The Stacking Benjamins Show

Episode: 3 Questions You're Dying To Know about Estate Planning

Guest: Attorney Tim Semro
Date: August 18, 2025

Episode Overview

Theme:
The hosts kick off Estate Planning and Charitable Giving Week with attorney Tim Semro, tackling the most common – and critical – estate planning questions from their audience. With their trademark mix of wit and practical advice, they demystify trusts vs. wills, discuss probate myths, cover tricky beneficiary scenarios, dive into state and international estate planning issues, and explore the roles of insurance and long-term care planning in managing your legacy.

Key Discussion Points & Insights

1. Trusts vs. Wills: What’s the Difference?

[07:44]

• Definition:
  • Trusts avoid probate and function as a contract, offering potential creditor protection, tax savings, and special needs planning.
  • Wills must go through probate and only direct the court about who gets what.
• Analogy: Joe likens a trust to a company that continues after your passing, with successor management following your written rules.
  • Tim: “The trust doesn’t die, it lives on beyond you... With a revocable trust, your Social Security number is the ID number until you die.” [08:40]
• Practicality: Trusts require more upfront work and cost, but are often cheaper and smoother to administer after death.

2. When Does a Trust Make Sense?

[09:23]

• Not Just About Wealth:
  • A trust can be crucial for even moderate estates in cases like special needs beneficiaries, blended families, or specific asset management needs.
  • “It really has to do with what you’re trying to accomplish,” says Tim. “Do you have family issues? Tax issues? Are certain assets complicated?” [09:23]
  • For large gifts to charity, simpler beneficiary designations might suffice.

3. How Onerous is Probate, Really?

[10:16]

• Probate is Overblown:
  • Tim calls it “a necessary evil... there’s nothing scary, it just adds time, costs money, and can be avoided with planning.” [10:19]

4. The Critical Role of Beneficiary Designations

[11:06]

• OG reminds listeners that old or missing designations create real risk: lost files, system errors, or life changes (e.g., divorce, new kids).
• Tim warns: “You need to review your estate plan every couple years... If you have everything pouring into a trust, you can make changes just by updating the trust.” [12:14]
• Hidden Trap: On CDs, beneficiary designations may disappear when the CD rolls over. [12:14]

5. What Happens When Accounts Aren’t Properly Titled?

[13:03]

• Each Account Stands Alone:
  • Without naming your trust or a beneficiary on each account, assets may default to your estate, triggering probate.
  • OG: “Having it blank is not a good answer.” [15:23]
• Special Problem: Qualified accounts (e.g., IRAs) bring tax complications and special rules.

6. Estate Taxes: Federal & State

[15:38]

• Tim: Law now provides a $15M per-person federal exemption—so most listeners needn’t panic (yet). But states can have much lower thresholds or separate inheritance taxes.
  • “...but there always is that chance down the road...the winds could change.” [16:11]
• OG: The federal exemption isn’t “permanent,” and state laws matter. [16:54]

7. Step-Up in Basis & Gifting Mistakes

[17:15]

• Shortcuts Backfire:
  • Gifting assets (like a house) before death creates capital gains issues for heirs (carryover basis vs. “step up”).
  • “If they would have just left it in her name or done different planning, you could have got that step up in basis and then not paid the income tax.” – Tim [18:48]
• Adding Kids to Accounts Risks:
  • Doing so can expose assets to your kids’ divorces/creditors. “There are easy ways to avoid that with simple trusts.” [19:11]

8. Titling Assets: Joint Tenancy vs. Tenants in Common

[20:04]

• Joint Tenancy w/Right of Survivorship: Survivor gets all; avoids probate.
• Tenants in Common: Each party owns a share passed via will/estate plan; can cause accidental probate.
  • Memorable Moment
    • Doug: “If half your house is going into probate, can you specify like not the half with the kitchen?” [21:30]
• Check state default rules!

9. "Per Stirpes" vs. "Per Capita"

[22:11]

• Per Stirpes: If a child predeceases, their share goes to their kids.
• Per Capita: All living beneficiaries split equally, regardless of family branch.
• “Does your state default to per stirpes or per capita? That can cause surprises.” – Tim [22:30]
• Trusts supersede state defaults as contracts.

10. Moving States or Going Overseas

[24:09]

• Domestic Moves:
  • Documents are generally honored, but interpretation may follow new state law. Best practice: review your plan after a move.
• International Moves:
  • If you keep US citizenship and US-based assets, plan stays mostly under US law. Opening foreign accounts? You may need local legal input.
• Noncitizen Spouses:
  • Special marital deduction rules, careful trust planning needed. [27:55]
  • “You have to talk to an attorney...there are a lot of other rules that come into play.” [28:34]
• Pick Your Domicile Wisely:
  • “Get a tie to a state that doesn’t have an income tax.” [29:15]

11. Multiple Wills and Validity Questions

[26:03]

• Latest valid will typically governs, but states vary on requirements (witnesses, handwriting/holographic, etc.).
• Disputes can get messy if documents are improperly executed or witnesses are conflicted.

12. Insurance, Long-Term Care, and Estate Planning

[35:43]

• Long-Term Care (LTC):
  • Planning for LTC is complicated and highly state-specific.
• Medicaid Lookback Rules: Gifts made before qualifying for Medicaid can result in lengthy ineligibility. Tim: “You have to know the rules...as soon as you start giving away the assets, you don’t have control anymore.” [38:33]
• Emotional Trap: Gifting for Medicaid can backfire both financially and emotionally.
• Hybrid Insurance Products:
  • OG discusses pros/cons of life insurance with LTC riders. They’re convenient but often pricier.
    • OG: “Be careful trying to get so poor that the lowest bidder is going to be taking care of your healthcare.” [40:52]

13. Risk Management Mindset

[47:41]

• Start by asking: “What’s my real risk? How would I handle it?”
• Insurance is for high-magnitude, low-probability events. Don’t base all decisions on product features.
• It’s OK (and even good) to pay premiums and never file a claim.

Notable Quotes & Memorable Moments

• Tim Semro [12:14]:
  "Every couple years you need to be looking at your estate plan. What accounts have you opened? Have you got a new broker? Your beneficiary designations may have fallen off."

• Tim Semro [15:25]:
  “Blank is bad. Yeah. Especially with a qualified account, you're going to pay to the estate and you're going to end up taking all that tax in the estate.”

• OG [16:54]:
  "Remember this, Doug, what OG was laughing about, somebody who told him, well, now that the tax law is permanent... Is it ever permanent?"

• Tim Semro [18:48]:
  "If they would have just left it in her name or done some different planning, you could have got that step up in basis and then not paid the income tax."

• OG [40:52]:
  "Remember these are the same people that build our roads. So be careful, like trying to get so poor that the lowest bidder is going to be taking care of your healthcare."

• Tim Semro [47:54]:
  “You may look at it and say, while I don't like the premium, I actually have a better outcome in my plan if I pay the premium and don't need it than if I don't pay the premium and pay for it out of pocket.”

Timestamps for Key Segments

• 07:44 – Trusts vs. Wills, avoidance of probate
• 09:23 – When should you use a trust?
• 10:16 – What probate is really like
• 12:14 – Danger of outdated/missing beneficiary designations
• 13:03 – Titling accounts and implications for probate/trusts
• 15:38 – Estate tax updates (federal and state)
• 17:15 – Step-up in basis and risk of gifting assets too soon
• 19:11 – Risks of adding kids to your accounts
• 20:04 – Joint tenancy vs. tenants in common
• 22:11 – Per stirpes vs. per capita explained
• 24:09 – Estate planning when moving states or abroad
• 26:03 – Conflicting wills, validity, and execution issues
• 35:43 – Life insurance, living benefits, and long-term care in estate planning
• 38:33 – Dangers and rules on gifting assets for Medicaid
• 40:52 – OG’s insurance advice: “Don’t plan to get so poor that Medicaid is your best hope.”
• 47:41 – Risk-management vs. product-driven insurance decisions

Bonus: Listener Questions & Scam Warning

[49:03 & After the Show]

• Common 401k Mistake: Not increasing savings rate with pay raises. Listeners are urged to boost both savings and lifestyle upon raises for optimal progress.
• Scam Stories: Multiple listener (and host) stories about increasingly sophisticated fraud attempts involving banks, title companies, and financial advisors.
  • Red flags: Last minute changes, urgency, slightly-off email addresses.
  • Quote, David’s story [52:57]: “Well, slap your forehead with a dildo and wave it in the air.” — A scammer's bizarre response when pressed for ID.
• Safeguards: Always verify with a known contact before transferring funds or sharing private info.

Conclusion & Action Steps

Estate Planning Best Practices:

• Review and update your documents every 2 years
• Pay special attention to beneficiary designations on all accounts
• Avoid shortcuts (like gifting the home "just in case") – seek professional guidance
• Know your state’s rules, especially if you move
• Consider a trust if you have special situations or complexity — not just “wealth”

On Insurance & Long-Term Care:

• Start with risk analysis, not product features
• It’s fine if you never make a claim—that’s success
• Consider hybrid life/LTC products if appropriate, knowing they often cost more

Above all:
Don’t put off estate planning until it’s too late—your family (and your future self) will be glad you prepared.

Resources:

• Tim Semro's firm: semrohenry.com ([57:35])
• Stacking Benjamins Facebook Group (“the basement”) – join for community Q&A

Fun, functional, and a little irreverent—just how estate planning should be.

For more details on any section above, see indicated timestamps for easy reference!