’s for anyone who wants to protect their family’s legacy. So folks, scan the QR code on the screen or visit empowerlegacyquiz.com. Take the quiz today and start planning with clarity. You know, folks, planning for the future shouldn’t make you feel overwhelmed. You deserve the peace of mind knowing your legacy is secure and your loved ones are properly cared for. At Empower Wealth and Tax, we believe in making the estate planning process seamless and stress free, ensuring that your hard-earned assets are protected and your directives are followed to the T. Don’t leave your future to chance. Schedule a free appointment with us today and start your estate planning journey with confidence.
Leah Woodford
19:56
Welcome back, Austin. I’m back with Phil Capriotti Sr., and we were talking about testamentary trust. Why do we need one of those, Phil?
Philip Capriotti
20:04
So, that’s the third most commonly used trust. A testamentary trust is, it’s built right into your will. Okay? It’s a—and that’s what I call it. It’s a built-into-your-will trust. Where do we use it? So, we use it for families with minor children, okay, especially if you’re in a situation where you may be raising your grandchild. I have a number of clients, not a lot, but a few, where children have passed, where children may have severe addictions, and grandparents actually raise the children until our grandchildren, until, you know, children get on their feet. It’s also commonly used with blended families. So again, we want to, it’s not just like some folks say, Yeah, I need a trust. Well, what kind? We got to, we have to talk about it. Many folks, for instance—I have four different trusts. I have a trust for the business. I have a trust for my grandchildren. I have a trust for my children. I have a trust for my charities. Okay, and my wife does this as well, because of second marriage. So, so that the idea is folks shy away from trusts because they think it’s so god-awful expensive, and most of all, they have to pay to understand how to use it. And this is why we’re doing this two-part show. I want to under– I want folks to understand they can call us and we can help them with that. So where is it used? So, I told you, families and minor children, and also blended families. How is it best applied? It delays and controls inheritances. For instance, especially for high-net-worth folks, my wife passes away. Do I want to distribute all of our assets to our five children all at once?
Leah Woodford
21:57
No.
Philip Capriotti
21:58
Why would I not want to do that?
Leah Woodford
22:01
They may not be mature enough to handle that responsibility.
Philip Capriotti
22:04
Correct, or their spouses may not be mature enough to accept the responsibility. There’s a lot of pressure that’s put on spouses. Also, when all—a lot of money is dropped into and again, when I look at it, we have number, you know, multiple children—when a big chunk or a heaping sum of money is dropped into someone’s lap who’s not used to managing it, normally, they’re broke within three to four years. That’s the average. Many folks that hit the lottery, even these large lotteries, broke within three to four, five years, max. Why? They don’t know how to take care of money. They don’t understand that money makes money. And so with that being said, this is what we want to do. So, for instance, give you an example—and this is how I’ve used it. Upon my demise, all right, my children and grandchildren, they get X amount of the earnings from the trust on my birthday. Now that accomplishes a number of different objectives. Okay. Number one, I want them to remember grandpop and the good Lord above. That’s what I want them to remember. Number two, I want to make sure that this, that we can turn this, this hard-earned nest egg into generational wealth. I don’t want them blowing it. And number three, I want to make sure they keep on working. So, I want everyone to know, everyone in the family to know this is what to expect. Primarily, what we did was we helped raise you, we educate you. We made you independent. So we don’t want you, will you get a lump sum? Yes, you’ll get a lump sum. Okay.
Leah Woodford
23:47
It’s cherry on top, though, it’s not the whole cake.
Philip Capriotti
23:51
That’s it. You’re going to get a lump sum of a small lump sum, but you’re going to get continual income. Now, to me, that made sense. My grandparents did it in another way, and I’ll talk about that in a different segment there. It’s really where I got the idea. But I’ll talk with clients when we’re setting up their retirement income plan, and you know, I’ll say, how many kids do you have? Well, I have two. Well, all children are not created equal. This one’s extremely responsible. This one is responsible, but not when it comes to money. Okay, so, and that’s what we’re talking about, okay. So a testamentary trust would be something that we might want to entertain. It’s cheap to create, much expensive later, especially if it has to go through—if you don’t have it, your estate goes through probate. What other folks don’t realize is probate costs a lots of money, it costs lots of money.
Leah Woodford
24:46
It could go on for years too.
Philip Capriotti
24:47
And it could go on for years. And situation, even with a trust, when you have a, an executor or an executrix that’s a beneficiary of the trust, you can’t have them directing the trust, because other kids, you have a conflict of interest. Always hire an independent—someone that you trust, somebody that you’ve already worked with. Now I want to hit on one more trust before we go, and that is a special needs trust. So, this is critical for families with disabilities. Okay, families that have disabled children or disabled adults need a, need this type of trust. Injury settlements. I have a client that was in a major car wreck with a tractor trailer, and—major car wreck. Left her permanently disabled. Speech disability. Thank God, she can still walk. So instead of having her receive a big lump sum money 20 years ago, when this happened, she gets an annuity and from two different settlements. So she receives—literally—5,000 a month from one—there were basically two people at fault—and another 7,000 a month for another. And that annuity will be paid for the rest of her life, as opposed to having a lump sum. So when we look for a special needs, that money is in a special needs trust. It’s designed to pay her. So if her husband passes away, we don’t have to worry about somebody coming in, you know, fancy Don or Dan or whoever, and trying to get her money away from her. So, special needs trust are very crucial for families with disabilities. We use them with families, especially with disabled children. We want to protect our children when we’re gone. We want to make sure that our children have income and qualify for all the benefits that are necessary. It’s also used in injury settlements, this type of thing, if you have a, like a car wreck, something like that. Basically, how is it best applied? It supplements care without losing your Social Security and Medicaid, okay, because you can qualify for these benefits. And it’s designed to give lifetime protection to vulnerable beneficiaries.
Leah Woodford
27:04
I love that, Phil. Nobody ever talks about that.
Philip Capriotti
27:07
Yeah, so, and especially, and again, this is some folks look at it as a negative subject. Leah, I don’t. I look at it as, many folks that need these things don’t even know they exist, but they don’t know who to call. All they have to do is pick up the phone, dial, 888-818-6557, or click the QR code and go to empowerlegacyquiz.com—and by the way, while you’re there, also click on empowerrothquiz.com. It’s very simple to use and it’s very simple to access this. Call in for complimentary interview.
Leah Woodford
27:41
Thank you so much for watching Retire Smart Austin with Phil Capriotti Sr. and Empower Wealth and Tax. For, for those of you that aren’t getting these conversations, make sure you call Phil and his team at 888-818-6557.
Philip Capriotti
27:59
Great.