No Regrets! Don’t Make These Estate Planning Mistakes

Our 2 Cents – Episode #147

No Regrets! Don’t Make These Estate Planning Mistakes

We’ve got a great show for you this week! Steve and Gabriel share some common estate planning mistakes and what you can do to avoid them. This episode is an important one for anyone who wants to leave a legacy free from regret or legal turmoil. Click a link below to listen in now!

  1. No Regrets! Don’t Make These Estate Planning Mistakes:
    • Failing to plan for expenses that can be foreseen—especially healthcare.
    • Failing to update beneficiary designations.
    • Failing to update your trust (or not having one at all).
    • Failing to communicate your wishes and intentions.
    • Transferring real estate while still living, instead of at death.
    • Failing to maximize your asset amounts.

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Podcast Transcript

Announcer: You are listening to Our 2 Cents with the team from SGL Financial, building wealth for life. Steve Lewit is the president of SGL Financial, and Gabriel Lewit is the CEO. They’re here to discuss all the latest in financial news trends, strategies, and more.

Gabriel Lewit: Well, good morning, good afternoon, good evening. This is Gabriel and Steve with Our 2 Cents. Welcome to today’s show.

Steve Lewit: Welcome.

Gabriel Lewit: How are you doing today, Mr. and Mrs. Listeners? Hopefully great.

Steve Lewit: Do I have to… I have to answer for them?

Gabriel Lewit: Well, that wasn’t true.

Steve Lewit: “We’re doing great.”

Gabriel Lewit: What’s your best Mr. Listener voice?

Steve Lewit: Oh, no, I won’t.

Gabriel Lewit: Let’s see.

Steve Lewit: I’m using my Bronx voice. This is from the Bronx, folks. How are you all doing? You’re doing good out there? I hope so, because we’re doing good here.

Gabriel Lewit: You know I’m going to ask for your Mrs. Listener voice next.

Steve Lewit: I don’t know if I have one of those.

Gabriel Lewit: You were doing it just a second ago.

Steve Lewit: “Oh, hello.” You know what amazes me, Gabriel? Is watching a ventriloquist do all those voices while they’re drinking coffee, or something like that. It’s like how do they do that?

Gabriel Lewit: Well, I used to watch America’s Got Talent a lot.

Steve Lewit: Yeah, me too.

Gabriel Lewit: There was this little girl on there that… she never moved her mouth, but she could sing songs, and there was another one, the same thing, could do different voices, but it’s weird. Super weird.

Steve Lewit: Yeah, it is weird, isn’t it?

Gabriel Lewit: Yours was nothing close.

Steve Lewit: No, I don’t think so.

Gabriel Lewit: Don’t take that the wrong way.

Steve Lewit: Oh, I will not take it the wrong way, and America’s Got Talent is not waiting for me.

Gabriel Lewit: Well, at least not for that.

Steve Lewit: I often thought of going on America’s Got Talent and singing, but I haven’t.

Gabriel Lewit: They have a soft spot for older people-

Steve Lewit: Older folks that sing.

Gabriel Lewit: … that have talent. Yes.

Steve Lewit: Yeah. In fact, one of the-

Gabriel Lewit: You could revive your opera career.

Steve Lewit: No, I don’t want to… Well, maybe, but there’s a woman in England who, years ago, an older woman, who was an opera singer, and she came very popular, very famous. She won the whole shebang.

Gabriel Lewit: Yeah.

Steve Lewit: Yep.

Gabriel Lewit: Well, folks-

Steve Lewit: Hey, I won $16 in the lottery yesterday. I just want you to know.

Gabriel Lewit: Retirement, here we come.

Steve Lewit: Right, I’m going to retire now.

Gabriel Lewit: Yeah. Obviously, if you haven’t been watching the news, a couple people have won multi-billion dollar payouts on the Mega Millions and the Powerball. We bought some tickets, but we did not win.

Steve Lewit: I won. I won $16.

Gabriel Lewit: Well, $16, yes.

Steve Lewit: Yep.

Gabriel Lewit: So, congratulations to you, Mr. Lewit.

Steve Lewit: Thank you. This is a strange beginning to our show, isn’t it?

Gabriel Lewit: Well, sometimes you got to have a little fun.

Steve Lewit: Yeah, well, we’re kind of all over the place.

Gabriel Lewit: Again, could you imagine if we were just like, “Hello.”

Steve Lewit: “Hello, folks.”

Gabriel Lewit: “Today, let’s talk about standard deviation.”

Steve Lewit: “Yes, standard deviation. Yes, we’re going to talk about-”

Gabriel Lewit: The alpha and the beta of the portfolio today.

Steve Lewit: Actually, alpha and beta would be-

Gabriel Lewit: The alpha and the beta last year.

Steve Lewit: … an interesting topic. Katie, put that on our list, that we’ve got to talk about alpha, beta, gamma, and delta. Really, I think that would be interesting.

Gabriel Lewit: Well, anywhos, yeah.

Steve Lewit: What do you got for us today, Mr. Gabe?

Gabriel Lewit: I like the rhetorical lob of yours, because you know what we got.

Steve Lewit: Sent it right back to you. Lead the way.

Gabriel Lewit: So, we’re going to talk a little about some estate planning regrets.

Steve Lewit: Yes.

Gabriel Lewit: Okay, so unlike some things that are reversible in life, sometimes, with estate planning, you realize too late that, “Oops, I should have done that.”

Steve Lewit: Yeah, well, too late is really… You can’t even say, “Oops.”

Gabriel Lewit: Yes, yes.

Steve Lewit: There’s no, “Oops,” when it’s too late.

Gabriel Lewit: Well, there are some. You might get sick, and then realize, “Oops, I should have…”

Steve Lewit: That’s true. I was thinking of more, “Oops-oops.”

Gabriel Lewit: Yeah. Yeah, you pass away; you can’t say, “Oops.”

Steve Lewit: No, so yeah.

Gabriel Lewit: But anywhos, we’re going to talk about those, and then we’re going to talk a little bit about holding real estate in retirement. Okay, had a conversation with a client just the other day that prompted me to say, “Hey, I don’t think we talked about this in a while.” So, we’re going to talk a little bit about that. So let’s dive into some estate planning regrets, if you will.

Steve Lewit: Well, here-

Gabriel Lewit: Now, what is estate planning? You, and I know, obviously, but just in case some of our listeners don’t know, what do they mean by estate planning?

Steve Lewit: Yeah, years ago, people thought estate planning was just for wealthy people, they didn’t have an estate, but if you own anything, you have an estate, and estate planning says, “What happens to my estate?”

Gabriel Lewit: All your stuff, your money, your assets.

Steve Lewit: All my stuff, my money, my pictures, my cars, my jewelry, my real estate, my investments, my REITs, everything. What happens to that, if you’re married, after the second person passes away? How does that estate, because that’s all considered an estate, how does that estate get to somebody else that I want it to get to, and how do I make sure it gets there, and how do I make sure they don’t lose a lot of money while it is getting there, and that’s all estate planning.

Gabriel Lewit: Well, yeah, there’s going to be, we’re talk about not planning properly for some expenses, some family issues, some tax issues. We’ve got a range of some of the bigger mistakes you commonly see here that we are going to walk you through, and our goal here is, of course, so hopefully that you don’t forget to plan for these things, or you’re willing to accept whatever risks that may come from these actions.

Steve Lewit: Yeah, and to your point, Gabriel, we’ve had instances where people did not fix their estate or pay attention to it, despite our suggestions, and then when they passed away, it was a mess, and you can’t fix it once a person passes away. You can’t fix that.

Gabriel Lewit: That’s true.

Steve Lewit: It is what it is.

Gabriel Lewit: Yes. So let’s jump in here. Number one is failing to plan ahead for expenses that can be foreseen, like healthcare, in particular, and healthcare costs, or I would add to this, or being unwilling to think that it’s going to happen to you.

Steve Lewit: Yeah, how many people have you talked to when you talk about, “There’s a 70% chance of one person in a couple over 60 years old going into a licensed care facility?” And how often has somebody said to you, because I know how often somebody has said it to me, “Well, that won’t be me.”

Gabriel Lewit: Yes. Yes, “That’s not going to be me, Gabe. We have longevity in our family. Oh, if I kick the bucket, it’s just going to go overnight,” or something. We’ve heard many, many discussions about this, and it’s a very interesting one, because there’s really two categories of people that I encounter, broadly, which you may not know what I’m going to say here. One of them is people that have experienced firsthand, somebody, either their family member, their friends, their friend’s family member, who’s had or needed home healthcare, nursing home.

Steve Lewit: Especially a parent.

Gabriel Lewit: Yeah, parent, a brother, a family member that’s maybe sick when they’re younger, somebody that needs care, and those people realize firsthand, or secondhand, just how challenging that can be, and how expensive it can be, and how much work, and effort, and time it can be, and how disruptive it can be, and they’re just banging down the door to get some form of long-term care coverage or healthcare coverage.

Steve Lewit: I got a call three, four months ago for a client who is ailing, and will need a care facility, and she says to me, “Well, how can I protect my estate?” Well, I wish we had had this conversation five years ago, because there’s a five-year lookback.

Gabriel Lewit: Well, for some techniques, which we’ll get to that in a little bit here. Yeah.

Steve Lewit: But it was last minute, and that puts a lot of pressure on trying to fix it. It’s impossible.

Gabriel Lewit: Right, so the point is, there’s, generally speaking, for unpredictable high costs, expenses that are low in frequency, that’s what insurance is designed to protect against.

Steve Lewit: Yes.

Gabriel Lewit: So, insurance is designed to protect you from catastrophic losses.

Steve Lewit: Protect the estate.

Gabriel Lewit: The estate. I’m just saying, insurance in general and long-term care insurance is designed to, of course, protect your estate from the risks of a very expensive long-term care needs.

Steve Lewit: Yeah, well, put it this way-

Gabriel Lewit: … which is why it’s called long-term care.

Steve Lewit: Yeah, so if you’re in an Alzheimer’s facility, it’s $125,000 a year, give or take, and let’s say the average stay… Look, I know my aunt… Did I ever tell you this? My aunt was 45 years old, and got Alzheimer’s. This was years ago. She was in a facility for 22 years, and it wiped out the entire family.

Gabriel Lewit: Of course, yeah. That’s an incredibly long time.

Steve Lewit: Now, that’s pretty rare. It’s usually three, five, seven years, but that could be a million bucks.

Gabriel Lewit: Well, I think what happens is people look at the averages, right? They say, “Well, the statistic says the average stay in a nursing home is less than two years,” or whatever it is, a little less than two years, I think. So, “Yeah, if it costs me $100,000 dollars, then I just need $200,000, and I’m good, which I have that saved up, with no need for planning ahead.”

Steve Lewit: Except when there’s an average, Gabriel, there’s a high end and a low end, and that’s what creates the average. So if you’re in the high end, that average don’t mean nothing.

Gabriel Lewit: Yeah. So, okay, if you’re four years, right, all of a sudden, the $400,000 times two.

Steve Lewit: It’s $800,000.

Gabriel Lewit: It can get pretty expensive. So that’s the first one, okay? Again, we’re not going to sit here and give you a 30-minute discussion on long-term care, but that’s one of the first risks there, is not planning ahead for that healthcare cost and being surprised later on that it did, in fact, occur, and, “Whoops. Yeah, I should have had some insurance to cover that.”

Steve Lewit: Or I should have known.

Gabriel Lewit: Yeah. Okay, so the second one, number two, of estate planning most common problems, or failures, here, is failing to update your beneficiary designations, okay?

Steve Lewit: Yes.

Gabriel Lewit: It’s been a little bit, but we see these pretty commonly, but one of the most… I think I encountered somebody, what was it? Six months ago or so, and been divorced, and one of their beneficiaries was still their ex-wife from 20 years ago. I’m like, “Did you still have her on here on purpose?”

Steve Lewit: For a reason, or-

Gabriel Lewit: And he’s like-

Steve Lewit: Does he still love her, or what’s going on?

Gabriel Lewit: “Nope.” So things like that. You want to take the time to review your beneficiaries periodically, generally, I suggest once a year, and decide, “Is that still who I want to receive my money?” Now, why would it change? Well, all sorts of reasons. Family member all of a sudden doesn’t treat you right, and you’ve changed your mind, somebody passes away, and now it’s going to go to their estate if you don’t change that person. So there could be all sorts of different reasons that you might want to review this.

Steve Lewit: In the middle of a divorce, somebody is in a coma, they’re very ill. That has to do with powers of attorney, but that controls the estate if somebody’s very ill.

Gabriel Lewit: Yeah, and then there’s also maybe new people, maybe-

Steve Lewit: Grandkids.

Gabriel Lewit: Yeah, grandkids have been born, and you’re like, “Hey, I’d like to leave some money to little Timmy,” or Tommy, or Jane, whatever their names are.

Steve Lewit: Yeah. I’m not going to go down that road, but yeah, it’s a very simple thing, and I think because it’s so simple, it escapes everybody’s mind. It’s like, “Oh, I’m all set,” and the other thing, also, is if you create a trust, then the beneficiary has to be changed to the trust, rather than to the individuals. I think we’re going to get to that.

Gabriel Lewit: Well, since you just gave me a nice lead in there, Mr. Lew-

Steve Lewit: I did that on purpose, again.

Gabriel Lewit: Yes, so very similar, the sister to not failing to update your beneficiary designations is failing to update your trust, which, in many cases, contains beneficiary designations.

Steve Lewit: Yes.

Gabriel Lewit: Yes.

Steve Lewit: Yes, yes.

Gabriel Lewit: Yes, yes. So yeah, those two go hand-in-hand, and there’s other reasons why you might want to update your trust, but, for now, it’s for the same primary reason as you would update your beneficiaries. You want to review that regularly, make sure that that hasn’t shifted for you in your planning.

Steve Lewit: Yes, and part of estate planning is to assure that when you pass away, that your money goes to where you want it, it goes to the person you want it to go to, and that’s the purpose. If you’re very wealthy, trusts have tax implications, but for most people that don’t have $22 million and are married, the trust is a way of making sure the money gets to the people that it is designated to go to, and somebody else, like an attorney that’s suing, or the outlaw in a divorce, the money doesn’t go to somebody else. So we urge people to, everybody, have trusts.

Gabriel Lewit: Yes. Yes, we do. They are very good tools for planning.

Steve Lewit: Absolutely.

Gabriel Lewit: Okay, so the next one is a failure to communicate.

Steve Lewit: Tell me about that.

Gabriel Lewit: Well, many things in life can be solved with good communication. It’s a certain skill that is lacking for many.

Steve Lewit: Have you noticed that?

Gabriel Lewit: Well, I’ll especially say it’s lacking in the world of construction.

Steve Lewit: What you’re going through. Can I share with the folks what’s going on?

Gabriel Lewit: No, you said it before. I’m putting in a pool, and dealing-

Steve Lewit: He’s building a pool.

Gabriel Lewit: Dealing with contractors is-

Steve Lewit: It’s supposed to be a lot of fun, and-

Gabriel Lewit: Well, I just say, if these people would just return a phone call, or just communicate, my goodness, how many problems would be solved, and so your estate plan is very similar. If you fail to communicate, then people, let’s say you have three kids, and you’ve got three daughters, I don’t know, whatever, and you’ve got Grandma’s engagement ring that has passed down the family, and you’ve never decided which of your three daughters gets the ring, and then it’s a very nice expensive ring, for purposes of this, not that your kids care about the money part, of course, but let’s say that you pass away, and then the three daughters are like, “No, Mom once told me I’m going to get the ring,” and the other one’s like, “No, she told me I was going to get the ring,” and then the third’s like, “Well, she never told me I was getting it, but why should you two get it when I should be getting the ring?” And this is just one small example of how this could go, but there are many, many, many things that kids, unfortunately, will argue over if the parents have passed, and there is no explicit instruction, or desire, or wish that’s been relayed, and so this is a failure to communicate, and, as a result of that, you can create a lot of family drama, ill will, arguments, fights, even lawsuits.

Steve Lewit: Folks, I’ve seen, and I’m sure Gabriel has, too, the nicest kids that don’t care about money, and they’re easygoing, we get together as a group, we’ll invite a family in to share their estate plans, which is another thing I think everybody should do, is share your estate plan with your kids, which is what you’re suggesting here, to communicate.

Gabriel Lewit: Yeah, of course.

Steve Lewit: But the nicest kids, after the parents are gone, it’s like Jekyll. Which one is it, Jekyll or Hyde?

Gabriel Lewit: Jekyll and Hyde.

Steve Lewit: Yeah, a different person. It’s all of a sudden they’re fighting over the stupidest things. It could be a piece of furniture, and they’re in battle, and they’re battling over money. Now, what if one child says, “No, I was supposed to get 30% instead of 20%,”? Then you have a huge battle, and all of that can be taken care of prior to your leaving the world.

Gabriel Lewit: Well, and I’ll give you another example, because this is one that, as I said, there’s dozens and dozens of examples, but let’s say that, for whatever reason, and I’ve seen this with beneficiary designations, we were just talking about those, where the kids are not equally allocated, let’s say, on their beneficiary designations; one child’s going to get more than the other, or two childs are going to get more than the third. Well, if that’s not properly-

Steve Lewit: Did you say, “Two childs,”?

Gabriel Lewit: Two children. Two childs?

Steve Lewit: I thought you said two childs. Yeah.

Gabriel Lewit: Two children.

Steve Lewit: Two children, yes.

Gabriel Lewit: You knew what I was saying.

Steve Lewit: I knew, but-

Gabriel Lewit: One child, two children.

Steve Lewit: But you know me.

Gabriel Lewit: You do like to correct me on my grammar.

Steve Lewit: Well, “Two childs.” I want audience to know that you are [inaudible 00:17:47]

Gabriel Lewit: It just happened because I said one child, and then… Yes, you are correct.

Steve Lewit: You are an educated human being.

Gabriel Lewit: I did that to see if you would catch me.

Steve Lewit: I caught you.

Gabriel Lewit: Yeah, there you go.

Steve Lewit: Sorry.

Gabriel Lewit: Yeah, so two children get more than the third child.

Steve Lewit: Good job.

Gabriel Lewit: There you go.

Steve Lewit: Good job.

Gabriel Lewit: And then the third child’s like, “What the heck?”

Steve Lewit: Or “What the…” something else.

Gabriel Lewit: Yeah, and that’s not fair, and they get resentful and angry towards their siblings, and they say, “Hey, Mom probably didn’t mean that. Why don’t you share some of the extra that they gave you to me?”

Steve Lewit: And they feel entitled to that money.

Gabriel Lewit: And then, the older ones, of course, because money is the root of all evil, right? And brings out the Jekyll and the Hydes and people, the ones that are getting more say, “No, no. No, no, Mom and Dad left me more for a reason. They didn’t like blah, blah, blah, that you did back in X, Y, Z. They told me that,” right? Or whatever, the stories that you hear, and then who’s now pissed at one another?

Steve Lewit: Ooh, you said the word. Yeah, exactly.

Gabriel Lewit: PO’d.

Steve Lewit: PO’d. Yeah, so the-

Gabriel Lewit: Yeah, the siblings fight, they argue, they break relationships, and the families fracture it all because Mom and Dad did not want to… And it comes from, I think, good intentions like, “Let’s not stir the pot while we’re alive. They’ll figure it all out when we pass.” Oh, well, sometimes, but not always.

Steve Lewit: Well, the biggest issue I find for more clients than… I’m surprised at how many that I have to deal with where they’re considering or going to disinherit a child, and that’s very, very sad, but it’s a very difficult decision, that they have three kids, let’s say, three childs, and there’s… What? You can have three childs.

Gabriel Lewit: I prefer to have one children.

Steve Lewit: Yeah, so they have three children, and Betsy, she hates them, or thinks they did a lousy job, and the parents say, “Well, why should I give her any money?” And then they die, and Betsy says, “Where’s my share?” So that has to be very carefully taken into consideration. Otherwise, there’s a huge battle. The other part of it is if there is a battle and a will goes to probate, probate in Illinois isn’t that bad; it’s six to eight months and probably 5% to 8% of your estate, which is terrible. You don’t have to pay all that money, but you can be in probate two years, three years, with a litigious child like that.

Gabriel Lewit: Yeah. So that’s the goal of communication, but we see it fairly frequently missed. The other part, too, is just communicating where all your wills, trusts, powers of attorney documents are, so that your family can find them, should something happen to you. You can communicate, “Hey, this is my estate planning attorney. Call them.” You can say, “Here’s where everything’s stored,” but make sure you communicate. That’s the key for that one there.

Steve Lewit: It is.

Gabriel Lewit: Okay, another one here. This is a smaller one. We won’t get into the weeds here, but maybe some people think they should transfer their real estate while they’re alive. This is usually part of what you were saying, a long-term care asset repositioning strategy, usually.

Steve Lewit: Medicaid protection.

Gabriel Lewit: Medicaid protection. We won’t get into that, but there’s some risks in transferring real estate and other assets while you’re alive that sometimes people don’t fully think through, because they’re so focused on trying to protect their estate from being spent down so that they can qualify for state-sponsored long-term care if they need it, so-

Steve Lewit: Or they’re gifting for tax purposes.

Gabriel Lewit: Yeah, so there’s things you want to be careful of on that front. We should do a whole, I think we were going to do one at one point, maybe we bring an estate planning attorney as a guest on the show and talk about Medicaid planning. That would be kind of interesting.

Steve Lewit: That would be kind of interesting. Let’s do that, Kate. The danger there is putting a child on the real estate as an owner, or as part of the owner, as a way of passing it over, say, “I’m just going to put them on the title,” and then the child gets sued, or runs into financial difficulty, or is bankrupt, and all of a sudden, that real estate is up for grabs.

Gabriel Lewit: Well that, and then if nothing happens, and it’s not been long enough, you lose a step up in basis. There’s other issues tax-wise that can happen there. So it’s just one of those areas you want to really spend your time on and be careful with.

Steve Lewit: You got to be careful. A lot of folks put their kids on their checking accounts. So if they can’t make a decision, “Well, my kid is on my checking savings account.” They say, “Yeah, that’s great until your kid becomes,” I don’t know, I’m exaggerating, “A drug addict,” or I helped a client six months ago, bailed her daughter out of jail. Now, there are things that happen to children, and if they’re part-owners of your money, your money is now up for grabs.

Gabriel Lewit: Yep. Yep, yep,

Steve Lewit: Yep, yep, yep.

Gabriel Lewit: The last one here is, in my opinion, failing to maximize your legacy amounts, of your assets amount. Asset. I can’t talk today, my gosh. Asset amount, assets amounts? Which one is it?

Steve Lewit: Your childs will teach you how to speak.

Gabriel Lewit: Asset amounts. There we go. Yeah, in other words, most of our clients, they have a big chunk of money that they’re not going to spend through, and we will then talk to them, and we’re going to say, “Hey, since you’re not going to spend this, why don’t we maximize it and leverage it into higher amounts you can leave for your kids or grandkids?” And for some reasons, there’s a very good percentage of people that we talk to, and where we present that idea, that just say, “Nah, they’ll be okay.”

Steve Lewit: Yeah, I don’t get it. I honestly don’t get it.

Gabriel Lewit: “Yeah, they’ll be fine. They don’t need more money.”

Steve Lewit: Yeah, it’s like you’ve got money; why not put it to work, and give them more? I don’t understand why people don’t want to do that.

Gabriel Lewit: Like there are some enhanced death benefits. I mean, I’ll use this word, annuities, right? There’s some enhanced death benefit annuities where if you’re 84 years old, you can get an immediate bonus, right? A big bonus on this.

Steve Lewit: And that becomes a death benefit.

Gabriel Lewit: And it’s an immediately available lump sum death benefit that would otherwise take you four or five years for your accounts to grow, so that if something happens to you-

Steve Lewit: If they grow.

Gabriel Lewit: If something happens to you in the next year or two, you’ve leveraged your money. Examples like that, life insurance can leverage your money. In other words, if something happens to you before… Let’s say you buy life insurance at 70, and then something happens to you between 70 and 90, you’ve leveraged your money. Now, granted, if you buy life insurance, a GUL, a guaranteed universal life policy, for example, and you happen to live to 100, yeah, then maybe the leverage component diminishes the longer and longer you live.

Steve Lewit: But that’s not the point. That’s not the point. I mean, it is the point, but it isn’t the point, if I can… How clear was that? All right, the point is that-

Gabriel Lewit: You and I are clear as mud today.

Steve Lewit: Yeah, we are. I’m going to go swimming in your pool. No, so the point is that you work all your life for this money. This is how I feel about it. Nobody gave me anything. I didn’t give you anything, right?

Gabriel Lewit: Not yet, but you’re still here.

Steve Lewit: Well, one day, you’re going to-

Gabriel Lewit: I hope you’re here for a long time.

Steve Lewit: Well, I don’t think I’ll disown you. Yeah, but most people work hard for their money, and, to me, it’s like, “Hey, you worked so hard. Let’s squeeze as much out of this dollar that we can possibly squeeze,” and it’s safer than what you’re doing now, and if you don’t want to give it to your kids, give it to charity. If you don’t want to give it to charity, give it to somebody, but why give it away? So I don’t get it.

Gabriel Lewit: Yeah, no, I’m with you. For example, one of the GUL options that I ran for a client, this was, I don’t know, last year.

Steve Lewit: You need to explain what G-

Gabriel Lewit: I said it earlier, but I’ll say it again.

Steve Lewit: Say it again.

Gabriel Lewit: Guaranteed universal life. It is one of the ways you can pass a death benefit. So let’s say you’re 70, and these aren’t exact numbers, I’m just throwing something out, because I don’t remember the quote, but let’s say you buy a $1 million GUL policy, guaranteed universal life, it can’t expire like a term policy, it’ll go on forever, and let’s say that costs you, I don’t know, I’m just going to throw out a number, $20,000 per year, okay?

Steve Lewit: Which sounds like a lot.

Gabriel Lewit: It sounds like a lot, but you’re 70 years old. So let’s say $20,000 a year times 10 years is $200,000. So you put in $200,000. Now you’re 85, or 80, sorry. So by the time you’re 85, you put in $300,000.

Steve Lewit: That’s correct.

Gabriel Lewit: Right? 90, $400,000. It doesn’t matter when you die, though, you’re going to get $1 million back, okay? So if you happen to pass away, inadvertently, at 72, you’ve put in $40,000, and your kids got $1 million-

Steve Lewit: Tax free, by the way.

Gabriel Lewit: Tax free, and this was $200,000, $300,000, you were never going to spend, right? And people look at me and they say, “Well, why? Nah. Why bother?” And the way I look at it’s like, okay, let’s say you passed away at 80, and you put in $200,000, and your kids get $1 million, you just gained them $800,000. It could be 10 years of your life salary, if you think of it of how long you worked to create and save $800,000, that you can now boost and leverage your legacy to your kids, and it just always amazes me that a lot of people are like, “Nah.”

Steve Lewit: And if you don’t like your kids, you can designate that for your grandkids.

Gabriel Lewit: Yeah, but the key is this is money you weren’t going to spend, it’s not your emergency fund; it’s excess, and why not leverage the excess?

Steve Lewit: You can create with that money charitable funds that become a legacy. So if $1 million dollars goes into a donor-advised fund, Gabriel.

Gabriel Lewit: Well, that’s the other way. Well, yeah, to clarify, you could take that money, a lump sum, donate it to a charity, a charitable remainder trust, send yourself a CRAT, a charitable remainder annuity trust, or there’s all sorts of different trusts.

Steve Lewit: Get the money back.

Gabriel Lewit: Get an income stream. That income stream to you pays for the life insurance. So you’ve done both; you’ve got a charitable tax deduction, done the Roth conversion with that tax deduction, increased your life insurance leverage to your kids, done a good thing at the same time. It’s like a win-win, win-win.

Steve Lewit: Yeah, and think of it this way: if you’ve got $1 million dollars in a charitable trust, like a donor-advised fund, I started to say, and it earns 5% a year, that’s 50 grand a year. Now, you’ve got a perpetual legacy, that 50 years later, the charity is going to get a check in your name.

Gabriel Lewit: Yeah, some clients do that. They make their donor-advised fund the beneficiary of their big life policy, then they make their kids the trustees or future kind of overseers of that donor-advised fund, and now that child can donate a huge amount every single year to charities for the rest of their life on your behalf.

Steve Lewit: That’s right.

Gabriel Lewit: It’s a great legacy-building tool there.

Steve Lewit: There’s so much that can be done, even not for your kids, but if you have money, and you have wealth, there are remarkable things you can do for other people, and we urge you to do it.

Gabriel Lewit: Yep. So those are the most common mistakes that we see, and hopefully you don’t make them. We’re here to help you not make them. Call us: 847-499-3330, or go to, or email us, If any of this piqued your interest, or if you want to do an estate review, the state analysis, maximization, a trust review, a long-term care discussion-

Steve Lewit: Beneficiary review.

Gabriel Lewit: … call us. All these things we just talked about kind of bundled into one. So thank you so much for tuning in today. We did not get to real estate.

Steve Lewit: We did not get to real estate.

Gabriel Lewit: Sometimes you and I just get in the weeds here, and just start going. So hopefully you enjoyed the conversation. Today was a deeper dive. Next time, we’re going to go into the world of real estate, amongst a few other topics we got tuned for you.

Steve Lewit: It sounds good.

Gabriel Lewit: Alrighty, have a great rest of your day, or evening.

Steve Lewit: Everybody, you all stay well.

Gabriel Lewit: Bye now.

Steve Lewit: Bye now.

Announcer: Thanks for listening to Our 2 Cents with Steve and Gabriel Lewit. For any questions about your finances, give SGL a call at 847-499-3330, or visit us on the web at, and be sure to subscribe to join us on next week’s episode.

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