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This episode is a business coaching course that explains the difference between wills versus trusts.

Results-Focused Training, Tools, and Workshops from Expert Business Coaches.

Featured Coaching Excerpt - Notes & Transcript, Part 1
  • WIll: A document on which a person specifies the method to be applied in the management and distribution of their estate after their death.
  • Lesson Nugget: You will need a will in order to protect your family and decide who gets what if you pass away.
  • Trust: "A fiduciary relationship in which one party, known as a truster, gives another party, the trustee, the right to hold title to property or assets for the benefit of a third party, the beneficiary." -Investopedia
  • Fun Factoid: Rockefeller created America's first great "trust" in 1882. The trust had a worth of about seventy million dollars, making it the world's largest and richest industrial organization.

[THEME MUSIC] creating a will and time management tips taught like lynda.com

-What's up, guys? My name is Daniel McKenna. I am the captain of the hype squad here at Thrive15, online training that teaches sales, time management tips, marketing, branding and more. Today, we have Clay Clark sitting down with Attorney-at-Law Wes Carter and we're talking about wills versus trusts. What's the difference? Here's the deal. Eventually, you will die. And we don't really like to talk about it and we don't really like to get into the details, but eventually, it's going to happen. And what you've worked for your entire life, you probably want to have to say of where that stuff goes. So you need to know about wills, you need to know about trusts, and you need to know what's the difference. What do I work with? What do I need to do?

Here at Thrive15, we believe that knowledge without application is meaningless. Unless you actually take the time to learn something today and apply it to your life or your business, watching this video is going to be more meaningless than a monkey on stilts, although that would be hilarious and I'd like to see that.

Thrive15.com and Wes Carter are providing general legal information to provide Thrivers like you with a basic framework of the terms, concepts, and scenarios found within the legal system of the United States. If you are a human who is watching this video, you should seek the legal advice of a local attorney before making a legal decision. If you are watching these videos from any country outside of the United States or from any planet outside of the planet Earth, you need to seek the wise legal counsel of a local attorney to better understand the legal complexities found within your country, planet, state, or city.

For instance, in some states, including California, Florida, Nevada, Alaska, and Hawaii, a motorist can be cited for driving too slowly. Other states, you don't have this law, although Clay has actually been pulled over for driving too slow in the state of Oklahoma, which pretty much never happens. Wes Carter is a great American and a beautiful man, but Thrive15.com and its partners are in no way legally liable for any fashion statements that he makes verbally or just by emitting fashionable awesomeness simply by entering into a room. Wes Carter is not related in any way, shape, or form to Clarence Carter, recording artist, Sean Carter, entrepreneur and artist, or Jim Carter, MLB baseball great.

CLAY CLARK: Wes Carter, how are you, sir?

-I'm well. How are you?

-I'm doing awesome. I've got this orange highlighter today.

-It's an awesome color.

-Feeling great, I got this. I've got this pen. I got the pen. I got this. I got both of them ready to go.

-It matches my tie.

-Well, it does, it does. If you want to have it right here, you can.

-Color-coordinated.

-OK. Well, hey, we're going to talk about wills and trusts today and specifically, wills versus trusts and kind of how that all works. But before we do, there's a lot of people all over the world asking the same question. They're asking-- they're-- they're wanting me to ask you this and so who am I to stand in the way of the Thrivers who want to know this information?

WES CARTER: Right.

-They're saying, legally speaking, are you in any way, shape, or form related to Hurricane Rubin Carter, an American middleweight boxer who was wrongly convicted of murder and later freed via a petition of habeas corpus after spending almost 20 years of his life in prison?

-I was not-- am not.

-Oh, sounds a little bit murky. I don't know if we-- we'll move on.

-Somebody might have gotten married or divorced along the line, but no. I don't believe so.

-Do you want to plead the fifth? I understand you can-- not in this space, but in court.

-I don't want to offend the Carter family.

-OK. All right. So now, we'll hop into it now. So today, we're talking about wills and trusts. But before we can get into that, I'm going to read off the definitions of each one and then I'm going to get some clarification from you as to what it means in common sense terms that common folk, like myself, can understand.

WES CARTER: Sure.

-So I define-- I define a will as being "a document on which a person specifies the method to be applied in the management and distribution of their estate after their death."

-It's a very good definition.

-Yeah. Do you-- I mean, do you-- tell me what this means to common folk. What is-- in your mind, what is a will?

-Just a written document, typed, written-- depends on what kind of will it is-- that says, here's what's going to happen to my property when I pass away. Here are my heirs. There's property left over after I name all this property, it's going to go to this kind of leftover bucket. And that's pretty much what it is.

-Let's say, like right now, I'm 33 years old, but I kind of sound like Mickey Mouse and I say, "I'm 33. Why do I need a will? You know, why do I need a will?

-Well, everyone needs a will one, if you have children, you're going to want to name who's going to take care of your kids if something happens to you and your spouse. That's one of the most important things, probably. And also, it's going to protect your family. You might be 33 and have five kids. And if you were to pass away, you don't want your family to have to go to court and go through a very lengthy process, have-- the wealthy man that you are, have all your relative come out of the woodwork, want a piece of the pie.

-Can I ask you this? Is it-- is it, if I eat a 100% gluten-free, 100% organic-- the chickens that I eat have been free-range. They've never actually been enclosed in a cage. I'm doing all those things. I'm doing all the-- the moves to extend my life. Do I still need a will?

-Still need a will. You could be the healthiest man in the world and get hit by a bus.

-Well, luckily, I stay away from buses, and I'll tell you that. So I obviously don't need a will, but OK. So now, we're moving on to trusts. So I want to define the word "trust." Wes, the good folks at Investopedia define a trust as "a fiduciary relationship in which one party, known as the trustor, gives another party, the trustee, the right to hold the title to property or assets for the benefit of a third party, the beneficiary."

WES CARTER: Yes.

-What? What does that mean?

-Basically, it's a legal document that sets up a little pools of assets and you put the stuff in this school and there's one person named or a group of people named as the trustees. And they're the people that watch over your property and decide, according to how you set up the rules, how to give the property away or what to do with it.

-You hear a lot of conspiracy theories. You say, well, it's the Rockefeller trust that controls the world. It's the rough-- Rothschild trust that controls the world. What do you-- what are these trusts? People say there's these trusts. Does this mean that it's like, someone's created this organization. Now, it's been around for hundreds of years? Or walk me through this here.

-Yeah, it basically can live on for a very long time. But it's a piece of paper that says, I'm going to create a trust and I'm going to make these rules. I'm going to put this money into this imaginary thing and here are the rules by how it's going to be distributed.

-Wow.

-Yeah. I mean, so you can do it for the benefit of a charity. You can do it for the benefit of your kids. You can do it where you can change it during your lifetime or that once you create it, you can't touch it again.

-So you-- the trust lives on forever, but the human does not.

WES CARTER: Correct.

-OK. That's your opinion, because I eat gluten-free and I know that I will, in fact, live longer than most trusts.

-You possibly can.

-OK,

all right.

Watch videos online that include time management tips, sales, marketing, branding, accounting and others.

Featured Coaching Excerpt - Notes & Transcript, Part 2
  • Lesson Nugget: Any planning for your death is really planning for the future of your friends and loved ones.
  • Ask Yourself: Is there someone in my life who depends on me and would suffer from me not having a will in place?
  • Lesson Nugget: If you do not have a will or trust in place when you pass, your property will be distributed according to the laws of the local state.

FindTime Management Tips

[MUSIC PLAYING]

-So in your mind, on a scale of 1 to 10, with 10 being the highest, how important is it for every entrepreneur to have a will in place ASAP?

-I think it's a 10.

-10?

-Especially if you start having business assets, you want a will. You want to know that your family's not going to have to fight it out in court after you die.

-What about for somebody who's, maybe, a little spiritual, and says, I don't even want to talk about my death because that might cause my death? I'm like, kind of not trying to laugh, but I'm being serious because I have actually talked to people that say this. They say--

-Don't want to put that out there in the universe.

-They say, I don't want to talk about my death because if I do, it might perpetuate, it's like a self-fulfilling prophecy.

-Well, talk about your family's life rather than your death.

-OK. So you've been down this road before.

-Yes.

-When you make a will, how long does it take to make a will with somebody?

-You go set an appointment with an estate planning attorney. For maybe an hour or two you sit in there, and they usually have them wrapped up in a week or so.

-Really?

-All your documents. But it' a will, trust. You need to talk to a good estate planning attorney about how to combine those, and make it all work for you.

-I want to share a sad story, but it's a true story. It's a bad deal, but I want to give an example because I think a lot of people watching this, they maybe don't see how important it is. Years ago, I worked with a business owner, and one of his clients would come by and deliver pizza all the time. Just to kind of stay in his mind, he would drop by pizza, and say, I'd love it if you'd refer me when you get a chance. And he'd always drop by pizza. Very consistent with the pizza.

And so, you got to know him. You got to see him as the-- you know, here's the guy who owns the business. He's always humbling himself to drop by pizza, and it's a way to build a relationship. He's probably 43, 44. And I remember that he didn't come by one week, and we're like, what's going on? We found out he actually had passed away, and he had a heart attack, sudden heart attack, age 43, 44. And found out that he didn't have life insurance, and he didn't have a will set up or anything.

And so all of a sudden, his wife, who's now the widow, she now became partners with his business partner. And they had no cash. They didn't have enough money to even pay for the funeral. It was just this very dramatic situation. He was so critical in the daily operation of the business, and it became a bad deal.

And only at times like that, in my mind, do you really see how important it is to have a will. And so, I'm not trying to increase the amount of will-related business in America for attorneys. I am saying, though, if you are watching this and you have anybody who's dependent upon you at all, wife, kids, whatever, staff, employees, you really need to make a will.

-Absolutely.

-I mean, what does it cost to make a will? If you come in, you say, well, I want to make a will. What does that cost?

-I'd say, depending on how many assets you have, probably start around $750, and go up from there.

-OK. $750 to going up from there. Now on a scale of 1 to 10, in your mind, how important is it for every entrepreneur to have a trust?

-I think a trust depends on your situation. But when you get a good estate planner, there's a high likelihood they're going to use a trust, as far as how they're going to set up all of your estate plan. But make sure you have a will. Talk to your attorney about whether or not you need a trust. I would say 6 or 7 [INAUDIBLE] in trust, out of 10.

-All right. So Wes, now what happens to people's estate after they pass away if they don't have a will or a trust?

-That's the big difference between the two, when you're talking about what they do. A will is filed with the court, and then the court knows how you wanted your estate to go, and they usually honor that. Whereas a trust is outside the court process. Whatever's inside a trust, it is determined by the trust document itself, the rules that you set up, what's done with all the property.

-So if I don't have a trust, though, in place, and I don't have a will, what's going to happen?

-Then you still go to court, but as opposed to the court administering your will, trying to honor your wishes, then it goes to whatever default rules are in your state about how property is distributed among your heirs.

-In just real talk, though, for a second, like in Oklahoma for instance, like, if you do not have a will in effect, my understanding is that a large amount of your assets are taxed. So like, real talk, if you died today, and you had a property worth $1 million, fully paid off, what happens? Oklahoma?

-Well, you're going to get an estate tax of some sort, which is why trusts are coming into play a lot, because trusts can help plan for that tax.

-So your kids, or whoever owns the land now, gets a tax bill?

-Yes.

-For how much, if it's a million dollar property?

-Well, that you would have to ask your CPA, but what you do want to do is, also, if you don't have a will, it's not just your kids necessarily. It could be your parents, your spouse, your kids, all of them in there trying to figure out what their share is. Or if you had a prior marriage, or children from another marriage, you can see how complicated this can get inside court with everybody figuring out who gets

what...time management tips.

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Featured Coaching Excerpt - Notes & Transcript, Part 3
  • Death Tax: Taxes imposed by the federal and/or state government on someone's estate upon their death. These taxes are levied on the beneficiary that receives the property in the deceased's will.
  • Action Step: Call an attorney and ask them about creating a will.
  • Lesson Nugget: Don't let misconceptions fool you from making smart choices: talk to your attorney.
  • Lesson Nugget: If anything (from income to property) has changed in your life, talk to your attorney and update your legal will or trust.

Also learn time management tips on Thrive15.com

[MUSIC PLAYING]

-Now, and from a general perspective, I'm not going to coach on the actually amount, but isn't the death tax now an upwards of a third?

-Usually. Usually, you lose a huge chunk, because not only the federal level, the state level, as well. Everybody's going to get their piece.

-I actually met a guy who his father had passed away, he had a million dollars of farmland, so I'll give an example, a million dollars of farmland. I met him in Nebraska at a speaking event I did for the Cattlemen's Association. I'm out there, he had a property that his father had left him for a million dollars. And he didn't have a trust set up. And just not having that paperwork and not having it done, he said that he owed over $300,000 in taxes.

Now there's not a huge demand for people wanting to pay cash for farmland in Nebraska right now. So he didn't have $300,000 So he had to go get loans to take out to pay the taxes. And then just to pay the taxes he now had to start farming on land that the family hadn't used in years just to pay the taxes, or just to pay the--

WES CARTER: Principal interest.

-Yeah, pay the principal interest on the tax bill. This is the kind of insanity that could happen if we don't take the time to do this. So very important, super duper important that you, if you're watching this, if you're just going, I don't know if I need to make a will, I would call an attorney. If you say I don't know if I need to make a trust, I would call an attorney.

-You do need to make a will. If that's what you're asking yourself, let me answer that for you. Yes, if you need a will, go talk to someone about what you're going to do with all of your stuff, your family after maybe you're not here anymore.

-What's the biggest misconception that people have when it comes to wills and trusts?

-I think the biggest misconception is I'm too young or I'm too healthy to need it right now.

-Organic baby come out.

-But the truth is you just never know. And the other misconception is I don't have enough. I don't have enough property, my net worth is negative. But that doesn't mean that you don't need still a will to address what's going to happen with all the stuff you do have, your kids, your family, the shares in your business. So even if you're not rolling in the dough yet, you still need to talk to someone about planning for your estate.

-Yeah, I cannot stress. This is just something I'm deeply passionate about, about making sure people do that. As far as finding an attorney, can all attorneys? Like if you have a buddy? Say you got a bro, say you go, "I know a guy. I know a guy. I went to college with a dude." Can any attorney help you make a will and trust in any state?

-Usually want to go with a state planning. Usually want to get someone in your state, because they can vary from state to state, the rules.

CLAY CLARK: Yeah.

-And I would suggest going to someone who practices an estate planning, so they can go not just a will, but trust, and help you plan some other aspects.

-Let's say that I used to live in Delaware. I lived there for the tourism, for the energy, for the community, for the sports teams. A lot of reasons I lived in Delaware. I lived there for a long time because it was just awesome. Then I decided to move to Oklahoma for the tourism, for the sightseeing, for the celebrities, for just the whole deal. So when I move, do I need to get another will made? Do I need to make another will to adjust fruit to my new state or another trust to adjust to my new state?

-You need to have an attorney review those just to make sure, because when you move, you're probably going to change your property, as well. So you are at least are going to probably need to update those document, because you're gonna have different property that you bought in Oklahoma verses Delaware.

-And the final, final question, how often should review these documents? I'd say every couple of years.

-Really?

-As you take stuff away, you sell stuff, you buy stuff, you have more kids, your business grows with more investors, I think that's something you need to constantly kind of keep on your radar to update.

-Hey, Wes, I appreciate you coming on here and talking about wills and trusts. And I mean, I really appreciate you kind of not answering the question about who you're related to. I thought that was kind of political. I mean, I just look forward to suing you.

-Can't wait.

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