Keith McManus

Keith McManus - estate planning

Estate planning helps us protect the people who matter most to us. It ensures that our legacy is carried out the way we want it to be and protects the people we love. It’s one of the most important pieces of a retirement plan—and there are many ways for this process to go wrong. 

To help us understand how to build robust, comprehensive estate plans, we’re joined by attorney Keith McManus. Based in Cape Cod and Plymouth, Massachusetts, he’s the founder of McManus Estate Planning, and has helped thousands of families and individuals successfully transfer wealth across generations since 1996.

Today, Keith joins the podcast to give us a basic breakdown of estate planning documents, the common misconceptions about estate planning, and the pitfalls he sees in many estate plans.

In this podcast discussion, you’ll learn: 

  • When it’s the right time to start estate planning—and when to revisit your estate plan.
  • How major legislation like the SECURE Act can dramatically change an estate plan.
  • Why having only a will is a massive mistake—and why Keith recommends working with a highly specialized estate planning lawyer.
  • The major taxes that come into play when transferring wealth across generations.
  • Why there’s no one-size-fits-all approach to estate planning.

Inspiring Quotes

Estate planning is something that is filled with potential opportunities for tax savings, for legal protections, and for protecting the people most important to you. It’s definitely not something you do just at the end of your life.” – Keith McManus

Do not assume that a trust you already have somehow protects assets for children against divorces or somehow manages to avoid taxes because it’s a trust. Please assume the opposite.” – Keith McManus

Resources Mentioned

Read the Transcript

Keith Ellis: Welcome everybody to the Retirement Road Map presented by SHP Financial. We are lucky enough to be joined here today by Attorney Keith McManus. Keith McManus is an attorney that is serving Cape Cod, Massachusetts, and the surrounding areas. Attorney McManus is a JD and is recognized as a leading estate planning attorney and educator here in Massachusetts. In addition to his 24 years of experience as an attorney, he is the founder of the law offices of McManus Estate Planning with offices based out of Cape Cod, Massachusetts and Plymouth, Massachusetts.

McManus Estate planning has an extensive experience from simple to very complex estates. It has helped thousands of families and individuals successfully plan wealth transfer to the next generation. A talented attorney dedicated to helping individuals and families make the best legal decisions. Keith has been practicing law in Massachusetts since 1996, and he develops long-term client relationships, serving as a trusted advisor. Keith guides his clients as they preserve wealth, protect their loved ones, and protect and ensure their legacy. So, we’re lucky enough to be joined here by Attorney Keith McManus.

[INTERVIEW]

Keith Ellis: Keith, how are you doing?

Keith McManus: Doing very well, Keith. Thanks so much for having me on the show. It’s great.

Keith Ellis: I know like I said, we’re excited to do this one, this podcast here today because when we’re meeting with families, time and time out and as part of our Retirement Road Map Process, we want to help the families we work with build an income plan, make sure that their income is going to last as long as they do, make sure that their spouse is taken care of, make sure we look at the impacts of inflation. We also want to make sure that their investment plan meets their current risk tolerance. And we’d start to look at different tax strategies where you come in there as well as health care strategies. And finally, and I think one of the more important pieces of the retirement road map is the estate planning piece.

Now, we’re not attorneys, so we rely on someone like yourself to help drop the documents to help clients kind of write out their wishes, how they want this all to go. So, I guess from an estate planning perspective, if you could kind of give the basic breakdown of estate planning documents some of the more important ones, some of the ones that maybe people have misconceptions about and some of maybe the pitfalls that you see. I know that’s three big things, but I think that’s a great way to get jump right into this.

Keith McManus: Happy to do it, Keith. Yeah, so first of all, to your credit and estate fees as well, a lot of people overlook this. It’s not pleasant to think about sometimes your estate plan and where things are going to go if people aren’t well, how things are going to shake out if someone becomes disabled and then certainly, when people die. So, SHP has done a wonderful job prepping its clients and understanding this is a very, very important task. Estate planning is not something that should be put off, but it’s easy to put off. Estate planning is something that is filled with potential opportunities for tax savings, for legal protections, and for protecting the people most important to you as people go through their life accumulating wealth. It’s definitely not something you do just at the end of your life. Estate planning is something that should be done up front as soon as people start accumulating some wealth, even if it’s a modest estate, and it should continue to be refined and built upon as people accumulate more and more wealth.

Keith Ellis: It’s funny, I was going to ask you because we’ll see folks come into the office and they’ll have an estate plan that they did back in 2007, 2008. How often should you revisit your estate plan?

Keith McManus: Yeah. So, once the plan is actually in force and you know you have an up-to-date plan that it’s just been done, that it’s been properly funded, once you have all those boxes ticked off, you probably going to want to look at the estate documents about every three to four years or sooner if there’s a change in health or an abrupt change in the person’s financial well-being. So, I’d say about every three to four years is the general answer, but sooner, questions arise, people can always email or call with questions. You might want to sit down with a financial or estate planning advisor and sometimes do so together.

Keith Ellis: Now, not to jump right into it, but recently, about a few years ago, we had the SECURE Act passed.

Keith McManus: Yeah.

Keith Ellis: How did that affect people’s estate planning? And if someone had an estate plan prior to the passage of that law, is that something that they need to get ahead of?

Keith McManus: Yeah. So, every so often, every few years, you’re going to have a major piece of legislation come through, like the SECURE Act. The SECURE Act dramatically changed a lot of different things with regard to people’s financial affairs, and it also affected many estate plans. So, if people aren’t aware of what the SECURE Act is, they could certainly contact one of our offices, we’d walk them through it, but in general, if you had an estate plan and it’s more than a few years old and it hasn’t been looked at because of the SECURE Act, if the advisor or the draftsman for that estate plan hasn’t sat with you to go over it, it probably should be looked at. This has a dramatic change in how people deal with retirement accounts that have been inherited, and especially how they interact with trusts. So, previous to the SECURE Act, you had attorneys that were drafting trusts doing so in a certain way. There’s a certain standard of practice that would be considered best practices, and those bags of best practices changed after the SECURE Act. We have more options now to try and protect families.

So, in a nutshell, we could spend an entire podcast talking about SECURE Act. I’d say the quick takeaway from this podcast is if you haven’t done that or you don’t even know what I’m talking about, the SECURE Act, then you should certainly contact one of the offices to have your existing trusts looked at to make them comply with the SECURE Act. And certainly, if you’re just creating an estate planning, you’re thinking of a new one, rest assured that is something that we were automatically going to be doing for new clients is going to make sure that the trusts comply completely with those Acts as well as many others.

Keith Ellis: Yeah, when that law was passed, the following January, we put out some educational information on video, and that can be found on our website, SHPFinancial.com. So, like you said, if people don’t know what the SECURE Act is, they’ve never heard of the SECURE Act, they don’t know the impact of how the SECURE Act could affect their retirement accounts, their IRAS, Roth IRAs, 401(k)’s, please go to SHPFinancial.com and watch that video. It’s about 10 to 15 minutes, but it’s very, very educational and can really help guide you and know what the impact of this new law is to you and your family. So, one of the things, I’ve sat in some of your meetings before.

Keith McManus: Oh yeah.

Keith Ellis: Quite a few of them, actually. And one of the things that folks bring up is wills and trusts, obviously, and things like that. I guess, what is the benefit of setting up a trust versus just having a will for the folks out there that are really looking to educate themselves and start this process?

Keith McManus: Yeah. So, Keith, it’s a good intro. There’s a lot of core documents in most estate plans. There are dozens of documents in really robust estate plans, but two of the most critical are going to be wills and trusts. Now, wills are very common. Wills are things you see in the movies. You see them on TV. People talk about wills. Don’t forget to do a will. In reality, I think people oversell wills a bit. Wills don’t do everything people think they do.

Keith Ellis: Well, they think they avoid probate.

Keith McManus: Yeah, and they don’t. And they don’t do what people want them to do, which is transfer wealth efficiently to the next generation and maybe with even some tax protections and other protections too, like asset protection.

Keith Ellis: So, talk to me about the efficiency.

Keith McManus: Yeah. So, wills don’t have much efficiency at all, in Massachusetts, especially. You have many, many states that have laws on the books that indicate that if you die with the will, and the assets are actually going through the will as opposed to having a direct beneficiary or a joint account holder or being in a trust, then the assets that actually go through the will end up going through a probate court where you’re paying attorneys like us or someone like us hourly for an indefinite period of time. It could be weeks, it could be months, right? Who knows? But it’s all bad. Nobody wants to be in a court situation where you have to pay attorneys, and someone’s died, and it’s for an indefinite period of time. So, that’s kind of what you’re signing up for if you have a will-based plan, it’s not that great.

Now, trusts, on the other hand, trusts are where estate planning attorneys really shine, and someone who specializes in just doing estate planning can really stand out from the crowd of attorneys that occasionally do estate planning. So, first of all, wherever you’re located, you want to have someone who’s an attorney that does just this, doesn’t do any other areas of practice in their law firm at all. That’s my recommendation.

Keith Ellis: Well, it’s funny you say that because I’ll meet with folks and I’ll say, “Hey, look, you should probably, here are three or four different attorneys’ names.” And this is why we work with these individuals is because if you think about it, you want them to focus only on this where they might have a relative that does this real estate, divorce attorney, this and they wear many, many hats, so maybe it’s not the specialization. And I think when you’re dealing with wealth and you’re dealing with the idea of transferring wealth, transferring wealth efficiently, if it’s me in my estate, I want someone that is really the specialist in this area. So, I really like that tidbit in that idea.

Keith McManus: Yes. So, let’s build upon it. So, from that, you have to look at the world of structures, legal structures that are going to give your family an advantage. Now, if you think about it for a minute, this is very commonplace in the general world out there. Businesses set up structures all the time to get tax advantages and legal protections, don’t they? They set up as things like corporations, as LLCs, as family limited partnerships for family-owned businesses, all kinds of things like that. And what are these business owners doing? They’re taking advantage of the tax code in the laws, and they’re getting good specialized advisors to harvest tax and legal benefits.

Now, families do that too often with trusts. Trusts are analogous to what corporations and LLCs are to businesses. For families, like your family, my family, and many, many other families who have good advisors, these advisors are going to use a combination of trusts to try and avoid probate, to try and deal with taxes, and to try and protect wealth for subsequent generations. These are all easily accomplished, but they definitely need some time and attention. It doesn’t happen on its own.

Keith Ellis: Now, the probate is a long, arduous process that you were referring to earlier that really no one wants to go through it. Like you said, you’re showing up in court, and your estate goes into court, and you’re paying that attorney to settle it over, could be weeks, could be months. I’ve seen it go well over a year in some cases. So, I think that’s an important thing to note. And you said earlier, it’s efficiency, right?

Keith McManus: Oh yeah.

Keith Ellis: Most of the folks that we work with and the families that we represent and work with, that’s the one word that they use. They say, “Look, I want my estate to pass efficiently to the next generation.” Then, well, we start to look at its taxes. So, I know this is more maybe specialized, too, here in the state of Massachusetts, but I know there are other states that have this issue as well, but…

Keith McManus: Absolutely.

Keith Ellis: Here in Massachusetts, we have an estate tax.

Keith McManus: Oh yeah.

Keith Ellis: And it becomes an issue, but there are strategies you can use. So, I was hoping you could expand upon it.

Keith McManus: Sure. So, there are two significant taxes that often come to play when people are trying to move wealth between generations. One of the most significant taxes is the estate tax. It’s also known as a transfer tax or a death tax, depending on who you ask. And then the other is the capital gains tax. So, both of these need to be looked at. I think also income taxes should also be looked at as well, but these are all things that you can address through trusts. So, in Massachusetts and many other states, they’ve decoupled from the federal estate tax system. This means you have estate level, estate tax or death tax, and you have a federal, estate or death tax.

Now, the federal estate tax at the moment is very, very permissive. It’s very unlikely people are going to have to pay a federal estate tax since they’ve got a huge estate. In Massachusetts, however, the Massachusetts Department of Revenue has an estate tax on states that have a net value of only $1 million or more. And that’s inclusive of everything. So, it includes the death benefit of the person’s life insurance. It includes their house, their investments, their retirement accounts, everything down to tangible.

Keith Ellis: So, I have a term insurance for a million dollars. If something happens to me…

Keith McManus: You get a taxable estate.

Keith Ellis, Jr: Oh, wow.

Keith McManus: And that’s crazy.

Keith Ellis: That’s aggressive.

Keith McManus: And not only that, if you’re over a million dollars, they’ll tax the whole thing, they don’t just ignore the first million. One of these taxes that has some silver linings to it, we do have planning opportunities where we can reduce or eliminate this tax, but again, you have to actually come in and sit with somebody who understands this, and absolutely a great piece of advice to give a listener is if you need to tell your attorneys or your financial advisors about this stuff, and they didn’t mention it to you, the advice is going in the wrong direction. You’re paying them. They should be raising these issues with you. If you have a financial advisor who hasn’t brought this up with you, you might want to find a different one who actually understands this stuff. You’ve done an estate plan, and the estate planning attorneys never even looked at the estate tax or mentioned it or capital gains or protecting wealth, maybe it’s not the right fit.

Keith Ellis: It’s funny. Families come in all the time, hear us on a podcast like this radio show, see us on TV or whatever, and we start to dig into their financial situation and we start to mention the estate tax or the transfer tax, and it’s never brought up to them. They don’t even know about it. And it’s just an interesting thing, and I think you’re right there, it’s important for people to understand, one, what it is, how it works, but two, the planning opportunities around that, so.

Keith McManus: Absolutely.

Keith Ellis: We’re glad we crossed that and discussed that a little bit. I guess from my perspective, what are some of the common misconceptions that are out there that people need to be looking for, these misconceptions that sometimes you hear that, as you start to work with a family and work through their documents and work through what they want and their general goals and you hear what they say, sometimes, like, wait a minute, that’s not exactly how that works? You know what I mean?

Keith McManus: Yeah, oh, absolutely. There’s a lot of misconceptions. So, the first misconception we often hear is people not knowing what all the different goals are of an estate plan. I’d say that there are three primary goals – avoiding probate, addressing taxes, and protecting wealth for the future generations, protecting those inheritors. One of the misconceptions people have is they think all trusts are the same. They say, “Well, I set up a trust, so I don’t need to set up another one,” or “I’m sure my trust does this, that, and the other thing. After all, I heard about it on the radio that trust can do that.” So, first of all, don’t think of trusts as something that people just stamp out. Estate planning attorneys are supposed to draft these things like a computer program, so it achieves a certain purpose. If you said, “Gosh, I think all trusts are the same,” you might also say, “Well, are all books the same?” No, it’s something that could be called a book, but it doesn’t mean that it says the same thing as in another book. So, think of trust that way, think of it like an open-ended computer program or a book that you could write.

Now, the three main goals of this particular computer program or book are going to be to avoid probate, to knock down taxes that often accumulate during life or happen upon death, and then to make sure to protect the people that are going to receive it, so no one takes it from them as they move ahead in life, or if they’re in a bad spot. So, the misconception starts sometimes with that, with people saying, “I already have a trust, I’m going to assume it does all this stuff, and it’s not going to look at it.” So, I’d say number 1, review your plan, even if you think you have a great plan, even if it was just drafted, it makes sense to go to a specialist, an attorney that just does estate planning to even have them give you an opinion on it. Does this do what I think it does? So, I think that’s a great question for a listener. Does my trust really do what I think it does? Maybe even write down what you think it does and roll it by your financial advisor and your estate attorney. And if they don’t know, go to a specialist. It doesn’t mean you’re going to be going there every six months, like you’d go to a doctor, a dentist, or something like that. Estate planning attorneys, you’re usually going there every three or four years.

Another misconception is people often are not aware of what taxes are out there that they might have to be on the hook for. The third misconception is people sometimes– not necessarily misconception, I’d say it’s an omission. Sometimes people will just leave assets directly to someone. So, think for a second, Keith, about how most people who haven’t really been educated about this, how they’ll fill out a beneficiary form for a life insurance policy or their retirement account. What do they do? They own it, they leave it to their spouse upon death, and then they name their kids as the beneficiary. Yeah, that’s what we see all the time and usually see that for people that are working with advisors that don’t really get what a trust is supposed to be doing, or maybe the people don’t have a trust that does these things.

Now, wouldn’t it be so much better to leave assets to a spouse and then perhaps to a family’s trust that’s able to cure it for things like certain taxes and protect it for those children? After all, if you had an insurance policy, and it goes to your spouse and then your kids, what happens if the kids are minors when you’ve died? What if you and your spouse, both spouses, both die, and now you’ve got a couple of minor children that have inherited these assets, they can’t inherit anything, they’re too young. But if you have a trust there, it’s going to be managed, you’re going to have protections. What if you’re leaving assets to an adult child? But unfortunately, it turns out that adult child developed a substance abuse problem, or they got in a car accident or they fell off a ladder. Well, what’s going to happen if we take all those death benefits of those insurance proceeds and just stick it in their pocket, and they’re on public benefits? They lose the benefits.

Keith Ellis: Absolutely.

Keith McManus: What happens if they’re in the midst of a divorce? They lose the money. So, any time you see someone with beneficiary designations even, and it goes right into the children’s personal name and social, it’s filled with problems, I’d even add this one, but it’s something you have to consider. What if a child dies, and they were listed as one of the contingent beneficiaries instead of the trust? So, the trust will have all kinds of things that will protect against that. And by the way, you don’t need to have multiple, multiple trusts. Sometimes one or two trusts is enough to deal with the vast majority of estates. Now, since they’re so specific in their goal, once you have the foundational plan in place, larger estates often need additional planning, but the core foundational estate documents are usually built around one or two trusts.

Keith Ellis: And you were talking there a minute ago, which I thought was pretty interesting, and I think it’s kind of unique because a lot of times, folks come in and they say, “Our friend’s kids went through a divorce,” or “we went through a divorce and we don’t want our kids to go through a divorce, but more importantly, we want to protect our assets from that happening.” And sadly, divorces are more and more common nowadays, and I don’t mean to turn this negative, but I mean, it’s just the reality of the situation, right? So, I think one of the things that’s interesting is the idea of using trusts to harbor assets and make sure that there is some type of protection, but it has to be set up correctly.

Keith McManus: 100% correct. And I can’t emphasize that enough. Please do not assume that a trust you already have somehow protects assets for children against divorces or somehow manages to avoid taxes just because it’s a trust. Please assume the opposite. Assume if you already have a trust that it doesn’t do any of this stuff and have it reviewed until you know that it does because, as you said correctly, Keith, a trust that turns into sort of an APT or an asset-protected trust upon death has to have very specific markers within it for a judge to respect that. And it’s really hard, to be quite honest, to do it properly so that someone can receive an inheritance and have it protected against things like lawsuits and divorces. It’s gotten harder recently to do that with a lot of the court rulings that have come out against those kinds of structures. So, although that’s something that people mistakenly think that they just have, sometimes even people think that it happens with wills or a life insurance and stuff, like they can’t go after that, I wouldn’t make that assumption. It’s just too much money. When you’re talking about estates, you’re talking about everything you’ve accumulated during the course of your life, not just part of it, all of it.

Keith Ellis: Yeah. And I think one of the final major misconceptions is I have a trust, I, God forbid, end up in a nursing home, my assets are protected.

Keith McManus: Yeah, you hear that all the time.

Keith Ellis: So, I was hoping you could expand on that a little bit.

Keith McManus: Sure.

Keith Ellis: And I think maybe this is where we could dive into. Most folks out there that know what an estate plan is, they know what a revocable trust is, they know what an irrevocable trust is, but maybe give a little bit more around that.

Keith McManus: Sure. So, again, you could do an entire show on Medicaid planning.

Keith Ellis: At some point, we probably going to have to.

Keith McManus: You should, yeah. Medicaid planning, nursing home stuff, major, major topic of conversation when we sit with clients. So, number 1 sort of a misconception, let’s just start throwing some ideas out there. Number 1 misconception clients have is they assume that just because they have a trust, everything’s protected against the nursing home. Not true. Often people are talking about nursing home protection, what they’re really saying is, “Hey Keith, is there a way that I can structure my estate so that I can still own all my stuff and do whatever I want, but the government will also write a blank check to pay for my nursing home?”

Keith Ellis: Not.

Keith McManus: And the answer is no, okay. So, essentially, you need to understand, what kind of programs are going on here? Where does this money really showing up from? This is coming from a federal program called Medicaid, not Medicare, but Medicaid.

Keith Ellis: Often confused.

Keith McManus: Yeah, very often. Now, Medicaid is administered on a state level. So, if you’re in California, it’s Medi-Cal, maybe you’re in Massachusetts, it’s MassHealth, whatever they got, it’s basically the Medicaid program. Medicaid is a welfare program. It’s an indigency program. So, what you’re talking about is how do we get this patient successfully on these government benefits?

Keith Ellis: How do we successfully impoverished this patient?

Keith McManus: Yeah.

Keith Ellis: That’s really what you do.

Keith McManus: That’s what you’re doing. And so, this goal becomes a very, very difficult goal the more that person has accumulated.

Keith Ellis: Of course.

Keith McManus: As you can imagine, and there are certain assets that make it very, very hard. Like, imagine if you’ve got a stockpile of a huge retirement account out there, that’s pretax. Well, if you give that away to someone, you give it away to the kids and wait five years or something, or you give it away to an irrevocable trust and wait five years, it’s showing up as income.

Keith Ellis: Correct.

Keith McManus: Yeah. And maybe with penalties, depending on your age and circumstance, right? So, Medicaid planning and nursing home planning, first of all, please understand it’s harder than it seems. Some people hear these homespun stories of you got an uncle here and aunt there, and this is what they did. They gave all their stuff away to protect the kids. Those are oversimplified, anecdotal stories. Now, in those instances, often it is a good idea to do Medicaid planning and nursing home planning. It often is a great idea to set up irrevocable Medicaid trusts. These things are sometimes called income-only irrevocable trusts by people that are in the industry. By people that aren’t, they’ll just call them nursing home trusts or something, but those kinds of trusts have very powerful tenets to them. There are very, very, a lot of real positive aspects like getting that clock ticking for nursing home protection, but they also have some tremendous drawbacks to them, too. Please, before doing any kind of a plan like that for nursing home protection, please expect, manage your expectations, understand there’s going to be pluses and there’s going to be minuses. There are tradeoffs with this kind of planning.

When you come to a company like McManus Estate Planning, we want you to understand the pluses and the minuses before pulling that trigger. And if it looks like it’s something you want to do, we go for it. We do those protections. But many times, clients look at it and they say, “Whoo, I didn’t realize that was going to happen. I didn’t realize I was going to be put in that financial position.” And then we’ll back away and we’ll take a different route. That’s part of the process.

Keith Ellis: Yeah, I mean, for those of you who want to reach Keith and his team, it’s

CapeCodEstatePlanning.com, or PlymouthEstatePlanning.com. That’s CapeCodEstatePlanning.com, PlymouthEstatePlanning.com. What I really like about Keith and his team is when he sits down to do a review of that first initial appointment, and I love saying this to the families I work with, he does it at no cost.

Keith McManus: No cost.

Keith Ellis: What I really like about Keith, if you haven’t gotten this today, he talks to people as a normal individual, sometimes not to be rude, but lawyers can speak a little bit above you.

Keith McManus: Yeah, no doubt.

Keith Ellis: At least, you make it, so it’s very understandable. So, thank you for joining us.

Keith McManus: My pleasure.

Keith Ellis: I guess one final question is beneficiaries, let’s talk about beneficiaries and accounts. Sometimes you see things mistitle or, like you said, leaving it in the kids’ names. How important is it to make sure and how often should you revisit that?

Keith McManus: Critically important, critically. So, again, think of your overall financial well-being and estate planning being a part of that. Number 1, you want to make sure you get a really good quarterback or coach or guide, and that’s going to be the financial advisor. They’re going to be meeting with you much more frequently than the estate attorney. The estate attorney, essentially, to use an analogy, it’s like we’re drafting the estate documents, like creating an engine, but then you need a really good mechanic to change the oil every so often.

Funding the trust and putting things as beneficiaries into the trust, whether it’s the children, the spouse, the trust, that’s ultimately going to be a discussion between the financial advisor and their client. So, number 1 bit of advice, pick a financial advisor that understands how to fund your trust, how to make the right beneficiary choices. Don’t rely on the estate attorney just doing it once when they first draft the documents and then hoping every three or four years we look at it. You really want to understand that process with a good financial advisor. It’s critically important, Keith, because people can sometimes inadvertently skip their trust. Let’s say you’ve got a trust that has all these benefits in it. On paper, the trust looks great. People ask me this all the time. They say, “Hey, Mr., Mrs. So-and-so, I want you to take a look at their estate plan.” And they’ll email me over the estate plan, the trusts and the wills and stuff. And I’ll say, “Hey, this is half of the puzzle for me to tell you of Mr., Mrs. Smith have a good estate plan.” I also need to see the financials and I need to see how everything’s titled. Otherwise, I have no idea. I don’t even know what their net worth is.

So, I would say, having beneficiaries is accurate, but the way to approach the matter is have your estate documents and have them compared to what they’ve actually done for those beneficiary choices. Who owns the house? Is it you? Is it you and your spouse? Is it in your trust? Is it in an LLC? Who’s the beneficiary of your life insurance? Is it the kids? Are they minors? Is someone head injured? Is it the trust? All of those make tremendous differences. People can actually lose the benefits of the trust by simply skipping it sometimes. Like, imagine you have a great estate plan, but you’ve never properly named all the beneficiaries.

Keith Ellis: Or how about never naming them?

Keith McManus: Or never. You get your retirement accounts, your life insurance, just go spouse to spouse to the kids. Where’s the trust? You just skipped it.

Keith Ellis: Yeah, you paid all that money for a document that is not even part of your overall plan.

Keith McManus: And the sad thing is, a lot of people mistakenly think that they sign the trust, and it vacuums all the assets and then protects them. No. Again, use the engine analogy. Imagine, think of the trust like the engine. You get to fuel that engine up. You need to get your gasoline in the gas tanker. When you turn the key, nothing happens, right? So, that’s why, like you said, Keith, funding the trust is critically important. Drafting the trust is sort of our job. Funding the trust is going to be an advisor’s job. And it’s something that’s going to happen every time they open a new account, every time they sell you a new insurance policy or annuity, all of those great financial products have to be set up in a certain way. And it’s certainly not something you’re going to be calling your estate attorney all the time to be doing when you’re already meeting with the financial advisor to do it.

Keith Ellis: Right.

Keith McManus: You just need to pick the right one.

Keith Ellis: Exactly. So, yeah, you want to make sure that you’re dealing with someone that knows your state laws, knows your state tax laws, and knows how to fund the trust.

Keith McManus: Yeah.

Keith Ellis: Oftentimes, overlooked. So, we covered a lot here today.

Keith McManus: Yeah.

Keith Ellis: Misconceptions of estate planning, what to look for in trust, taxation, even the SECURE Act. So, again, to find Keith and his team, visit CapeCodEstatePlanning.com, that’s CapeCodEstatePlanning.com or PlymouthEstatePlanning.com. We talked a little bit about the SECURE Act earlier, and sometimes when we mention the SECURE Act, people don’t really know what that is. It was a law that was kind of, I don’t want to say, swept under the rug, but it was done at the end of the year in 2019, then COVID hit, so it wasn’t really focused that much upon. So, please get educated on the SECURE Act. We have a nice piece of video on the SECURE Act, that’s on SHPFinancial.com. And Keith, thanks for taking some time today and joining us and educating the audience here.

Keith McManus: Happy to be here. Thanks for having me.

Keith Ellis: Really appreciate it.


[END]

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