What really happens after someone passes away—and why are so many families blindsided even when they think everything was “set up correctly”? In this episode, John and Tommy pull back the curtain on the messy, emotional, and often confusing reality of settling an estate. You’ll learn why wills and trusts don’t operate the way most people assume, as well as the true challenges in modern estate planning.

Listen in to hear why over-engineered estate plans can create massive administrative burdens, costly tax consequences, and heartbreaking stress for families already navigating loss. John and Tommy also reveal the hidden traps inside complex documents, the importance of simplicity and flexibility, and the practical steps every family can take to ensure their plan actually works when it matters most.

Listen to the full episode here:

What you will learn:

• An important correction regarding a previous episode. (5:30)
• Why trusts don’t fix all of your problems. (8:33)
• Which legal documents you should have. (11:45)
• How to ensure your legal documents actually work for you. (18:50)
• The importance of getting things sorted before someone passes away. (28:00)
• Why we shouldn’t make our estates more complicated than they need to be. (39:00)
• When you may need complexities in your documents. (45:45)

Ideas Worth Sharing:

• “If we don’t have a fundamental understanding of income tax planning, we’re fundamentally missing one of the most important parts about estate planning in 2025 or 2026.” – Mason & Associates
• “I think a misconception with these legal documents is just because you did them, that something good’s going to happen. And what I mean by that is you have to do the documents and then you have to use the documents.” – Mason & Associates
• “More complicated doesn’t equal more value.” – Mason & Associates

Resources from this episode:

• Federal Employee Financial Planning: Intro to Estate Planning (EP23)
• FEFP: Estate Planning Across State Lines for Federal Employees (EP76)
• FEFP: One Big Beautiful Bill Part 2 (EP100)
• FEFP: One Big Beautiful Bill Part 1 (EP99)
• HIPAA
• SSI (Supplemental Security Income)
• Mason & Associates: LinkedIn 
• Tommy Blackburn: LinkedIn 
• John Mason: LinkedIn

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Read the Transcript Below:

Congratulations for taking ownership of your financial plan by tuning into the Federal Employee Financial Planning Podcast, hosted by Mason & Associates, financial advisors with over three decades of experience serving you.

John Mason: Tommy, welcome to the Federal Employee Financial Planning Podcast.

Tommy Blackburn: Thanks for having me, John. It’s been a blast here recently. Well, as always, the firm is doing well. Looking forward to today’s episode. I think we may want to address a comment we got on a previous episode, just to kinda clear that and explain what happened.

But we’ve been rocking and rolling. We had an awesome client appreciation event for those clients that are more local. Some do come from far away, but it’s primarily more of the local clientele. And then we were recently at Virginia Tech with their financial planning program, giving back, guest speaking, and just trying to help out with the program we graduated from as well as the future generation. And I think we’re both very, we feel very confident in the future financial planning generation based upon what we saw.

John Mason: It was the, we’ve always enjoyed going back to Virginia Tech and, audience, as we dive into this topic, life after death or estate planning, whatever we’re gonna title this episode.

The few updates is one, Tommy and I have been going back to Virginia Tech for probably a decade now. So we both graduated together from Virginia Tech. We did our senior project where we designed a firm together, and then fast forward 15 years later, we’re running a firm together. So that’s one of the messages, and that’s why we’ve been going back to Virginia Tech for so long is we’ve always had this special connection between me and him.

Me and you, Tommy, where the professors saw a lot of value in that and it’s pretty cool to go back and encourage the students, like, “Look around you. You may be looking at your next business partner.” And that’s a message that not many other people can deliver. We’ve always been excited about the program, but for whatever reason this year it just seemed to, I don’t know the expression, knock our socks off, or we were very impressed.

It just felt, it felt different this year and I don’t know if that’s because we’ve hired our business coaching consultant and we’re hiring and we’re like thinking about this lifestyle enterprise firm that we’re growing and maybe we’re just more in tune with the world or something than we have been, but it just felt great.

Tommy Blackburn: It did. And as we’re going through all of that, of course, Virginia Tech is not nearby per se, so we had about a four hour drive or so each way as well as a lot of time together, which is really good for John and I to have that time to think about the business, catch up on each other’s lives, talk about what we’re seeing.

But anyway, as we were going, this topic came up, which we also tried to share somewhat with the students. Now they don’t have the same level of experience and expertise just yet to, so we may have been way advanced, but they were following somewhat. Anyway, it was kind of, “Hey, we’ve been dealing with clients or situations where folks have passed away.” And so this whole premise of life after death came up. And so we wanted to say, and John, hopefully I’m not stealing your thunder here. It’s gonna be a bit of a rant, we feel like today and an educated rant because we do feel kind of fired up as we’ve been going through this.

And with that being said, we are not attorneys. We can’t give legal advice. What we can say, though, is that we are typically the ones walking right alongside clients when these situations happen. And some of the rant today, too, is that folks came, the theme here was mom and dad or somebody that wasn’t our client, so then the child says, “Hey, they passed. Something happened before we were able to kind of become the planner for mom and dad as well. And so then we’re stuck dealing with this situation.” So I think we wanna talk about that. John, I don’t know if you wanna just dive right in from here or if we wanted to go a different direction or any housekeeping items before we get on our soapbox.

John Mason: Well, I jotted down, as you were saying, we had a lot of time together and that was really great. And I’m laughing, not for our marketing team, not for our business coaching consultant, not for our operations team, not for the other financial planners. Typically, when you put us in the same room for 24 to 48 hours straight, we wreak havoc in a good way.

So sorry to the Mason team and all of our supporting casts that we have here. Before we dive in there was, thank you for your comments. Thank you for liking and sharing the video and subscribing to the channel. We did see, and we do read all of the comments that are both on YouTube.

We try to see the ones on Apple podcast and other platforms, and there was one recently and all, it was my fault, where we were talking about the One Big Beautiful bill. I think it was episode two with our guest, Stephen Kimberlin. And folks, we were talking about a variety of tax law updates, a variety of situations.

And I misspoke and we’ll always own it when we misspeak, but we were talking about the different types of mortgages. The mortgage interest is deductible, that the amount of mortgage interest that was deductible has changed over time. And then I accidentally threw PMI in there because that’s also a consideration, mortgage insurance, and rightfully so, there was a listener who said, “There is no PMI on VA loans.”

And yes, you are correct. We know that, we’ve been advising that for 15 years that there’s no PMI on VA loans. There’s also a funding fee, but maybe not a funding fee if you qualify with a disability rating. So we are very aware of those rules. We thank that person for the comment. A little bit upset that in the midst of all the great information, we have now lost all credibility because I accidentally misspoke a little bit. So, my call to action, Tommy, for our audience that’s enjoying the content, is please don’t let that be the only comment on Apple podcasts.

Like, come on, man, like we produced a lot of content here. And for that one to show up and me see that on the weekend, I was like, “Man, we need some more positive comments to really drive home that like, yes, we are credible and that everybody can make a mistake.” And oh, by the way, not to toot our own horn too much, hosting a podcast and doing a 30-minute to an hour episode isn’t for the faint of heart. Like that’s, it’s a pretty unique skillset that we have and hopefully, everyone can understand. When you’re kind of in a role, there on all these technical things and thoughts that come into your mind and some of it you do hopefully, and hopefully it sounds good when you hear us brainstorming in these podcasts. Again, we got a new tax law and so a lot of thoughts are going through our mind of how these things change. And so in John’s defense there, or just explaining it as I think most people do understand, is he was thinking like, “Okay, so now PMI is back and these itemized deductions are changing with this law.”

And it just was a slip, just was a thought that popped in there and it was correct to point it out. but please don’t–give us a little bit of benefit of the doubt if you can in these situations. We do slip up from time to time and it’s not that one, at least it’s not that we didn’t know that rule. It was just an honest words got jumbled.

John Mason: It’s a conversation and we don’t overly script these podcast episodes. They’re natural, they flow and we do have a lot on our mind. Today’s November 3rd, 2025. With that being said, Tommy, let’s dive into this life after death podcast episode.

I guess we can also say, like, if you’re listening to this, it’s probably December, January, so we are gearing up again for our new client process and experience podcast that we’ll be delivering as well as onboarding new folks into 2026. So if that’s you and you’re interested, process starts at masonllc.net or 757-223-9898.

Okay. So Tommy, life after death, educated rant, this is not legal advice. We’re fired up. Maybe we can just say that trust don’t fix all of your problems as kind of like the first bullet point.

Tommy Blackburn: Yeah, I love it. There’s a lot of misconception out there. I think we both have seen this. The world’s changed quite a bit.

So back in the nineties or so, you had estate tax exemptions that were only a few hundred thousand dollars, half a million, so estate taxes could, and not income tax, estate tax. So the value of your estate, if it was over $500,000, all of a sudden, you could start paying estate taxes. So there was a lot of planning around mitigating that.

And I think that’s the preconception. Sometimes you still see from people where they’re like, “Hey, I need a trust so I can not get taxed.” And it’s like, well, that planning is no longer at the forefront because we’ve got 13 million or so per person from an estate tax that we can pass without any. So most of America, this is no longer a concern.

So we don’t usually use a trust nowadays; it’s not as common for estate tax mitigation. There is still income tax planning. And some of what our gripe today is around the ramifications of trust and income taxes and some complexity there. So one is getting that. Also, maybe start off just by saying these documents are very important.

John and I are not trying to say that, you know, estate planning is very important. We’re very, still very big proponents of it. What we want to do is maybe spread the message of simplicity over complexity, and that we do need to do these documents. So we would say wills, power of attorneys, advance medical directives.

Some of this is specific by state. So we’re thinking more of Virginia right now. Beneficiary designations, titling, these are all critical, usually low-cost, and it gets you the most bang for your buck. We definitely want those. Trust can make sense. However, let’s maybe be a little more cautious as we start to introduce trust, particularly if we make them more complicated.

And I’m gonna hand it back over to you, John, but as I think so, so okay, these are important big proponents of it. We also want to first just address the preconception that having these things done and having all our beneficiary, you know, buttoning it up as tight as we can doesn’t mean that there’s gonna be no work on the other side of this.

John Mason: Wow. That might just be the whole podcast.

Tommy Blackburn: I hope I didn’t steal all the thunder.

John Mason: You crushed it. So, summarizing some of the key points that you said there. One is that fundamentally, we changed the difference between what we were planning for with estate planning. So it ended up, we used to have to worry about the death tax or the estate tax.

Now it’s fundamentally an income tax game for the most part. And if you get wrapped up into an irrevocable trust or some of these entities that live on forever, then you can have trust tax returns and estate tax returns and things like that. But primarily, we’re planning for the income tax side of things rather than we are for the death tax.

So I think that was a great point. You highlighted the legal documents that one should have or one should consider having. So I quickly wanted to identify or define what those are and also call out. We have a couple good episodes with estate planning law firms, Virginia Estate and Trust Law, Heather Szajda.

There was another firm out of Pennsylvania. We will link those in the description below so that you can go back and hear some of that conversation. But simple, Tommy, is a power of attorney, generally, it’s durable. General, durable power of attorney, which means it’s in effect at all times. There’s a lot of reasons why you want that, but you also have to understand the limitations or the concern of having something that’s in effect at all times.

I don’t think we have time to cover that today, but overall, durable power of attorney is typically the direction you go, and it allows somebody to effectively be you for a financial transaction. It’s very important to have that document because most of America right now, assets have been in your own individual name.

A hundred years ago, maybe everything was a joint account. It was a non-qualified brokerage account. It was a house that you owned together. Well, with the invention of the IRA and the 401(k) and these other retirement accounts, Tommy, the bulk of the assets we see are not jointly owned anymore, and if I get sick and I’m married to you, you can’t access my IRA without that power of attorney.

Tommy Blackburn: That’s correct, because retirement accounts have to be in your individual name. So we’ve gotten away from that joint ownership and for most married couples, we operate as a team, as a unit. And so while it may be, “Hey, that 401k is in my name, we view it as our joint property,” which for all points and purposes it is.

But from a purely legal standpoint, retirement accounts are an individual name. So we do need that power of attorney to be able to affect that and we want somebody we trust. I think that’s a key point, as John and I were talking about all of this and its complexity, not for the power of attorneys so much, could be, but when we get overly complicated and it’s sometimes it’s like, “’Cause I don’t fully trust this person or that person,” it’s like, well, we’ve got an issue right there and we need to solve that.

We need to have people we trust that we name to these because they do have a lot of power. So if you don’t trust them, we shouldn’t be designing a document to put somebody we don’t trust in the power. It should just be you’re the person that I trust. And that’s who you’re gonna hold this position.

John Mason: So we talked a little bit, maybe you already said it, but I’ll say it again. The more complicated doesn’t equal the most value. And so power of attorney’s a good example. So if you’re going to meet with an estate planning attorney and they’re like, “Hey, Tommy, we can make your power of attorney springing,” which means it’s not in effect at all times.

“And I’ve got this great idea, the person would have to fly to the moon, 75 doctors would have to say that you’re incapacitated. The person would have to drive a Corvette and also have a Maserati in the garage, and their hair must be blue. How does that sound?” You’d be like, “Well, that sounds wonderful. Like I’m really gonna be protected.” The negative with that is nobody’s ever gonna be able to use your document, so they sold you–

Tommy Blackburn: Nobody’s ever gonna trust it. Yeah. Yeah. Whoever’s supposed to look at this and be like, “Yeah, that is your power of attorney,” and be like, “No way. I’m not coming near this thing because I can’t trust a, based on what you defined, I’m supposed to be able to trust. I don’t trust any of this, so not even gonna honor it.”

John Mason: So we can make it very complicated, which in many circumstances makes it unusable. And many of our audience has probably been to a doctor where they’ve been trying to get a power of attorney or something for a parent or an elderly parent.

And they run into the roadblock of the doctor needs to say, “Mom or dad is physically or mentally incompetent.” And it’s like, that’s really hard. And that’s the last thing we need in crisis time. We just wanna be able to use the document. We don’t wanna have to be running around town trying to get people to sign off on things.

So next one is some version of a medical document. North Carolina calls it a–Virginia, I think they call it a healthcare power of attorney. Virginia, we call it an advance medical directive. This is gonna be basically things that allow somebody to make medical decisions for you. Maybe it has your living will baked in there, all things medical, that’s something you want.

And again, that’s a document that is going to be springing, because if you can make your own medical decisions, you should, but in the event that you can’t, that’s when that document comes into play. It’s very important. Things like HIPAA releases, Tommy, or typically included in there, which those are different than the decision maker, right? So maybe I’m your agent under your healthcare directive that allows me to make your medical decisions for you if you can’t. But maybe Mike and Bobby and Ben and everybody else in our office, maybe they can still talk to the doctors and get information to provide that to me so I can direct your care. So it is important to think about the different roles. So those documents, again, that’s a very important one.

Tommy Blackburn: Absolutely. And I know we don’t wanna spend too much going down. And again, of all the documents we have in place, episode 23, I think, was with Heather Szajda of Virginia State & Trust Law. I think we did a very good job kind of covering these documents we can have. And there was another one, I think was episode 76, where we focused on maybe some Pennsylvania law with another guest attorney there. So we have those documents. Maybe we’ll hit on probate for a second. And that it very much depends on by state from our anecdotal experience.

Virginia doesn’t seem to be that bad or expensive of a probate state. Some states, I think may be a very different story. And we say all this to say we don’t think probate is always the boogeyman that it can be sold to be. Certainly, if we can avoid it, if there’s not a reason to go through it, then we should just not go through it.

But we also don’t have to be terrified of it, and we can avoid it by titling things correctly. So, “Hey, John and I are married. I die, if I wanted to keep it simple,” joint tenants, right of survivorship, or tenants by the entirety. Somewhat similar type of titling just goes to him outright. IRAs, our 401(k)s, retirement accounts, these beneficiary designations, they will bypass probate.

So we can keep things very efficient that way. Then we come to, I think maybe it’s time to just kind of jump into what we’re fired up about here, which is trust.

John Mason: So I think you’re right, Tommy. You hit on probate. One reason is privacy, so that’d be one reason to avoid probate. But like the boogeyman of some states take longer than others is true. If you have property in multiple states, you probably don’t wanna go through multiple probates, so that would lean towards trust, but you also talk–

Tommy Blackburn: To be fair, we’re not advocating for probate.

John Mason: Correct.

Tommy Blackburn: I was just saying that we don’t think, we don’t think that it’s also something that we need to be terrified of.

John Mason: And you mentioned also, I think a misconception with these legal documents is just because you did them, that something good’s going to happen. And what I mean by that is you have to do the documents and then you have to use the documents. So you have a trust or you have a will, and you said whatever you said in the documents.

But if you don’t update the titling and you don’t update the beneficiaries, maybe you’re not having the intended consequences, or maybe there’s unintended consequences and which you talked about titling and beneficiaries. If you say in your will or trust, “I wanna leave everything to Michael Mason,” but your beneficiary says, “I’m leaving everything to John Mason.” I’m the one that gets the money. And it doesn’t matter what your will or your trust says. So it’s important to understand that titling and beneficiaries come first and then what you say in these legal documents comes next.

Tommy Blackburn: Absolutely. Yes. And in fact, we would say if we have done things very well, it’s all nuanced. There’s probably some specific case where you can say, “Yeah, going through probate’s best,” or, “Actually, having to go through the will was best.” But by and large, proper titling beneficiaries is way to go. And if we’ve done it well, nothing goes through the will, nothing goes through probate, nothing goes.

So it is interesting ’cause we see this misconception too, right? Of like, I’m gonna like, “Something in the will says this.” And it’s like, well, it doesn’t matter if there’s a beneficiary designation because nothing is passing through there. And so you could say whatever you wanted in that, or a beneficiary can believe whatever they want to believe. But if the IRA says it’s going to X, that’s where it’s going.

John Mason: And you hit on this earlier, but I’m doing this right now with a client, is we have some updates that we do wanna do to estate planning. “We’re not leaving money to children, now we are.” And beneficiary designations are free, right? So we work for our clients, we help them update beneficiaries.

We can retitle assets. It’s a lot easier to update beneficiary designations every, hopefully, not every six months or every year, but as needed. That’s free. It doesn’t require an amendment, it doesn’t require a restatement, it doesn’t require a codicil. It is super easy and efficient to just update beneficiary designations.

So as we head into trust, they don’t necessarily make your life easier in many circumstances. We talked about this, Tommy, a little bit, is that these estate planning attorneys, and we don’t wanna throw them all under the bus ’cause there’s some good ones, but there’s also ones that sell a bill of goods or a book of goods, in this example, which is a giant red or blue binder that’s extremely complicated. And they talk about things like pet trust and they talk about things like creditor protection, and they talk about all these things that sound amazing and it costs $5,000 or $7,000, and it’s like, well, that’s a whole lot easier to sell.

Then here’s a bunch of documents that are really not that complicated. They don’t sound that sophisticated and they still cost $3,000, and it’s a lot easier to sell, kind of like the sizzle of these really complicated documents. And we’ve used, so disclaimer, we’ve used active management or tactical asset allocation in the past.

We now believe and have for a while that a more strategic or passive allocation for investments is better. But sometimes, the active management sounds better. It’s like, “Oh, we’re gonna buy and sell. We’re gonna do this and that, and it’s gonna be really active. And some people say they’re gonna beat the market.” And that sounds a lot better than saying, “You’re gonna get the market less our fee. We’re gonna add the value in all the other places that we can control.”

Now, to some, our clients, they like that latter message. Other people out there who aren’t clients maybe want the kind of the sizzle of the chance to beat the S&P 500. That’s really hard. Drawing a parallel, Tommy, to selling a really complicated document and a really complicated investment strategy isn’t always the best.

Tommy Blackburn: You’re absolutely right. An analogy here is that both of them sound great on the front end, but then the aftermath is usually not anywhere near as great as it sounded when it was being sold. And yeah, sometimes these have been called trust mills. Hopefully, I don’t get myself in trouble here for calling that out, but it’s just this: the firm seems to exist, some of these firms, just to turn out trust.

And it’s this very complicated book that you’re gonna pay a lot for, and sometimes we get frustrated as clients, consumers of, “I’ve got the other attorneys who don’t have the sizzle and they want to bill me in six minute increments, whereas I can pay $5,000 and I had this very complicated conversation and document I got and I’d rather,” for some reason that sounds better. But it, and truthfully, usually the six-minute increment billing get you what you actually want and a better place for the people on the other side of this.

So I think, yeah, so trust can be sold. I mean, they can be sold. And then one thing that really frustrates our firm and our experience of dealing with clients and helping people with this is that a lot of times, the selling of these, there is no service or support in the aftermath. So we’ve got this beautiful document that was very complicated and then somebody passes, well, we can’t change it anymore. And all of a sudden, somebody, client, beneficiary we’re trying to help is like, “Hey, mom said, wanted me to have it and wanted the kids to have like some small amount that they could enjoy just a gift.”

And it’s like, “Well, guess what? You now have an irrevocable trust.” It says that it’s to be left in trust. You’re supposed to get income quarterly, which means somebody has to calculate what the actual income of this is. We’re gonna have a trust tax return. You’re limited to like what distributions you can and cannot take. So it wasn’t that you can just potentially take this all outright. It may be locked in there with all the administrative costs to go along with it.” And they’re usually just like, “Well, this is not a, this is one far more expensive to administer than we thought it would be. Isn’t at all what we thought we were getting?

And this is where, yeah, some of the chip on our shoulder is right now. These type of experiences, like why was this made more complicated than it needs to be and far more expensive now? And whoever drew this up, where are you right now? Like, why are you not? And typically it’s like, “Hey, I’m happy to charge a bunch of more fees to probably not fix the solution just to draw off a certificate of trust.”

So they now have that where it’s like, “No, we need actual help figuring out how to make the best of this situation.” And that’s where we, to the defense, we do work with a lot of other great attorneys that try to help us clean this up. And it’s unfortunately, it’s expensive. Even bringing in good, qualified, trusted people to help us and tax prepares, it costs money.

And that’s where we just sit back and we’re thinking, we’re making this better. We’re trying to rescue this situation as best we can. But even that is still unnecessary. Could have been avoided, but now we just gotta deal with the situation we have.

John Mason: It costs time and money. Costs time and money. And sometimes the time is the most, maybe insulting, or the one that’s hardest to deal with. Everybody grieves differently. There’s the grievers who grieve by doing, and then there’s the grievers who don’t wanna do anything. And the ones who grieve by doing, maybe they are more cut out for this really complicated administration piece, but the ones who are struggling and kind of just wanna hold up for a little bit and not do much, the thought of one revocable trust breaking into 17 different irrevocable trust and having 17 different tax returns and 17 different EINs and 17 different sets of rules and managing all that is exhausting. So one, you have a cost of administration, both at like immediately a death, a cost of all that, and then a potential ongoing cost and time burden of administration.

So typically, Tommy, people are doing a revocable trust, a joint revocable trust or two individual revocable trusts and or revocable. And what that means is you can change it, amend it, delete it, you can make it go away, you can update it, however you wanna say it. It’s a lot easier to do things when it’s revocable.

Typically at death, the trust goes from being revocable to irrevocable, or meaning you can’t change it. Now, again, this isn’t legal advice. We’re just saying that sometimes we’ve seen that irrevocable trust, all of a sudden, magically are not irrevocable anymore. And then there’s equally good attorneys on the other side of the equation.

They’re gonna help that person through whatever methods try to make the estate administration process or the trust administration process easier. I have just a couple things, ’cause we’re going through this now, because can’t assume that just because you, or just because your parents did something, that it’s right.

And like right now, I have a case that I’m working through where it was two revocable trusts. And it was designed for estate tax purposes. It was the old AB trust, and that’s all well and good. It was, it seemed good on paper. We could check the box that it was done, Tommy, but then now that spouse one has passed away.

Now we have this irrevocable trust that we’re like, “Man, we really don’t want to…” This was not a client, by the way, this was a parent of a client who were helping through this process. The irrevocable trust says, “Provide for mom. Give the surviving spouse all the money in the world. Health maintenance, education support, give them everything.”

But now all of a sudden, we’ve gotta hold it up in this document with its own separate tax return and administrative struggles and investment struggles and tax planning issues when the document could have just said, “Give it all to mom and let her do what she needs to do with it, rather than hold it in trust.”

Well, 25, 30 years ago, there was a reason to do that. In this particular case now, there’s not. So don’t just assume because something is done that it’s still right. Laws change. Tax rules change. So that’s important. A lot of times we’ve encountered, and we’re not the smartest people on the planet, we’re pretty good at what we do, but a lot of times the people that are selling these documents, Tommy, maybe don’t–they live in theory, land. Just like we did when we graduated from Virginia Tech and the theory land is like, “Well, do this, this, and this and go name 17 subtrusts as the beneficiary and go here and do that.” Well then, Schwab or Fidelity or Axos looks at you like a three-headed monster and they’re like, “Bro, I don’t know what you’re doing, but you can’t do that here.” And it’s like, “Well, what are we supposed to do now?”

Tommy Blackburn: Yes, that’s right. The custodians like that. That’s make up all the rules you want, but you’re not doing it here, so you’re gonna have to move your account somewhere else, ’cause we’re not signing off for being involved in this because it just seems like a lawsuit or something waiting to happen.

To your point, John, that was great. So you’re saying, well, I guess one rant that I think about as we’ve been going through this and we believe our hearts are large and we wanna help our clients and the client, who’s important to our clients. So that’s the fact pattern where these unfortunate situations seem to pop up is, “Hey, mom and dad, I’d like you to start helping with them.” Or, “Somebody died, can you help me? Coach me through it?” And we’re probably always going to help, but the chip on our shoulder is, no. I want to say like deep down it’s like, “no, I’m not gonna get involved unless we’ve been as proactive as we can.”

Because, unfortunately, as John said, once they, somebody passes, it becomes irrevocable. And now we’re stuck with this really messed-up situation. Our hearts would never let you go through it alone. We are gonna get involved because we see what you’re up against. But ideally, it’s the minute you mention mom, dad, somebody in the family that’s getting older and we’ve got some questions, we need to act now.

‘Cause we’ve seen this movie and the movie is, we’ll get to it, and we gotta just kind of get mom and dad comfortable, whatever it is, life is busy. But then they pass and there’s nothing we can do. So we really, it’s a lot easier to John’s point when it’s revocable, if we can get involved now and begin making those changes, cleaning this up, so much easier and more cost-efficient than dealing with the aftermath.

So maybe as a firm we will be actually slightly pushier going forward when we hear that there are family members where there could be some concerns of, “If you really want my help, we need to do it now.” Versus getting stuck with a very sticky, difficult situation later.

John Mason: Yeah. The conversation I had last week was exactly along those lines. It’s like, I’ve been working with this client for 10 or 15 years and I said like, “For my benefit, can you please have this conversation with your parents? Because at the end of the day, this is gonna fall on the two of us. You, as the administrator or the trustee or the one that has to execute the documents, and me, that has to help you clean up the pieces, can we please do something now? Like I’ll drive to Richmond, Charlottesville, like whatever. I’d rather do that now while we can make changes now, then have to wait for something really bad to happen.” And this particular client as well, Tommy, not only do we have, oh, this is a different client, the one I met with last week, is mom’s now incapacitated.

And they’re like, “Well, what we wanna do is we want to go update mom’s legal documents.” And I’m like, “Well, you can’t.” So not only do we have how things change at death, we also have diminishing capacity over time, physically and mentally, where all of a sudden now you may not be able to update those documents when you need them to.

And it just gets, it gets messy. So I think the sooner the better that you update those documents, make changes while you can, understand that your life changes, laws change, and you have to dust these things off every so often.

Tommy Blackburn: Absolutely. I think, as we’ve thought about this and discussed it and got fired up and also still passionate about estate planning and the vehicles and methods available to us, I think our message is keep it as simple as you can.

Sometimes things have to be complicated. If we have a good reason for complexity, then so be it. And John and I are prime examples of why we need some complexity, and that’s because we have minor children. So if something were to happen to us and our spouses, there needs to be a trust in place because they can’t handle, they can’t manage money at this age.

They, just not good at all. So there’s gonna have to be complexity there for that. But I actually pulled up my revocable trust, John, before we launched into this ’cause just reminding myself, like, what does it say? Hopefully, I’ve evolved. I’ve avoided all of these, these pitfalls we’ve been talking about, and I am at least skimming it, very happy at it again, because it says, it starts off by saying, “If my wife survives me, she gets it free of trust.” We’re done, right? It came into the trust; it went out of the trust. She is free to live her life. And some people would have an issue with that. Say, “What if your spouse remarries? What if,” because then, the new spouse could have access in these things. And yes, I get that and acknowledge that, but at the end of the day, I’ve just decided I trust my spouse.

I trust that she is the mother of our children. And I’m okay with this. Like, I’m just gonna leave it at that because I don’t wanna make things more difficult or complicated. Then goes on to say we’ve both pre-deceased, goes into trust for the benefit of our children. And so to me, certainly I am, I guess I am taking on some risk by allowing it to be simple in the complete trust of my spouse. I’m okay with that, but then it gets, it got complicated for minors when it needed to get complicated.

John Mason: Thank you for sharing that. I do believe that there are reasons for a trust to get complicated, and I’m not sure it’s a pet trust, although we all love our pets. I’m not sure that that layer of complication is necessary.

In your example, I share your thought where it’s like, we’ve been married, we have children together. Like, let’s just make sure you have all the money you need and whatever you decide to do. Like, I did my best. I had the life insurance, I did the beneficiaries, I did the trust. Like, if you screw it up from there, there’s not much I can do about it.

You’re always gonna get screwed up regardless. Revocable, irrevocable, held in trust, not held in trust. It was probably gonna go poorly if that person did a 180 on us anyhow. Now, second marriage, different story. Second marriage, it’s like we don’t want to disinherit our kids, but we want to provide for that spouse; complexity probably warranted and required in that situation.

Even in our situation, Tommy, when the money goes to that younger beneficiary’s trust or the trust for the kids, there is a cost to that. There’s an administrative burden to that. There’s tax implications of that and that’s all warranted because you don’t wanna leave a 5-year-old money, right?

At the end of the day, you didn’t really have a choice there. You didn’t really have a choice.

Tommy Blackburn: I don’t even know if I wanna leave an 18-year-old money, right? It’s just, I wanna make sure that you have had a chance to fully mature and become educated on things before we leave you with these. It could be very harmful to you.

John Mason: So you said a couple other things about complication and I know a case that you’re working on specifically, the client said, “My mom didn’t want this.” And I want you to elaborate. Sorry?

Tommy Blackburn: Several times that statement has been said.

John Mason: So I want you to elaborate on that in a second. But I also wanna share a funny story before we do that, ’cause I think it goes hand in hand. I was reviewing a document, maybe feels like yesterday, but it was probably a decade ago, and article, I’m just gonna make up the article’s–article three said, “Leave everything to Tommy,” hypothetically. And article seven said, “Leave everything to Ben Rakes.” And it was like the two articles were in direct conflict with each other.

So I reached out to the Red Book attorney. I reached out to this law firm. I said, “Hey, what’s going on here? Which article wins?” And they said, “Well, article two wins because it comes before article seven.” And it’s like, that cannot be the right answer in this particular situation here. So, I just, the more complicated it is, the harder it is for the attorney to understand, the harder it is for the financial planner, the tax professional, the trustee.

So simplifying it makes it easier for everybody to understand and administer. And it’s just so important to understand that sometimes, and I just wanna hit this real quick as a final rant, we’ve talked to estate planning attorneys that don’t understand tax law, that don’t understand income tax return, but yet the trust that they’re selling, the majority of the reason that we’re doing estate planning now is for the easy facilitation or transfer of assets and income tax planning. And if we don’t have a fundamental understanding of income tax planning, we’re fundamentally missing one of the most important parts about estate planning in 2025 or 2026. So, rant done.

Tommy Blackburn: No, it’s a great rant. And I also think you can’t underemphasize, like the administration from the trustee perspective, because typically we probably want a qualified estate planning attorney to help us answer questions, guide us in the aftermath. We want a good partner there who doesn’t have to necessarily be full-time on retainer, running the trust is the trustee, but it’s just there to give advice and help us navigate. Probably want a financial planner who’s gonna be on retainer like us. Maybe you don’t. But not only managing the investments, of course, but helping managing the income tax planning and just helping you in the trenches walk through all of this.

And then we probably have a family member or a trusted friend who’s going to be trustee or, again, trustee trust. We want somebody who knows these people and that we can trust. And so that’s where I come back to. And it’s like they may have never seen these type of documents before, and this may be the only trust they ever deal with, even if it’s on an ongoing basis.

But yet we’ve given them 5,000 pages to read through and it’s like, how, why did we do this? Or we’ve got all these schedules and we’ve just like, let’s try to make, just realize the cost both in, as you said, John, very well, time and money of making this more complicated than it needs to be. I’ve seen some attorneys, I feel like, with some fairly sage wisdom without having, being able to offer legal advice myself of, just let’s keep this as simple and somewhat ambiguous to the extent we can, if we need to be specific, so be it. But let’s give the trustee essentially latitude and then let’s have some conversations with the trustee while we’re still here and together. And perhaps let’s leave them some separate written instructions about like what our thoughts on things are so that legally within that trust document, they have a lot of flexibility.

But outside of that, they’ve actually had some more guidance to try to set them up for the best success that we can as well as honoring our wishes.

John Mason: Real quick, Tommy, because that was a great point. I wrote down exaggeration ’cause and we’re emphasizing some points, maybe we’re exaggerating like a tad. I don’t know that we’ve ever read a 5,000-page trust, so, audience, just know easily

Tommy Blackburn: They’re very lengthy. Easily over a hundred pages.

John Mason: Yes, we may be exaggerating slightly, both Tommy and I, to emphasize these points, but still, a hundred pages is a lot more complicated than 10, whether it’s a thousand or 5,000, like don’t nitpick us there.

We’re trying to make a point and make it digestible. The flexibility provision, Tommy, that you mentioned and leaving it kind of ambiguous. Heather, I believe we talked about this in her episode, but she, I know she mentioned to me one time that there was a trust that she read that very specifically, emphatically, beyond the shadow of a doubt said, “At this event, at death, you must sell the house. Must sell the house.”

Well, then that person died in 2008 when, 2009, when the housing bubble happened and markets were depreciated 50% or more, I think was the number, it was a butt whooping. And then the trust says you must sell. Well, a normal human, if they can look at the situation, would probably say, “Maybe that doesn’t make sense right now. Maybe we delay the sale of this real estate three, five, however many years, so we’re not selling it rock bottom.” And again, that’s just building in that flexibility and latitude where this particular document basically guaranteed in that situation a 50% butt whooping.

Tommy Blackburn: Yeah. We didn’t leave any room for judgment, like a human’s judgment in that. And so, that’s a very, I think a very good example of just exercising caution. And again, so that was like one sentence in a trust. And we’re saying, and this is not exaggerating, these documents can be in the hundreds of pages. So imagine all those sentences and just when we say exercise caution and you’ve gotta read every one of those sentences to make sure there’s not something like that’s gonna catch somebody, how you didn’t want them to catch it. So I think, again, simplicity just hits on the value there. And we talked about income tax and trust.

John Mason: Go ahead.

Tommy Blackburn: This is overly, maybe overly simplified because there are things of like how beneficial–of how distributions can flow income out or not.

There is planning that can be done here, but trust hit the top tax bracket currently. I think once income is over $15,700 or $16,000. So at that point we’re at 37% plus we’ve got other surtaxes like net investment income tax that could be coming in, you’re talking for, you individually, as a married filing joint, I think it’s out of, I forget when you hit the top tax bracket, but it’s probably six, $700,000. I mean it’s a very high taxable income before. It’s a very large disparity here, and that’s where we’re saying, yes, trust can make sense for special needs, minor children, different type of things, we can make a justification. But from an income tax man, those trust get hammered very quickly versus you as an individual.

John Mason: They do. And Tommy, I was writing down some other things as you were going through the great points. There’s a couple software programs that we’re using that is gonna be AI-driven likely, but the hope is that we will be able to have these software programs upload a trust to it, upload a will to it, and say, “Give me a flow chart and explain this to me, what’s going to happen.”

And so we’re really close on some of that and I think that’s gonna be a huge part of our practice because every sentence matters. Commas, periods, punctuation, articles conflicting. I don’t know how good the software is going to be, but I’m not exaggerating in the fact that if you wanna understand your trust or your will, you need to make a flow chart.

You need to read every single punctuation, every single sentence. And you have to document the flow of the assets. And like, if this happens, what? If that happens, what? If we both die together, then what? And those outcomes aren’t necessarily the same depending on the order of events that happens.

I’m very hopeful that some of the software programs that we’re using should help us decipher that message for clients. So quick other things, and I know we wanna wrap up this podcast shortly. Other reasons why you would need complexity in your documents could be like a disabled beneficiary. So somebody who is receiving SSI or SSDI, or somebody who’s on Medicaid.

Maybe we need a special needs trust that is a justification for complicated documents. Maybe there’s a beneficiary with a drug and alcohol problem. Maybe there is somebody who’s just like really, really bad at managing money and needs help. We could make the argument there. It says, “You did your best, give Joe the money and if he squanders it, he squanders it.”

That is certainly an option, assuming it’s not a drug and alcohol or other disability provision, or you could potentially hold that money in trust for Joe for the rest of his life. There are complications to that and some things to think through. But for the bulk of our clients, the goal is get it all in and get it all out, which I think leads perfectly into, Tommy, “Mom didn’t want this.” So what happened with your client that has you so hot and bothered?

Tommy Blackburn: And you got, there’s a theme. This isn’t the first situation I’ve encountered like this, it’s just the most relevant or the most recent. So, mom, yeah, mom wanted money to go to her only child, I think, free of trust, probably was convinced like, “Oh, we can put it in trust for credit or protection. Maybe these things sound good and it’ll be efficient transfer, protect the bloodline.” But ultimately, I think it was, “Bring it in, bring it out. I would like it to just efficiently go to her.” And to her, to have full access to her inheritance, to enjoy, manage, do whatever she wants with it.

And also, I have these grandkids, it’d be nice to leave them something, some small portion of this as well, just to let them know, grandma was thinking of them. Well, we put all that into trust and now it’s just, it’s been this unfortunate situation of, so yeah, we have the one irrevocable trust ’cause she passed and now it’s irrevocable that you can’t really be avoided with a revocable trust.

But now we need to break it into multiple subtrusts. So now we potentially have like five tax returns in one given year. We have these subtrusts for the grandchildren and we’re talking about administering less than $50,000, right? And so interestingly as educational piece, I imagine most states have this, Virginia specifically, pretty much has a bright line test that says if a trust is less than $250,000, the value inside of that trust, no questions asked. I mean, there is a process to follow, but the state is completely fine with you eliminating that trust if you follow the process. But because it’s below that dollar threshold, the state completely agrees this is not economical to continue to administer.

So if you, the trustee, feel that way, go right ahead, follow the process, get rid of it. So thankfully, we do have that card available that we’ve played working with everybody. So we have been able to wind those down. It didn’t stop the fact that we still had to go through this process, which, at least this year will, has increased cost, long-term at least. It will only be a one-year issue.

Then, and we also had real estate mixed up in there. So grandkids were actually a party to the real estate now, so we’ve gotta make sure that we make them whole and we haven’t violated anything as we swap assets. So took care of that. Then of course, now daughter has her trust, which is over, way over the $250,000.

So we can’t make that argument of it’s uneconomical to administer, so we have to keep it. But then there’s, she can take income. Well, first we gotta define income and we gotta calculate income and we gotta figure out how to do it. But it’s like that’s not what she wanted or her mom, right?

It was just like, we want you to be able to enjoy this. But now we’ve got this handcuff and then we have what’s called the HIM standard, which John and I joke about. ‘Cause like nobody seems to like have a great read on like what does this really mean? So this is health, education, maintenance support. “Oh, you can take principal distributions. So dig into the corpus, the principal go in excess of income for health, education, maintenance support.” What does that mean? ‘Cause that’s all pretty vague. And maybe that’s okay. But then this one also said, “We gotta have a co-trustee if you want to do these HIMs distributions.” So now, it’s crazy, right?

Where it’s like, John, if your parents left you money and they trusted and knew you, do you think they really wanted you to have to go get somebody to sign off on, get access to your funds? I highly doubt it. But so now this is the process that she has to go through. But interestingly enough, as John said, we can line up very qualified people as well to help.

And so we’re going through this decanting process, which is kind of interesting of if you think about like a decanter for wine where you pour it into the glass or essentially pouring the trust into another trust. And there are limitations as to what you can change in this new trust that it goes into.

But we pick up some additional flexibility. So that distribution should be a little bit easier and as we manage an inherited IRA and Roth IRA that are flowing into this trust, which that’s probably questionable, whether that should have maybe just avoided a trust altogether and gone straight to her and have more flexibility anyway, we’ve gotta manage that. We’ve got 10 years of tax planning. Perhaps we’ll wind it down before then and eventually the trust will get to less than that two 50 and we can make the argument that it’s not economical and we can wind it down. But all this to say, I don’t think any of this was intended, and it’s higher cost and restrictive.

It’s just, it feels nasty. At least it does to me as I go through it. And I feel bad for them. I had nothing to do with this. I’ve just been caught, you know, I’m just trying to help them catch the pieces here, but I just feel terrible, just feel bad because I can’t imagine it’s what anybody wanted.

John Mason: Well, she said multiple times, “This is not what mom wanted.” And at the end of the day, this is probably cost, I’m guessing, over $5,000, if not $10,000 of estate fees and attorney fees to get this resolved. And you personally have probably over 10 hours invested in this. The client probably has over 10 hours invested in this, if not more.

It’s just very labor-intensive. And as I think about some of the stuff I’m unwinding right now too, I mean, it’s 10, 20, 30 hours of stuff. And that’s with having a good financial planning team or good advisory team. I wrote down money manager. We charge a similar fee to what somebody would charge who’s only managing your portfolio.

Are they gonna be the one you call when stuff hits the fan to help you unwind all of this? I would venture to say, and I’m just gonna pick a percentage, just for point, 90% of the people out there that charge like us probably aren’t helping with this end of the spectrum. Most of them probably say, “You should consult your tax advisor and your estate planning law firm. Come back to me and let me know what we should do.” They’re probably not on the other end, which says, “Let me help you build the team and let’s fix it together. And oh, by the way, we’re charging pretty similar fee,” maybe the same fee, maybe less in some circumstances. So just understand what you’re getting for or what you’re getting for what you’re paying.

Trust police, who are the trust police, they’re not really out there, but I guess the police of the trust would be the next line of beneficiaries. So like, if you are it and there’s nobody after you, well, there’s not really a trust police after that. If your kids are the trust police, just make sure you do right by your children. But at the end of the day, there’s not really a trust police. And then the reason that HIMs is so, health maintenance education support is so vague, you can make a case for almost anything. Like for my health, I could go visit Dr. Peter Attia in Texas. I could hire a personal trainer.

I could go get stem cells in Europe somewhere, hair transplants over wherever else, and all of that’s from my health. Maintenance education and support, I could make a case that, you know, I could join Rhonda Patrick’s monthly fee to have access to her podcast for education, right? Like, you can just think about how far this goes, Tommy. Like a lot falls into those categories, which is good and bad. It’s good to have flexibility, but it’s also like, “Did you really gain anything if you have that much flexibility already?”

Tommy Blackburn: And that’s what I was sitting and thinking. I think part of it’s, so again, who’s policing it? Maybe nobody, because I think some of it is supposed to be like, what was the pattern before?

And if all of a sudden the pattern changed, like it probably wasn’t like maintain–wasn’t maintenance, right? Because our maintenance used to be X thousand and all of a sudden it jumped up by $10,000. But yes, bigger point to you is like, well, if we were gonna put that flexibility in here, why didn’t we just let ’em have it to begin with? I guess that’s why then you say, “Well, I have a co-trustee to police them and make sure that they’re not self-dealing, self-serving.” But it’s like, again, what did we just made it more conflict? Why did we give ’em the flexibility? Make them ask for permission. Yeah.

John Mason: So as we wrap up, Tommy, I want to hear any closing thoughts that you have.

One thing I wrote down as well, and we encountered this recently, is that the default is not always what you want. And so we have access to, through some of the associations that we belong to, software, and what we have access to the default software, pretty much stinks for our use case. So you’ve got like level one and level 10.

We always want level 10 software, gives us the flexibility, gives us the tools and things that we need to run our business. A lot of people operate on level one, that’s fine, but we don’t always want level one. Sometimes we want level 10. So I encountered recently, or we encountered recently a longtime relationship, they live together. They bought a house together, but they’re not married. And the default is that in Virginia, at least married couples own a house tenants by the entirety. Non-married people own a house, joint tenants with right of survivorship, which means if Tommy and I own a house jointly together and I die first, my spouse does not inherit the house.

Tommy does, ’cause he has rights of survivorship. That whole WROS part, that joint tenants with right of survivorship. I just disinherited my spouse. Maybe Tommy and I would have our own individual trust own each 50% of that house, or maybe we would own the house, tenants in common, so that Tommy could have a beneficiary and I could have a beneficiary.

But how many times, how many people out there, maybe it’s you listening, you bought a house when you weren’t married, and then you later got married, and maybe that wasn’t appropriate or maybe some certain circumstances have changed where the defaults, like you think that real estate attorney is asking you, “Shat happens when you die, Joe, where do you want the money to go? Do you want it to go to Sally or do you want it to go to your son?”

The real estate attorney’s not doing that. They’re just drafting up the closing documents and you’re signing here. So they’re not bad people, but they’re not being compensated, Tommy, to ask those questions. So take a step back, and think about the real estate attorney, the teller, the financial planner, all of the different people that have to rally around your estate plan to make it work.

There’s only one person you’re likely paying to do that, and it’s probably the one person who’s not doing it. And that’s probably your financial planner, right? You’re not really paying anybody else to do that work. So you either need to pay somebody to do it or you need to change your expectations and make sure that your planning team is doing it.

Tommy Blackburn: I love it. I want to say thank you to our audience. I know we have ran a little longer in this episode. We hope that this is valuable. Realize it was some somewhat of a rant, but the rant is to try to show the pitfalls that we’re encountering and the frustrations that we feel for people we’re helping and we hope it’s educational and inspires action to prevent this from happening.

And with all that being said, estate planning is critical. Big fans that we’re, even though we just bashed it, we’re very big fans of doing it, being proactive. But I think the takeaway is keep it as simple as you can and no simpler, right? If it needs to be complicated, if there’s a level of complexity, then so be it.

But let’s maybe try to keep the objective simple as possible. Unless you’re a billionaire and you’ve, you know, that’s a whole different world that we are planning for at that point. But for most of us, keep it simple, as simple as you can, and do be proactive. Get these things in place ’cause it will make it easier.

But easier does not mean painless. So even a very simple estate plan that you’ve drawn up and you’ve done everything you can, you put your beneficiaries in, there’s still going to be some lifting, right? There’s probably a piece of real estate that has to be sold, even if it was titled, or maybe it doesn’t have to be sold, but there’s a piece of real estate that something will need to be done with.

There are just certain things, cleaning out a house, just, it’s not gonna be painless, but you can certainly lessen the pain by putting the best things in place.

John Mason: I love it, Tommy. Well, thank you for another great episode of the Federal Employee Financial Planning Podcast. I’ll echo your comments to the audience.

Thank you, audience and clients, for being with us on this journey. Well over a hundred episodes, I think, over three years doing this. And, please do all the things like subscribe, leave us some nice comments to overshadow the one comment that’s out there. And Tommy, appreciate you, appreciate our whole team, specifically, outside of Mason & Associates. The estate planning firms, the attorneys and the tax preparers who help us through the mess, we’re in the mess with them. There’s no place we’d rather be. Maybe we’d want the mess to be a little bit easier, but that’s why we do what we do. So, audience, thanks again for being with us on another episode of the Federal Employee Financial Planning Podcast.

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