Strategic Trusts for Tax Savings on High-Value Assets

One of the realities of building wealth is that the more you have, the more you have to lose. Asset protection and estate planning aren’t just legal technicalities—they’re essential parts of safeguarding everything you’ve worked for. 

The worst time to plan is when you actually need it. If you wait until you’re facing a lawsuit, a creditor, or a sudden death in the family, it’s already too late.

Think of asset protection like insurance. Most of us wouldn’t drive without auto insurance or own a home without homeowners’ insurance. Yet many wealthy people operate businesses, hold investments, and build family wealth without putting legal structures in place to shield those assets. One lawsuit or one major life event can undo decades of hard work.

On the estate side, not having a proper plan doesn’t just cost money—it creates stress and hardship for your loved ones. Without a solid estate plan, your family could end up tied up in probate courts, fighting over assets, and losing valuable time and resources. 

We’ve talked on this show before about basic steps everyone should take—like forming entities to protect your business or making sure you have not only a will, but also a living trust. Those are the starting points.

But as your wealth continues to grow, your planning needs to grow with it. High-net-worth families have to think about more robust strategies—things like dynasty trusts, asset protection trusts, and the best jurisdictions to set them up. 

These aren’t just technical details. They’re the difference between wealth that gets preserved and multiplies across generations and wealth that gets chipped away by taxes, lawsuits, and poor planning.

To help us understand these tools at the highest level, I’ve invited perhaps the most respected attorney in this space—someone who is seen by other attorneys as the thought leader in asset protection and estate planning—Steve Oshins. Steve has pioneered strategies that are now industry standards, and his work has shaped how families across the country protect and grow their wealth. You’re going to want to pay attention this conversation closely.

Transcript

Disclaimer: This transcript was generated by AI and may not be 100% accurate. If you notice any errors or corrections, please email us at phil@wealthformula.com.

 If your trust is drafted really well at the inception or via the first decanting, you probably will never have to decant the trust again simply because you’ve already built the flexibilities into the trust.

Welcome everybody. This is Buck Joffrey with the Wealth Formula Podcast coming to you from Montecito, California. Before we begin, reminder. There is a website associated with this podcast called wealth formula.com. Go check it out for the latest resources there. And also, uh, remember that if you are an accredited investor and you would like to potentially see deal flow, uh, go to wealth formula.com and sign up for the investor club.

You’ll get onboarded. At that point, potentially, uh, see opportunities that you wouldn’t otherwise see that are limited for accredit investors. Again, that’s wealth formula.com. Sign up for investor club. Now let’s, uh, let’s talk a little bit about issues, uh, related to, uh, building of wealth. One of the realities of building wealth is that the more you have, the more you have to lose asset protection and estate planning Art.

Just legal technicalities. They’re really an essential part of safeguarding everything you’ve worked for. You know, the worst time to plan this stuff is when you actually need it. So if you wait until you’re facing a lawsuit, a creditor or a sudden death in the family, it’s already too late. Right? Think of asset protection like insurance.

That’s basically what it is. Most of us would drive without auto insurance or own a home without homeowner’s insurance yet. Many wealthy people operate businesses, hold investments, build family wealth without putting legal structures in place to shield those assets. And all it takes is one lawsuit, one major life event that can undo decades of work on the estate side.

Not having a proper plan doesn’t just cost money. It actually creates an enormous amount of stress and hardship for your loved ones. Without a solid estate plan, your family could end up tied up in probate courts fighting over assets, losing valuable time and resources. Now, we’ve talked on this show a lot about the basics.

Everyone should take forming entities on the asset protection side, of course. And when it comes to the estate planning, you gotta have both a will and a living trust. Okay? You’ve got to do that. If you don’t, uh, if you don’t look it up right now and, and you’ll understand why it has to do with probate, but.

We’re going beyond that today, but your, as your wealth continues to grow, your planning needs to grow with it. High net worth families have to think about more robust strategies. Things like dynasty trust, asset protection trust, and the best jurisdictions to set them up. So these aren’t just technical details, they’re really the difference between wealth that gets preserved, uh, and.

Debt that does not. So to help understand the nuances of this stuff, particularly this concept of the dynasty trust, I’ve invited, um, one of the most respected attorneys in this space. Someone who’s really seen by other attorneys as a thought leader who essentially kind of follow his lead. Uh, Steve Oshins.

He’s pioneered strategies that are now industry standards and his work has shaped really how. Families, uh, across the country, high net worth families really protect and grow their wealth. You’re going to wanna listen to this ’cause even if you are not wealthy today, probably are on your way. And, uh, this, this could very much be about your.

Your future self, and we will have that interview with Steve Oshins right after these messages. Wealth Formula banking is an ingenious concept powered by whole life insurance, but instead of acting just as a safety net, the strategy supercharges your investments. First, you create a personal financial reservoir that grows at a compounding interest rate.

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Visit Wealth formula banking.com. Again, that’s wealth formula banking.com. Welcome back to the show everyone. Today my guest on Wealth Formula podcast is Steve  Oshins.  He’s one of the nation’s leading experts on estate planning and asset protection. He’s based in Nevada and is really best known for pioneering strategies like the Nevada Dynasty Trust Hybrid Asset Protection Trust.

Uh, he also publishes the annual state rankings for Dynasty and Asset Protection Trust tools that attorneys across the country really rely on. He is really a thought leader in this field, and I really want to emphasize that. Um, a lot of people kind of listen to what he does and kind of pivot their own law practice based on what Steve is, is coming up with.

Uh, so really excited to have him. Steve, uh, welcome to the show. Thank you, buck. It’s great to be here. So Steve, let’s, let’s start out with this. Um, people in this, um, you know, in this audience, they hear about all sorts of different kind of trusts. What exactly is a Nevada dynasty trust and why is, uh, Nevada often considered one of the best jurisdictions for these types of things?

Well, let’s start with what a dynasty trust is. A dynasty trust is an irrevocable trust that continues for as long as applicable state law allows. Um, in many states that will be roughly 120 years, and in other states like Nevada, it can be 365 years, and there are other states where it can be perpetual.

So why would we wanna set that up? Because for as long as the trust is in existence, those assets are protected from estate taxes. Creditors and divorce and spouses are the beneficiaries. So all in all, we want to maximize the duration of the trust so we can protect the assets from estate, taxes, creditors, and divorce for the children, the grandchildren, the great-grandchildren, and so on and so forth.

So why is Nevada one of the leaders? Well, Nevada and South Dakota are the leaders and no state is even close. There’s a. Big drop off before you get to the next batch of states. Nevada and South Dakota are basically neck and neck. The, the dis, the difference is that South Dakota allows a perpetual trust, whereas Nevada allows a 365 year trust.

In my opinion, the world might not even be here in year 360 6, so that’s not a big deal. Uh, basically you go somewhere where you have a relationship with a well reasonably priced trust company. Uh, that that bills on a flat fee basis and it’s a low number that it’s not gonna scare anyone away. And then you, whether it’s South Dakota or Nevada, wherever your relationship is, and my best relationships are obviously in Nevada, that’s where you go.

These, you can’t go wrong with either of these two states. Got it. So with, uh, for someone with significant wealth, what are the real benefits of setting up a dynasty trust? Um, obviously, you know. You can talk about them, but asset protection, estate planning, something else. Sure. There are three different things that I’m looking for.

I’m looking for asset protection. I’m looking for state tax avoidance, and I’m looking for income tax savings opportunities. Um, not every client’s gonna fit into all three of those. Probably every one of them fits into the asset protection. Depending upon the net worth of the client, we may or may not care that much about the estate tax.

Um, right now. We’re looking at roughly a $28 million state tax exemption. And January 1st, 2026, it’s gonna go up to 15 million per spouse. So there’s $30 million per married couple. So if you’re under that number, especially substantially under that number, we’re not really focusing in on estate tax savings at this moment.

We can always make up for that in the future. Uh, for those people. We’re gonna be more in the asset protection world, and we’re also gonna look for. Income tax opportunities. If they are approaching the, the 28 or $30 million number, assuming they’re married, then we start thinking deeply about the estate tax avoidance, um, strategies.

And if we wait a little bit longer than we should have, which is fine, we can always make up for what we didn’t do years ago. So. Nobody should ever feel rushed. But if you’re, if you’re a married couple and you’re worth over $50 million, clearly you need to make, to set the dynasty trust up and make a big gift and, and maximize the use of your exemption.

Now, for those people that are under 30 million, we just take it on a case by case basis. Yeah. And, and that brings up a good question ’cause we we’re sort of talking offline about this, but, you know, at, at what point do you, because you brought up the idea that this is not just about estate planning, it’s also about asset protection.

So. What is, what is the right time? I mean, I guess you said it case by case, but give, give us an example of, you know, a situation where you might wanna start thinking about doing this. Uh, there’s obviously other ways that people are setting up asset protection, they’re doing offshore trusts and all that kind of thing.

What, what’s the right time, the right person for this at the lower level, the right time? Well, I, I should actually answer that by telling you the wrong time. Long time would be after a person has um, already had a problem and they’re in the middle of a problem. It’s not necessarily when they were served with a lawsuit, it’s when the problem started.

So the right time is going to always be while the coast is clear. It’s kind of like buying insurance. You can’t buy homeowners insurance while your house isn’t on fire. You can’t buy life insurance while you’re in hospice. You can’t buy health insurance while you’re getting chemotherapy. You know you have to buy it well in advance while the coast is queer.

There’s a chicken and egg column here. Uh, most people don’t want to pay to get something done unless they feel like there’s something they’re doing it for. That’s the wrong way to look at it. We have to look at it like, um, I’m a wealthy person, and we never know if today’s gonna be the day that something happens.

So let’s set it up. Just like you buy your, your insurance, your homeowner’s insurance, or your life insurance, your health insurance, or you buy your umbrella insurance, you buy it well in advance to the problem, and if a problem does occur. Thank God you, you set it up. Um, interestingly, you asked me about the types of trusts.

I know we’re gonna get into that. Yeah. Foreign Asset Protection Trust. I’ve never done one, but um, I just posted on LinkedIn this morning, 29 Foreign Asset Protection Trust cases that have gone south. So the case law is really bad there. That’s why we go to the Hybrid Domestic Protection Trust. And I know you’re gonna be getting there at some point.

Yeah. Yeah, absolutely. And, and I think that was one of the reasons I wanted to bring up this thing, because pe there’s people who are in this, you know, uh, situation, uh, where, you know, they’re high earners and, and say they have, uh, maybe they’re not ultra high net worth per se yet, but they’re, you know, they’re making over a million dollars a year.

They, they’re 40 years old and already have a net worth of 10 million. Should they be looking at this yet or not? I mean, if, if they’re looking at some sort of asset protection strategy anyway. Uh, a lot of people are looking offshore and so should they, even though their net worth is not 30 million, 40 million, something like that, should they be looking at this kind of option?

I don’t think the anybody should be looking offshore. Um, you know, with the 29 cases that I posted on LinkedIn this morning, uh, I, the problem is I don’t see any case where, where the person actually won. They either lost in some way or they had to sit in jail to protect their assets. And, uh, my, uh, my opinion of sitting in jail to protect your assets is, I wouldn’t do it.

No, I get that. But What, but what about, what about those people who are not at 30, 40 million? I mean, is this an option for them? Because they want asset protection. Sure. I get a lot of those two to $10 million doctor types, for example. Tons of those. Um, the, you know, the people worth even 1 million. If they know that they’re probably in a, in a type of industry where they’re gonna be sued, we can at least get it started.

There’s a point when it’s too small and it’s just not worth it. But I generally look for a $2 million net minimum net worth. That’s right. I mean, and I think the, uh, that’s helpful because I’d say probably the average net worth of the listener here is about 5 million, and they’re probably, uh, you know, high net worth people just in terms of, uh, you know, high earning doctors.

This is, this is the show for high earning doctors. So, but that’s good to know. So, um, okay, let’s go back to. Uh, you know, some of the mechanics here, so, a dynasty trust is designed essentially to last for centuries. So how does it, how, what, what is it that allows families to pass, uh, wealth across multiple generations without it being eroded by estate and gift taxes?

It’s, it’s actually very simple. You make a gift into a dynasty trust and then you file a gift tax return and you allocate generation skipping transfer tax exemption to the trust. Once you’ve allocated the generation skipping transfer tax exemption to the trust, no matter how large that trust grows, those assets are not subject to estate taxes for as long as applicable state law allows, which as we discussed earlier in Nevada, would be 365 years.

Right. And so here’s the, here’s the other question that a lot of people ask me about. Um, just in general when I mention that, like, I, I think these are good ideas for people. If they say, well, if I put money into a dynasty trust, do I completely lose control? Because of course. You have a trust, um, and that is no longer you, it’s out of your estate.

How do you structure these trusts so that families still have flexibility and influence without sacrificing protection? Uh, good question. It depends which attorney you go to. If you go to an attorney that, uh, didn’t take, uh, state tax co, um, code in, in law school, then you end up with a form agreement and the attorney’s petrified to, uh, make any adjustments to the document.

But any attorney that understands the estate tax code knows how to draft, where the grantor or settler of the trust who puts the assets in, can be the investment trustee of the trust. So generally we’ll have the seller who sets up the trustee, the investment trustee, or we’ll use the settler’s, spouse, or child or best friend or brother or sister as the investment trustee.

And then we’ll use a close friend as the distribution trustee, or we’ll use the Nevada based trust company as the distribution trustee. If we use a close friend is the distribution trustee, then we use the. Trust company in Nevada as a jurisdictional trustee. Um, some of, of what I just said won’t apply depending upon what we’re trying to accomplish.

For example, if we’re trying to avoid state income taxes, then we’re not going to use the grantor or grant or spouse as a trustee or anyone else who lives in their state or in certain other states that would cause a tax. And then regardless of who we pick, we can always have give the grantor. Who sets up the trust, the power to fire and hire trustees.

So even if the grantor’s not a controlling trustee, the grantor is the one pulling the strings in the background who always has a friendly trustee serving who will, uh, presumably do whatever the client wants. You can also, can you not Steve, have basically the idea that the trust can, you can, you can have a situation where a trust like this owns an LLC.

That LLC, uh, has a manager, right? So say for example, your assets are owned by this LLC, you don’t necessarily have the trustee to have to go do everything every time You wanna invest, every time you want to, you know, make a distribution or whatever you’re doing. You can have an LLC that is owned by a trust.

Choose a manager for that LLC and that could be you, correct? Sure, yeah. Yeah, sure. It depends how the trust is drafted. Sometimes you don’t need to do that. Um, you know, we can save you from an LLC fee, um, because you didn’t need it. But if there was a trust where you didn’t want whoever the trustees are to handle the direct manage management of the assets, yes, the assets can be transferred into an LLC owned by the trust.

Then whoever you want can be the manager of that LLC. Now we have to be careful if we’re trying to save state income taxes and we’re trying to avoid, uh, any contacts to the, the grantor’s home state. But generally, yes, you can have assets in an LLLC owned by the trust. Right. And I, I guess it’s kind of like in that regard, having your cake and eating it too.

In a lot of what we do, that’s the case. Yes. Right. Okay. Um, let’s, let’s talk a little bit about taxes. You mentioned this before, but beyond estate taxes, which, you know, it’s gonna be an issue for some, not for others. Um, you’ve, you’ve written that state income taxes obviously matter a lot. How can using a, a trust in Nevada help a California or New York family, for example, legally avoid state income taxes on investments inside the trust?

First of all, we have to make sure the trust is its own separate tax paying entity. So we have to set up what’s known as a non-grant for trust and, uh, we’re all gonna have to get a whole lot more familiar with those now that we have our new tax act. Because income tax declining is the new estate tax declining, uh, for a lot of these clients who have net worths below the the new permanent numbers.

For the exemption. So we have a non-grant or trust, meaning the trust pays its own income taxes except to the extent it makes distributions to the beneficiaries. And, uh, for New York and CA and California, we have to avoid any resident trustee. California has a, a, a very unique statute in that it prorates the tax on undistributed taxable income.

Based on the, partially based on the number of California resident trustees versus non California resident trustees. So we’re gonna avoid California resident trustees. New York’s, uh, statute, uh, causes a full New York State income tax if there is one or more New York resident trustee or $1 or more of New York sports income.

So you even have to move that little $50,000 in New York rental property out of the trust so you don’t screw up the taxation of that trust. Uh, so by setting up a non grantor trust in Nevada with no resident trustees from the client’s home state, we can avoid the New York or new or California state income tax on any taxable income that’s not sourced to California or, or New York sourced to means, uh, for example, a business operating in California or, or New York.

Or real estate operating or, or that is situated in California or New York. So this will work on selling a business, even if the business was located in that state. You can sell the business. That’s the, that’s the big opportunity here. Or investment portfolio or outstate real estate, for example. So it works for a lot of assets.

You just mentioned something I think is kind of important in that, um, so your trust could, um, you know, these kind of trusts can own. Active businesses, right? They can correct. Own active, and, and that, bring that up because you think of, uh, people often think of trust, primarily owning, you know, just stocks and, you know, passive assets.

But you can have, you can have, uh, a, an active business and this is a really, really important point potentially for business owners. Uh, thinking about exits. Is that fair? Yeah, we, our greatest opportunity is the non grantor trust where you’re gonna exit your business and sell it just because the business was operated in New York, where California as our examples doesn’t mean you can’t sell it, which is selling an intangible asset in out of that trust and avoid the state income tax in the sale.

How much control at that when you have, when you have a non-grant or trust, Steve, is that a lot less flexible for somebody in terms of control, um, or what they can do, uh, with that trust compared to a grantor trust? It’s, it’s definitely, I don’t know if I wanna say a lot, but it’s definitely less flexible than a grantor trust, uh, because you can, you can really mess it up easily if you give the grantor too much control.

We don’t want to use any local resident trustees or have administration in our, our. Grantor’s home state. Um, so you are giving up the direct control that you could have had with a grantor trust, but at the same time, for example, in California, we’re saving 13.3% on the sale of the business. So, um, it’s a question for every individual client, are you willing to give up the direct control in exchange for saving X percent on the, the sale of the business?

And almost always the answer is yes. So then the other question people have is once that money goes into the trust side of things, okay, whether it’s an LLC, whatever the case may be, what is okay to use, uh, that money for and what is, it’ll not okay to use it for, well, it’s okay to use it for anything that’s legal.

That would be the answer for any trust. Now if, if there are state income tax, if there’s state income tax planning going on, then we have to be very careful. Um, if the, if the grantor was a resident of either New York or New Jersey, which has a similar statute as New York’s, you can’t even have $1 of local, um, source income or you screw up the entire trust.

So you have to make sure you distribute any source income out of the trust and cleanse the trust. Uh, for other states, it’s just gonna. It’s not gonna, uh, destroy the tax savings in the trust. It’s just going to not get the tax savings for that particular income. So the New York and New Jersey residents especially have a, have more to worry about there, but basically ask, well, I guess the question is like, you can’t just give, make yourself distributions from that trust, uh, for personal expenses.

Can you? It depends what we’re trying to accomplish with the trust. Yeah. Um, well, the way we always draft our trust, we use in. An independent distribution trustee, as you know, to make the distribution decisions. Uh, now, the, now when you say you can’t just get it, um, I, you’re referring to a version of the trust where the settler or a grantor is a discretionary beneficiary, which would mean it’s a completed gift.

Domestic asset protection trust. One where, uh, let’s say buck sets the trust up for the benefit of buck, buck, spouse, and buck’s, descendants. In that case, if it’s a grantor trust, you just have the distribution trustee make the distribution decision to buck. If it’s a non-grant tour trust, then we need the distribution trustee plus any one adverse party, meaning, for example, one of your children whose interests are adverse to yours has to sign off on the distribution to you or to your spouse.

So with the non-grant tour trust, as you can see, um, it’s a, it’s a little. Tighter that we have to draft it and we have to be a little more careful not to mess up what we need to do in order to avoid the taxation going back to your return. Got it, got it. Okay. Well, you, um, you also created something called the hybrid Nevada Asset Protection Trust.

So what, what makes that different from the traditional one and, and why might people prefer it? For asset protection purposes, um, your, your basic options are either a foreign asset protection trust. I already, and I already told you, I’ve identified at least 29 cases that have gone south, so that seems to be a bad move at this point.

That was the way people were. Planning back in the eighties and nineties, but nowadays, I don’t think it’s smart or a regular domestic asset protection trust, which is one where you set it up in a state like Nevada or South Dakota for the benefit of yourself and your family. Um, those have been working well.

Uh, we don’t see a lot of case law. There’s only one bad case on that that I’ve ever seen. Uh, in fact, there was a local, uh, a recent good case, although it’s still an ongoing case, um, on those. And otherwise, so the issue is, can a person who lives in the state that doesn’t have a statute like this, set one of these up and have the law where the trust is, is set up, apply for creditor protection purposes?

And we’re still not a hundred percent sure on that. There’s almost no case law, which means it seems to be working. But if we wanna work around that and get to the point where we are as close to a hundred percent success as possible. We don’t make the settler a beneficiary of the trust. For example, uh, buck, you set the trust up for the benefit of your spouse and your descendants, assuming it’s coming from your separate property, not your community property with your spouse.

So you’re not a beneficiary. You set it up for spouse descendants. That because you’re not a beneficiary. We know that works in all 50 states, but we still set it up under Nevada and we build in this hybrid provision, which is the power of a trust protector, like your best friend. To be able to add and remove beneficiaries, including the power to add you.

So in the extremely unlikely situation where you need something outta that trust, which basically means your spouse predeceased you, and you run out, ran outta money, we have a backdoor ability to give you something outta that trust that’s better than any other asset protection option out there because it doesn’t have the potential taint that you’re a beneficiary of your own trust, which is what potentially can get you in trouble.

Got it. Um, let’s talk a little bit about decanting. Um, it’s basically the ability to pour an old trust into a new one, right? So how does that keep the flexibility over decades? Centuries? Okay, so it’s an interesting question because if, if your trust is drafted really well at the inception or via the first canting.

You probably will never have to decant the trust again simply because you’ve already built the flexibilities into the trust. Where we see the decanting would be where you have an inferior trust agreement. Uh, you know, a lot of the estate planning attorneys weren’t trained well and they just grab a form and you know they’re doing something that.

That meets the minimum, minimal state, uh, standards of what one would expect from an attorney, but they don’t do anything super. What if we want to fix and enhance that trust once we enhance it into a really, really nice trust? You probably don’t need to decant it after that unless there was something that, some flexibility that you somehow didn’t think about.

Spill it into the trust in the first place. Uh, the top attorneys forms have already built in these flexibilities in most cases, but, uh, we’re, none of us are perfect. You know, we don’t have superpowers. There’s no way that I can anticipate anything, every, anything and everything that could happen. I think that my documents, uh, get at least 99% of what anyone would wanna change.

But if there is something that I’m not thinking about, we can always decant the trust, which is where we have the distribution trustee distribute the assets into a new, a brand new trust. For the benefit of one or more of the same beneficiaries of the old trust in order to fix something over years. And that all being said, um, one other comment is sometimes we do set up a perfect trust, but then strategically we wanna divide the trust into more trusts for certain purposes, such as, uh, qualified small business stock and the $10 million QSBS exemption per trust.

So sometimes we have a perfect trust. Then there’s an opportunity to sell a business that’s gonna qualify for the $10 million per, per non grantor trust, um, um, exemption from federal income taxes. We have five kids, so we do decant that trust into five separate trusts because there’s a tax reason to do so because of a change in circumstances.

Steve, I have, um, a few clients I know of who are, uh, sitting on, uh, you know, eight figures of of Bitcoin. Uh, something like that, and they’re looking to potentially just sell and get out. Would this be a good option, a, a non-grant or trust if somebody lives in California or New York to move that over, then sell, uh, after it’s in a non-grant or trust?

Yeah, that’s a, that’s a, that’s a good opportunity there because, uh, you can save the state income taxes on the capital gains of the sale. Now, California, New York, funny that you mentioned, those two states and Washington, the state of Washington, are the three states where you can’t set up an incomplete gift non-grant or trust or so-called Ning or Ding Trust, as they call it, in Nevada or Delaware.

So for California. Residents, New York residents and Washington residents, we always have to set up a completed gift, not a grantor trust, which means we are limited to the client’s remaining gift tax exemption in how much we can transfer to the trust. So if the client is married, we’re looking at $27.98 million of gift tax exemption.

Um, whereas. If the, if the client lived in a different state where we set these up from, such as, uh, we do a lot in Oregon, Hawaii, Massachusetts, and some of these other high tax states, they can throw, uh, um, billions of dollars of, of Bitcoin or other assets into an incomplete gift trust and avoid the state income tax.

So for the California and New York. Residents, it makes sense to do it as soon as possible. I guess we, we just had a little bit of a dip in Bitcoin over the last, you know, week or two. You know, maybe, maybe today’s the day to make the gift, you know, at least, you know, high, a little short time ago. Uh, because the sooner you gift it, the, and get the appreciation moving out of your estate, the more you can avoid in state income taxes because of that limitation, because it can’t be the incomplete gift version.

If that makes sense. Yeah, yeah. Got it. Um, what, uh, what role does, um, do these trusts play in in situations of divorce? Uh, it depends who set the trust up. Uh, if it was a community property joint trust, it doesn’t play any role other than to increase legal fees and, and complexity. So they should have stayed married.

Um, if someone set up an asset protection trust that works such as a hybrid domestic asset protection trust, well before the, the marital issues. So not a week before filing for divorce, you know, not right before, um, you know, they, they were throwing things at each other in the living room. You set it up years ago, you’ve moved those assets, uh, away from your marital estate and then they’re not subject to division and a divorce.

So people, people who are in a bad marriage who have wealth should think about setting this up, but not those who are in such a bad marriage that they’re gonna be divorced over the next couple years, for example. It’s probably too late to set something up at that point. Um, so you wanna set it up now? So if you have, if you think in 10 years maybe there’s a 50% chance that we’re gonna be divorced, you might as well set it up right now.

If you think there’s a 50% chance you’re gonna be divorced in two months, uh, there’s a really good chance it’s too late because things have already gone too far. I mean, I guess the other way to think about it is, is this, um, a, a way to protect your own assets If you’re not married yet and you do get married and you already have one of these in place.

Uh, absolutely. Um, you wanna move, you want your prenuptial agreement to show the lowest number possible. This is not where we wanna brag. It’s kind of like when you die, you want the lowest number. When you’re bragging, you want the highest number, uh, or when you’re going trying to get a loan from the bank, you want the highest number Here, we want the lowest number on our, on our, um, exhibit A in our prenuptial agreement.

So if our client’s worth $10 million, why not throw, let’s say, $5 million into an asset protection trust, A hybrid version where the client’s not a beneficiary, so that when you’re putting the divorce. The prenuptial agreement together, it shows that you have a net worth of $5 million. Although it’s a good idea, in my opinion, although I’m not a family law attorney, to at least disclose the existence of the trust and note that the client is not a beneficiary of the trust.

I I, I like as much disclosure as possible. So you take away the argument that you were hiding something. Yeah. So tell us a little bit about like, the changes, um, you know, the changes of. Um, that, that we can potentially see with tax law IRS scrutiny in the future. How, how do you, how do you navigate those?

I mean, it just seems like, you know, a lot of this changing all the time and if sometimes I think there was some threats to the way grantor trusts were treated before during the Biden administration that seemed to pass. But can you, can you talk a little bit about how do you navigate some of those issues?

I mean, part of it might be trying to get into a trust when laws are favorable, right? Is is that kind of one of the strategies you talk about? Sure, yeah. When laws are favorable, such as where we have a high state and gift tax exemption, the ultra wealthy people now have a lifeline to be able to take their time a little bit here to make their gifts.

Although a gift today is better than a gift tomorrow because of appreciation, but we don’t have that pressure to get it done by the end of the year. For a client who is having trouble making some decisions, we can take a little bit more time. So, yeah, as long, anytime we have a good opportunity, we, we want to jump on it in case the law goes the other way the next time Congress meets.

Um, now it’s hard to navigate our job as. Estate planners is to try to help our clients understand when to jump and when not to jump. Um, a lot of what I’ve learned from doing this for now 31 years is, uh, there’s a lot of potential law changes such as the grantor trust law that you mentioned, and our job is to tell our clients to let us know those things just relax.

It’s extremely unlikely that anything like that could possibly pass. It’s just, you know, sometimes the Democrats wanna show, show their voters. Something in their potential act. The Republicans wanna show the voters something. These are just ideas that someone wants to get passed. It doesn’t mean that it’s going to get passed.

So our job is to calm our clients down and make sure they don’t make gifts with that they’re, they’re gonna regret. We don’t want donors remorse. So a lot of what I’ve had to do over the last few times that the estate tax exemption was gonna drop down, such as in 2012, there was a big concern in 2020, you know, with with Biden in 2021, with there being a potential democratic tax act.

And then this year a little bit of. A concern for a while because the exemption was gonna drop in half. My job was to calm the clients that shouldn’t be making the gifts, and then the ones like the 50 millionaires who should be making the gifts regardless of where the law goes. My job is to push them harder.

So I, I feel like I did a, a, mostly a good job. I, there were a lot of clients I couldn’t, they were begging me to take their money to set up their dynasty trusts. And I was, I was saying no to a lot of them. I was trying to say yes to the ones who do it, but there were a lot of them that just begged me and I said, you’re gonna regret it, but I will certainly take the retainer and I will set it up for you, but you’re gonna regret it.

And, and I was right. So our job is to try to, um, advise our clients not to do something they’re gonna regret. Yeah. Um, tell us a little bit about the process, Steve, of, um, you know, working with you, shedding, you know, discussing this possibility of doing something like this. How, uh, tell us, tell us how you work.

Okay. Sure. The best way to reach me is to send me an email. Um, uh, I’m at S-O-S-H-I-N-S at os HIN s.com. Send me an email and just say, here’s basically what I’m looking for, or, I don’t know what I’m looking for, but I’m wealthy and I’d like to set up a video meeting with you. And then we set up a meeting and then, um, if we know a direction, then it.

I usually set it for 45 minutes. If I’m, if it’s just a ultra high net worth person, I’ll set it for 60 and then we will explore a little bit. And where I’m gonna try to get the person is to is with either asset protection planning, the state tax avoidance planning, or state income tax avoidance planning usually.

And sometimes there’s some federal income tax avoidance planning as well. And usually if I’m. Uh, if I’m in a meeting with someone who has wealth, there’s something I can help ’em with. It’s, it’s very rare that there’s nothing. Sometimes we go into the meeting having absolutely no idea where the meeting’s gonna go, and I just take them to where I can help them.

If there’s, if I don’t think I should help them, I tell them very clearly, I don’t want to take your money because you’re better off just getting something basic done local, and there’s no reason to have me help you. Here’s a referral. Um, and then the process is assuming they like me and they want to go forward, either they think about it or they tell me on the spot, and then I get them the engagement agreement, take a re roughly a 50% retainer, and then intake questionnaires, and then we just draft and then do the follow-up meeting to go through the documents, get ’em executed if we’re okay, and then get them.

I would just, uh, say that, uh, I’ve worked with Steve, myself. Uh, definitely. Uh, Steve is one of the best attorneys out there. He’s a terrible salesman though, I’ll tell you not to get things. So, so he’s the perfect, it’s reverse psychology bucket. It’s worked on you so far. That’s right. That’s right. It’s worked on me for sure.

Uh, anyway. Uh. If, if, if people want to also, if it’s just easier, certainly, you know, send me an email, let me know if you’re interested in talking to Steve, and I’ll be happy to forward the email to him. Um, I’m, I’m a big fan. Hopefully some of you who, uh, you know, are doing risky stuff as physicians are starting to build wealth, maybe really something to think about.

So Steve, I wanna thank you so much for being on the show and, um, you know, I’d love to have you on again sometime. Alright. I, I don’t know if we, uh, ran out of material though. We’ll have to find a new, a new material. Got it. Next time. Thank you. It’s been a pleasure and I, I always enjoy talking to you.

Thanks. You make a lot of money, but are still worried about retirement. Maybe you didn’t start earning until you’re thirties and now you’re trying to catch up and meanwhile you’ve got a mortgage and private school to pay for and you feel like you’re getting farther and farther behind. Good news. If you need to catch up on retirement, check out a program put out by some of the oldest and most prestigious life insurance companies in the world.

It’s called Wealth Accelerator can help you amplify your returns quickly, protect your money from creditors, and provide financial protection to your family if something happens to you. The concepts here are used by some of the wealthiest families in the world, and there’s no reason why they can’t be used by you.

Check it out for yourself by going to wealth formula banking.com. Again, that’s wealth formula banking.com. Welcome back to Show Everyone. Hope you enjoyed it once again. Uh, can’t say enough about Steve Oshin a very smart guy. Sometimes he’s too smart, so you have to like ask him questions a few times over.

But, uh, he is a guy who, you know, some of the. These families in, in, in this country actually, um, uh, really rely on and, uh, he’s actually more affordable than a lot of the others out there who are, um, much more sales oriented. Uh, so if you are thinking about doing something like this, I highly, highly recommend, uh, Steve Oshins.

Anyway, that is it for me. This week on Wealth Formula Podcast. This is Buck Joffrey signing off.