[Speaker 1] (0:00 – 0:39)
Hi, I’m Armand Roman, host of the Founder’s Guidepost. You’ve built your business over decades, and now it’s time to think about that once-in-a-lifetime exit. You’ve come to the right place.
Here, you will hear business exit professionals talk about what you should know before exit. Besides hosting the Founder’s Guidepost, I’m CEO and founder of Axiom Founder’s Family Office, working with founders to help preserve their American success story. And it all begins with a founder stress test.
We also host the Scottsdale Founder’s Forum for the founder considering exiting in the next 36 months. Here’s to your hard work and to your American success story. Enjoy.
[Speaker 2] (0:40 – 1:54)
Welcome to another episode of the Founder’s Guidepost. I’m Thomas Markey, CPA. I work here at Axiom Founder’s Family Office.
Today’s topic is going to be estate document review. What issues should you consider when reviewing your estate planning documents? It may be time to review your estate documents.
Just like your annual physical, it’s a good idea to schedule a checkup for your estate documents to ensure everything is as you intend. Granted, probably not the most exciting activity on your to-do list, but you don’t want to let important details derail all the work you’ve done. The good news is you don’t have to do it alone.
Part of the service that we provide here at our office is we coordinate with you and your attorneys and comprehensively review the key considerations that can inform and affect your wills. Living trust, irrevocable trust, power of attorneys, living wills. To make the most of your time, our office has created a checklist that Armando, Roman, and myself are now going to walk through.
Armando, take it away.
[Speaker 1] (1:55 – 19:14)
Thank you, Tom. Estate planning is not the most exciting thing and it often makes people think about their own mortality. We often tell folks, as you know, that people, we have an expiration date.
We just don’t know when that is. It’s really, really important that we take the time to keep those estate documents updated because on day one, it’s just you. Then it’s you and your spouse.
Then kids come along. The kids grow up and they leave. All those changes mean that documents also have to change to keep up with them.
What I’m going to do is bring up this estate planning checklist that we have. You should be able to see that now on the screen there. In this estate planning checklist, I’ll just go through and touch on a few things that really matter here.
Upper left-hand corner is, have you recently changed residency? It’s very common for people to move to Arizona from another state. They often forget that they’ve got to look at those estate documents because they are state-by-state specific.
Each state has different laws. If you move here from Chicago or New York, you’ve got to make sure to get the Arizona documents done because it matters when your time comes. The second point on there about applicable laws and any changes since your last documents were executed, it’s really important to be aware of what is happening.
A big thing happening right now that most people are aware of is tax rates are going to go up in 2026 and the estate tax threshold is going to drop. What that means is if you have a taxable estate, meaning that you and your spouse combined net worth is somewhere missing around $26 million today, when that threshold drops from $26 million to something lower, you may be missing out if you don’t get with your attorney and get your estate documents updated because there are moves you can make now to make full use of the current exemption. If you wait too late, it’s gone.
Once it’s gone, it’s likely gone forever. This third bullet, you need to confirm and share location of your original documents. We always advise that when you have adult children, make sure that at least one of them knows where documents are or make sure they know who to call.
If mom and dad suddenly don’t make it home from vacation, they know who to reach out to who knows where those documents are, where the assets are. Often that’s either the estate planning attorney or it’s us, the wealth manager family office as well that would have those documents and know who all the relevant players are who can bring those pieces together and keep the family’s wealth intact for those beneficiaries. That’s how we can certainly help.
Next on this general power of attorney, the general POA. One misconception is that with the power of attorney often called a POA, the power of attorney that expires when the person dies. Meaning if the estate documents are safe for mom and dad and there’s a power of attorney that say a brother has, when that couple passes, that POA, it terminates.
That POA, power of attorney, it no longer exists. It’s important that the documents that are written are very clear that while you’re alive, who is responsible if you cannot make those decisions for yourself? Often with the husband and wife, it’s each other, then maybe it’s a sibling.
But then once your time comes and you expire, you’re gone now. Now who has control? Who has authority over say the assets and over being the executor of the will and that kind of thing?
Those agents are really, really important. What we often see is people have done these documents years and years ago and maybe at that time there was a best friend and that best friend is kind of out of the picture now. Or maybe it was a sibling and that sibling has gone down a dark path and he or she is not the best person to be responsible once you’re gone.
It’s super important to keep on top of who is the person who you really want to be in charge as you go forward. That’s how we can help. We’re looking at these documents.
We’re asking the questions because we do things five, 10 years ago and we forget. When we ask the questions as we look at estate documents, we often hear, oh yeah, oh, that’s right, oh yeah, because it’s time to update and make things current. Do you want to limit your agents and powers?
Is there a need or good reason for a general POA? Have you revoked? Again, this gets to the same point that keeping all those people current is just very, very important as you go forward.
Upper right-hand corner, healthcare power of attorney and living will. This can be very sensitive. Healthcare power of attorney means and we think about people being in a comatose state in the hospital.
If you are in a hospital bed and you cannot make decisions, who has the healthcare power of attorney to make decisions for you? It’s really, really important and I know this from firsthand experience. My father was in that condition just not even a year ago.
My brothers and my mother and I, we had very serious conversations about what do the documents say, what would my dad have wanted and what instructions did we need to give to the physician so physician knew what he was able to do and what he was supposed to do given the family’s wishes and the patient’s wishes. Again, that healthcare POA, extremely, extremely important and you want to get that done in advance. You don’t want to wait until there’s someone in a deathbed or near death where now you’re trying to get these things figured out because the emotions run very high at that time when you have that kind of thing happening.
That’s this paragraph here about end of life. Just make sure that it’s clear. Sometimes the healthcare POA power of attorney says who’s in charge, but it doesn’t talk so much about end of life.
I remember talking with the physician when the physician, there was what’s called a DNR, do not resuscitate. Do not resuscitate, well, that means that if the person is going downhill and looks like he’s going to die, the doctor, even though we had those records in my father’s documents, the physician still asked, he said, does that mean you do not want a breathing tube inserted if your father needs that? So my brothers and I, my mother, we all looked at each other and said, yes, that’s what that means.
That’s what my father would have wanted. So even if your documents, you think they might be clear on all of that, I can tell you from experience that you want to make sure you take a good close look at those documents and you talk with your attorney about what they say and what you want to have happen if you’re in that situation. Are you wondering if you’ve missed anything in your planning?
We hear that a lot from very smart, very successful people. And that’s why you may want to know more about our Founder Stress Test. If so, go to axiomcorp.com.
The header now, last will and testament, personal representative, an executor. We often see this in the movies where there are the beneficiaries waiting to hear who got what from the will and the estate. Well, the executor is the one that makes sure that everything that’s written in those documents, that that’s what happens.
And so it’s so critical. And as we have conversations with our clients, it’s just so critical that whatever you want for your beneficiaries or you don’t want for them, that it says it in writing in those documents. And what you might feel and think right now today on who should get what and who should represent you, that might change in a year.
It might change in a year. It might change in five years. So very, very important to revisit those documents every so often.
The last bullet on this page, do you have minor children? Well, the biggest question is if the parents of those minor children are suddenly gone, who is going to raise those kids? A brother, a sister, a grandparent?
You decide while you’re alive, because you certainly don’t want the courts or the state to decide for you. You are in control. You’re the mom or you’re the dad.
And you get to decide while you’re alive that if you’re gone, who is going to be in charge of raising your children. When they become 18, they can, they’re adults, they can do what they want. But really, really important to make sure that those decisions are clear and in writing so that the family is as best as can be if something horrible happens within the family there.
Left-hand corner up here, Last Will and Testament continued. I’m just scanning these to see what else might be in here. There’s inheritance tax burden, and that gets to a taxable estate.
So again, the threshold for a married couple today is about $26 million, close to $27 million for a single person, about $13 million. Meaning if your overall net worth is below those numbers, then there is no estate tax. But if you’re close to that number or above that number, then that is an opportunity that you have to get with your attorney, get with your tax CPA, get with us, have the conversation so that you can do what you can do to minimize that estate tax and or eliminate the estate tax all together.
Because there are very legal ways to do those, but you’ve got to do it ahead of time and plan ahead to get it to happen. Does your will refer to a tangible personal property memo? Yeah, let me just kind of go past that.
Revocable living trust, trustee appointments, the trustees. I’m going to talk about one thing here that I hear often that people seem to forget in their documents. You hear about beneficiaries and you hear about trustees, and there’s what is often called a beneficiary trust.
And I’ll give you an example of a beneficiary trust that we saw that the intent was great. It was fantastic. The intent was this, when mom and dad’s time came, then their daughter would be the trustee of her own trust, where adult daughter is the beneficiary and adult daughter is also the trustee.
So she is in control of those assets and those assets are creditor protected. Meaning if there’s a lawsuit, they’re in a separate trust, they cannot be touched. That’s what’s called creditor protection.
Great idea, fantastic idea. But the problem can be that if daughter has a spouse that has undue influence and maybe it’s just not the best relationship, then even though those monies might be in a trust and that daughter is in control, imagine a married couple that lives together, sleeps together. They are a married couple, a family.
It’s very feasible where you can see where one spouse can put constant pressure on the other to where the monies come out of that trust and they get spent on things that mom and dad never wanted to be. So the simple resolution to that kind of a situation is to appoint a corporate trustee. And what the corporate trustee’s job is, they are tasked with reading what that estate document says, what those trust documents say, and then only giving out monies in accordance with those trust documents.
So if now daughter and or husband want to pull out money to go buy a yacht, well, if the trust says they can do that, then okay, trustee is obligated to pull the money out for a yacht. But if that’s not what you want, then you write in there how those monies can be used. And you’ll often hear the acronym HEMS, Health Education Maintenance and Support, HEMS. That acronym is intended to take care of the things that are necessary for ongoing living and ongoing health of the beneficiary of that trust. So when you’re looking at your trust documents, I would ask you to be very careful on who you select as trustee. I would also ask you to be very careful to ask yourself, your adult, your child, your adult child who is the beneficiary of this, will they be strong enough or will it put too much pressure on them if they are their own trustee of their trust? And I’m not so much even thinking about them, because you might have an adult child who’s just fantastic, smart, responsible, and all those great things.
But who is their spouse? And what pressure might the spouse put on that relationship where they might invade the trust and pull all the money out because that’s just what the relationship requires? So let me go to this irrevocable trusts in the upper right hand corner.
You can see up here ILIT. ILIT can be a great tool. It can also be the wrong tool or strategy.
And ILIT is basically an irrevocable life insurance trust where the basic idea is you put an insurance policy in that trust. And that trust then when you die now suddenly turns into cash because the life insurance policy pays out when you die. And now you have money to pay for the estate taxes.
And there’s a reason why that trust exists, because if you don’t have that trust, instead you just have the life insurance policy, then your estate is what it was before you died plus the proceeds of that life insurance policy. The way you avoid that is you put that life insurance policy into its own separate trust, separate from you. That’s why it’s called an irrevocable life insurance trust.
And just continuing, SLAP is a way, it’s a spousal lifetime access trust. The idea is as a married couple, you have the ability to do some transfers there amongst yourselves and take advantage of the estate tax threshold. So I’m giving a very high level talk or touching on these at a very, very high level, lots of details, all those details matter.
And that’s why you’ve got to have those conversations with an attorney who really understands these strategies and these vehicles in the context of the state where you live, because it matters. QPERT for your personal residence, income tax returns, irrevocable trusts. So I’m just looking now at the lower right-hand corner where it says miscellaneous and seeing what that says there.
Pre-marital agreements. Their pre-marital agreements are prenuptial agreements. And if you have one of those in your marriage, very important that your estate documents are aware of that, that your lawyer’s aware of that, so that when he or she is drafting, they understand where things are, they understand what you want.
And I would also, one thing that we do here is when we take a client to an estate lawyer to have documents put together, and we talk about the strategy that we’re trying to accomplish with the attorney, we also review those documents before the client signs them, because people are people and people make mistakes. And we don’t want to see a mistake after someone has already passed. We’d much rather see that error before it’s signed while the person is alive and those documents can be edited and then signed and then put into the permanent vault so that when they’re necessary, they can be brought out to enact the desires of the person who has now recently passed.
So if you’ve got questions or thoughts or concerns, and I know I just spit out a lot of information, but the whole idea of this checklist is that you get an idea of what matters when it comes to thinking about your estate documents. People get these done, they leave them sitting for 20 years, and then they look at them again later. Well, in 20 years, you’ve already lived an entire lifetime for some people.
And it’s just critical these documents remain current with your life today and with what you’re looking for going forward.
[Speaker 2] (19:15 – 19:21)
How often do we see clients create these documents and they don’t follow through as far as changing the registrations?
[Speaker 1] (19:21 – 20:28)
Well, that’s a good point too, Tom, that the documents are the documents that I’ve seen too many of these, we’ve seen too many of these documents drafted. And then there’s a letter of instruction from the attorney to the client saying, okay, client, now that your documents are done, here’s this beautiful three ring binder, looks nice and official and legal. And yes, it is.
But there’s a sheet of paper in there that says, client, now you have to do this. You have to go to your bank and you have to retitle your bank accounts. You have to go to your investment advisor and retitle your investment accounts.
You have to update the beneficiary on your IRAs, your 401ks, your defined benefit plans. And you have to go to your life insurance company and update the beneficiaries on your life insurance policies. You have to take the title of your home and now retitle that with Maricopa County here in Arizona, because yes, we did it in these legal documents in this three ring binder, but it’s not official till you go to the state and they record that.
And now it’s done. So thank you so much for bringing that up, Tom, because we see that a lot, way too much.
[Speaker 2] (20:28 – 22:05)
And that’s part of, sorry if I interrupted you there, but that’s part of the beauty of working with our office, our family office. Let’s talk about that for a second. So as a family office with our clients, we are trying to find efficient ways to help them accomplish their goals with the least amount of risk, which includes from a tax perspective, wealth protection, wealth transfer and charitable giving.
And these state documents kind of cover a lot of those different subjects. So as an example, you know, you and your spouse can give double tax free. So with our clients who may be even below that $25.84 million exemption, we’re looking at strategies going forward into the future because we know they’re going to have a taxable estate probably at some point. So current laws doubled that federal estate and give tax exemption through, as Armando said, December 31st, 2025. It’s currently 12.9 per person or 25.84 million per couple in 2023, but it’s scheduled to return to 2017 levels soon. So are there strategies that our office can look at, coordinate with your CPA and your attorney to not only give you peace of mind, as Armando said, from a lot of those information as far as, you know, healthcare, power trains, et cetera, but also from a tax perspective, somebody’s decisions could be a million dollar swings one way or the other.
So that’s our job as a family office is to find those efficiencies and maybe do some tax planning strategies.
[Speaker 1] (22:06 – 22:10)
Yep. And always looking at the big picture, always look at the big picture. What does that family?
[Speaker 2] (22:10 – 22:50)
Right. I mean, you, you ratted off a bunch of different acronyms that hopefully we didn’t put our audience to sleep, but that’s our job is to understand those, those, those terminology, and then bring in the experts that may be specialized in those different types of trust. If it’s applicable, right, exactly.
So if you need help with those strategies or understanding this terminology, that that’s what we currently do with our clients. Give us a call at 4 8 0 3 6 7 9 0 0 0. Armando has also availability with it for what we call a discovery call a 20 minute phone call.
Get your questions in. Does it cost you a dime and see if we might be a good fit for you and your family?
[Speaker 1] (22:50 – 22:59)
Yeah. And if we’re not, that’s okay, but we’re certainly happy to answer questions and have conversations to see where you are, what you’re doing and offer some suggestions of what might be helpful.
[Speaker 2] (22:59 – 23:05)
Right. Again, it’s not fun. A lot of people don’t, it’s not exciting subject, but holy cow, is it important, right?
Armando?
[Speaker 1] (23:05 – 23:21)
That’s right. Absolutely. Once you’re, once you’re gone, you’re gone.
And the people you leave behind, you don’t want to leave them with a mess to clean up or with litigation or fighting from other family members and siblings. You don’t want that. No parent wants that for their child.
None.
[Speaker 2] (23:22 – 23:32)
All right, great. All right. Well, thanks for this is the latest episode of our founder’s guideposts where we’re kind of touching on our checklist that we have and the customer service that we provide our clients.
[Speaker 1] (23:32 – 23:54)
Hope you enjoyed this episode of the founder’s guidepost. Whether exit is on your immediate horizon or maybe 10 years down the road, there’s something here for you. Wondering if you’ve missed anything in your planning, schedule your 30 minute founder’s strategy call at axiomcorp.com.
And congratulations on your business success. You are the American success story.
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