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As you can see, I don't have a separate Microphone, but so I I have no idea what the sound quality is like on your end. It's a little tinny It's not as it's not as silky soft as it is when you're through a podcast my current sure That's just the world we live in it now So are you down in Missouri today? I am indeed. How's uh, I mean not to be so cliche, but how's the weather? Well, that can be cliche. Apparently not as bad as it was in Sioux City yesterday Yeah, they had some they had some stuff That's what I heard. I heard that Sioux City had a heat index of something like a hundred and twenty-eight Yesterday. Oh, I missed that detail Uh, and well, that's what one of my part-timers told me and that Lawrence, Kansas on Sunday Blew out all records. They had a heat index of a hundred thirty four in Lawrence, Kansas So and I forget what the temperature was how far north of a hundred it was, but the humidity has been just so Incredible and I assume it's the same there in Des Moines, right? The air is definitely thick. I 134 I was in the Houston Fort Worth Dallas Fort Worth community Community About four weekends ago The ambient the ambient was 116 The heat index was like 121 And we're downtown Fort Worth and you walk in the shadows Because the sun hurts. Yes at 116 degrees like you get out in the like the shadow to the light, uh, Remarkable difference in temperature and it did not feel good at all And how long ago was that? Did you say that's about four weeks ago? Okay. All right Well, just think four weeks ago that would have the sun would have been at the same angle that it would have been in in the middle of may But think how much different the sun felt In the middle of july from what it does in the middle of may. It's pretty remarkable. There's a huge. Yeah huge swing huge huge swing I was gonna grab my notebook. Hold on a second. All right Oh, my kids took my pen I gotta use my reserve pen Speaking of kids, how many do you have now? Oh, I love that you asked this question, uh four Four all right, so Yeah, and by the way, megan sends her warmest most loving affectionate regards, uh She uh, she goes I miss those two so much she goes of All of the tenants that she enjoyed you guys were the best. Um at summer field Oh, that's great. We sure we sure felt thought the world of her She's a pretty amazing lady. I outkicked the coverage Yeah, you got a winner there We'll keep around for a long time. Well, yeah the risk there's uh I don't I don't think it's the issue of me keeping around. I know what I got It's uh me making sure I live up to the expectations on my end So well, let's um, i'll do a quick intro to kind of create a Pause and then well and give you a heads up. I never sent any questions ahead, but we're um My and I don't know if you had a chance to listen to any of our current podcasts, but i've recorded no I haven't I have seven that are live now. Um, i've got two others in the hopper You'll make three that will come out over the next, uh, three to four weeks the Uh, what what prompted me reaching out to you was I had a recording with um, two folks a gal named, uh, rena striegel and matt williams Excuse me, matt roberts and um Oh, she'd shoot me right now if she heard me stumble on this. What is the name of her? business, she does farm business planning and matt is with severson and streggy as a financial planner And so we chatted for a solid hour it might have been almost uh, 60 minutes and that their podcast will come out Uh, oh this makes no i've got three i've got three in the hopper right now you'll make four Um, theirs is going to come out next week and essentially, we just talked high level about the the the challenges that Family farm businesses have and um And in the in the in the importance of them really looking ahead and trying to plan well um For what's you know? What's coming ahead and the transitions all that type of stuff and one of the things they said to me was I said so you guys quarterback this thing like well You got to make sure you got all your stakeholders involved And at the end of the day the farmer and the family really need to take this by the reins And one of the one of the players that you need on the field is a good attorney so That's where you come in All right, are you hearing me okay your uh video glitched on me just a little bit I I can hear you. Just great. Okay, good I'll dismiss that Cool. Well, uh today I have mr. Christie Barton on my podcast with me Uh, christie, you've got an operation as a practice in both, Missouri and Iowa. Is that correct? That is correct. And today we're going to chat about uh Well, we can chat about whatever we want, but hopefully about uh trusts and Planning around family farms. Do you feel I feel like you're an expert in that. How do you feel about that topic? Are you asking me to declare that i'm an expert Well, yeah I better not say yes. Peter. You better not say yes Well, you are uh, let me say this. Let me say this you're in the practice I've been at i've been in the trenches for a long time. I did my first farm estate plan back in 1976 okay and have never let up although there was quite a lull from let's say 1980 Yes through the mid-1990s um, but fortunately my My estate and tax planning practice working with physicians was booming during that period of time. Perfect yeah, so anyway, I've uh, Uh just by dint of being in the trenches for for so long you you learn some things that uh can really serve other people well, uh from time to time You never know all the answers uh, and you never know all the questions to ask but You just get better over time or you better get out, right? Uh, that's right. Well, and if we're not always as professionals in particular if you're not constantly evolving and learning um, you're probably headed the other direction like you said just Pack the shingle up and go on to something else. That's correct. That's correct There's no such thing as standing still you're either going forward or you're going back. That's right Do we learn about that in thermodynamics? I feel like that's a part of thermodynamics You know, I don't know I I liked chemistry and I liked physics, but I don't remember Uh any particular if you're talking about the law of entropy or whatever There you go not sure exactly what you're thinking about that um, that's enough said about that topic today as far as I'm Well, okay, so we're looking at the industry at large. We have a lot of transitions happening over the you know, the USDA has been telling us for the last 10 15 years that there's a huge transition in wealth and ownership in the farmland space in particular Um, but also the farming industry so as you and I chat Would love to high level kind of look at we've got Probably a scale here that we can talk through but you've got a farmer and their business on one end with no No plans at all, right no no documents. They're They're taking their crop to the co-op. They get a check they put in a bank account and they just they exist um all the way to the other end where you have multi-generational you may have fathers son uncles cousins, uh Maybe maybe employees that have some kind of um Skin in the game if you will in this practice and so I'd love to chat with you On all those topics um, but as we if we if we touch on a couple that I would love to find out about Because for farmers it seems like these are two of the biggest questions. How much time is it going to take me? And what's it going to cost? So let's start with the guy that doesn't have anything so you've got a farmer with a couple of kids and He knocks on your door And says hey, I think I need some help. What are some of the questions that you start with them? To start understanding where they're at from a from an operation standpoint Well, I think the question would be the same with just about any business operation And for that matter even folks who are not engaged in business The one of the the guiding lights peter the the foundational principles that that I have learned to operate on I didn't start out this way years ago But that is keeping the focus where the focus should be and that's on the people And all too often the the temptation is to get into uh process Strategies formulas uh and and make planning all about Stuff, you know rather than about the people So at least I always begin by asking about the people and sometimes Uh, I could be accused of wasting at least a few minutes on irrelevancy But I like to start with are your parents still living, you know, what was your mother's maiden name? Uh, if you're a married woman, what is was your maiden name? In the room here. I want to hear about the kids I want to know if they have siblings, you know, they're still alive. I inquire about their health situations And and where they stand I inquire about the health situation of their children Uh, I ask about the grandchildren and how they feel about the grandchildren because oftentimes You know, you know where i'm where i'm going with this. Oh, absolutely That it's not like building a skyscraper Where you have a set of blueprints that were done by an architect And once the materials are decided on it's a mechanical process of putting the things together but you you don't have that kind of mechanical potential when you're dealing with family members because you have so many variables based on their personalities and uh, whatever and I I always encourage people and I prod them to Plumb the depths of what's in their heart and to do what's in their heart and to get past the age-old Assumptions that well you have to treat everybody the same or Well, he didn't make any contribution, you know to our operation uh, but nonetheless, he is my son and therefore I think he should get The same share that our son who has stayed home who's worked for peanuts, you know for 30 years and although we're getting to the end of this particular generational cycle, but So many of the folks I work with had it not been for a son And on rare occasions a daughter back then i'm seeing more females engaged in farming now many more than I did You know 30 40 years ago but oftentimes had not One or two of the sons stayed home In 1981 82 83 84 there wouldn't be a farm there to talk about any longer So I encourage people to think in terms of doing what you really want to do ask yourself What it is you really want to do? and don't let other people's expectations drive your decision-making process in that regard and uh that's At least that's on the people's side, you know, that's more the intangible now. I love I love to talk process I love to talk strategies The academic side of things but again the starting place and the finishing line Should ultimately be about the people Well, you won't get any argument from me on that No, okay Not at all. Keep keep the focus on the people the main i'm but anybody that knows me and listen to this podcast knows I'm a people person That's the uh, most important thing of what we do at any given moment So as as you work through this What are some of the tools that you have in your toolbox as their attorney and looking at? Their estate that you like to work with And i'm there's all sorts of mechanisms. I think the word trust is probably one of the most common ones, but what are some? Types of trusts that you like to work with what are their advantages if you can go through kind of a list and if there Are any other tools that are out there that they can use from a structure standpoint? We'd love to hear about it Well, let me uh, I will answer that question, but but let me begin that answer by Explaining the questions that I normally ask people perfect It doesn't matter if you're a physician Um, if you're a backhoe operator, you know, if you're a farmer um, if you're a college professor, I asked the same questions and Number one what do you want to accomplish? And what I normally find out, uh initially is well, I don't know What I mean oftentimes Uh is well, I don't know. I don't know enough to even suggest that and so I then will say all right Is it important to you to eliminate taxes? Oh, yes. Yeah, absolutely Yeah, absolutely Um, and it so by eliminate taxes, I mean eliminate all death taxes and perhaps Limit income taxes. Would that be important? Oh, yes. Yes number two Uh, do you want to avoid? Probate administration or any other public administration of your financial affairs after you die Uh, and the answer almost always is yes, regardless of whether they have modest resources or great resources Question number three if they're married uh, and that is Would you like? to protect the plan that you two spouses mutually agree on so that It doesn't get derailed after the first one of you passes away Because we have been told for decades that the national statistics have pretty much remained the same And that is that 75% of men we're told will remarry if they outlive their wives And somewhere between a third and 40% of women will remarry If they outlive their husbands, which as we know statistically speaking is usually what happens uh the wife living longer but the point in that question is that Somewhere between 33% And 75% is the possibility or probability of an event That can blow your estate plan out of the water If you haven't prepared for it Um, and just as a sidebar conversation, I remember many years ago uh Easily 20 years ago. I was speaking, um to the Missouri Bar Association at one of the continuing legal education uh programs for the continuing education hours that we have to get every year as you're probably very familiar with that and The topic assigned to me was estate planning for second marriages and The approach I didn't have a curriculum. I had to develop the subject matter of the presentation and present it And the approach I took was the time to plan Best for your second marriage is while you are still on your first marriage And so that gets to the point three. What do you want to happen? Mr. And Mrs. Smith when the first one of you dies To protect what you mutually agree on To protect the individuals that you mutually want to protect after you're both gone How can you build that into an estate plan while still not handcuffing financially, you know the surviving spouse and Frankly peter that's the question that I find is almost never asked You know in estate planning circles um fourth question then is Do you want to protect the inheritance that your children receive and Well, yeah, I guess we would like to incidentally. I don't ask that question generally unless it looks like the child is in line to inherit somewhere north of $300,000 in worth of assets I mean below that if they get it stolen from them or divorced away from them or they blow it they blow it But at some point an inheritance value is sufficient enough That most of our clients would like to give some thought to protecting it and so uh the mechanism incidentally that we use on on that point is what we Call in-house a heritage trust And that's just our in-house label Uh, it's not a a technical term or a term of art that it refers to a particular type of trust arrangement But it is a way That a beneficiary can be given complete control of their own inheritance And still have all the income Uh have it protected from lawsuits including divorce have it bankruptcy proof uh And in a couple of states, uh, if you can can maneuver the trust so that you have the law of south dakota or missouri Apply to the trust. I believe the trust going forward is also beyond the reach of the state and federal taxing authorities Because both south dakota trust law and missouri trust law define a Beneficiary's property interest in a trust in such a way that a federal tax lien will not reach it Now there could be some other states, you know There are states that are pretty intent on asset protection as part of their legislative agenda And uh, it could be that alaska has followed suit and alaska trust law will do that. It could be nevada Will it could be delaware will i'm not sure the only two states I know of for sure are missouri and south dakota So let's chat about that real quick So you ever see you know that I I hang I live in uh, des moines, iowa, but and you guys have an office up here And and you look in the business space, right? There's um, delaware has the largest population of registered companies because of The the advantage that their laws have on the books for that creation of a business um What does it look like for somebody that's in iowa? If they wanted to benefit from the missouri statutes What would it look like for them to benefit from that? What's the process you have to go through to create something? Yeah, that's a that's a good question. That's a very astute question You can't sign a legal document In des moines and say south dakota law applies uh, or missouri law applies If you're going to invoke the law of another state, you have to have some kind of connection with the state Okay The fancy legal word for that is nexus N-e-x-u-s you have to establish a nexus with that state and uh The the tests are variable south dakota trust law makes it clear what you have to do to make South dakota law apply and that is you have to have a south dakota trustee Well that doesn't work for our clients outside of south dakota If what we're trying to establish here is a very user-friendly Uh mechanism, you know that you can use as your estate planning Vehicle and platform here. You don't want to have to go through uh The fiddle factors or the cost, you know of having a third party from another third party trustee Sure, because they're usually entitled to a certain percentage, correct? well Or there's a cost to it regardless. Yeah, there's a cost to it Let's put it that way and cost in that in that kind of situation cost is always negotiable. Sure The best kind of cost of all is zero zero That's right the lowest the lowest overhead That an estate plan can demand of you the better the plan is so uh, missouri case law holds that to make missouri law apply you have to the leading case on that is you work with a law firm in missouri and number two you physically sign the documents in missouri Now that could makeWe've been signing on the Highway 65 in South Lineville, Missouri, which is right across the border from Lineville, Iowa, that you can spit at someone across the line, you know, as far as that's concerned, or it can be, it doesn't matter, just physical presence in the state is enough, and particularly in the arena of trust law, where that turns out. So we occasionally have clients that want the additional asset protection that an ongoing heritage trust can have, and there are two other circumstances, Peter, where it makes sense to use Missouri law for this purpose, and one is, if you are using an irrevocable trust for the purpose of taking resources off the table as available resources to qualify an individual for Title 19 Medicaid benefits in a nursing home. Because the law of the state which governs the trust is also the law which governs the rights of third parties against that trust for, for example, estate recovery. By Department of Human Services in Iowa, Family Support Division in Missouri. And the Missouri law dealing with that subject is much more pro-family, much more anti-estate recovery by the state than Iowa law is. So some of our clients who are really interested in ensuring that they have an asset protection trust for purposes of qualifying for Medicaid and not having it reachable by an estate recovery action by the state of Iowa, will sign down here. The other circumstance that's- Christie, can we touch on that real quick? Sure, sure. Go ahead. Because I'm getting to that stage in my life where we've, Megan and I, my wife, we've both seen this play out a little bit. I want to just make sure I understand this. And then for any listeners that are hearing it, have hopefully kind of plant a flag that they go, oh, we need to think about this. So this, the rulings, the statutes that you're talking about there, and as far as their reach into the estate from a recovery standpoint, in Iowa, as I understand it, if you're going to rely on, in Title 19 would be the funds where if you applied for this to cover your cost of living to a certain extent, whether that was going to be in a nursing facility or some other kind of care facility with professional care, you, if I understand this correctly, you can't have, you can't have very much wealth. As it shows in a particular, categorically, they ask specific questions, and if you have dollars or value that are in these categories, then they say, well, you need to sell that and essentially turn it over to the state to cover your expenses for this. Are we tracking on the right thing, the protection value here that you're talking about and the difference between Iowa and Missouri? Correct. Okay. You're correct. And well, that's not just Iowa. That's true in all 50 states. However, the key phrase, Peter, is available resources. What resources do you have that are available to pay the cost of your medical care or your institutional care, you know, as the case. And federal law provides, and essentially federal law is the kingpin in all of this. There are variations in the states in terms of the way they implement the Medicaid program. State law can be more liberal than federal law in terms of, but it can't be more restricted, okay, than federal law. So federal law authorizes you to create what is generally referred to generically as an income only trust, an irrevocable type of trust into which you can place all or as much of your assets as you want. That imposes what is in effect, and now this isn't technically the right terminology, but I'm not going to try to be too technical. It imposes what is in effect a five-year period of ineligibility, okay? Technically it's called a look-back period, and I'm not going to get into the nuances of what that really means, but just count it or think of it as a five-year period of ineligibility. Once that five years has passed, and if you do not have in your own name or under your complete unfettered control disqualifying resources at that point, then you can apply for Medicaid even if you have millions of dollars worth of assets in this income only trust, okay? We have successfully gotten people with millions of dollars of assets in these trusts eligible for Medicaid. Now for this to really make sense, you have to do two things. Number one, the idea is to get a person eligible for Medicaid as soon as possible so that you don't have the drain on their resources every month because the cost of nursing home care is, as you know, extremely high. It is unbelievable. Yeah. So number one, get eligible as soon as possible. Now there is some value in just accomplishing that objective, but the real value is in point two, and that is making sure that there is no right of estate recovery against those assets if in the future you do receive Medicaid benefits and you create what's generally referred to generically as a Medicaid debt. And Iowa is one of the more aggressive states in the union at pursuing the recovery of Medicaid debt. Some states are embarrassingly lazy, you know, about attempting to recover even when their funds lying there almost, you know, low-hanging fruit to just recover. But Iowa is quite aggressive in doing that. So two things real quick, just for our listeners here, for the fun of it, I Googled it. So average cost in Iowa today for nursing care is $6,500 a month, people. So that's what we're talking about protecting. And then when you talk about Iowa being aggressive, that means they have, in some states, being lazy. I would assume there's probably some policy and procedural efforts that the state has gone through. As a state, they've put some importance on saying, hey, if you owe the state, we now have the staff and the bandwidth and the department to chase after the low-hanging fruit that you're describing. Yes. Okay. And even some high-hanging fruit that the Department of Human Services will pursue, or the Attorney General's Office, as the case may be, when it comes to a state recovery. So if you're going to protect the assets a family wants to protect, and whether that's a publishing business, I guess really those don't exist anymore, but I can remember one that was a family publishing business in North Missouri that we were able to protect and preserve. But most of the time, it's farmland that people want to protect. And that would be true whether I'm in Des Moines or whether I'm in Columbia, Missouri talking with people. It will generally be farmland that they want to protect the most. Well, and let's talk about that real quick. So from a high level, if you've got... So I was talking about that band of somebody with no protections on one end, and then we have a successful multi-generational farm on the other side. So looking at the multi-generational business with all sorts of players in this, grandma and grandpa get to the point where they need nursing care. In theory, if they haven't worked with you, somebody like you, to structure the holdings and the protections through trusts in a proper way, essentially what will be required then is the family business will need to support grandma and grandpa and all of their needs because the state, in particular Iowa, and your point about them being somewhat aggressive, is they're able to reach back in and be like, well, no, Grandpa Joe's name is on these 680 acres. Correct. Grandpa Joe's name... Oh, he's associated with some of this equipment and some of this debt, and oh, there's revenue that he's been paying taxes on from this business. So the state can look at that and go, hey, you owe us all of that, as opposed to protecting it properly through these mechanisms. And then the state goes, oh, okay, yeah, here you go. And then the burden becomes... You correct me if I'm saying this wrong, Christy, but the tax dollars that we have all paid into the system already to cover those costs, well, that's where the dollars and cents come from essentially. Am I thinking through that right? Well, if you're talking in terms of that's where the funding comes from, you know, for the Medicaid program. Yes. And it's largely federal funded, but it's also a state expense as well, as far as that goes. Now, the scenario that you just mentioned here, Peter, if there is that much in the way of assets that are visible, that are lying out there, that person would have never qualified for Medicaid in the first place. Roger that. Receiving it, right. You either have to give your resources away or put them into an income-only trust and wait out the five-year period. And if you end up going to a nursing home three years later, then the family has to figure out some way to pay for it for two years until you get past that five-year window. Now again, someone listening to this podcast who knows this area of law will understand that I am not using technical terminology when I talk about a period of ineligibility. There are periods of ineligibility depending on the value of the assets you give away in that sense. So it's not necessarily a five-year period of ineligibility. But the planning, the people that we work with always, the amount of resources that they end up either giving away or putting into one of these asset protection trusts would make them ineligible for longer than five years. So effectively, by having a five-year look-back period, whenever you apply for Medicaid, you have to list on the application any gratuitous transfers of assets that you made within the last five years. If it was five years and one month ago, it does not matter. So you just need to have a clean slate within the last five years. And as I said, if an individual already is in a nursing home before the five years are up, you have to find couch change or something to figure out a way to pay for it or even borrow money to cover the cost. I'd like to meet the person that has $6,500 for a month in their couch. Well, that's correct. And another problem we have here, Peter, is that this makes the problem even worse, particularly a situation where if you're dealing with farmland and typically an elderly farm owner, which means they're going to have a low-cost basis in that farmland, that is catastrophic to sell farmland to raise money for nursing home costs because now you're triggering a capital gain tax on that land. In that situation, most of the time, you'd be better off borrowing the money from a third party, keeping the land, and then when you die, at least the land gets a stepped-up cost basis. Kids, if they want to sell it, they can sell it tax-free at that point with a cost basis. But most of our tax-savvy planning for the last half-dozen years has really all been around this concept of tax basis, boosting basis. So in that regard, let me give you an example. If we've exhausted... Okay, here's the thing. Let me tell you one other thing about the Iowa Trust Code. As originally enacted by the legislature back in 2000, the Iowa Trust Code did not have what today could be considered a gaping hole. But an amendment was slipped in pretty quietly. It never got onto the Iowa Bar Association's legislative agenda, and I've still come across lawyers who do a fair amount of estate planning in Iowa who aren't aware of this hole, I'll call it, in the Iowa Trust Code, which says this. If you have an interest, whether you created the trust or not, it doesn't matter. So if your parents created an asset protection trust for you, and you end up in a nursing home or not even a nursing home, if you end up with catastrophic medical expenses at a younger age that aren't fully covered by insurance, that trust can be pierced to recover those. So what happened was in 2005, an amendment was quietly made to the Iowa Trust Code, which now says that a third party holding a claim against a trust beneficiary for, quote, necessaries, can now reach into that trust and collect whatever is in that trust to the extent necessary to satisfy their claim for necessaries. Necessaries is not a word that's usually used in everyday polite conversation. No, it's not. It goes back to an old word from the English common law that essentially refers to the necessary cost of living, the classical food, clothing, and shelter. And I remember when learning about, this has been before my practice lifetime, but when I was in law school, that a husband had a common law duty under the English common law to provide for the necessaries of his wife and his children, or the necessaries, again, food, clothing, shelter. Somewhat interestingly, Peter, a wife did not have a converse duty to provide necessaries for her husband or her children. Interesting. Yeah, that was interesting. Anyway, so it's not, I was surprised to see it pop up, you know, in the 21st century in a piece of legislation to see that word necessaries. So you're talking about food, clothing, shelter, case law in most jurisdictions have expanded that definition to also include medical care. And my recollection is there is a now more than century old Iowa Supreme Court case, which held that in effect, the costs of care in a rest home are also necessaries. So if you set up an asset protection, income only trust in Iowa, put your assets in it, wait for five years, you'll be eligible for Medicaid. No problem. Department of Human Services will give you Medicaid as long as you don't have outside the trust disqualifying, enough disqualifying resources, as long as the income flow from the trust is less than needed to cover all of your medical expenses, which it usually is for most people. The income flow from the trust is less than they need to cover the entirety of their costs. So then when you die, what happens when you die? Department of Human Services under this statute could say, look what the state has provided. What do we provide in a nursing home? Do we provide food? Yes. Yes, they do. Do they provide shelter? Absolutely. Do they provide medical care? In a way they do. I mean, if they have a practical nurse or even a registered nurse on staff to make sure you're taking medications at a certain time. Yes, they do. Well, then again, you have the Iowa Supreme Court case that says, well, all these expenses in a rest home, these are all necessaries. That means that if you look at what the intent of that statute was and what the literal wording of that statute is, I believe that even if you've set up an otherwise seemingly bulletproof income only asset protection trust sufficient to qualify a nursing facility resident for Medicaid, the Department of Human Services can break through that wall and recover 100% of their costs. Oh, that's a bummer. All right. Now, I personally am not aware of a case where that has happened, and we have had the asset protection trusts for Iowa residents who've died that if the state came after it, we never found out about it. You know, the clients contacted us and said, help, help, help, you know, at this point. But the wording is there, and the intent of the statute is clear. And you can have other circumstances, I think, that fortunately we find less frequently, and that is, what about if you have a child or a grandchild that might be a beneficiary of your estate, and you figure you want to set the trust for them, they don't handle money well, they've been in trouble with the law, maybe they've been incarcerated, well, what about the claim that the state will bring against you for reimbursement for the cost of incarceration? Doesn't this prison system provide food? Yes, they do. Do they provide medical care? Yes, they do. Do they provide shelter while you're there? Yes, they do. Unlike a nursing home, they even provide you special clothing, you know, for the most part. Yes, they do. When you're incarcerated. Very stylish. So what does this all mean? What does this all mean? It means that if I'm having a conversation with some folks in our office in Des Moines, and this is the kind of planning they want to do, I will explain to them the Missouri option and say, look, I'm not trying to hustle you to come down to our Columbia office to sign. I charge exactly the same legal fee for a plan if you sign it here, you know, Des Moines is if you sign it down in Missouri. But Missouri trust law does not have a hold that a person who provides necessaries, you know, there is medical care, there is no claim for nursing home reimbursement expenses for any of that. And so if, if we can legitimately make Missouri law apply to that trust, then you can say to Department of Human Services, this door is not open. Yeah. And you are not welcome. Nobody's here. Go away. That's right. That's, that's the idea. Okay. First of all, thank you for the background. That is absolutely fascinating and, and, and doing some math here while you're chatting about it. If a trust has a million dollars in assets in it and in Iowa in particular, they find out about it based on that legislation from 2005, if, if somebody was in a nursing facility for 36 months, that would mean the state's entitled to just over a quarter million dollars of that million dollar trust. And if that, of those assets and you know, depending on what the dreams and wishes are of the generations to come, boy, that's, that's a sizable hit on what that legacy might look like with that trust. So valuable, valuable information that you're sharing there. It is. So you talk about your fee. Okay. Well, let me, you asked, you, you want me to mention that generally speak, this kind of trust for the, we, we have our own copyright in form of, we call it an MQIT, Medicaid Qualifying Income Trust, or MQIT, M-Q-I-T. And our fee for that trust is generally $9,500. I set up the fee schedule for that years ago to be equal to two months, average cost of two months stay in a nursing home. That cost has gone up as you, actually. Yeah, that I just let you know. Sorry, folks. I just, I just told Mr. Christie, his fee's too low. Yeah, as you actually noted there, but fortunately, our cost of doing that trust has not.and I've gone up comparably here. So generally about $9,500 is what that costs. And Peter, the thing about all the plans that we do, we don't charge a percentage. It's not based on the value of the plan that, well, it is based on the value of the plan, but it's not based on the value of a client's assets. We do nothing by the hour. I stopped doing hourly rate work back in 1994. And I approach all legal engagements just like a contractor would. I give a client, the potential client a bid. So this is what it will cost. And now you know exactly what the damages are going in. I learned over the years that one of the most frequent complaints I heard about other lawyers that people would whine to me about was that, well, the lawyer estimated it would cost $1,000 and it ended up costing $6,000. And the client thinks that, well, the lawyer skinned me in that situation. That's not necessarily, that can be the case, of course, but generally speaking, I think that's not true because Murphy's Law is always operating all the time. All the time. Every kind of business and everything ends up taking more time than you thought it would. That's right. So by getting away from the time and effort model, we just do fixed fee quotes and the client, as I said. Sometimes, I mean, we try to make it as fair as possible. There've been times that I would have made more money flipping burgers at McDonald's for the amount of time I spent than I actually got paid because I underbid the job so badly. But as far as I go, so anyway, that's the basis we work on. There's no hourly rate stuff here because it doesn't matter whether I say, and people used to ask me, what's your hourly rate? Well, whether I say it's $100 an hour or $800 an hour. What does that tell you? Nothing. Until how much time it's gonna take, you don't know. So anyway, I don't mean to get so riled up about that, but I remember, oh, I remember about five years ago, I was doing our annual estate planning client seminar update in West Des Moines, and a lady who was not a client came up to me, a fairly young lady, came up to me afterwards, and she started telling me about custody action, that she went back to court for a custody change and a divorce action, and the lawyer told her it was gonna cost about $3,500, and he ended up charging her $14,000 when it was all said and done, and she wanted to know what she could do about it. Well, first of all, that had nothing to do with my seminar. That's funny. She's just looking for another legal mind. Yeah, the latest in tax updates, you know, estate planning updates, et cetera. And I wasn't able to give her a good answer, but I did try to salvage the lawyer's reputation in her eyes by saying I thought the high probability was he just honestly did not estimate up front. And again, I said to her, an estimate is an estimate. An estimate is an estimate, you know, that until all the dust settles, you really don't know what it is. But anyway, we've taken that business, that part, out of it by just doing fixed fee quotes. So when I say generally it's $9,500, and that's whether you're gonna protect $3 million of assets or $900,000 of assets. So, you know, it's not dependent. Perfect, no, and that's really helpful. The, so from a time standpoint, you've got a husband and wife, couple kids. Maybe you have a brother that's involved in the business still. Let's say they've got a few hundred, let's say 1,000 acres of farmland. They've got the equipment, finance, things like that. As they begin a journey with you on something like this, what kind of time commitment do they have ahead of them? Well, I think, excuse me, when it, one of the things that I find with the people that I work with, almost 100% of the clients that I work with will use some form of trust as the foundational platform for their plan, as opposed to a will. You know, because a will requires that you go through probate court. And because probate court is the only venue in the world in which a will can be carried out, you know, and it can be enforced. So having a will point you to probate, it doesn't avoid probate. And a lot of people misunderstand that. I don't get the impression I'm a probate basher. We always have some number of probate cases in our office going on all the time. But most of those were cases that I inherited from other lawyers' offices. Interesting. Rather than cases that we plan, because most of the time, the planning that the client wants to do, although theoretically it could be done, excuse me. I forgot to put my phone on mute. It could be done with a will. It's possible to do creative estate planning with a will, I just never see it. You know, it's done. It seems like the creativity in estate planning all occurs with revocable trusts, irrevocable trusts, partially revocable, partially irrevocable trusts, you know, this type of mix. And so with a husband and wife situation, I have been a strong proponent of joint trusts since 1976. There's been a huge misunderstanding, particularly in the Midwest, that I found where clients, married couples have been incorrectly advised by lawyers that if they wanted to protect two estate tax exemptions, they had to separate their assets out into two separate parts while both of them were alive. So they either had to set up separate titles and use separate wills, usually with testamentary trusts inside the wills, or they had to set up separate revocable trusts and divide their assets between the two revocable trusts. Well, Peter, that has never been necessary to do that in order to get to the estate tax exemptions. What has been necessary though, if you start with one joint trust is that after the first spouse dies, you may have to divide it into two parts so that you have a separate, effectively a separate husband trust and a separate wife trust after the first spouse has died. But you don't need to have it that way while they're both alive. And it's much simpler for clients, for married couples to just have one pot that they put their assets in. So if you're gonna buy a piece of rental property, you don't have to decide, well, are we gonna put it in the wife's trust? Are we gonna put it in the husband's trust? Are we gonna put half interest in the wife's than a half interest in the husband's? All that stuff is nonsense. You've never had to do that. Now, it's not legally wrong to do that. Don't get me wrong. What is wrong is to tell clients and has been wrong is to tell clients they had to do that if they were going to protect two estate tax exemption. Interesting. My bias has been, and my client's bias has been, I would say 98% of married couples that I've done estate plans for use joint trusts for the last 40 plus years. Surprisingly, they even work better than separate trusts for many couples who are on their second or third marriages. So Christy, I can think of a couple I know right now who have done very well for themselves and have what you've described here, where they have separate irrevocable trusts. You have- Oh, they're irrevocable? I beg your pardon. What was the other one you were mentioning? They're irrevocable or they're revocable? Sorry, revocable. I misspoke. Okay, thank you. Revocable trusts and- Oh, exactly. Let me correct your pronunciation. I don't know if you have any people from the East Coast that listen to your podcast or may ever, but for them, we need to say revocable trust. Revocable. Okay, anyway, I'm sorry to interrupt. No, I love it. I love it. All right, folks on the East Coast, revocable trust. The point of my question is this though. So if they have them set up separately, is it too late to do a joint trust and to simplify it? No, no, no, not at all. We convert them all the time. We collapse the two of them together. And let me think about this for a second too. In theory, does this save them on accounting costs as well? I've got to imagine there's a stronger accounting lift when you have two separate trusts set up versus if you just have one single joint trust. There shouldn't be any difference while both spouses are still alive because when we're dealing with revocable trusts, those trusts do not have to get a separate tax ID number and they don't file separate income tax returns. So a husband and wife will still file their joint 1040 just as they would if they had one joint trust. So that should be a neutral consideration. Every now and then I've come across a case where perhaps a plan was done by someone who was using outdated techniques where they got a tax ID number for a revocable trust, which wasn't necessary, or even filing an unnecessary income tax return. But pretty well, everybody is aware today that you don't do that and you don't have to do that. So let me, I was gonna get into some sexy stuff here, but go ahead. Okay, well, let's do the sexy stuff. But from a time commitment standpoint, we're gonna- Oh yeah, where are we? Oh, no, no, no. So you and I are good on time. We've been chatting for just under an hour. But I mean, expectation-wise. So for our listeners, if we're gonna do a joint trust, we're gonna work with you. What kind of time commitment do we have on our part from collecting information, filling out documents? Like what's the, let's just give them some swag on what to expect when getting into this process. Our normal turnaround time from date of engagement to date of final signing is generally three months. Okay. That would be our normal. Now, if someone says, hey, we're going to go to Bosnia in four weeks, can we get this done in three weeks? Well, we always, there's always room for factoring in and moving them up to the top, but just in general. And with farmers, you never know. We have to work around planting season. We have to work around harvest. So sometimes it can be shorter or longer than our norm in that case. And that's your, so without it being specifically exhaustive, what kind of documentation do they need to provide to you? What's the list there? Okay, Peter, that's a good question. And one of the things that we do that most other offices don't, and I really wish we didn't do this because it is so time consuming and time intensive but we've been doing it for so many years, we're stuck with it. We take responsibility when we're doing a trust-based estate plan to prepare all the documentation to get everybody's assets into the trust. So pretty much standard in our industry is lawyers will do deeds to get real estate transferred into the trust. And then they'll give you a set of instructions on how to handle bank accounts, brokerage accounts, co-op accounts, that type of thing. And frankly, I wish we did it that way, but we don't. We have a full-time lady in the office and her full-time job is handling the titling and retitling. So we have to get from there, we wanna know every bank account because we have to deal with every single bank account. So we want the bank account and the account numbers to either move those into the trust or set up a pay on death or transfer on death arrangement, POD or TOD to the trust, perhaps after both spouses have died in that instance. We need to have all the information on your IRAs, 401Ks, any form of qualified plan because that's a hugely important decision as to how you set up the beneficiary designations on those accounts. So we have to have that information and we go over all of those decisions with clients where real estate is concerned. If you have a mortgage against non-residential real estate, there's a federal law, the Garmin St. Germain Act, which holds that you don't have to get the permission of a lender to transfer residential property to a revocable trust. Otherwise, transferring to a revocable trust or to an LLC or to a partner, family partnership or irrevocable trust, that will trigger a due-on-sale clause in a mortgage. Even though it's not, it will trigger it. So when we're dealing with non-residential property and residential incidentally is defined by federal law as an eight plex or smaller. So if they've got an apartment building, you could argue that that's, they've got 20 units, you could argue that's residential. Well, one of the things we have to do is contact the lenders and get permission. So we have to get permission from banks. We have to get permission from farm services. We have the FCS. I mean, we have to get the approval here because we don't want to inadvertently put a client in a position where they triggered the due-on-sale clause and the lender can now call the loan due. Now that wasn't a big deal when the interest rates were what they were two years and farther ago. But now I think there are plenty of lenders that'd be salivating to make your refinance today, right? Yes, they would. And Christie, I beg your pardon. I'm gonna dip out of camera view here real quick. I gotta plug my laptop in. This is embarrassing. My laptop's about to die. All right, we're good to go. Okay. All right, well, let's get into some of that sexy stuff. Well, okay, I'll finish that thought if I may. Oh, yeah, please. Sorry, I didn't mean to interrupt. It takes a lot of time, Peter, I mean, to change their Vanguard. We go online, we have Vanguard's forms, we have Fidelity, we have Chase Morgan. We have almost every insurance company known to man. We actually fill out those beneficiary change forms, ownership change forms, if need be. We instruct the brokerage firms. We usually will fill out, if they've got an Edward Jones account, we'll fill out the account change form, all this, that. So I don't know any other firm in my sphere that does that. So we have a lot more time invested in actually getting an estate plan implemented so that there are no holes or no gaps. Because it can be, we had a case where some insurance policies got missed several years ago for a client up in Wright County. And they had probably $4.5 million in a revocable trust, but there were a couple of insurance policies, just over $100,000 that were cross-owned, that the wife owned on the husband's name. And my paralegal missed that. And so we ended up doing a free probate for four life insurance policies up in Wright County because of that. And again, the mistake was in my office. But anyway, so we gather a whole lot more information. We actually keep an asset list. And whenever we have a client review, the first thing we do is send that out to the client in advance and say, here is what our financial statement from you showed last time you were here. Please make any changes. And so we always pretty much will know from time to time. Frankly, that takes more of our time than doing legal documents, you know, and to get the plan. Okay, sexy stuff. Most of the sexy stuff revolves around tax planning, which for everybody can involve cost basis adjustment. One of the attributes of a joint revocable trust, and this is another advantage that Missouri has over Iowa. If a husband and wife set up a joint revocable trust that's governed by Missouri law, you don't have to be a Missouri resident, just sign in Missouri, so Missouri law can govern that trust. Then if a creditor sues a spouse, a creditor has to get a judgment against both spouses or the creditor can't get anything from that joint trust. So let me say, use me as an example as a lawyer. I have a joint trust governed by Missouri law. My biggest source of exposure foreseeably is getting sued for legal malpractice. So if I were on the wrong end of a huge legal malpractice judgment that exceeded my malpractice liability insurance limits, the creditor would not be able to collect anything of my personal wealth because it's all in a joint revocable trust with my wife. And there's no way my wife could be liable for legal malpractice because she's not a lawyer. She's not a lawyer. And I have a feeling that Megan is not involved in your commercial activities in a way that she could be similarly roped in and a judgment could be obtained against her just like it could against you. I mean, this is the type of thing that every business owner, given a choice, would be foolish not to use this kind of trust. Because if you have a judgment against you, if we use a joint trust in Iowa, which we do for almost all of our married couples, and let's say the husband gets a judgment against him, well then half of the joint trust can be taken to satisfy that judgment. Whereas none of that trust could be taken if it's governed by Missouri law. So now that's an asset protection thing, not a tax thing. But here's the tax thing that's fun. If you happen to live in one of the eight community property states, and some would say that there are really nine because Wisconsin is also a community property state by legislation, but historically, they're the old Southwestern French and Spanish part of the US, Louisiana, Texas, New Mexico, Arizona, California, Washington, Idaho, and Nevada. Skipping Oregon, Oregon is not a community property state. But under the Internal Revenue Code, section 1014B9, if you own assets jointly with your spouse in a community property state, and by default, that's treated as community property, whenever the first spouse dies, 100% of that property gets a basis step up. Whether we're talking about real estate, whether you're talking about gemstones, whether you're talking about a stock portfolio, whatever it might be. Whereas if you're in one of the non-community property states, like all of us in the Midwest are, except Wisconsin, then only a 50% basis suggestion is obtained. Okay, so 1,000 acres of land here that you paid $800 an acre for, and you own it jointly with your spouse, and that land is selling around you for 13,000 an acre whenever you pass away, then your half will get a basis step up to 13,000 an acre, but the surviving spouse's half is still at 800 an acre. Now, is that a big deal? Well, at first blush, it's only a big deal if you're gonna sell. Right, that only matters if you're selling. Yes, but is your land tiled? Well, yeah. How much is tiling worth? Ah, $1,500 an acre. That can be written off again. Do you have any bins? Do you have any barns? Do you have any fences? Do you have any rental houses? Do you have any ponds, you know, the dams? You start going through the list there, and you find that there's a whole lot of depreciation re-harvesting that can be done if you get a 100% basis step up across the board. Okay, so I'm gonna tell you a real life story to illustrate my point, and this is using a tool that we call the Tax Basis Branch, okay? And that-again, that's our in house label. If you Google that phrase tax basis bridge, which I haven't done for at least a decade, I don't know what you would get. But it's it's a tool that we use that's based on four private letter rulings from the IRS, the purpose of which is to get a 100% basis step up on all joint trust assets when the first house dies. Okay? Well, what is a joint trust own everything except annuity contracts and qualified assets. So if you're a farmer, it owns all your livestock, it owns all your grain, it owns all your machinery, you know, and it owns your land and all the improvements. So this is a real life story. And it happens to come from Iowa. The couple had the tax basis bridge wife passed away first, which doesn't usually happen. And so they had 800 acres of land, all of which, let's say was pattern tile, you know, at that point, tiling had already been written off. Well, we put a value of 1500 an acre on the tiling. Well, there's 1.2 million of new write offs right there. The wife died at a time when the harvest was finished in late November, it was a good year for harvest. There's no guarantees, you know that you're going to have all the crops in by the end of November. But in this case, they were. And there were $850,000 of grain in the bins. And as you know, your cost basis in harvested grain is zero. And when you sell a grain, it's all ordinary income, right? Not capital gain. Correct. This particular case, the grain now this again, this this incident I'm telling you about happened about 18 years ago. Okay, $850,000 of grain at the prices then not at today's, you know, grain prices. Okay. We'd be talking more money today. Yeah, we would. So anyway, and so the surviving husband had about a million dollars worth of machinery. And it had been written down to about $70,000 of remaining depreciation. Section 179 was not as liberal back then, you know, as it is today. So he still had some depreciation reserves writing off. So anyway, a friend who was an equipment dealer went out and, you know, did the windshield appraisal drives in the drives away and, and looks into the machine shed. Okay, a million bucks. So he got a million dollars. So his basis jumped from 70,000 to a million in his machinery. He had grain bins, he had barns, machine shed, as I mentioned. So all together, he ended up with $3.2 million of new depreciation write offs and $850,000 cost basis in his grain. So he said, I don't think I'll wait till after the first of the year when the market normally goes up, I'm going to sell now. So he had no income for the year that his wife died, but he had all of his input costs and his operating expenses. So he had a huge operating loss for the year she died. He carried that operating loss back for the three preceding years got the tax back he had paid for those three years still didn't use up his net operating loss, carried it forward another two and a half years. And so all of that, all of that, because of this thing called the tax basis bridge. So now if he'd sold the land, he'd been even better, he was sold all the land tax free, but he had sold a couple of his grandkids before he'd sold any of that land. And I also forgot that, that, you know, you can also, you can also get a new basis for excess soil fertility. Now you can jump through the normal hoops and have an agronomist come out and take soil sample and see how much residual lime, residual fertilizers, you can do all of that. And that's the gold standard way to do it. But most farmers don't want to pay to have that done. So we just usually take an arbitrary number somewhere around 300 to 325 an acre for excess soil fertility. Well, you can write that off again, you know. So even though you're not going to sell the land, when it comes to a cost basis step up, when all the improvements on the land, then this dog will really hunt here in that sense. So this thing is hugely valuable. I once had a client who had owned a company that he started with a cost basis of $500. His basis in his stock was $500 and the company was very successful. He ended up enlisting it on the London Stock Exchange. And when I visited with him, the value of the stock that he still held as then selling on the London Stock Exchange was $88 million. And his cost basis was $500. I could do that math. His wife didn't own any of the stock. And so this was, wife didn't own any of the stock. She was not in the best of health. It was a second marriage. Most lawyers would have said, you got to put some of that stock in the wife's name. So you get a cost basis step up. Just put it in a joint trust with the tax basis bridge. And that way, if the wife dies first, your basis jumps to $88 million or whatever your stock is selling in at that point. And you can get out, you can peel that stock off as fast as the market will let you, tax free. So this tax basis bridge is a huge deal. And for the life of me, I never see it. I've been using it since 2001. I've never seen it used anywhere else in Iowa. Now that doesn't mean it's not being used, Peter, but I've not seen it. And I ask accountants now, have you seen this? No, we never heard of it. And the biggest job I have is educating accountants about it because generally speaking, if it's an accountant I've never worked with before, and we say, Hey, all that grain got a basis step up. That grain is free. All the machinery all gets a new cost basis. The accountant says, you're either smoking something illegal, you know, or you have a greatly subnormal IQ, you know, one of the two. I have never, I have never had an accounting firm fail to go along with me after I explained and went through the development for it. And recently we have had two major brokerage firms. I'm not going to mention national brokerage firms who have also agreed with my analysis and they have stepped up the cost basis on a hundred percent. You know, the portfolio. That's a huge deal, Christy. Oh my goodness. It's huge. It can be massive. It can be massive. Absolutely. So as you talk about tax basis, well, as you talk about tax basis bridge, are there other terms? What, what are the other, are there other terms of for some of our listeners, if they want to learn a little bit more about this? And as we get to the end of this, we can kind of land the plane. I want to make sure that you've shared some of your contact information as well. If, if people want to learn more, but the, what is, are there other terminologies to describe the tax basis bridge? Well, it's more technical stuff. Okay. It's, it is a, it's in the language. Technically it is a general power of appointment. It's the first to die spouse is given a general power of appointment over all of the joint trust assets. And the assets don't have to be in a joint trust. I mean, they could be personally owned by the other spouse, but you'd have to call out those assets. It makes it very simple. If they're the assets are in one bucket, I'm following you, you give the power of appointment. And one of the other things that we do here is we want to, we want to make sure that there's only a step up in basis because what happens under the internal revenue code? Oh, incidentally, I, I misquoted something earlier. I said that community property gets a step up in basis under code section 10 14 B nine. It's really 10 14 B six on community property. It's 10 14 B nine that on everything else. So it's a basis adjustment of death. Now that could be a step down just as easily as it could be a step up. We had clients dying in early 2009, who took a quite a step down on some of the securities in 2008. The kids couldn't understand, you know, why was it? You know, they didn't get that. They didn't get a basis equal to what mom and dad paid for it. So we, the bridge only operates on assets, which have a higher market value than cost basis. So we want to make sure there's only upside, no downside. Okay. I love it now. Okay. So that, but that's a good trick. Now there, there are other things that, that, and this whole business of wanting a basis step up, we have had to retool and restructure lifetime trusts. A classical example is the old bypass trust where when the first spouse died, you know, there's a credit shelter trust or a family trust or bypass trust. Maybe there was farmland that was put in it at a thousand bucks an acre, you know, back in 1980. And it's worth 14,000 acre now. And the accountant and the lawyer say, sorry, no part of that's going to be in mom's estate when she dies at 95 years of age here in a nursing home. Well, yes, you can change that. We call that the family trust rescue where we can retrofit those old trusts like that. So that if the surviving spouse has more estate tax exclusion available to his or her state than is needed to zero out any estate tax exposure on his or her own assets, that surplus exclusion can be applied them to the bypass trust so that those assets can get a cost basis step up that way. When the surviving spouse dies, everything gets stepped up once again. Oh, wow. And so in the scenario, incidentally, where I gave you the example of the wife who died and the husband had 850,000 of grain. Well, what happens then? He got a new basis step up, got to redepreciate his machinery. He has since died incidentally. And guess what? Got another basis step up and the kids got to write off that machinery again. Well, in the real world, I love this. So the real world application of that is to your point where the husband went, you know what? I'm not going to wait. I'm going to sell my grain today. So he was able to do that, realize this income, not have the tax liability and enjoy that, all of it. Similarly, though, he wasn't motivated at that moment because of the structure describing to liquidate all assets to realize the highest basis today. And so the kids then were able to enjoy whatever that continued step up was and have limited tax exposure when dad finally passed. He didn't sell anything except his grain. Yeah. And I'm sure that was plenty of money for him to live on for a while. And he had $3.2 million of new depreciation write-offs to work against future income. That's a pretty sweet deal. That's a sweet deal. In that regard. So the idea here is that if you look at the typical generation skipping trust, you know, which will be enforced for a lifetime of the kids. And then when the kids have died, it passes out to the grandkids. Well, the Achilles heel of those trusts is there is no cost basis step up when the kids die. Right. So we've had to retool all of those generation skipping type trusts so that now we give the kid a particular extra power over the heritage trust that's conditioned on the kid having available the state tax exemption when he dies. So with the exemptions at the level they are today, hardly anyone is ever looking at a state tax problem and whether the exemption will drop back by 50 percent on January 1st, 2026 will probably depend on who wins the next presidential election. Probably, probably at this point. But again, we're looking to instead of getting assets out of your state. And that was the way it was for the first 30 years I was doing estate planning, Peter. But for the last 19 years, almost I've been doing estate planning. The question has been reversed. How can we get assets into the estate of someone who dies? Oh, wow. Now, so they get a basis step up because there are only two ways to get basis. Number one, you buy it, you pay for it. Or number two, the asset is includable in the federal gross estate of someone who dies and whether they have to file a state tax return or not is totally irrelevant, has nothing to do with whether or not you get a basis step up. And I'm going to give you one last example. And this really takes sexy, I think, to a new level. So many of these plans I see, like Spousal Lifetime Access Trusts, you know, that people use, and we use those too, incidentally, to lock in the exemption. If we've got somebody who's got 12 million of assets and they're afraid the exemption is going back to the seven million, well, we can do basically reciprocal Spousal Lifetime Asset Access Trusts for a husband and wife. But we want to make sure that if there's any estate tax exemption left that that spouse has, if there are any low basis assets in those Spousal Lifetime Access Trusts at either spouse's death, they get bumped up. We want to make sure that happens. Never give away the potential, never give away the potential for basis step up. And what I'm telling you now is a point that I've seen almost every single lawyer in the country miss, you know, in terms of planning. Now, my classic example of how you use someone else's life or someone else's death to get a basis step up. And so a real life couple came to me a couple of years ago, and they had an apartment complex that was worth about eight million dollars. And they've had it for many years and had it since the 70s. It was doing very well. Full occupancy. Some tenants they'd had there for a quarter of a century. They were doing well. And they said, we're getting killed on income tax. We've got no depreciation write offs left. Is there anything we can do? And I said, as a matter of fact, there is something you can do. So do you know anybody who's terminally ill? Who's living in your apartment complex? Who basically doesn't have any assets? Oh, yeah. I can think of several. Oh, yeah. Yeah. She has terminal cancer and so and so else, you know, is in the final stages of Alzheimer's and blah, blah, blah. And I said, well, here's what you can do. You can give a particular power to the first one of these people to die, such that it will cause your entire apartment complex to be includable in that person's federal estate. And as long as there's less than at the time, you know, 12 billion dollars, they don't have to file a state tax return. You don't have any filing with the IRS. And we can set it up so your whole apartment complex momentarily goes into the federal estate of that individual who just died. And then it rolls back out in an asset protected irrevocable trust to you going forward. So now you've got absolute judgment protection, bankruptcy protection, even federal tax lien protection, since this was a Missouri case. And you've got a brand new eight million dollar cost basis in your apartment complex. It took me an hour and a half with their CPA. And this is a CPA who's filed hundreds and hundreds of the state tax returns. He knew about basis step up, but he'd never heard about giving the power, a power to someone else, which would cause the asset to be includable in their gross estate so that it can get a cost basis step up. But the light came on, the light came on and he said, oh, my goodness, this is wonderful. And anyway, so with the accountant's blessing, we did it. Lady passed away. They got the basis step up and they're very happy. Holy smokes. So did was the the tenant that they they benefited from her? It didn't benefit. It didn't benefit at all. Well, that was going to be my question then. What was there? Was she aware of do you think this tenant was aware of what they were doing? No, no. And the federal the federal case law. Yeah. Very clear that you don't even have to tell the person. Fascinating. I'm holding up my cell phone here, Peter. I've seen it. Beverly Hills. Right now. Oh, my. I didn't realize that screen was showing. So I could give you what's called a general power of appointment over this cell phone. OK, Peter, I'm going to give you a general power of appointment over this cell phone. If you happen to die now, my cell phone is included in your federal estate. And so I could say, well, wait a minute, that's it's worth five hundred bucks. Maybe I can write that off again. I'm not going to jump to that. But my my point here is that by giving you a general power of appointment over this cell phone, it makes it now part of your federal estate. And I didn't even have to tell you I could sign a piece of paper, though, here in my office saying I hereby grant Peter Jack was a general power of appointment over my cell phone, sign it. And to be really formal, I get it notarized by someone here in the office and I just stick in my file. You don't even have to know you had the power. In fact, my first tax professor in law school used to joke and we didn't think it was funny at the time. I think it's funny now, but I didn't know enough to appreciate the humor in it. Then he said, the best thing you can do to your worst enemy is give him a general power of appointment over all your assets and never tell him about it and break it to his family after he's dead. So you get no benefit out of a phone that you don't know that I give you a power and the power of appointment. What was that power? It was actually I gave you a power to appoint it to your creditors. Oh, wow. It's never anything you could have done or used for any benefit anyhow. Well, and I was just going to ask you that as a follow up. And I know case law is clear. I don't have to tell you. You don't have to know it. And the federal case law is also clear. You can give it to a person who is completely mentally incompetent, provide that she has to exercise this power of appointment only in a last will and testament, which makes specific reference to this grant of a general power of appointment. And she's not even capable of executing a will because an incompetent person can't execute a will federal case law holding it was still a valid grant of a general power of appointment, which caused that phone to be includable in that person's estate. That is the predicate for getting a cost basis step up, having an asset includable in the federal gross estate of someone who dies. Fascinating. Yeah, we have to do a little fancy footwork to get it back to you in a way that gets around a particular section called 1014 E of the Internal Revenue Code, which if we didn't get around 1014, he would deny the basis step up for income tax purposes, but that's getting way too far off in the weeds. You know, for this conversation here, my point is basis is a valuable thing. Absolutely. And you don't want to use a planning technique that forever forfeits the potential for a cost basis step up at someone's death. That's my takeaway lesson here. And that has really, I should say, I don't want to revolutionize as much too strong a word. Let's just say that's really changed our perspective on the way we put together estate plans for the wealthy and the not so wealthy, because everyone appreciates a cost basis step up that puts you in a position to either sell an asset tax free or to read, appreciate it and effectively harvest tax benefits then and there while you're still alive, because otherwise it's money you send off to Washington DC or Department of Revenue. Yeah. And not that there's anything wrong with those departments, right? For those that are listening, it's like, hey, but if we have the ability to be good stewards, then we should. Yeah. Jesus said, render unto Caesar. He didn't say render unto Caesar more than that which is Caesar's, right? So I think rendering more to Caesar than you have to is the essence of bad stewardship of assets. Roger that. Well, on that, I'm just going to bring this to a close. Folks, thanks for listening. I hope you enjoyed this conversation as much as I did, Christy. I hope maybe we get you in the studio in person one of these days and continue some of these conversations because I know there's a lot of details that we can still get into. I really appreciate your enthusiasm. My pleasure. All right, folks, thanks for tuning in and we'll talk to you again soon. All right. Have a good evening.