Ken Moraif  
Hello everyone. In today's podcast, we're going to talk about ownership designations to continue our series on estate planning, and let me tell you something. I've been doing this for 30 years, and I have seen people make mistakes on their ownership designations that potentially could cost them 10s, if not hundreds of 1000s of dollars in taxes and inconvenience. So you don't want to make these mistakes. Retirement planners of America, rpoa.com Hello everyone, and welcome to the retirement planners of America podcast. I hope this finds you healthy, wealthy and wise. I am Ken Moray, if I'm the founder and CEO of ARPOA, and in today's podcast, in our series on estate planning, we're going to be talking about ownership designation. So we we just talked about the beneficiary designations. This time, we're going to talk about ownership designation. And there are five of them, and it's very important that you do them correctly, because if they are done incorrectly, it could cost you taxes, inconvenience your family, having a mess on their hands, all kinds of stuff can go wrong, and we don't not want that for you. So as usual, we're talking when it comes to estate planning, about passing on to your greedy, unwashed, undeserving heirs the fruits of your labor. And so let me bring Jeremy into the conversation. Are you somebody's greedy, unwashed, undeserving air?

Jeremy Thornton  
I believe I have washed recently, so I guess she looked pretty clean, but I appreciate that, so I would say undeserving, maybe unwashed, almost certainly not greedy, a little bit, a little bit. Yeah.

Ken Moraif  
Okay, so we have five topics to talk about, and by the way, ladies and gentlemen, what we're going to do here in this podcast is we're going to give you a 30,000 foot level view of these five topics. But if you want to get if any of them strike your fancy, and you want to get in depth on them. What we've done for you, that's what we do, is we created in depth podcasts on each one of these ownership designations so you can dive into them in some detail, if that's an area of interest to you.

Jeremy Thornton  
Okay, so to start out, I think we will talk about joint tenants with rights of survival ship versus tenants in common. Now my first question is, what does any of that mean?

Ken Moraif  
Okay, well, joint tenants with the rights of survivorship. So if you think about what that, what I just said, that's what it means. So joint tenants means you have people that are jointly owning this thing. They're joint tenants with rights of survivorship. Means that they have the right of getting it quickly, of no interference. It goes to them quickly. And we're going to call that JIT Ross for short. So don't keep saying joint tenants with light of survivorship 1000 times. So there's JIT Ross. Tenants in Common means that we own it jointly, in common, but you don't have the right to take over right away. Interesting. Okay, so why is that important? Well, because, you know, tenants in common are a good idea for what I'll call Brady Bunch families. Okay, okay. So in other words, you have your kids, they have their kids, and you want to make sure that you know it goes the right way. And all of that Tenants in Common forces the assets to go through probate, or at least a reading of the will to make sure it's divvied up the way you want to. The downside of tenants in common is that your spouse has to wait for that process before they can get at the money. Gotcha. So you have to be very careful not to have everything tenants in common, right? And what we found over the years is that if you had your account opened up by one of those companies in New York, their default setting is tenants in common. So be careful that they're not doing your estate planning for you. Okay? You don't want them so think about which one you want joint tenants with rider, survivorship or JIT Ross basically means that upon my death, my wife takes over immediately. Yeah, there's no delay, there's no probate, there's no nothing. It's she's It's hers. She has control over it. So there are some planning opportunities there, if you are a Brady Bunch family, but you still want your spouse to immediately take over. You could split those things up. So there are some planning considerations, but the important thing is to understand the difference between the two and not have that be the default setting, because the form said so, right? Because now you may be causing some disruption for your spouse or your family that you didn't intend. Yeah,

Jeremy Thornton  
they could, maybe could not get access to money or bank accounts and things like that. That's possibly one of the things that

Ken Moraif  
could happen. Yeah? And if you have a lawsuit, you know, hopefully not. But if there was one that money could, if it's sentence in common, could stay until the lawsuit resolves itself, and your spouse has no access to the money. Yeah? Oh yeah, yeah. That sounds, that sounds pretty Yeah. That's never. Happened in my experience, but there are famous stories where that has

Jeremy Thornton  
happened. Yeah, I got you. So talk to somebody that's an expert in this and decide what's best,

Ken Moraif  
yeah. And I wonder where they could that's a great question. Where should they go? I think they should go to our website, rpoa.com, maybe they'll find it there anyway. Okay,

Jeremy Thornton  
perfect. Okay, so that's JIT Ross and tenants in common. And tick, tick. Okay, so JIT Ross and tick, yeah, perfect.

Ken Moraif  
We need more accuracy. They sound like diseases. Do you have JIT Ross or do you have tick?

Jeremy Thornton  
Okay, so let's talk about the next type of ownership, which is a living trust. Yes, irrevocable and a living trust. What is the difference and why? Yeah.

Ken Moraif  
So those are two different kinds of ownership, a revocable trust, or as it's commonly known, a living trust, is a kind of trust that basically is you, right. It has your tax ID now your social security number. It's basically you, but you've pre organized your stuff, so therefore it does not have to go through probate. You've done all that in advance. You pre probate it. So there are advantages to having a living trust. I would say that most people watching this don't need a living trust. I think it's the most oversold under needed document that lawyers have ever devised. That's, my opinion, an irrevocable trust. So, so the the living trust is revocable, meaning that during your lifetime, you can change anytime you want, right? So you set it up a certain way, and then five years from now, you change your mind. You can change it until the the date of your death, the living trust, the revocable trust, can be changed. Once you die, it's locked in because you're the only one that can change it that, right? At that point, the the irrevocable trust is just like it sounds. The trust cannot be changed. So once it's set, you cannot go back. It cannot be changed even by you. Oh, wow. So once you've done it, it's like cast in stone. So you have to really think carefully. Why would you want to have such a trust? Well, because what those trusts do is they remove from your estate the assets that are in that irrevocable trust, because now you have no control over it, it's no longer part of your estate. So if you're looking to reduce the size of your estate so as to reduce your estate taxes, then an irrevocable trust might have a place for you. Other circumstances are if you have a beneficiary that's incapable of managing money because of whatever reasons. So there are lots of reasons for an irrevocable trust. It's not like a horrible thing, yeah, it's just a planning option, yeah. So you've got those two different ownership designations, living, trust, revocable. Change your mind anytime you want, but remember, the moment you die, it's locked in, yeah, or irrevocable, irrevocable, which is by the day, the moment you set it up and you fund it, it's a done deal.

Jeremy Thornton  
Yeah? Would would somebody more likely be to set up a irrevocable, I know, for tax reasons in the state taxing and things like that, would it be for maybe lay a loss of mental capacity and things like that. Maybe they do that if they get diagnosed with, say, dementia or Alzheimer's or something like that, would they be able to say, this is how I want it before?

Ken Moraif  
Yeah, in that circumstance, the living trust might be a better way route, because part of the living trust is documents that speak to what you just said. Okay, powers of attorney, those kind of things. So anything that has to do with while you're living, yeah, that you want to be able to change, but you want to preset, is the living trust side. Anything that you want to do now because you want to, you want to make sure it's out of your estate, or you're casting it in stone today would be the irrevocable side. Okay? And there's a lot of planning opportunities, which is why, again, ladies and gentlemen, we created a very special podcast that is only on living trust for you. Awesome,

Jeremy Thornton  
very cool. Okay, so the other types, we have family, limited partnerships,

Ken Moraif  
yeah. And since we love shortening things family, limited partnership is an FLP, okay, for short, which you call a flip, okay? And because we give a flip, right, we're going to talk about it. I love that. So, so the the flip is actually, and before I go into the flip let me one other thing about the irrevocable trust. The irrevocable trust is also a means by which you can leave an inheritance to your greedy, unwashed, undeserving heirs in a trust that potentially can last for 100 years. Yeah, and can protect from lawsuits, divorce, bankruptcy, estate taxes. So there's a lot of value to the irrevocable trust. That word irrevocable sometimes makes people, you know, it scares them, right? It's not a scary thing. It's just, it's just a thing, right? And maybe it's the right tool, okay, so back to the the flip. So the flip is where you actually create a four. Family business, okay, okay, the family limited partnership is a business. Is the and the business of your family's business is to manage your finances. Okay, so its job is to manage your real estate, your investments, you know, your assets and businesses, just like if you're a corporation, have certain I'll call it privileges, right? So if you're a corporation and somebody wants to sue you, it's very difficult, right? The flip is the same way you're creating a business. You're putting a hermetically sealed container around your investments, your assets. That is very difficult for somebody from the outside to get in and sue you for that. Also, because family partnerships are a business, your assets are no longer valued as a business, as as your bank account and your your real estate or whatever, they're valued as the business that owns these assets. Very interesting. And because of that, you can get what are called Business Valuation discounts. And these discounts can be significant. You know, I've seen where the value of stuff is discounted up to 50% for estate tax purposes, wow. So it is actually one of the best legal documents that lawyers have ever as opposed to the living trust. So and again, we've created a family, limited partnership podcast for you where we go into great detail about that. If that's something that you think might be a benefit to you,

Jeremy Thornton  
absolutely. And if you think it'll be a benefit to you, probably talk to an expert in that.

Ken Moraif  
Yeah, yeah, that's a good point. Every everything we talk about on these podcasts and everything, make sure you talk to your professionals first before you do anything. Because we're not lawyers. We don't practice law. We just help people to think through these things and and have the right questions maybe to ask when they talk to their attorney or use our attorney for that matter.

Jeremy Thornton  
Absolutely well, do we have any other topics that we want to cover with ownerships?

Ken Moraif  
No, I think that's basically the five general ways and and again. You know, ladies and gentlemen, if any of those piqued your interest, we do have the other podcast for you. And you know, as promised, I hope this was more fun than a human being should be allowed to have when talking about all of this boring financial stuff. And you know, as we've said, we specialize in working with people who are within five years of their retirement, or are in the first five years of their retirement. So if you're in that decade, then that is the single most important decade in your entire financial life. And we'd love to help you with that if you are so inclined. So thank you for watching. Please like and subscribe. You help us out. We've had over a million views. Thanks to you. Thank you. Thank you. Thank you, and we'll talk soon. Retirement planners of America, rpoa.com,