09/09/26 - Myths of Estate Planning pt.2

And we're on to another real common myth, and that is that a trust is only for the rich.

Yes.

And that's a myth.

It really is.

So...

A little brief history of trust is that back in the 90s when the estate tax was – federal estate tax was very low, $600,000.

So if you had more than $600,000, the federal government wanted to tax you should you die.

Boy, that was really low.

So trust began to sneak into the thought process much more before that time.

It really was an instrument that was utilized far less, and it was utilized for individuals that had a lot of wealth in order to ensure that money would be passed generationally.

And it was greatly known to put in a lot of strings, right, and play – Play God from the Dead, which is I'm going to keep controlling you with the money.

And then we got into trust babies and spoiled brats and everything else.

So what the old thought process through the 50s and the 60s and even through the 70s, what it did is it gave us a public perception that trusts were only for those who had money and needed to control somebody after they died.

And when we got into far lower tax thresholds in the 90s, now all of a sudden they came out to play for many more people because even back in the mid-90s, $600,000, that was not a very high threshold.

Now, it is – climbed over the years.

So in the past, how many years is that? 30 years almost.

Past 25 years, the estate tax threshold had moved from $600,000 to 10 and over 15 times that value.

So that's a really big threshold.

But don't be fooled by that number.

That's going to come crashing down in a couple of years, and it's only artificially inflated for a period of time.

So estate taxes have been one of the biggest reasons that trusts have come out of the woodwork and have become a more common instrument because – I mean, nowadays, specifically in the Pacific Northwest, it doesn't take much, specifically if you own a home, to now have $600,000 and $800,000, let alone...

Just in the house.

Just in the house alone, let alone throw in retirement accounts and any type of savings that you've been able to do during your lifetime.

So nowadays, being a millionaire is not the same thing as what being a millionaire was.

I remember growing up that...