What Your Estate Plan Is Missing

[0:00] Ryan Warwick: About two years ago, we went through a, a situation with my dad. Uh, he- Mm... ultimately passed away in, in 2024. And so about two years before his death, at a doctor's office, they had put a form in front of him and, and said, "What do you want to happen?" And-

[0:13] Shannon Warwick: Wait, I, I'm, I'm a nurse as well, and so when I saw this document, I said, "What is this document?"

[0:19] Ryan Warwick: Mm-hmm.

[0:20] Shannon Warwick: "And who had him fill it out?"

[0:22] Ryan Warwick: From the two years prior, right? Yeah.

[0:24] Shannon Warwick: Correct. It wasn't even the right document. Yeah. I mean, we're talking this gentleman filled this out when he was in perfect health, and it's saying that, you know, "We're, we're doing nothing. There will be no measures taken. Um, comfort only." You know, we're, "What, so, so no treatment? I don't... I'm very confused right now. We're actively treating him. Are you saying we shouldn't be treating him? And why would he have filled this out?" He didn't know what he had filled out- Yeah... turns out. He had no idea. The doctor just said, "Hey, I've got paperwork. Fill it out. Sure looks good." We had the incorrect document. We had to redo the documents- Mm-hmm... while he was very ill.

[1:05] Ryan Warwick: We see this quite frequently, and it doesn't, it's not just isolated to healthcare documents.

[1:11] Shannon Warwick: Welcome to the Worth Beyond Wealth podcast. Where net worth meets personal worth. I'm Shannon.

[1:16] Ryan Warwick: I'm Ryan. We help families navigate the emotional, relational, and personal realities that money alone can't solve.

[1:23] Shannon Warwick: If you've built wealth but still wonder what it all means, or how to keep your family grounded while protecting your legacy, you're in the right place.

[1:31] Ryan Warwick: We sit down with experts and with you to talk identity, purpose, and connection beyond the balance sheet.

[1:38] Shannon Warwick: Because true wealth isn't measured in dollars. It's measured in the impact we make and the relationships we nurture.

[1:45] Ryan Warwick: So grab a seat. Take a breath. And let's redefine what it means-

[1:48] Shannon Warwick: To be truly wealthy together.

[1:50] Ryan Warwick: This is the Worth Beyond Wealth podcast.

[1:54] Shannon Warwick: Well, hey, thank you for being here today, guys. Um, we're ready to start another round of Worth Beyond Wealth, and we are pretty excited because we have a special guest today. We have Joshua Reames with us. Thank you for being here. Of course. I'm gonna let Ryan go ahead and introduce you.

[2:07] Ryan Warwick: Yeah. Uh, Josh, again, thanks, thanks for being here. We're really excited. So Joshua Reames is a partner with the Elder Law Group of Ahrens D'Angeli Law Group. Um, Josh is, uh, focused on estate planning, asset preservation, and long-term care planning for seniors. Josh, you're a graduate of NNU, uh, Northwest Nazarene University. It's a local college here in Idaho. Then you went up to Willamette University for law school. Um, you are an accredited attorney with the Veterans Administration- Mm-hmm... and I think we'll hear more about that today. A member of the National Academy of Elder Law,

[2:47] Ryan Warwick: um, on the board of the Greater Idaho chapter of, of the Alzheimer's Association, and, um, you focus on including, uh, what I've already said, but Medicaid planning, elder-focused estate planning, veteran ben- ben- veterans benefits, excuse me, and inc- incapacity planning. So a word salad there-... of things that you do.

[3:11] Shannon Warwick: Yeah. And, uh- You do a lot. Yes, and I- Do you sleep?

[3:14] Josh Reams: Not very often, no.

[3:15] Shannon Warwick: Right, because-

[3:15] Ryan Warwick: And do you have kids?

[3:16] Shannon Warwick: Well, I was just gonna say, this is Worth Beyond Wealth, so also you're a dad and a husband, and do you wanna talk about your-

[3:21] Josh Reams: Yeah. No, I appreciate that introduction. Mm-hmm. It's an honor to be here today. Uh, I love what I do. It is a, a huge passion of mine, but I have a family at home and three little kids, an eight-year-old, a five-year-old, and a one-and-a-half-year-old.

[3:33] Shannon Warwick: Okay, you don't sleep.

[3:33] Josh Reams: Uh, so life is very busy between sports and the practice and family and church and all of the things. And so, uh, it is a unique balance as a professional as you know, uh, but a real blessing to be in each one of those roles.

[3:46] Shannon Warwick: That's fabulous. Thank you.

[3:47] Ryan Warwick: And, and before we started recording, we were talking about how maybe unique your practice is- Yes... in that you, you work on one hand with, uh, elder law or in elder law and VA law and then also high net worth planning. And do you wanna speak to that at all?

[4:05] Josh Reams: Yeah. We're a, a unique group. Uh, at Ahrens D'Angeli, we're a boutique, uh, estate planning firm is how we usually say it, but really there's two ends of that spectrum. One half, uh, is what I jokingly refer to as the tax nerds. Many of my partners went to extra school after law school to get more specialized in tax, and we're working with families that are in the high net worth, the 30 million and above, who are worried about the estate tax, family succession planning, how to deal with much more complicated estate issues, uh, and require a deep dive on the tax side. On the other end of the spectrum, uh, our elder law practice really focuses on individuals that are entering the long-term care part of their life, where we are dealing with issues of incapacity. We're dealing with issues of long-term care facilities that, you know, the average cost of a facility in Idaho right now is over $10,000 per month per person. Right. Your average family doesn't know what to do with that, and so we, we dive into Medicaid and VA benefits and then everything to do with death on both end of those spectrums. So normally when I give that word salad, people go, "Oh man, that sounds so boring." Right. Uh, and I say it's one of the most incredible practices 'cause we get to help family build legacies, protect legacies, help them through what can be the most difficult moment in their life- Right... and feel secure in those moments.

[5:19] Shannon Warwick: Agreed.

[5:19] Ryan Warwick: And most of us at some point in our lives will, will either have loved ones going through that or, or go through it ourselves, so something that is, uh, important to get some, some knowledge around.

[5:29] Josh Reams: It really is incredible to me how much time people plan for other things that happen in life, uh, and yet, you know, I hate to break it to you, but our mortality rate is 100%, uh, and so all of us are gonna die and deal with those issues. But so many people look at estate planning as what happens when we die and not the 20, 30, 40 years leading up to that. What does it look like when I retire and sell my business? What does it look like when I may have incapacity issues? You know, statistically in the United States, if you're over the age of 65, there's a 75% chance that you will need some form of care, whether in-home care, assisted living, skilled nursing. So we'll spend a lot of time focused on other areas of our life that quite frankly, statistically, are very small, and these issues that are

[6:14] Ryan Warwick: Pretty much guaranteed to happen Absolutely We don't like talking about, particularly as a culture.

[6:19] Shannon Warwick: Right. Yeah. And that's actually a great segue into our first point. Um, so just the main focuses of estate planning, um, why it's so important, why it's so neglected- Mm-hmm... um, what are the consequences of not engaging? But I think a great question to just- just get us started is what the heck is estate planning? Yeah. Sorry. Diving into that- that- that first just kinda, you know, blah, you know. What is this thing? Because people hear estate planning, and I think often the door closes. Mm-hmm. I don't want to think about, talk about that, and it doesn't apply to me.

[6:53] Josh Reams: Yeah. This is a very common a- approach from many, many, many clients. Um, we like to procrastinate this area of our life because they are difficult discussions that need to be had. And I can't emphasize this enough. We- we push it off, we push it off, and there are dire consequences from a family standpoint, from a financial standpoint, from a tax standpoint, and I'll just give a- a quick couple, uh, examples. Like, I had an incredible client that came to me a couple years ago who was in her 80s, a high net worth individual, but unfortunately really had done no tax planning, hadn't kept track of her annual exclusion gifting, et cetera, uh, and she passed away recently. And unfortunately, there was a very minute amount of time to do planning, and her family is writing a check to the IRS this next week for almost a million dollars in taxes- Wow... because they didn't plan ahead, which easily could've been done, right? On the other side of that spectrum as well, uh- Yes... when we have issues of capacity, when we can't make decisions, then all of a sudden we're forced to go to a judge. That's the most amount of time I spend in court, is for those types of cases of incapacity. So when we ask what is estate planning, estate planning is really two important things. It's protecting your legacy. It's protecting what you have worked so hard to build over decades of life, and making sure that your wishes are known. Mm-hmm. And I think that, as I mentioned earlier, many people focus on estate planning as what happens when they die, which is a big part of it- Right... but so much of it is what does my life look like from, you know, even early before retirement- Mm-hmm... to the day that I die, and making sure that my family understands what I desire when it comes to my care, making sure that my financial team understands what my goals are with my charitable intentions. What are my best ways to plan from a tax advantage standpoint? These, all these things where I have clients who have worked incredibly hard, incredible entrepreneurs who have been successful, who are missing great opportunities- Mm... to plan while they are alive.

[8:50] Shannon Warwick: That's a great way to put it, and it's so interesting. I was just having a conversation literally yesterday with someone, same sort of situation, and I said that- that the truth is here, um, somebody will be making these decisions, period.

[9:03] Josh Reams: Mm-hmm.

[9:04] Shannon Warwick: There- there's no- there's no way out of that, so the decision then is do you want to be involved in your own decision-making, or do you want someone else to make them?

[9:15] Josh Reams: Absolutely. Yeah. A- and more importantly, not only what are- what are those decisions, what do you want in those decisions, but who do you trust to make those decisions? Absolutely. You know, I come from a family of five. I have four incredible siblings. We love each other to death. We get along, which is not the case in all families. Yes. But even among the five of us, we have five very different personalities and different goals in life and different family situations, and different views even on parts of the world itself. And so- Absolutely... when we come together as a, what I think is a very highly functional, loving family, there's still difficulties in those decisions, particularly when it will come to our parents. How much more so if we do not have the perfect situation, when we have families that don't always get along and- Right... spouses that interject things that aren't always appropriate, right? And we wanna make sure that that is delineated ahead of time because it removes so much issues- Right... from the process. I always say that I push a lot of paper, but my goal is peace of mind for the client, and it's probably one of the greatest gifts that you can give your children and grandchildren and maybe your company and you name it. Mm. Like, the people that you love so much and have worked with and live life with, they will benefit from you putting those things in writing.

[10:27] Shannon Warwick: That's really beautiful.

[10:28] Josh Reams: Yeah.

[10:28] Shannon Warwick: Couldn't agree more.

[10:29] Ryan Warwick: We've- we've said before, it's- it's an act of love.

[10:31] Josh Reams: Mm-hmm.

[10:33] Ryan Warwick: Um, and I think

[10:35] Ryan Warwick: o- one of the things I- I wanted to ask you about based on what you just said is- is this idea of- of successful transition, and we- we have referenced a book called Preparing Heirs. Mm-hmm. They did a- a study of about 3,500 families, and they claim that approximately 70% of transfers or transitions from one generation to the next are unsuccessful. Mm. They have a definition of what un- uh, unsuccessful means, but what's interesting is the lack of success, they then went on to say is- is something like two-thirds related to just a lack of communication.

[11:15] Josh Reams: Yep.

[11:15] Ryan Warwick: Um, so to your point, you, parents may even have a plan, but don't communicate that to, we'll- we'll use your family, the five kids, and now five kids don't know, you know, that you have different perspectives, and you don't know exactly what Mom and Dad, "Well, they said this to me, and that this is written, and that doesn't make sense." So what do you s- I mean, is that-

[11:35] Josh Reams: I- in line with what you see perhaps, that a lot of s- transitions are not successful

[11:39] Shannon Warwick: We have conversations or d- Yeah, absolutely... decisions

[11:42] Josh Reams: I'm a huge fan of communication, and if, if possible, I will even have full family meetings- Love it... and bring in the children and say, "Look, these are the documents your parents have prepared. These are, you know, how they operate and what they need to do, and you two or this person is in charge." Just having that expectation of understanding who is gonna make those decisions and why they were chosen. I always joke that it's a whole lot harder to argue with mom and dad now when they're living than when they die and everything's a surprise, and all of a sudden we start conjuring up all of these theories of why this person was chosen or not chosen. Sure. And just having that communication, e- even when, quite frankly, often children may not be really invested in that conversation sometimes, they know mom and dad are trying. They know that they have set together their goals, that there are documents, and that there's a team of resources, typically myself as the attorney, the financial advisors, the CPAs, that they know that they have a resource guide to go to when the time comes. But that is often very rare. Uh, even when I meet with clients and do their estate plan and I recommend, give copies to your children. Make sure that they have the documents. Otherwise, it's really hard to use them if you don't have them. And there's this privacy element in there- Hmm... about, well, this is, this is my estate. This is, you know, my wealth. My kids don't know what I have in the bank account. My kids don't need to know these things. And I say, okay, at a bare minimum, they need to know that these things exist and where to find them, even if you're not willing to get into details, which I hope you are, particularly if we're talking about succession planning with a business. Mm-hmm. But at a bare minimum, at least start that conversation. Where that gets difficult is I had a, a, a farmer that I worked with, incredible family. As with many of the farmers and ranchers in Idaho, they're great with dirt and they hate paperwork, right? Yeah. That's a pretty common... And honestly, most entrepreneurs are so focused on their business- The thing... they really haven't focused on the back end of what's happening. So I met with this farmer and his wife, and they have multiple ranches in Idaho, and it's gonna be an incredible asset to pass on. They have three children, and two of them won't talk to each other. Mm-hmm. They will talk to mom and dad, and they'll talk to the other sibling, but they won't talk to each other, and their plan is to give the family ranches to all three of them, right, inside of- Hmm... this corporation. Okay. And I said, "If they will not talk to thems- each other now, how is this gonna work from a practical perspective when- Oh, 100%... you pass away?" Uh, and they told me, they said, "Well, they'll do it for the love of mom and dad." And I said, "They don't talk to each other now when you're alive. They're definitely not talking to each other when you pass away." And so we had some really tough conversations about, what does this look like? Is it appropriate to maybe not split the ranch among all three? Maybe there's other options with life insurance and other assets to still have- Sure... an equivalent distribution, but then you don't have these complexities. And so that communication piece is really big, uh, even within a very microchasm of things like vacation properties.

[14:31] Ryan Warwick: Yeah.

[14:31] Josh Reams: Uh, and so maybe you're, you know, you're not in that high-net-worth category where you're trying to sell a $100 million business. Maybe you just have a property up in McCall, right? And I rarely if ever see those properties last past one generation because just going from mom and dad to three kids, now how do we control that property? Who makes the decisions? Who uses it? Well, you know, two of the kids live close, so they use it all the time, and the third kid lives on the East Coast and doesn't want to pay the taxes anymore. He wants to sell it. He wants to Airbnb it. And so simple things like operating agreements and LLC structures can build this incredible guide for parents to give to their children to make it clear how it's supposed to work and remove any potential for- Yeah... contention.

[15:14] Shannon Warwick: Just diffuses the fight before it can start.

[15:17] Josh Reams: Mm-hmm.

[15:18] Ryan Warwick: We, we l- literally had in our office two days ago a family talking about the very issue of, of 40 acres, uh, somewhere in Idaho, um, that they want their four kids to have and to share, and- Mm-hmm... um, and but they can't split it up because, you know, this, this one spot over here has the well, and so - Yeah... you know, there, there's no- Yeah... the... I mean, in, in my experience over time, good, you know, families, even that get along, splitting properties becomes a real challenge- Right... more, more than splitting up the money and even a business that could be sold. So it's, it's, uh, it's an interesting, uh, navigation.

[15:59] Josh Reams: And there's great ways to account for that, right? Like, even within the, the context of an operating agreement, you can dictate rights of first refusal- Mm-hmm... and buyout provisions. Right. And if I want to buy your piece of the property out on the family cabin, what does that look like? How is an appraisal done? Who, who pays for that? Who... If I want to buy you out and I don't have enough cash, there's a pre-structured promissory note, right? Just those little intricacies- Mm-hmm... that we don't really think about until all of a sudden one of the family members wants out. Mm-hmm. Those are little areas for contention that can just be- I agree... completely removed ahead of time.

[16:32] Ryan Warwick: Yeah.

[16:32] Shannon Warwick: Well, I think everybody's seen and heard, and everybody's part of the plan at that point. So- Mm-hmm... so there's no... The, the element of surprise has been removed. Feelings that maybe are worn on the sleeve have been massaged a little bit. Mm-hmm. And then we've made accommodations as opposed to, you know, surprises and fights and just... It sounds like you're just removing this.

[16:53] Josh Reams: Well, and think about the context of someone is ill, someone is incapacitated. I know. Someone can't make decisions. Somebody just died. Like, those are emotionally raw moments where-

[17:03] Shannon Warwick: You can't think clearly. Right. You're not.

[17:06] Ryan Warwick: Yeah.

[17:06] Shannon Warwick: Uh, you know, the other thing I think about, do you run into a situation where there's several kids and culturally you see a- Mom and dad go to the eldest Mm-hmm. Okay. How does that play out?

[17:22] Josh Reams: Yeah, so this is a very common perception by most families, even most clients when they come in and we're talking about who's gonna be in charge of your will, who's gonna be in charge of your power of attorney they typically will automatically default to the oldest child even if there's not a good reason for it. Yes. And these are the discussions that I like to have as an attorney is why is this person good for the job? Are they good with stress? Are they good with finances? Are they good with healthcare decision-making? Mm-hmm. Do they work well with their other siblings? I think even the siblings often presume that maybe the oldest child is gonna be in charge, but that doesn't mean it's the right decision.

[17:56] Shannon Warwick: Doesn't mean they're the right one.

[17:56] Josh Reams: Right? A- again, going back to my family of five, I love my siblings. I think of my, the different dynamics, right? My, my older sister, incredible mother, great hardworking woman, she hates hospitals. Like, she just does not do hospitals well. As I always joke that she'll pass out by the time she gets to an elevator. So she is the oldest adult female. Okay. She's also the eldest. So statistically speaking, it is almost always the oldest adult female who becomes the caregiver of the parents in America. And so naturally they might say, "Okay, she's going to be the person in charge. She's the eldest. She's a female. She matches all the definitions we want for this position," except she hates the medical field, right? And so she's not a good option, and my parents don't pick her not because they don't love her, but because they understand those family dynamics. And I think the challenge is, is that everyone's worried about hurting feelings, and I understand that. I appreciate that, but picking the right people for the job makes such a difference in how those plans actually play out.

[18:53] Shannon Warwick: But I think we can understand, uh, you know, there's also the situation we're not necessarily setting that person up for success, are we? Mm-hmm. Because really we're a- we're asking them to act outside of the parameters of, of their giftings. Yep. And maybe someone else in the family much better suited, and, and that's okay.

[19:12] Josh Reams: Yeah. And understanding that sometimes it might be appropriate to name two people. I mean, we do co- Agreed... co-agents or co-trustees. You know, typically I joke we don't want to go past two people. Nothing works well by committee. Uh, and so I had one gal who had six kids who wanted all six kids as co-agents- Oh, God, no... on her healthcare power of attorney. I'm never going to draft- No... that as an attorney. No. So there are, there's wiggle room.

[19:32] Ryan Warwick: But when there are two, now, now how do you navigate disagreement?

[19:37] Josh Reams: Yeah. So you know, typically if we're a well-working, functioning family and we have two people named in the documents, I will give them authority to act independently of each other. Mm-hmm. It, so that way practically speaking it is more efficient, but then there's larger transactions, larger decisions that require both. Okay. And there's lots of different ways you can structure this. Sometimes if you have two people maybe you designate a third as a tiebreaker, right? Mm-hmm. Sometimes you may not have a third. You might just have the two children, and they're gonna have to get along with a decision or have a court involved, which is the last thing that we want, right? Absolutely. So you can build in those structures to say, "This is how much flexibility I want them to have independently, what decisions they have to be made together, how we may want someone to step in if a decision can't be made." Mm-hmm. And then there's sometimes in some families where it is very obvious it should be one person, and they're gonna take care of everything, and everyone's gonna be okay with that. Great. Um, but people assume, it's a very common presumption that when I die, like, it's just all gonna kind of be figured out, right? Mm-hmm. I had one case where mom and dad passed away. They just assumed the kids were gonna get along, and they did not. In fact, they had great disagreement with each other. One of them had committed a large amount of financial elder abuse as dad was dying, and so we're talking about millions that are missing from accounts. Wow. We have to get a judge involved. We go to probate, and we spend a year and a half litigating who's gonna be, just to be in charge, not even taking care of the estate. Wow. And now finally we have someone appointed. In that case it ended up being a third-party fiduciary, and what a waste of time and money because mom and dad assumed it was just all gonna line up.

[21:05] Shannon Warwick: Right.

[21:05] Ryan Warwick: And so that assumption led them to not specifically name, not to have documents in place. Mm-hmm. What, what was missing?

[21:11] Josh Reams: In that particular case they had nothing.

[21:12] Ryan Warwick: Okay.

[21:12] Shannon Warwick: Right.

[21:12] Josh Reams: They didn't do any planning at all. There, there is a perception that, well, when I die, like, my kids will just get everything.

[21:18] Ryan Warwick: Yeah.

[21:19] Shannon Warwick: Just... Yeah, yeah.

[21:19] Josh Reams: Maybe eventually when we jump through all the other steps. Instead you could have made that much, much more efficient and clear- Yes... and avoid what can be a lot of drama for a lot of families.

[21:29] Shannon Warwick: Well, you just teed us up. I- What documents-

[21:31] Ryan Warwick: I, I want to ask one-

[21:31] Shannon Warwick: Oh, you want to ask them a question?

[21:32] Ryan Warwick: I want to double click on one thing- Okay... you said. It was kind of in passing, and it had to do with communicating to kids. Mm-hmm. And how, how private m- many people are, it's probably the, the majority I, I would presume that say, "Look, this is, this is our private stuff. We'll maybe give them a copy or maybe not." Mm-hmm. But, um, there's not a lot of communication in, in many cases from parents to the next generation. Yeah, we did our documents. They'll come talk to you when it's done. Mm-hmm. But in this study it was really interesting. That, that is the very thing that created a lot of regret and, um, maybe frustration and, and anger at the first generation- Maybe-... after the fact because-

[22:14] Shannon Warwick: ... because you didn't trust me

[22:14] Ryan Warwick: ... you didn't, that's how it's perceived.

[22:16] Shannon Warwick: You didn't trust me.

[22:17] Ryan Warwick: You trusted Josh as, as our- Joshua... Joshua, as our attorney. You trusted Ryan as our wealth advisor. You trusted Joe as our CPA, but you didn't trust us- Me... or me with any of that information. Right. So that's, that's an interesting dynamic that I think a lot of people don't think about when they're making that decision to communicate or not.

[22:40] Josh Reams: And I think it goes to a deeper question of why. Why do you not feel comfortable having this discussion? What are the things that you are concerned about with disclosing this information? And maybe it takes time for us as advisors to kind of flesh that out and help them realize what concerns may not be valid or that maybe are, but we can help mitigate with- Yeah... certain discussions. It really is, uh, incredible to me, and I know you've experienced this in your own firm is that when people come in and you know that the other family member has been saying exactly what you're about to say, but because of the way that you communicate it, because you're a trusted advisor- Mm-hmm... all of a sudden they go, "That's the most incredible thing I've ever heard." Yes. And the child's over in the corner banging their head against the wall going-... "I've been saying this for months," right? Yeah. Yeah. And so I actually, it's interesting as- Oh... as I work more and more with, with the elderly in my elder law practice is that many are afraid to have these discussions. Yes. So my first point of contact- Now, typically, is actually the children who are calling saying- Yeah... "We know mom and dad need to do this. They don't wanna navigate finding the right person. We wanna talk to you about if this is a good fit, should we talk?" And then mom and dad come in, and it's almost in the inverse, where all of a sudden it's the kids are saying, "You have to get this done. You have to make sure that your things-" Right... "are in order because-" Right. Right... "people don't wanna do this." And so there has been a huge shift, I think, with our baby boomer population- Yes... our elderly population is doubling, that their children are seeing what other families are going through, saying, "Mom, Dad-" Exactly... "we don't want to experience what-" This again. "... John across the street," right?

[24:07] Shannon Warwick: Same conversation the other day.

[24:07] Josh Reams: So.

[24:08] Shannon Warwick: Well, and I think- It's good... I think when you start to look through the lens of, uh, you know, we, we kind of alluded to it, to it earlier, but generational, cultural- Mm-hmm... um, also the own le- their own lens, their own perspective, their own lived experiences, if there's been trauma, what were their perceptions of money around, and we talk about this extensively, from their own upbringing.

[24:29] Josh Reams: Mm-hmm.

[24:30] Shannon Warwick: Money is private. We keep it private. It's no one else's business. Mm-hmm. Right? So then we have a lot of barriers that we're overcoming. And so I think we're making a lot of headway the more we have these open, raw, honest conversations, and we start bringing people in, and we offer education, and we open up a safe space to have conversation, well, all of a sudden, we can kind of get this trickle effect, and then it catches on, and hopefully it's wildfire. Mm-hmm. And then we start turning around that generational perspective, that cultural perspective. Those barriers start to come down, and we can have, we can have a healthy perspective around things like estate planning.

[25:04] Josh Reams: Mm-hmm. I think education is such a big part of what we do, where so many families don't know where to start, don't know- Yeah... what documents they should have, don't know who they should be conversing with. It's one of the reasons why I like doing things like this, is to say, how do we educate our population- Yes... better-

[25:20] Shannon Warwick: Yes

[25:20] Josh Reams: ... on these issues? As a culture, we will do everything possible to avoid this idea of death, right? We won't talk about it. Right. We, we literally will change our physical appearance to make it look like we're not aging. Like, we go through- Yeah... great lengths to admit that we're not dying.

[25:34] Shannon Warwick: Well, we don't like to say, we don't like to say die.

[25:35] Josh Reams: Yes. Notice. Notice. Yes. It's, they've passed. Mm-hmm.

[25:39] Shannon Warwick: Oh, they've, they've gone on. Oh, they, it... But we don't want to say this person has died.

[25:46] Josh Reams: Right.

[25:47] Shannon Warwick: Yeah.

[25:47] Josh Reams: So as, as a culture, we really have to get better at having these intimate conversations about aging and dying- Honest conversations... 'cause we're going to see a huge shift- Yeah... over the next 20, 30 years- That's right... in our population, where these discussions are going to happen, or must happen, or if they don't, we're gonna see the consequences of those. No. And so.

[26:05] Shannon Warwick: 100%. No. But you've teed us up really well for this next point of what documents are essential as we begin this road to planning. Yeah. And I know this could be an entire podcast so go.

[26:15] Josh Reams: Yeah. I'll just, I'll just hit the highlights. Okay. And I wanna make one specific comment as we begin this piece. Okay. I think many people when they think about estate planning is they think of a form that they just fill out. That's what they think of. Mm-hmm. They think, "This is something I can do on my own. This is, I can find a form online, or I can use AI now, and they'll just give it to me." Right. Right? But as we've already just discussed a little bit, we can see the complexities of the puzzle. Oh, yeah. Right? The nuances, yeah. Every client is a different set of documents. Every client is a different set of goals. It's a different set of people. It's a different set of family dynamics, and that puzzle is why I love my job, but when someone comes in and just assumes that, you know, every puzzle's the same, there can be real consequences to that. But as a generic statement, the f- we always start with four basic documents, and then we start to add extra tools to the toolbox, like trusts, okay? And so the four basics, the very first document that most people are aware of and should have is their last will and testament. And how I describe a will is it is your letter of instruction to the court and to your family about who you want in charge and where your assets go. So if you die today and you don't have a will, which many people don't at all, then I have to have a probate judge get involved, and he is going to or she is going to decide who's in charge and where the money goes, and that gets messy.

[27:31] Shannon Warwick: I'm gonna pause you right there, because I know that's a question, and I know this because we have been in a meeting, and I think the client was in her mid to late 70s. Ryan said the word probate. Mm-hmm. And I, I saw the expression, and I said, "Could you pause for just a quick second? Let's chat about that." And she said, "Yeah, I don't, I don't know what probate is."

[27:51] Josh Reams: Mm-hmm.

[27:52] Shannon Warwick: What is probate?

[27:53] Josh Reams: Yeah. When we die, the majority of our assets essentially can be locked from a legal perspective. Real estate is a really good example of this. Mm. Even on my house that I own 50/50 with my wife, we do not have automatic rights of survivorship in Idaho. So if I die, my wife owns her half, and technically my estate owns the other half. Right? My IRA, my 401, those are my separate accounts. Now, typically, on those accounts I would have a beneficiary designation. Mm-hmm. And if I have a beneficiary designation, that is a contract between me and the company- Mm-hmm... and those are gonna pay out upon my death, right? Mm. Without probate. My house would not. My checking, my savings, my investments, often, that may be if I'm a single person are only in my name, nobody is allowed to have access to those accounts when I die. Even if there's a child listed as a cosigner- Mm-hmm... as soon as the original owner passes away, they will typically remove that access. So the question is: How do we sell the house? How do we access the bank accounts? Mm-hmm. How do we pay final bills? How do we deal with final tax returns? Mm-hmm. All of that requires a court appointing someone in charge. Lots of people like to call this an executor, but here in Idaho, we call it personal representative. So I have to go to a judge, and if I don't have a will-... the judge is gonna look at The statute to determine who has priority to be in charge Mm-hmm And typically that would be my children, but I hope my children get along, right? The case I gave earlier- Yeah... the children did not get along. Not get along. And so now everybody's fighting in front of the judge about who should be in charge. Then when we go to distribute money, it is not based on what I maybe said in passing at dinner. It's not based on what maybe I had scribbled in a notebook. Like, that's not gonna be effective. It's the law that's gonna control that distribution. Yeah. And we assume that certain things are gonna happen when we die- Mm-hmm... but state law, to be frank with you, is often a one size fits nobody in my opinion. Uh, and so just a good example of this, uh, I had a, a client who passed away. He had some separate assets from his wife. He had some separate farmland. And so he passed away. Wife had to file probate in order to get access to those accounts to access the property. So we're in the middle of a probate in Idaho- Mm... and Idaho says that community property goes to the spouse. But separate property, anything that is separate property, goes half to the spouse, half to the children. And in this particular case- Mm... this was his second marriage- Oh, shoot... and he had children from a prior relationship. Yeah. On top of all of that, he also had a farm in Ontario, Oregon. Don- I was gonna say, don't say Oregon. You did. Yeah. Okay. And so we had to file a separate probate, so two probates now, one in Oregon, one in Idaho, and Oregon, uh, is a separate property state, and said that the majority- Okay... of the ranch that his wife thought she was gonna live off of for the rest of her life actually went to his children that he had not talked to in decades, right? Oh, no, no. And behind door number three is that Oregon has an estate tax that Idaho does not. And so that family paid a very large bill to the State of Oregon for estate tax that they wouldn't have paid otherwise. Yeah. And here's a gentleman who worked so hard his entire life- Of course he did... that if he would've did a little bit of pre- planning, we potentially could have avoided two probates and an extra estate tax, right? So in that case, no will, disastrous effects. If they had a will, he could have said, "Here's who I want in charge, my wife, and I want all of my assets to go to my wife," and that would've been controlling. And the key thing here is that many people who have wills go, "Oh, I don't have to go through probate when I die," and that is completely false. A will has no effect at all until the probate judge says it does. So child calls me and says, "I'm in charge of the estate," and I kind of chuckle to myself and I say, "No, you're nominated to be in charge, but you have no authority till the judge appoints you." So we always have a will just in case we need to talk to the judge. We'll talk about some other ways to avoid that process entirely. That's where I wanted to go. But we always have a will to start off with to say, "Hey, if we get a judge involved, here's who I want in charge- Right... this is where my money goes." Okay. Right.

[31:38] Ryan Warwick: Now, you said something that, uh, and this was an important issue earlier this week with this client. They were worried about their kids having money if they were both gone at the same time- Mm-hmm...

[31:50] Ryan Warwick: to pay for last expenses and just, you know, credit card bills or whatever might pop up. And, and you, you said something, um, in, in that, uh, in your comments about some of these things fall off at, when, when somebody passes away. So I was a signer on an account- Mm-hmm... or something like that. So what if I'm a joint owner of an account? So is it ever good in your mind to make a child, let's just say, hey, here's Shannon and Ryan, and they make a child, uh, a signer, or excuse me, not a signer, an owner- Mm-hmm... of, of a, you know, let's move $50, $100,000 over to an account so that a lot of these things can be handled and th- they could have-

[32:35] Josh Reams: A pool of money

[32:35] Ryan Warwick: ... like unencumbered access. Yeah. Okay. Yeah. So is that a good way? By a relative. Is it not? What are other issues?

[32:40] Josh Reams: Mm. Yeah, so the, the benefit of having somebody named as a co-owner is they have full access to the account. Okay. When you die, they still have access to that account. Yeah. Right? They own the money, right?

[32:49] Ryan Warwick: Regardless of the titling, like joint with rights of survivor, i- is that probably the best way?

[32:54] Josh Reams: Yeah, so that's one way to do it- Okay... is either sometimes they're literally a co-owner right now or they're the rider of, uh, you know, survivorship that goes to the next person. TOD. A TOD, a transfer on death designation that says when I die- Mm-hmm... it goes to this person. Mm-hmm. My concern with actual co-ownership, and not all professionals agree with me on this, is that- Mm-hmm... if you name your child as a co-owner on an account- Mm-hmm... there's two problems with that. Number one is liability. If that child goes through bankruptcy, divorce, lawsuits of any kind, now all of a sudden they are listed as an owner on your bank account. Now, there's maybe some ways that we can differentiate and exclude that from those kinds of lawsuits, but it's a mess to do that, to say, "Hey, we know that they're listed on this account, but now we have to prove that they never put money into it and they don't use it for their own personal needs." Geez. And so there's a huge liability issue with co-owners. The other part of it is when you die, maybe you have, again, three, four children- Mm-hmm... and you've named the oldest, Tom, as the owner. Yeah. Well, now you're gone. Who owns that account legally? Right, right. Well, Tom does. Tom does. And if Tom- Yeah... you know, wants to follow mom and dad's estate plan, he could, or Tom could walk away with all that money, and I have seen that happen where they will name a child as the sole owner on an account when they die, assuming they're gonna use it to pay the bills and then pass it on, and they go, "No. Legally I don't have to," and they're correct. And now all of a sudden we have this issue where the other beneficiaries are really upset- Well, yeah... because that child- Sure, sure... walked away with more. So I typically like to, which just leads me up to the second document that we're gonna discuss- Yeah... is what's called a financial power of attorney- Okay... that says, "During my lifetime," so not when I die, but when I am alive, from the moment I sign it to the moment that I die- Mm-hmm... I am going to have somebody I trust- Mm-hmm... who can essentially sign my name in a financial capacity. Yeah. And they are what we call a fiduciary. They have a legal obligation to take care of my finances for my best interest. If I put my child on my account as a co-signer or co-owner, they have no fiduciary duty to do what's best for me. Hmm. Whereas a power of attorney invokes this legal theory of fiduciary, and I can tell you from the other side of my practice, financial elder abuse is a huge issue, and nine out of 10 cases- Right... is usually committed by a family member. Oh, absolutely. Mm-hmm. So that power of attorney provides restrictions, it provides access, and it provides guidance to what they can do while I'm alive. If I have capacity, if I don't have capacity, who's making those decisions? Typically, I always recommend we name three people in order. Like I name my spouse and then I name my two children as the backups on that document. Okay. Because if I only name one person and my spouse dies or becomes incapacitated, I've now- Yeah... lost the ability to use that document. But that power of attorney gives the kid the ability-... whoever to access my accounts, to talk to my financial advisor, to deal with all kinds of transactions. Mm. But-

[35:38] Shannon Warwick: Do you recommend it's a child, or do you recommend it's actually someone else?

[35:41] Josh Reams: Yeah, so this goes to our, our prior conversation. Yeah. Who is best for this? Yeah, yeah. Who do we actually want? And there are plenty of people who will choose professional fiduciary companies-

[35:50] Shannon Warwick: Okay

[35:50] Josh Reams: ... because maybe they don't even have a child to d- It-... play that role- Right... or their child's not accessible, or-

[35:55] Shannon Warwick: There's two children, and now we've done a favorites game.

[35:57] Josh Reams: Right. We're dealing with this- One chooses... family issue. Okay. And I've had some families that their children don't manage finances well. Correct. And, and particularly, you know, we can talk about this later, but this idea of, of our elderly population having a, a massive amount of the US wealth, we're about to see the largest transition of wealth in our nation's history. Mom and Dad know how to manage that money typically. The kids, I don't know, maybe they do, maybe they don't. Right. And a lot of them don't, and so are we going to choose someone who's not well-educated in this complexity of assets to be in charge of them? Probably not. Maybe we do need to bring in a professional. So- Right... that power of attorney gives us all the access we need during lifetime. Mm-hmm. Now, when I die, my power of attorney ceases to exist, okay? And so that's where we might want to have some other mechanism that triggers to allow the kids access.

[36:43] Ryan Warwick: And that was their primary issue. Yeah. Their question, right, um, is how do we do this if we're gone? And, and we talked through incapacity and, and then at death, so, um, excited to hear. Is, first thing, I also want you to know I wasn't playing attorney. I said, "If you put a jo- joint owner on here, you have other potential legal issues- Yeah... that you need to talk with your a- attorney about," so I'm really glad you brought that up. That's great. And, and it's i- i- interesting to me that you said not all professionals really agree with that.

[37:11] Josh Reams: There's many professionals, even within my own field, that would say, "Hey, do, do a joint owner on this account. Even if this is a smaller amount, then they have direct access, and you can have everything else kind- Mm... of over on this side." Yeah. And sometimes that works. Again, there's got to be a lot of trust. There's got to be an understanding of that child's ability with finances. Right. And it's not just sometimes the child. Sometimes it's their spouse. Sometimes it's their kids, the grandkids. Like, how many people are influencing that decision-making? So these are conversations we, we want to have. So we have a last will and testament, we have a financial power of attorney, and then we have two healthcare documents that- Okay... one is a healthcare power of attorney that allows for someone to make healthcare decisions f- for you. I could go on and on and on about all these stories- Stories... of in-... incapacity and guardianships where I have to have a judge get involved because of healthcare decisions, or if we don't have a financial power of attorney, we can't access certain assets. Like, right now alone, I probably have 20, 30 guardianship, conservatorship proceedings in Ada County alone just because the spouse cannot access assets or can't place a loved one in the appropriate facility. Mm. And it's really, really expensive and time-consuming. Like, why are we doing this when we could've just delineated this ahead of time? Mm. So having that healthcare power of attorney is essential for certain decisions, or even for the next person in line, they don't have access to your medical records. They don't have the ability to talk to the doctor, and so- Mm... we need to address those concerns ahead of time.

[38:35] Ryan Warwick: And this would lay out... Okay, so there's a power of attorney. There's also, um, the medical directives, I guess. Mm-hmm. Is, so is that a, a different document that maybe I'm jumping ahead to?

[38:45] Josh Reams: No, that's perfect in the sense that it is, it is our fourth document. Okay. In Idaho, we often merge our healthcare power of attorney and what we call a living will or advance directive together. Okay. But they're two separate, technically two separate documents. One says, "This is who I trust with my healthcare generally if I can't make decisions," and then my advance directive is, "Hey, I'm at the end of my days. I am in a coma, and I'm not coming back out of it," or, "I'm gonna die in the next couple weeks according to professional opinion. What do I want?" Yeah. My wife is an ICU nurse. Mm-hmm. And she sees the other side of this. It's awful. And so many families have not discussed this. They have no idea of what decisions- Mm... need to be made.

[39:22] Shannon Warwick: No, they're made on the deathbed. Yes. And it's painful.

[39:24] Josh Reams: Extremely.

[39:25] Ryan Warwick: It, it's confusing.

[39:25] Shannon Warwick: Or they're made in urgent, emergent situations, and we just discussed, uh, we're not thinking clearly- Mm-hmm... in that moment. Um, and I can think of, of a personal situation where someone actually came to me and said, "Would you be my healthcare power of attorney?" And I said, "Sure, as long as you talk to this person. After that has been dealt with, you can come back to me. We can do paperwork."

[39:52] Josh Reams: Yeah.

[39:53] Shannon Warwick: But, but that's uncomfortable.

[39:55] Josh Reams: It is, and again, as we talked about, we don't like talking about dying and incapacity or assume that we're gonna be one of those people that we can make our own decisions till the day that we die, which that does happen, but many, many, many people as they age-

[40:08] Shannon Warwick: No, it-

[40:09] Josh Reams: ... need, need a team to help through that process.

[40:12] Shannon Warwick: Yeah.

[40:12] Ryan Warwick: Can I give you a scenario? Because, uh, maybe others are dealing with it, and, and I said a moment ago, this, this is confusing. I mean, uh, about two years ago, we went through a, a situation with my dad. Uh, he- Mm... ultimately passed away in, in 2024, and a- along the way, we, we had... I, I think this was the most conf- confusing part. So about two years before his death, at a doctor's office, they had put a form in front of him and, and said, "What do you want to happen?" And, you know, he fills out the form and not, not even thinking about- Mm... really thinking about death. He was in, uh, had, had great health. And so that's on file at a doctor's office, and then we would go into the hospital during his illness, and it seemed like, and, and Shannon can maybe interject here-... that every time he would go in with pneumonia or, you know, for, for the next hospital visit for whatever reason, that these questions were asked again. And so

[41:05] Ryan Warwick: the hospital then has- Yeah... something on file, and every time then, it's, it's a conversation at a moment of some level of stress because something's going on, and, and Mom's there and doesn't fully understand. Mm-hmm. And then there's also, over in behind door three-... the advance directive that's out there. Well, how do, how do these all, how are they supposed to sync up?

[41:29] Josh Reams: Yeah.

[41:30] Shannon Warwick: Well, and I think even going back, what... I, I'm, I'm a nurse as well, and so when I saw this document, I said, "But-" What is this document?

[41:38] Josh Reams: Mm-hmm.

[41:39] Shannon Warwick: And who had him fill it out?

[41:41] Josh Reams: From the two years prior. Correct. Yeah.

[41:43] Shannon Warwick: It wasn't even the right document. Yeah. I mean, we're talking this gentleman filled this out when he was in perfect health, and it's saying that, you know, "We're, we're doing nothing. There will be no measures taken. Um, comfort only." You know, going, "What? So, so no treatment? I don't... I'm very confused right now. We're actively treating him. Are you saying we shouldn't be treating him? And why would he have filled this out?" He didn't know what he had filled out- Yeah... turns out. He had no idea. The doctor just said, "Hey, I've got paperwork. Fill it out. Sure looks good." We had the incorrect document. We had to redo the documents- Mm-hmm... while he was very ill.

[42:23] Josh Reams: We see this quite frequently, and it doesn't, it's not just isolated to healthcare documents. Again, because there's lots and lots of forms out there, people will fill these things out or go through some online program and end up with a result which is completely opposite to what they wanted because nobody is walking them through that process. No. Or I had someone, actually three cases this summer, where people had done their own wills online- Yes... but then did not execute them according to Idaho law, and all three were rejected by the court. Okay. Right? And so those, there's these middle, little details that actually matter. When it comes to the healthcare- Real quick. Yeah.

[42:55] Ryan Warwick: That would mean they signed in front of a- Notary or-... independent third party, a notary. Yeah. What would that mean?

[43:01] Josh Reams: So in Idaho, you need to have it signed, dated, notarized, and have two witnesses.

[43:05] Ryan Warwick: Okay.

[43:06] Shannon Warwick: Yeah, exactly.

[43:06] Josh Reams: And in this particular case, we had one will that was notarized and signed, no witnesses. Okay. We had another one that was signed, one witness, no notary. Oh, gosh. And I could give you- Yeah... several different, uh, variations of that. Uh, and then they had created this really complicated trust that did not apply to their situation at all. And so honestly, in the end, the fact that the will was rejected was a better outcome, actually- Okay... for the family, which was surprising, but it's a good example of how without knowing those details. So for the healthcare documents, everybody, no matter their age, no matter their assets, should have these four documents. But a healthcare power of attorney says, "This is who I trust to make decisions." Okay. And in many ways, the hospital is going to lean on that person. All hospitals, for good reason, don't wanna get sued when they make a decision. Okay. And so they want someone to sign off on it. Even if you've clearly delineated what you want and made those choices and said, "I want comfort care. I want treatment," they're still gonna go to that agent and say, "Okay, the document says this. Can you sign off that that's the case?" Right. And so there can be situations where a client has said, "I want this," and now there's a family member who's an agent who does not want to enforce those wishes, who's telling the hospital, "I know Dad said he wanted comfort care, but I just can't make that decision emotionally right now, so we're gonna keep him alive for a couple more weeks." Is that really what Dad wanted? No, it wasn't. No. But he didn't pick the right person who could make that decision. Yeah. So you have these two documents, one that's general healthcare, one that is specific. I mean, it's very, very specific that it says, "These must be the conditions to apply for end of life, and these are what I want in those conditions," right? Mm-hmm. On top of that, the doctor's office has what's called a POST, a physician's order for scope of treatment. It is an actual doctor's order that also asks some of these questions, worded very differently, uh, and often are just handed to the patient to say, "Here you go." Mm-hmm. But then the doctor has to sign the bottom, and now you have an actual physician's order- Yeah... in the file, right? And they really need to know what they're signing. And, and-

[45:02] Shannon Warwick: That's the problem. You need to make sure that they've actually reviewed and it actually was appropriate.

[45:07] Josh Reams: Correct. And for you and I, like we're at a stage in our life where we don't even need a POST because those are typically for individuals who are approaching end of life, who are much older or have some kind of diagnosis- Mm-hmm... that indicates that that's coming. Mm-hmm. A good example of this is that a, a POST form is really the only document that you should be executing for the purposes of a DNR, a do not resuscitate. Correct. Correct. The law in Idaho has changed, where in the past you could not do a DNR unless it was in that form. There's a new statute that says we can write powers of attorney essentially however we want now. Mm-hmm. And we could include DNR instructions. I am not a doctor. I am not advising my client on whether or not they should be resuscitated. That should be in that POST form, right? Mm-hmm. And so for some clients, they only have a healthcare power of attorney and an advance directive. Mm-hmm. And then for elderly clients or people who have certain issues, they should have a POST on top of that. The problem is all three of those should be coordinated together. What happens if my advance directive says all treatment and my POST says no treatment? Correct. Now we have a huge problem because we didn't coordinate between the doctor and the attorney.

[46:11] Shannon Warwick: Correct.

[46:11] Ryan Warwick: Well, or if, if one isn't even in the mix at the hospital where somebody's trying to make a decision, I mean, to make sure that these are all in the same package, that people are looking at all of them, right?

[46:20] Josh Reams: Right. Yeah. I mean, who, who knows it exists? Right. This goes back to our communication piece. Yeah. Do the children know it exists? Does the spouse know where to find it? Does the hospital have a copy of that document? No. I always tell my clients, "Give copies of your financial documents to your financial team. Give your healthcare documents to your doctor." But even if it's already in the system, maybe it's in your patient portal, we know in high-pressure moments it is not easy to find documents sometimes. Yes. So I always recommend if you're in one of those moments, walk in with a hard copy, right? Yeah. So those are the four basics. Thank you. Last will and testament- So good... financial power of attorney, healthcare, and living will. However, many of us need or want more tools in the toolbox. Mm-hmm. And this is what I tell clients through the education process, is that everybody wants different tools for different reasons, for different goals, right? When I go out to my garage to go pull out a tool for a certain job, honestly, I wish I had one job that did it all, or one tool that did it all, right? I was changing the, the bike tires for my kids 'cause they'd gone through a bunch of goat heads this weekend. Uh, and I hated it. I was, I had a whole bunch of different tools out, and I was pulling off the tires, and I had to take the chains off, and it's greasy and it's messy, it's hot. Um-

[47:24] Shannon Warwick: It's like an inventory.

[47:26] Josh Reams: Yeah, right?

[47:26] Ryan Warwick: Yeah, yeah.

[47:26] Shannon Warwick: One tool does it all.

[47:27] Josh Reams: I wish, I wish- Their Stan's Toolless... right? But typically, I'm dumping my toolbox upside down- I, yeah... finding my fire extinguisher tools.

[47:33] Shannon Warwick: Where's that one tool? Yes. Yeah.

[47:35] Josh Reams: And every mechanic will tell you, every handyman will say, "You gotta have the right tool for the job." Yeah. So what are your goals? So let's just go back to a simple example of probate, right?

[47:43] Shannon Warwick: Okay.

[47:44] Ryan Warwick: Okay.

[47:44] Josh Reams: Many, many families don't wanna go through probate. Now, probate in the state of Idaho is honestly incredibly easy compared to other states. Good to know. Oregon, Washington, California are, have really tough probates. Oregon, Washington have estate taxes. Yeah. California is known for having one of the worst probates in the country- Wow... expense-wise and time-wise. Okay. So when people come to Idaho, particularly from out of state, they go, "Oh my gosh, your probate system is so much easier." Mm-hmm. However, many families still don't wanna go through the court process. They don't want their affairs to be public. They don't want- Mm... there to have to be this extra judicial supervision.

[48:17] Shannon Warwick: Sure. So some families- It's fair

[48:18] Josh Reams: ... wanna add something like a trust, okay? And there's revocable trusts, and there's irrevocable trusts, and we can dive into each one of those. Yeah. But the whole point of a trust is to achieve these additional goals. The primary one is typically probate avoidance. So I like to describe a trust like a box, and we're gonna put things in the box. Mm-hmm. So I have a box right now, my trust, and my deed to my house is in my, in my trust. So we're just gonna use the house now for an example. When I die, my wife is also a trustee of the trust. We are trustees together. We have full access to everything in the box. We make the decisions. Everything's for our benefit. Everything is on our tax return. Honestly, everyday life looks almost exactly like it did before I had a revocable trust. Mm-hmm. But now my house is titled in the name of my trust. When I die, my wife does not have to worry about my name still being on the property because the trust owns it. Mm-hmm. And she's in charge of it. And then when she dies, my successor trustee steps in automatically without court supervision, without going through probate- Mm-hmm... and they can distribute the assets to my children. Like, that's just one example of the many ways that we can use the trust, right?

[49:23] Ryan Warwick: Is there any method, uh, protocol that has to be done, um,

[49:29] Ryan Warwick: y- when somebody dies with a trust? So does a death certificate... Just to, like, somebody, let's say it's your child, n- now wants to go down and, and do something on the house, how do they prove that they're now in charge?

[49:42] Josh Reams: Yeah. The trust agreement will typically specifically state that upon my death or incapacity, here's who's in charge next. Okay. However, financial institutions, title companies still want proof, right?

[49:53] Ryan Warwick: Yeah.

[49:53] Shannon Warwick: Mm-hmm.

[49:53] Josh Reams: So typically that's gonna require a death certificate. Okay. And then we have a special form called a certification of trust, and I say that this is your get out of jail free card. Mm-hmm. This is your cheat sheet. Every financial institution wants to know 10 things about the original trust, who created it, when it was created, where it was created- Mm... these kinds of things, and who is the current trustee. So right now I have a certification that says my wife and I are the trustees of our trust- Yeah... and it has all that information. When I die, then I typically, or the firm that I work with, would say, "Hey, we're gonna create a new certification of trust that now states, signed and notarized, that you are the trustee of this trust." Mm-hmm. And that combined with a death certificate is usually enough to open up all of those doors.

[50:36] Ryan Warwick: Yeah. Great. Yeah.

[50:36] Josh Reams: Right?

[50:36] Shannon Warwick: Great.

[50:36] Ryan Warwick: I just, yeah, wanted to double-click that there is something that has to be done.

[50:39] Josh Reams: Yes. Yes, there is. Uh, and, and people will assume they have automatic authority- Yeah... which to some degree they do, but documenting that is always important.

[50:47] Shannon Warwick: Y-

[50:47] Ryan Warwick: And this is the fastest way most typically. I mean, m- That is correct... should be a matter of a f- a few weeks maybe.

[50:54] Josh Reams: E- exactly. I mean, and the great thing about having the trust is it's set on your timeline. It's set on- Mm-hmm... what the family needs in that moment. Mm-hmm. Instead of being s- held up by a court system. Right. Like, if I have to have a hearing in front of a judge right now, it's gonna take me about four or five months just to have that hearing- Gosh. Okay... because of how backed up they are, right? So that- Right... could really delay things for many, many, many families. Absolutely. Instead, we could say, "Hey, a couple week turnaround time." Yeah. For some families, they are dealing with the death of a loved one. They're doing the funeral. They're doing... They're not even gonna ask the legal questions for a couple months. Yeah. That's okay. They have the ability to pick the timeframe that works for them. Right. And then they're, they are controlled by the trust agreement. So mom and dad, who have passed away, are still dictating who's in charge. They're still dictating where the assets go. They are still being the guiding force behind what happens to the estate. Mm-hmm. Imagine what you would normally put in a will, it's just in this trust instead, and that's like the simplest basics of trusts. Yeah. But you can start adding layers to it. I always say, "How many layers of the cake do you want?" And what you want in yours is gonna look very different than some of my other clients might want or even need, right? Sort of yeah. If you are a high net worth-

[52:01] Shannon Warwick: But that's great. What you want and what you need- Yeah... we talk about that. Yeah, yeah, yeah.

[52:04] Ryan Warwick: And Josh, do you find that a lot of people think a revocable living trust

[52:10] Ryan Warwick: perhaps does more than it actually does, i.e. it's- Mm... some sort of legal protection or some sort of- Yeah... tax protection?

[52:17] Josh Reams: So great, great question. There is this perception that a- Mm-hmm... standard, basic revocable living trust, that it does provide all these magical qualities, right? That if I put my assets in this revocable trust, then if I get sued, nobody can touch those assets. Mm-hmm, mm-hmm. So to be clear, a revocable living trust is an, uh, document you can amend, you can change. It is revocable. You are the trustee, so you're in charge of it, and everything's for your benefit, and typically everything is reported on your Social Security number. And so for IRS purposes, you and the trust are the same person, right? Mm-hmm. So if I get sued, there is no protection from creditors in a revocable trust. Okay. Okay? And-

[52:57] Shannon Warwick: So creditors and predators, I think that's an- Yes, yes... important component, too, when we're talking about situations where there's been a death, and now we have a widow. Mm-hmm. And if they remarry, right? Is that something we need to- Yeah... kinda hedge on a little bit?

[53:08] Josh Reams: So this is great when we're talking about the- Yeah... the layers of the cake. Yeah. Right? Yeah. So when I die, one option is everything go to my spouse. She's in charge of it. She can still amend it. And, and to use kind of a, a, a crass example, right, if, if I die and my wife falls in, in love with the gardener, or if she died and I fell in love with the secretary, and now I have the ability to rewrite the trust- Mm-hmm... well, there's a problem potentially. I mean, I guarantee if you go and talk to five of your neighbors, you're gonna hear a story about a new spouse who came in and walked away with all the assets, right? Mm-hmm. Because that client can come in, amend the trust, and give it all to the new spouse, and then they die, and that new spouse May not care as much about their non-biological children and walk away with the money, right? Right. It's the same thing in marriages that maybe it's a second or third marriage, and we've got his kids and her kids and everybody's kids, the cheaper by the dozen type, uh, scenario. Mm-hmm. Yeah. And she dies, he comes into my office and says, "I never liked her kids," and rewrites the whole estate plan. Oh, gosh. Yeah. Like, that happens more than I would like to say.

[54:05] Shannon Warwick: Sure.

[54:05] Josh Reams: So what do we do in those situations? Well, we can add an extra box to the, to the cake. Another really silly example of this is think of a Russian nesting doll, right? Yeah. The old, the old silly Russian nesting dolls. Yeah. So we have the main doll, which is your trust. That's all we see, and when you die, it can open up and have as many other dolls inside of it- Okay... as we want. Okay. So a good way that we resolve this problem is that when one spouse dies, their portion goes into an irrevocable what I call marital trust. Mm-hmm. And that trust can take care of the surviving spouse, and the spouse can still have access to it, but they can't change the terms and conditions of the trust. Okay. So if they were to be remarried or, quite frankly, they were subject to undue influence or subject to a child that was trying to steal money- Right... those terms of that trust are solidified in place. Now, I always say the more restrictions, the more protection, but less flexibility. So if somebody dies and they put their assets into an irrevocable trust for their spouse, lots of protection, but that spouse cannot change the terms and conditions, and maybe they don't like those terms and conditions. Mm. And I've had clients that love having that protection and other clients who hate the restrictions, right? Mm-hmm. So how much complexity do you want when you pass away? That's up to you. That's not up to me. That's... And so again, thinking about the client, and every client is different, what they want. Sure. M- many don't want that. Many do want that. I have two clients I met with today, both one wants it, one doesn't. They don't want that extra layer for a- all kinds of different reasons. Okay. And that's up to them. They need to understand what it means. Okay. I see this a lot when we have very large, complicated California trusts- Mm-hmm... that people move here to Idaho. They need to update those documents to the state that they live in, okay? And when we review those trusts, many times it will have many complicated sub-trusts, mainly for tax reasons that applied when, you know, husband and wife did this in the early 2000s- Yeah. Yeah... or the late 1990s when the tax rules were completely different- Okay... than they are now, and they come into my office, and I say, "Look, when your spouse dies, this trust splits into three separate trusts," like the old ABC is what we call it. And we have to retitle assets, and we have to do an accounting and an inventory. Mm. And the surviving spouse is just like deer in the headlights staring at me going, "Wait, what? Like, my husband just died six months ago, and now I have to do all of this paperwork" that they probably didn't need because the tax provisions had changed since then. Oh. Right?

[56:24] Ryan Warwick: Some of those old trusts dictated what assets went where. They... It may have said, uh, put all of the assets into the bypass trust to take full advantage of whatever amount of the credit was at the time. Yep. And now our credit's huge, and so all assets go into that if it hasn't been updated. Yep. And that's not good for other reasons down the road, right? Yeah. Like, like step up in basis and-

[56:45] Josh Reams: Yeah, if we're looking at these trusts, I mean, maybe you have a person that comes in that has a fairly simple estate. They're below the $30 million estate tax exemption level, so they'd have to be over 30 million to trigger an estate tax. Right. We have lots of very successful people that come in that are sitting at the five, the eight, the $10 million range, right? And because of their age, we're not worried that they're ever gonna hit the $30 million mark. They don't need all of these extra complexities and restrictions- Sure... right? Sure. And maybe they've read online that while you should have these, look at all the tax benefits, and so they come in saying, "I need all these extra things in here," and then realize, oh, I don't, or I don't want those things. I don't understand the complexities. Other people who come in who absolutely need those extra tax planning techniques- Right... I mean, if, if you're a high net worth individual, there's no doubt that you should be looking into trust planning, not for probate avoidance, but for tax planning, right? Yeah. And so every client, again, who comes in based on their assets, based on their goals, is gonna start adding those extra layers or adding those extra tools, and that's where trusts can honestly, I, I sound like a total dork here, but like, or a nerd, is that it's so much fun because we get to build all these extra tools that- Yeah... help the client achieve their goals. Yeah. Maybe goals they didn't even know that they could achieve or wanted to achieve- Yeah... until they realized there was a tool to achieve it, right?

[58:02] Shannon Warwick: Yeah.

[58:02] Ryan Warwick: Yeah.

[58:02] Josh Reams: A good example- Right. Yeah... uh, of this is when I die is how do I want to give assets to my children? Mm-hmm. While many estates just say, "Hey, here's the assets," and that's fine, but if my child goes through bankruptcy, divorce, or lawsuit, then their inheritance is subject to those creditors. I prefer to say that my child's going to receive what I call a legacy trust- Yes... 'cause we're building a legacy. Correct. And that legacy trust-

[58:24] Shannon Warwick: Yeah, I love it

[58:25] Josh Reams: ... provides protections. Number one, I have minor children, have I- as I've mentioned, and I love my children to death, but let's be honest, most 18-year-olds are, are not great financial- I, I-... individuals, right?

[58:36] Shannon Warwick: ... like to let them know that they have squishy frontal lobes. Yes. Yes. Yeah, and, and my 15-year-old literally said to, um, her, her doctor, "Yep, me and my friends, we got squishy frontal lobes" and the doctor loved it. Like, you sure do.

[58:51] Josh Reams: Yes. Yes. And particularly science shows that we as males, like, don't fully develop till, like, what? Age 28. Yeah. Uh, right? And so- Yeah... number one is how do- 25 years old- Yeah

[59:00] Shannon Warwick: ... is when that myelination actually mainly- That mid-20 mark... mid-20s.

[59:04] Josh Reams: Yep. Yep. So how do we make sure that a, a very bright, intelligent, wonderful child with squishy lobes, uh, is protected sometimes- Yeah... from themselves? Absolutely. And so we have certain requirements about how old they can be before they manage their own financial affairs. Like in my trust, I say, "I love you, but someone's gonna manage that money for you till you're 30."

[59:21] Shannon Warwick: Because I love you.

[59:22] Josh Reams: Because I love you. They're gonna take care of college tuition. They're gonna take care of all the things that you need- That's right... but they're gonna be smart about it. And then when you become age 30, many trusts will just, again, give all the money, but then it's, it's subject to creditors. Instead, they could take over their own trust, become their own trustee- Mm-hmm... and have creditor protection for life. So I have many clients- Mm-hmm... who their c- their kids are in their 40s and 50s and 60s, and they're not worried about age issue, but they go, "Why would I not want to give my child the ability to have an unlimited wall of protection?" Around these assets. Mm. And so maybe they're not even worried about probate, because probate here is not terrible. Yeah. But they love the idea of building a protection for their spouse or tax planning. Sure. Or protecting their kids, or I do a lot of disability planning, and so if we have a special needs- Yes... child- I want to chat about that. Okay... what do we do? I, I often will see that they will just disinherit that child, or they will give the money to another sibling and say, "Hey, make sure to take care of your- Oh, no... disabled sibling." That is a horrible plan. I completely disagree with that. Horrible plan. Yeah. Okay. Uh, and, and often we see that that child is neglected. Neglected. And so a special needs trust is a way to say, "Here's a certain amount of money that will take care of you for the rest of your life- Mm... but you can, number one, still qualify for programs like Medicaid and disability." Exactly. Right. And someone else is managing that for your lifetime. Got to pick the right people to do that. Right. But what a wonderful way to protect someone you love so much- Oh, it's just precious... who maybe can't manage those finances the same way your other children can. Right. And so you can see how we went from a very basic box to all of a sudden all of these tentacles and other boxes. That is dependent on the client and their desires and what they want and how they desire their children to be protected or not. And, and other restrictions that may go in there, I always encourage flexibility. Um, don't control everything from the grave, right? Uh, but also be smart about the way that you pass that legacy on. Sure. That's good. That's, that is so good. Yeah.

[1:01:17] Ryan Warwick: Um,

[1:01:19] Ryan Warwick: this can get really complicated. I know, so... I, I know that before I asked the question.

[1:01:23] Josh Reams: Yeah.

[1:01:24] Ryan Warwick: But, but we talk with a, a lot of v- very successful people. Mm. Often they're pretty young. Um, often well over the lifetime credit amount- Mm... which as you've stated is, is you've used 30 million, uh, uh, 15 million a person is really how that's broken out. And so s- let's take somebody in their 50s, they're worth 50 million, and they're starting to be concerned about taxes. Mm-hmm. They're over the 30 million that they can pass tax-free. None of us know what tomorrow holds. Uh, we're still growing that asset.

[1:02:03] Ryan Warwick: But may not want to give it away yet. So are there- Yeah... you know, how do we balance those... It, it, it's almost I'll, I'll say a conflict of interest, right? I, uh, I want to avoid tax, I want to take care of my kids, but I'm not ready to give everything away yet. And I think a lot of people are in that. Mm. You probably see it all the time.

[1:02:20] Josh Reams: Got it. Okay. So this is a v- a very common client that we work with- Yeah... where they have been very successful, often young entrepreneurs, but they have all these different pieces of the puzzle. They, they still have young children. They often are also dealing with the long-term care issues of their parents- Yeah... what we call the sandwich generation, right? Yeah, exactly. They're running a business, they're doing all these things, but now they're starting to ask the question of, "Wow, all of a sudden I have a net worth that maybe I never thought I would. How do I deal with the difficulties of this estate and taxes and meet all those conflicting interests," right? There's the basics, right? Which is getting those wills and powers of attorney. There's the revocable trust, and within that we can build specialized tax structures that when the first spouse dies, we don't want to pay an estate tax. Mm-hmm. And this is also not just a federal estate tax that you and I are talking about, but many, many, many clients own property in Oregon, in Washington, who have estate taxes that kick in after the million dollar mark, right? So we may have multiple tax issues that we're looking at from different states and federal levels. Right. But making sure when the first spouse dies that we're not triggering any taxes at that moment. And, and again, you already acknowledged this can get really complicated very quickly, but to picture that box when the first spouse dies, having it split into three trusts, okay? And one of those trusts is what we call the survivor's trust, and that is the surviving spouse's half of the estate, and they can basically do whatever they need to do with that. The other half would be the deceased spouse. So, um, Ryan, I'm gonna use you as an example. We as men tend to die first. Uh, and so- That's just not true... yes.

[1:03:58] Ryan Warwick: I guess we're lucky.

[1:03:59] Josh Reams: Yeah. Yeah, right? I, I always tell my spouse if she died before me, I would be miserable anyways. That's right. And so I- Oh... I would rather go first. So- Boy, you're just getting points.

[1:04:09] Josh Reams: Gosh. So my half would go into, or your half, Ryan, would go into two different trusts, and the purpose of that trust is, number one, to maximize what we call the marital deduction, to maximize my $15 million worth of exemption. And then another one's called the family trust. And the purposes of these two trusts is to maximize what exemption I have, and the way that we can do that is we can put certain assets into one trust, and the growth on those assets are no longer included in the surviving spouse's estate when they die. Mm-hmm. And so if we have an asset that we think maybe is going to grow significantly in value, and we don't want it to be subject to the estate tax when the second spouse dies, this is a great way to plan- Mm... ahead for that, right? That's great. However, there are competing interests. If I remove an asset from either one of your estates when you die, it does not get a step-up in basis for capital gains purposes, right? So we're pa- playing this tax game of would I rather pay a 40, 45% federal estate tax or would I rather pay capital gains tax of, right, whatever amount it might be in your particular tax bracket? Well, sometimes those numbers are very obvious which one of those we'd want to do. Right. We also look at other assets that may be highly appreciable, and we do want the step-up in basis. But if, unless we've built those tax strategies in there, that's not even an option. And so now we have someone who has a very large estate who we didn't do any of these steps or planning techniques, and now the first spouse dies, and we've lost the opportunity, right? So that's kind of the basic format of saying, "We want these in place. We're gonna start there." But then we get to have a lot more in-depth conversations about what do we do during your lifetime when both of you are alive to deal with the size of your estate and potential tax issues, right? And, and this is where we get to have- Very interesting conversations about philanthropy and, and charitable giving Mm-hmm And how do we best- Yeah... do this to both maximize my charitable intent but also maybe get some tax savings when I'm alive and tax savings when I pass away, right? Right. And so now we're starting to add other tools to the toolbox, but the hard part, I think, in that 50-year-old age client that you're talking about is that they're still growing. Their assets are still moving. Correct. They are still making many, many, many decisions- Yeah... and they want flexibility. So I will have many people in that age demographic that come in and say, "Hey, I saw this incredible TikTok video." Mm. I love my TikTok and Instagram videos that say you can do all these crazy, crazy things.

[1:06:29] Ryan Warwick: 50-year-olds are getting TikTok?

[1:06:31] Josh Reams: Honestly, it actually happens more than you think. Okay. So, uh, I've got a few clients in their 60s and 70s coming in every day. I know. Yes, yes. I had one client, unbelievably successful. We're talking about 100 million-plus, uh, in assets, and he would email me probably every other day with a new tax saving technique he found online-... and then I'd have to explain to him why either that's not possible-

[1:06:52] Shannon Warwick: It doesn't apply to you

[1:06:53] Josh Reams: ... or not true. Or maybe it is an option, but when we start getting those tax- Yeah... savings, there's restrictions that come with it. Right. So how many 40, 50-year-olds want to restrict their ability to access assets, right? Right. How much control do they want? As people get older, it is easier for them to say, "Hey, it is time for me to start thinking about succession," or, "It is time that I'm okay that I have all this, this big pot of assets over here. I'm happy taking this other pot and restricting it- Mm-hmm, sure... for other reasons," right?

[1:07:21] Ryan Warwick: Sure.

[1:07:21] Josh Reams: That middle group, it's really hard because we want them to be flexible. We- Yeah... there's a lot of decisions that are gonna be made in that 40 to 60 range, right? Mm-hmm. Where we're approaching retirement, that if I restrict those assets too much for supposed tax reasons, now all of a sudden we're stuck with those decisions, right?

[1:07:39] Shannon Warwick: Yeah. That's a great point.

[1:07:40] Ryan Warwick: And to not get into it today, but I mean, there are additional tools that people can do. I mean, there are installment sales. There are other types- Mm-hmm... of trusts that get a little more creative and-

[1:07:48] Shannon Warwick: Yeah.

[1:07:48] Josh Reams: Yeah, irrevocable trust planning is amazing. Yeah. It is an incredible technique, particularly on the charitable giving side of things. Okay. But you have to be very intentional, understand the consequences of what you're creating- Mm-hmm... and what is your long-term goal? Do you wanna be charitable throughout your lifetime? Mm. Do you wanna be charitable when you pass away? Mm. Do you wanna give X amount of charity? Are there other ways that we can give more to charity than what you originally thought because of planning?

[1:08:11] Shannon Warwick: And again, great segue way. So, so charitable giving. We are the Worth Beyond Wealth podcast- Yeah... and so as I was prepping and I, I've, I've had the benefit of hearing you speak, and, um, I was reviewing, um... Actually, it was one of your, um, I think it was just, uh, one of your slideshows that you had utilized. But you, uh, you said something that I loved. You said, "Philanthropy with purpose," and I loved it. Yeah. And I was like, man, I couldn't think of anything better to go along with Worth Beyond Wealth. So can you dive into charitable giving and giving with intention? Yeah. Um, you had, uh, quite the list on there, outright gifts, donations, IRA, uh, DAF, bequest, charitable remainder trust, charitable... You, you, you just, you had everything. There's a plethora. Mm. Do you wanna, do you wanna dive in, I, I say quickly because we have about 15 minutes? Yeah. Minutes.

[1:08:58] Josh Reams: Yeah.

[1:08:59] Shannon Warwick: Maybe maybe could give-

[1:09:00] Josh Reams: It is the alphable- alphabet soup of-

[1:09:02] Shannon Warwick: It was alphabet soup

[1:09:02] Josh Reams: ... of, of giving. Yes. Yeah. We are so incredibly blessed as a nation. We are so incredibly blessed as individuals that we have an opportunity to be generous. Mm-hmm. And the question is when we are gonna be generous, how do we be intentional about it? I have so many clients that are the most giving, loving individuals in our community that I've ever met but are missing great opportunities to give and potentially give even more-

[1:09:27] Shannon Warwick: Yeah

[1:09:27] Josh Reams: ... with proper planning, right? And sometimes it's very basic. Sometimes it's an outright gift, right? So, uh, you know, I think about my alma mater, NNU, and I think about how people give to them, right? Mm. Let's say somebody has this piece of property, and it's a farmer, right? And he is just, loves NNU, and he loves the opportunity to give, so he says, "Hey, I'm gonna sell my farm, and I'm gonna give some money to, you know, NNU," as an example. Mm. Well, the issue is if he sells that piece of property, right? Now, we all know that land in the Treasure Valley has exploded in value. Mm-hmm. So, you know, most of our poor farming families have all of a sudden become millionaires just simply because they own dirt, right? Yes. And so I, I think of if, if you look across-

[1:10:06] Shannon Warwick: I was gonna say

[1:10:06] Josh Reams: ... look across the street from, from The Village-

[1:10:08] Shannon Warwick: I can't drive across... right? I can't pass that field anymore without thinking about you.

[1:10:13] Josh Reams: Yes, yes. So I always use this as an example that if you go to The Village in Meridian- Uh-huh... there's this huge farm across the street. Alfalfa. It is, it is the biggest intersection in Idaho, the most trafficked. That has to be the most valuable piece of real estate, and yet it has not sold, right? Probably because that farmer knows if he sells that piece of property, he is going to pay a massive bill, a capital gains bill when he dies- Correct... right? Correct. Now, one option is he could hold onto the property, and when he passes away, his kids get a step-up in basis. They inherit it. They sell it the next day, and I always joke they're gonna go running down the street with- Whoo... with balloons and streamers because they are going to have a huge payout without capital gains tax, right? Mm-hmm. And right now he's probably getting a farming deduction on it, all these things. Yeah. I don't know who owns it. This is my theory-

[1:10:54] Shannon Warwick: I don't know

[1:10:54] Josh Reams: ... right? So if, if that's the case-

[1:10:55] Shannon Warwick: But I watch him buck and hay all the time, and I love it

[1:10:57] Josh Reams: ... right? Let's say that he's very charitable, and he says- Yeah... "I wanna sell this property and give money to my alma mater." Well, if he does that, he's paying a huge tax bill off the top. Instead, he could take what is a highly appreciable asset, it could be stocks, could be land, whatever, and give it directly to that charity institution, right? That's it, yes. Now he gets even a bigger deduction- Mm... 'cause he gave away a bigger asset than if he had paid taxes on it first. Right. And the charity gets a larger, you know, option. Mm-hmm. And they get more flexibility on what to do with that charitable gift, and that's a very simple example of stocks and real estate. Yeah. Just giving it, the difference between selling it first and giving the money- Correct, yeah... versus giving the asset, right? Mm-hmm. And then we start to get in more complicated, you know, strategies of giving, right? Yeah. I have a required minimum distribution that I have to do on my retirement account after the age of, what is it now? 73, right? They change it every other year. Mm-hmm. Um, but at 73 I have to start taking this income from my retirement account that maybe at that stage in my life I don't desire or need often, right? Need, yeah. Correct. And so instead, I could direct those to charity, and it's a great way to get- Mm... a deduction and not take that-

[1:12:00] Shannon Warwick: I love that too... additional income. Yeah. Mm-hmm.

[1:12:02] Josh Reams: Right? And there's other things you can do with your retirement accounts as well when it comes to charitable giving.

[1:12:05] Ryan Warwick: And I'll, I'll just make a quick mention. I mean, before 73 when you have to take money out, if you're giving, the tax rules have changed enough- Mm-hmm... to where many people are not getting a full value for the-... charitable deduction on- Right... the tax return. And so once they turn 70 and a half, they can still do what you're talking about as a- Mm. Right... qualified charitable distribution.

[1:12:26] Josh Reams: Yeah. It's a wonderful way to maximize your charitable giving with good tax savings. Mm-hmm. Uh, and even, yeah, being able to start earlier than your normal RMD age, right? Then we get into much more complicated measures of charitable giving, right? Mm-hmm. Uh, one of those is, is a donor-advised fund, which I know you guys are very familiar with. Uh, but a donor-advised fund is you give money, right, essentially, and you take the deduction at the moment you give the money, but then it's invested inside of this fund, and you get to give directions on how that fund is used. And so maybe I have a client right now who wants to give $300,000 to s- some institutions when he passes away. Mm. And his wife also wants to give a, a much larger number than that to charitable institutions when they pass away. And we said, "Well, one of the things you could do," 'cause they have the cash flow to do this and the money in the bank, "is to take that money now, put it in a donor-advised fund- Mm-hmm... get the deduction," and now all of a sudden, what was a, you know, million-dollar total gift is invested and grows. And now you're all of a sudden giving maybe a couple million over the c- course of your lifetime- Yeah... and continuing- Incredible... after you pass away. Mm-hmm. Yeah. And so people who have this awesome charitable intent, you go, "Hey, what if I could get you tax savings- Well-... and-" Just put the charity on steroids. Yeah, exactly. Now, again, I am not a financial advisor. That's your realm, and so typically I have this basic conversation with the client about some of these options and say, "Look, go talk to your financial fe- team about- Mm... a DAF. Go talk to them about the best assets in your portfolio to be giving to charity," right? Where we can really get involved as estate planning attorneys is specific types of irrevocable trusts. Mm-hmm. And this is where we get into that alphabet soup where things really get complicated, right? So we have something that's called a, a charitable remainder trust.

[1:14:08] Ryan Warwick: Can I jump in before we- Yeah, please. So one thing we see, uh, m- more than I would care to, uh, admit it o- over the years, has been a c- a client with IRA assets, and so to, to frame that up, uh, in, an individual retirement account, uh, is, uh, typically, um, has never been taxed. Mm. So if we have, uh, we'll make up a number. We have a, a million dollars sitting there in an IRA. They want to give a couple hundred thousand dollars of that, or, or from their estate to, to a charity. So we have the IRA, and then we have a million dollars outside of the IRA, and guess what? Their will says $200- Mm... charitable bequest.

[1:14:46] Josh Reams: Mm-hmm.

[1:14:47] Ryan Warwick: Their family gets the IRA and the remaining 800,000, and it's really a terrible way to pass money both to the charity and, so- Awful... efficiently, we can give it from the IRA instead. We name the beneficiary. Don't put that charitable bequest in your will or your estate plan, maybe I should say more broadly. Um, and let's name it as a, uh, as a specific beneficiary from the IRA so that your family get the most, uh, bang for the buck- Mm-hmm... by receiving after-tax dollars with, and not your least, uh, valuable asset- Mm... which is your IRA money that hasn't been taxed. But we see it all the time.

[1:15:25] Josh Reams: Mm-hmm. It's an excellent example. I've had this conversation too many times to count in the last 12 months. Y- the client I was just talking about where we were looking at the opportunity of using a DAF, if they decide not to do that, then what is the best way to give that money on death? And so we looked at their retirement accounts, talked to their financial advisor and accountant, and we're rewriting part of their trust to say, "Look, when we die, then we want specifically that charitable bequest to come out of this massive IRA that exists," and hey, more money that goes to the kids that doesn't have those same tax consequences. And in their case, they have some IRAs, they have some 401Ks, they have some really complicated annuities. Mm-hmm. Like, what assets do you want to go to your kids or even your spouse versus what assets can go to charity in a much more efficient way? Mm-hmm. And so people come in and say, "I want to give this much to charity." Awesome. Now let's go down this rabbit hole- Yeah... and figure out the best way to do that- Yes... and making sure that they're not accidentally penalizing their surviving spouse- Yeah... or their children through that process.

[1:16:24] Ryan Warwick: Well, and think about the dollars that are being wasted. I mean, you mentioned earlier the, the family that's going and, and you know, there's a, a legal website, and they create their estate plan documents on there. And, and this same family might be a do it yourself investor with- Mm-hmm... accounts at, at Schwab or Vanguard or whatever- Yeah. Yeah... and they're getting no advice, and they don't know, and so now- Mm... kids get the IRA, and charities get this because they- Mm... named it in their will, and- Right... it could have been a lot better even if they had paid a little bit of fees- Yeah... to an attorney or a wealth advisor over time, right?

[1:16:54] Josh Reams: Same, same outcome in the sense kids get money, and charity gets out- Yeah... you know, but the actual dollar amount- Yeah, yeah... is significantly different just because of one little technique, right? One little thing that can make the big difference in it. Yeah. Yeah. So those beneficiary designations are key. Matching it with your estate plan, like that's a whole nother part of our discussion that we haven't really gotten into, but so many clients who have an estate plan not realizing that those beneficiary designations override the rest- Mm-hmm... of the estate plan. Mm-hmm. And so all of a sudden, we have money going places that they never intended. I can't tell you, and I know you've seen it even more than I have, but people that still have their deceased family member as the beneficiary on their IRA or, quite frankly, their ex-spouse. Uh, my, my legal counseling sessions have often turned into marriage counseling sessions, which I do not get enough pay, payment for. Uh, and trying to deal with these issues-... like, "Oh, hey, I didn't realize your ex was still the beneficiary- Oh... on your life insurance." Yeah. Uh, those questions- Whoops. Yeah... need to be reviewed often and, and frequently. Yes. Yeah. And so- Yes. But very quickly as- Yes... we think about these other types of, of charitable giving- Yeah... with intention, right? Um, a- an example of this is a charitable rem- remainder trust. It's an irrevocable trust. Yeah. Okay. So I'm going to give money to this trust- Mm... and I'm going to get a deduction when I do, and then that, that charity re- charitable remainder trust, the remainder is the charity. So when I die, that trust is going to pay out to the charity. But what's going to happen is I get the deduction now, and I'm going to have that trust pay me back a certain amount of income, and we can set that up based on a percentage amount or an exact amount, and I've put the principal asset in there. I'm getting an income stream in return, that there's some great tax benefits to that as well, and then when I die, everything that's left in that trust goes to charity, right? Mm-hmm. Hence the charitable remainder trust. Really great planning technique, but it's an irrevocable trust, so you can't change it once you put it in there. And secondly, the principal asset that you've put in the trust, you don't have access to it. You have an income stream- Yep... but you're not getting to the asset itself. And so do you really want to restrict yourself in that regard? For some clients, absolutely, they're fine with that. They don't need that asset, they just want the income stream. There's lots of different ways we can set up that income stream. Maybe it's a charitable annuity trust that it's got an annuity that's paying back, but it's going to the charity. In the inverse, we can have a trust that pays the charity during my lifetime or for a set of, let's say, 20 years. Mm-hmm. And then when it hits the 20-year mark, then it pays out to my kids, right? So you can create these trusts that are irrevocable in nature, they do have restrictions, but really great tax savings during your lifetime, way to bless the charity now- Mm-hmm... or in the future, and still have something that's beneficial to me or to my family. And there's, again, there's several different versions of these types of trusts.

[1:19:35] Shannon Warwick: Right.

[1:19:36] Josh Reams: But what a great planning opportunity- Mm-hmm...

[1:19:39] Josh Reams: to maximize your tax planning now, but also maximize your charitable intent. Mm-hmm. And often I say, "Look, it's not, there's not one answer to any-" Mm. "... of this."

[1:19:48] Shannon Warwick: Mm-hmm.

[1:19:48] Josh Reams: Everybody has different tools that they use at different- Yeah... times for different purposes.

[1:19:53] Shannon Warwick: And I think one thing that's kind of resonating for me, I, I wonder if often people avoid... It's, it's an avoidance thing because this is s- this is so weighty. Mm. There's so much here, it's overwhelming. So I think my encouragement would be go ahead and invest in taking the time and paying the fee to have someone sit down and guide you. We talk about a good guide all the time- Mm... and having this trusted advisory team. Yeah. So really you are investing in your peace of mind, in your family's peace of mind, in your legacy, truly to, to take that opportunity now. W- And we say choose your hard. One way or another, things are hard. Yeah, yeah. When would you like that to be hard? Right now when we can actually be intentional, you know, kind of just eat this elephant one bite at a time, or do you want this to be really hard and potentially very painful later? Maybe you're not here, but that's not the legacy you meant to leave. Yes. So.

[1:20:49] Josh Reams: And I know that often can feel overwhelming because there's so many different aspects.

[1:20:52] Shannon Warwick: So many different aspects, yeah.

[1:20:53] Josh Reams: Do it in chunks. I mean- Definitely... it's very, very rare, if we were to take that example of a high net worth individual in their 50s, I'm not doing this all at the same time, right? We're gonna start with the basics. We're gonna make sure that their trust is set up, make sure the basics that are set up for their kids are set up. Yeah. And then as they- Right... age, you have a foundation to build off of.

[1:21:11] Shannon Warwick: I... See, and I love this, and we talk about these, these documents, uh, Life Raft in particular we've chatted about so much, but these are living documents. That's how we see. Mm-hmm. This is, this is a living, kind of a breathing, morphing thing, and we go back and we visit it often, right? And we regroup when we need to regroup, and we have good guides that help us make adjustments along the way. Be okay with that. Absolutely. Yeah. So as we're closing, what is one big takeaway that- Mm... you want listeners to walk away? If there's one thing, is there something that sits just kind of- Yeah... sticks in your craw?

[1:21:43] Josh Reams: The, the biggest thing I can tell families- Yeah... is just take the time to educate yourself. Mm, love it. Take the time to have the conversation with your family as a whole and understand what the options are. Doesn't mean you have to even make a decision yet. Understand the options of planning and why it's important, and then you can go from there. It's why I'm a big proponent about educating clients before they make any decision or even, quite frankly, even have to hire me, is to say, "Look, here are the options you have. Here's why they're important. Now go home and think about it for a while. Like, go home and make sure you understand what these are, and we can come back and revisit these discussions." Mm. Education is so key, and because it can feel overwhelming- Mm-hmm... we just don't start, and the, the outcome of that is disastrous- Disastrous... on all the categories we've talked about today. Right. Educate yourself and communicate.

[1:22:32] Ryan Warwick: Yeah.

[1:22:33] Shannon Warwick: Thank you, Josh, for this.

[1:22:34] Ryan Warwick: I'd, I'd love to make one- Yeah... one final statement that, that I think we, we didn't touch on, and that is- Mm... let's just assume, and we've, we've seen this a lot, let's assume people do this. Mm. They get it done. We've, we've pat ourselves on the back. Yeah. Now guess what? Five, 10, 15 years have passed.

[1:22:50] Shannon Warwick: Yes.

[1:22:51] Ryan Warwick: Is it still done?

[1:22:52] Josh Reams: Yeah.

[1:22:53] Shannon Warwick: That's why we say it's living.

[1:22:54] Josh Reams: I was thinking this- Yeah, yeah, yeah... in my, in my head. I typically tell clients that as a general rule, review your documents every five to seven years.

[1:23:03] Ryan Warwick: Right.

[1:23:03] Shannon Warwick: Yeah.

[1:23:03] Josh Reams: Maybe, maybe even sooner, but five to seven is like- Okay... that's the top end of that- Okay... where we're saying, look, you can think about where you two were seven years ago. Oh. How much has changed?

[1:23:12] Ryan Warwick: Yep.

[1:23:12] Shannon Warwick: Y- yeah, we... You know what? When our daughter turned, our oldest daughter- Mm-hmm... turned 18, I, I looked at Ryan and went, "She's legally an adult." Yeah. "We have to change our will. Oh my gosh."

[1:23:24] Josh Reams: Yeah.

[1:23:25] Shannon Warwick: It was just kind of this moment of, oh.

[1:23:26] Ryan Warwick: But it's every- it's everything from assets growing, the rules changing. They've been- Yes... changing so rapidly. Yes, yes. Um, so it was just a, I, I just wanted to get that in there that-

[1:23:35] Shannon Warwick: No, it was awesome. I loved-

[1:23:35] Josh Reams: Yeah

[1:23:36] Ryan Warwick: ... people, um- I'm thinking- It's why in the Life Raft program we- Yeah... we have life cycle, the rhythms and patterns, and you can't just put these things on a shelf and assume they're done forever.

[1:23:44] Shannon Warwick: Mm-hmm.

[1:23:44] Josh Reams: And sometimes that cycle is not the five to seven years. Sometimes someone dies unexpectedly. Yes. Somebody moves, assets change- Growth... either up or down. You move to a different state, different rules. You not have- Exactly... property in Oregon that has an estate tax. Right. So there's that generic rule of five to seven, but there are other things that are gonna happen-

[1:24:01] Shannon Warwick: There are extenuating circumstances where-

[1:24:02] Josh Reams: ... that you should go-... sooner... I think I need to double check where we're at in this process.

[1:24:06] Shannon Warwick: Absolutely. Yeah. Absolutely. Thank you so much- Thank you... for being with us on this topic.

[1:24:09] Josh Reams: It's my pleasure. Thank you.

[1:24:10] Shannon Warwick: Yes, thank you.

[1:24:11] Ryan Warwick: Thank you for listening to the Worth Beyond Wealth podcast. If you liked this podcast, please like, share, and subscribe. The highest compliment you could give would be sharing this with a friend. Thank you. The opinions expressed in this program are for general informational purposes only, and are not intended to provide specific advice or recommendations for any individual or any specific security. RW Investment Management, LLC, dba RW Investment Management, is a registered investment advisor. Testimonials given by current clients are not in exchange for compensation. This document is solely for informational purposes. Advisory services are only offered to clients or prospective clients where RWIM and its representatives are properly licensed or exempt from licensure. Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital. No advice may be rendered by RWIM unless a client service agreement is in place. RWIM is not a legal or tax advisor.