Retirement and Legacy Blueprint Webinar – Episode #2

On this webinar we talk about refinancing a house, how the Secure Act affects your IRA’s, why you want to avoid probate, does a Ladybird deed make sense.

Every Wednesday at 1 PM, Attorney and Advisor Christopher J. Berry, Esq., CELA will be answering questions and sharing wisdom on a legal, financial, or tax planning topic. Feel free to submit questions ahead of time by email to These are informal and educational.

Michigan Estate Planning Attorney and Advisor discusses legal, financial, and tax planning.  Call our office 844-885-4200 or visit us at to learn more.

Join us weekly for at 1 PM, every Wednesday.

We have offices throughout Michigan in Brighton, Ann Arbor, Livonia, Novi, and Bloomfield Hills.

In this episode, you’ll learn…

  • Refinance Issues and asset protection
  • Mortage companies refinancing 
  • 60/40 rule and how the market affects bonds now
  • How to handle buying a house and paying for rent in a tax and homestead perspective
  • Setting up a second property in LLC to protect liability
  • Does probate vary in different states?
  • How does the Secure Act affect Legacy/Castle Trust? 
  • Stretching the trust to the maximum time
  • Is IRA protected in a lawsuit
  • Ladybird deed to protect against probate
  • Setting up a Legacy trust

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Episode Transcript:

All right, everyone. Welcome to our Wednesday webinar. My name is Chris Berry with Castle Wealth Group. We like to do these every week now, just as a way to continue the education. And if you could, in the chat, let me know if you can hear and see me. Sometimes technology is a little weird, so if you could, let me know whether you can hear and see me. That should be me, and you know what? We can get rid of this virtual background, and there’s me and my office. So you should be … Yep, Angela says all good. David says all good. All right, wonderful. So if you do have any questions, and already I have about five questions, I’m going to cover … Great to see you, Beverly, or virtually. As well, Diane. If you do have any questions, feel free to type those into the questions and answer section, and I’ll try to address those.

And right now I have about five things I want to cover. We do these about once … We’re doing these every Wednesday at one o’clock. So the same registration you used today, you can register moving forward. And if there’s anything that you think hey, you know what? I have some personal questions where I don’t want to bring it up on the call, what I’m going to do is put in this link that you can go to actually book time on my calendar. So if you go to, we can book a short phone call. Really like doing this. I did it last week. It came off really great. Had a lot of participants. Had a lot of questions. And I just like serving the role as an educator. So think of this as an open office hour where I’m here for you.

Now, a disclosure, anything I say, make sure to sit down with a professional, maybe me, to make sure it fits for your specific situation because a lot of times it depends type thing. So this is more general advice, I will answer those questions, but keep in mind before you take action, let’s look at the whole picture, not just that little snippets. A little bit of disclosure there, but with that, I’m going to go ahead and share my screen. So bear with me as I share my screen. I’m starting to get better at this, navigating these Zoom meetings. I don’t know about you, but I’ve been on all kinds of Zoom meetings over the past couple of weeks, so give me just a second and you should be seeing now my whiteboard here. So bear with me, I have horrible handwriting, but I typed out some of the questions that we already received.

The first thing I want to talk about is really refinancing issues. So a lot of people are refinancing right now due to all of the low-interest rates. It’s a great time for that, where I’ve had some people with interest rates on their mortgage as low as 2.75%. Where it becomes interesting is when we have Trust. And with trust, a lot of times your mortgage company is not going to allow you to refinance inside of a trust. So let’s say we have something like a Castle Trust, which is our asset protection trust. So let’s say we have that Castle Trust, and now they’re going to want … now you want to refinance to get a lower rate, and let’s say the house doesn’t decide or the trust. Well, some refinance companies or mortgage companies will not refinance inside of the trust. So sometimes what we have to do is we have to take the trust, or the house out of the trust, do the refi, and then put it back into the trust.

The downside of that is if we are taking outside of an asset protection trust, like the Castle Trust, it will restart that five-year clock for a nursing home or Medicaid protection. So we have to weigh does it make sense to refinance for that lower rate, understanding that we might restart that five-year clock if we do have an asset protection trust, like a Castle Trust. Now, if we just have a basic revocable living trust and the house is in that, and we take it out, we do the refi, and then we put it back in, no downside to that. So that’s where, with a revocable living trust, it’s a little easier to navigate, but with a revocable living trust, you’re missing out on the asset protection. And understand, each mortgage company is a little bit different on that, and we do have some mortgage companies that will refinance with the house in the trust. Sometimes it might be at a slightly higher rate, but there is a possibility.

But what I want you to understand is every mortgage company, it’s a private entity, and they can choose what they want to work within terms of whether they want to work with refinancing in a trust or not. But something really to consider with the low interest rates we have, we’ve had a lot of calls on a refinancing. Now, along the same lines is, with these low interest rates, it’s really been a tough time in the bond market. So just something as an aside, if you have money in the market and you’re following that 60/40 rule of maybe 60% in equities, 40% in bonds, understand that bonds are really underperforming right now. And I sent out a Forbes article that talked about how, if you are following that 60/40 rule and you’re looking at bonds as that 40%, maybe you should be looking at some alternatives because interest rates are so low, and that’s good for the refinancing side, but it’s not as good for portfolio side on the bond side. So hopefully that’s helpful with refinancing.

This is the second question that was submitted, buying a house out of state for daughter and paying rent. How should we handle that from a tax perspective, from a homestead perspective? So let’s say we have our primary residence and that’s in Michigan. So we have our primary home in Michigan, and now we want to buy a second property, let’s say for our daughter. If you as the parent are the one buying it entirely and it’s going to be in your name, there’s not going to be any homestead, because it’s a second property. So it’s going to be a second property. Another question coming in. I’ll get to that one. So that second property, it’s not going to be a homestead, so you can’t take the homestead exemption. And unless you are going to have say, the daughter as a co-owner of something on that property, which there are pros and cons to that, the downside is if that daughter gets a divorce, lawsuit, creditor action, bankruptcy, you might lose that home. Now, you have to answer to her if you want to sell it.

But what a lot of my clients will do, especially if say that daughter’s paying rent, is they’ll want to put that rental property, whether it’s a family member or not, inside of an LLC. And the reason for that is this rental property, whether it’s a family member or not, it’s now a hot asset, a hot commodity, meaning if there’s a slip and fall on that property and it’s not inside of a limited liability company, an LLC, that hot asset could blow up and now explode over onto your own personal assets, where now you could be personally liable. But if we build a box around it, like a limited liability company, an LLC, and we can do this in Michigan even if it’s a Georgia property, we deed that Georgia property to the LLC, now the LLC is the owner. From a tax perspective, it’s not going to be any different. In fact, it might be better because now you can take some business expenses, but either way, it’s not going to be a homestead.

But now, with the LLC, you can maybe take some business exemptions from a tax perspective, and then also you’re limiting your liability. So I have a lot of clients where they do have second pieces of property, whether it’s a cottage up North or a rental property, whether it’s to a family member or to just another family, they’ll put that second piece of property into an LLC because they want to limit liability because if it’s just in their name and there’s a slip and fall, they could come after their own personal assets. So buying a second property, I would buy it in your name, and then once you’ve paid for it, we would transfer it into an LLC. And this is something, even if there’s a mortgage or something like that, we could probably do. Number three, does probate vary in different states? If there are no disagreements, does it still have to go through probate? So we’ve taken care of one. We’ve taken care of two.

Does probate vary in different states? If there are no disagreements, does it have to go to probate? Probate does vary, to a certain extent, in each state, but in reality, it’s relatively the same in the sense that how assets end up in probate are going to be the same no matter what state. What’s going to differ is just how complicated the probate process is. But typically what you’re going to have is a core process. It’s going to last a certain amount of time. In Michigan, it lasts at minimum five months, and you’re going to have certain costs associated with it, you’re going to have inventory fees, filing fees, publication fees, sometimes attorney fees. The national average is 3 to 5% of any assets going through probate typically get eaten up in costs, whether it’s inventory fees, filing fees, or publication fees. So most people want to avoid probate. And the way to avoid probate in each state is going to remain the same.

 And understand, even if there are no disagreements, you still may have to go through the probate process. So even in Michigan, if there are no disagreements, everyone is on the same page, but an asset ends up in probate, you still have to go through that five-month process where you have inventory fees, filing fees, publication fees. So the probate process, how assets end up in probate is going to be the same in each state. And really what we’re talking about is what’s called a state administration and this is going to be the same in every state. So first we look at how do assets transfer upon death. That’s what a state administration is. And first, we have what we call joint ownership. So if you’re joint on a piece of property, let’s say you’re a married couple, one spouse passes away, then it’s going to go to the surviving spouse. That’s joint ownership. Joint on a checking account, one spouse passes away, it’s going to the surviving spouse. A second would be through … And this is all a state administration.

Second, would be through beneficiary designations. So if you have a beneficiary listed on a 401(k), on a IRA, something like that, it would go to whoever’s listed as a beneficiary. Third, would be through a trust. So you can have different types of trusts. We could have revocable living trusts. We could have asset protection trusts like the Castle Trust. But if an asset doesn’t go through joint ownership, beneficiary designation, trust, then it ends up going through probate. And that process is going to be the same in every state of how do we avoid probate? Well, we need to rely on either joint ownership, beneficiary designation, or trust, whether you’re in California, Texas, or Michigan. If it doesn’t pass through one of the first three ways, then it goes into probate. Now, what’s going to be different is how the probate process works. But most states, you’re going to have this timeframe. In Michigan, it’s going to be five months. Then again, the national average is that 3 to 5% of any assets going through probate get eaten up in costs. That’s just the national average.

And so if you can avoid probate, chances are you’re probably going to want to do that. And avoiding probate with a basic estate plan is pretty easy. You just rely on beneficiary designations. Maybe you have a trust and you could do something called a ladybird deed for the home. But again, even if you’re out of state, you’re still probably going to want to avoid probate because you don’t want to have your kids or your beneficiaries having to go through a court process, even if there’s no fighting involved. So that’s number three. Number four, how does the SECURE Act effect Legacy or Castle Trust? And really what we’re getting at here is stretch rules. So really what we have in our office is three different types of estate plans. We have what we call a basic revocable living trust, and this is a trust that avoids probate, outright distributions to the beneficiaries. So it’s a great plan, it avoids probate, we take care of the financial power of attorney, medical power of attorney, et cetera.

Our second level of planning is what we call our Legacy Estate Plan. And this is where we build in what we call Legacy Inheritance Trust. So whatever we’re leaving to the next generation is protected for their lifetime from divorces, lawsuits, creditor actions, bankruptcies. And then third type of plan is what we call our Castle Plan. Castle Plan avoids probate, protects the kids, but most importantly, it protects you from creditors, lawsuits, and, most importantly, longterm care costs. So the question is how does the SECURE Act affect these types of trusts, building the opportunity for a lifetime of asset protection? Well, what the SECURE Act did in this past December 20th. Yeah, December 20th, 2019, which seems like a lifetime ago. We were doing workshops on the SECURE Act in early January, and February, and even into early March, before the pandemic hit. Yeah, and it seems like a lifetime ago, but what the SECURE Act did is two things.

First of all is it pushes back the RMD age, so the age you have to take out from your IRAs, from 70 and a half, now it’s at 72. And the second thing that it did is that it said that if you inherit an IRA, not as a spouse, but as a beneficiary, a non-spouse beneficiary, So a child or anyone else other than a spouse, instead of being able to stretch out the benefits over their lifetime, at most all the taxes would have to be paid within 10 years. So really what the SECURE Act did is, to a certain extent, it killed off the stretch IRA. So now if you inherit an IRA, you can only stretch it up to 10 years. So prior to this, you could stretch it out over your lifetime. And now the question is how does that affect Legacy and Castle Trust? So if we build in stretch out language inside of a trust, what does that mean? Well, it means that we can still stretch it to the full 10 years.

So the SECURE Act says that no matter whether you name the trust as a beneficiary, you name a child outright as a beneficiary, at most you can stretch it 10 years. With the language that we build into these trusts, we say that it still qualifies as a designated beneficiary so you still get that full 10-year stretch. If we didn’t include that language, then you would be stuck with a five-year stretch. So what the SECURE Act did is no matter whether we name the trust as a beneficiary or we named the beneficiary outright, at most they’re going to have a 10-year stretch, which means that all the taxes have to be paid within 10 years. So that’s the SECURE Act. Number five, are IRAs protected from lawsuits? IRAs are protected, and 401(k)s are protected up to a million dollars in a lawsuit, potentially. Now, you still have to go through bankruptcy to get that protection.

The interesting thing is that IRAs are not protected from longterm care costs. So while IRAs are protected if you were to get sued, IRAs if you go into a nursing home are not protected from longterm care costs. So that’s why we have a lot of clients who are taking their IRA money, paying a tax, and maybe moving it into the trust, A, because it makes sense from a tax perspective, B, because they’re concerned about longterm care costs. So to answer this question specifically, are IRAs protected from lawsuits? Yes, but not longterm care costs. And also, again, this is just an aside, but with those IRAs, with taxes going up in the future thanks to the Tax Cuts and Jobs Act, thanks to the CARES Act that just added another $2.2 trillion to the deficit, plus we’re going to have round two of the CARES Act, with more stimulus money coming out, which is going to raise the deficit even further, what a lot of people are doing are looking at pulling money out of the IRA sooner rather than later to pay the taxes.

Now, here’s a question. I have a child. My husband does not. I made my husband sign a prenup to be sure my son will receive my half of our assets. If I become incapacitated, will a trust ensure that? Well, with the prenup, if both of you signed a prenup, that needs to be honored. The concern would be money. If I become incapacitated, that doesn’t affect the prenup. So your prenup still will be held in place. Now, what you might want to do with a trust is you might want to say that whatever you’re leaving to your husband, if he were to pass, maybe it goes back to your side of the family, but I’d have to take a look at what the prenup says, but to answer your question, the prenup would remain in effect and remain in power. And again, if you had a trust, that would also remain in effect and remain effective as well. So that is all the questions I have. Let me know if there’s any other questions that you have, and feel free to type those into either the chat or the question and answer section.

And I’ll just share, while I’m giving you an opportunity to ask any more questions, the things that we’ve really been talking about this last week from a market perspective is the potential downturn in the market. We’ve been on a 12-year bull run. We’re moving into a presidential election year. We had a little bit of a gut punch in March, but if you look at the unemployment out there, if you look at a lot of the indicators out there, there’s a lot of things that indicate that we might have another downturn. So the question is what are some things that we can do to try to protect against that? That’s been a big conversation piece this last week. The other thing we’ve been talking a lot about is tax planning, looking at the idea of we have this Tax Cuts and Jobs Act that’s effective from now to 2025, but what happens based on everything that’s happened in 2020, with the pandemic, and us adding another $2.2 trillion, plus another stimulus package on top of that? Maybe we should look at strategies to move money out of those IRAs sooner rather than later.

From a legal planning standpoint, something we’ve been talking about a lot is how are we leaving things to the next generation? Are we leaving things to them outright? Where now, let’s say you leave it outright to that child and he gets a divorce, a lawsuit, creditor action, bankruptcy, or passes away, now that money might go to a spouse versus going down to the grandkids. And that’s where we look at things like the Legacy Trust to protect that legacy, to make sure that everything we leave to the next generation is protected. So let me see if there’s any more questions. Looks like I answered that question. All right, so with that, I want to thank everyone for attending this week. I do appreciate it. We had a great turnout again. We’re going to do this basically every week, every Wednesday at one o’clock, the same login each week. If you do have questions that you want me to answer as part of this, or if there’s anyone else that you think would benefit from attending, feel free to either email us at or feel free to share this log in.

Plan on doing this from now until basically December. It’s really an opportunity to connect with our clients and people who want to be clients. We used to do a lot of in-person workshops, but with everything moving to a more virtual world, we wanted to do these weekly wisdom webinars, just sharing good information. And again, if you do want to see how this applies to your situation, feel free to give our office a call at (844) 885-4200, or feel free to book some time with me by going to, and we can book a time. Looks like there is another question here. What is the best way to protect my Michigan and Florida home? A Ladybird deed? Well, it depends on what we’re trying to protect against. If we’re just protecting against probate, then a ladybird deed works great. And what a Ladybird deed is a type of deed that says it’s in your name while you’re alive, and then upon death, it avoids probate and goes to whoever you’ve named as a beneficiary. So it’s like a beneficiary designation for your home.

So a ladybird deed will protect you against probate, but if you’re looking to protect against longterm care costs, nursing home costs, then we might want to look at a Castle Trust, because, for a home to be protected while you’re alive, they only count a primary residence. So if you do have a second piece of property, like a property down in Florida, that would be a countable asset that would have to be spent down. So what we would do is we would look at setting up a Castle Trust, moving assets into that trust, and then once we make it five years, everything inside of that trust would be protected from the longterm care costs, from that nursing home or Medicaid spend-down. So a ladybird deed is great to avoid probate and make sure the home gets wherever it’s supposed to go upon death, and it can protect a primary residence from that nursing home or Medicaid spend down because a home is exempt while you’re alive, but if we have a second piece of property, the ladybird deed will only protect against probate, it will not protect against that nursing home or Medicaid spend down.

So instead, we might want to set up an asset protection trust, move the home into the trust, and then it would be protected. So hopefully that was helpful. Approximate cost of a ladybird deed? In our office, we charge 250 to do a ladybird deed. And then what about legacy is protected from lawsuits? So with the Legacy Trust, the way it works is whatever is left … So when you pass away, anything that is inside of the trust would be protected if we were to set up a Legacy Trust. So the difference here is that … And let me try to share my screen real quick again, so give me just a second. So sharing my screen. So with the Legacy Trust, so upon death, think of it like this. So you pass away, you have two options. And this is what we call a base plan. So the base plan is basically you’re just giving a pillowcase of money to your beneficiaries.

So whatever they inherit from you goes outright to the kids, but then if there’s a divorce, lawsuit, creditor action, bankruptcy, that money could be lost. Or if they pass away, half that money could go to the in-law, who we call an outlaw, versus what the Legacy Trust does, so this would be the Legacy Trust, is it says that whatever the beneficiaries inherit from you, if anything, would be protected from divorces, lawsuits, creditors, bankruptcies. If you have two kids, each kid could be the trustee of their own separate share. So whatever they decide to keep in the trust would be protected from a divorce, lawsuit, creditor action, bankruptcy. So we’re giving them the opportunity so whatever they inherit from you could stay in the bloodline. They would have peace of mind to know that whatever they inherit from you, as long as they keep it inside of the trust, would be protected.

They could receive all the income, they could decide how it’s invested, and then, if they wanted to, they could take the money out of the trust and put it back in their name at any time. All they’d have to do is, at that time, appoint what we call a key holder. So think of this like a safety deposit box, where you go into the bank, you can’t just go in and take your money out. You’ll go into the bank, you turn a key, the banker turns a key, then you can take the money out. A similar concept here with the Legacy Trust is that to take the money out of the trust, they appoint a key holder and that key holder can be anyone of their choice. It could be a spouse, a friend, a sibling. That key says no, they can just pick a different key holder. Keyholder says yes, they can take the money out. And so for that silly little extra step, we’re now giving them the opportunity so whatever they inherit from you, if anything, can be protected from divorce, lawsuits, and the money stays in the family.

So for that silly little difference, it’s building in that opportunity for that asset protection. So whatever they inherit from you could be protected from divorces, lawsuits, creditors, bankruptcies. That’s the big difference between a basic revocable trust that just says, “I’ll write to the beneficiaries” … just says, “I’ll write to the beneficiaries,” versus how we can build in all of the protections against divorces, lawsuits, and making sure the money stays in the family. So that’s really the big difference between basic revocable trust and a legacy trust. And with that, it looks like I’ve answered everyone’s questions. Again, I appreciate everyone sticking on the line. This is very fun, at least for me, and hopefully educational for you. And again, if you do have any questions, feel free to give our office call, (844) 885-4200, or in the chat, I put that website And with that, make it a great week. I look forward to seeing you on this next week, and next week, again, if you have questions, feel free to shoot those over. Thank you so much. Take care.

Castle Wealth Group Legal in Media

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