 Aloha, welcome to finding your piece of the rock on Think That Kauai. I'm your host, Abe Lee. I have been a licensed real estate agent since 1973. I'm the owner of Century 20 on I-Properies Hawaii and work with almost 100 wonderful agents in real estate sales. I started Abe Lee seminars in 1980. I have taught over 10,000 students to help them to get their real estate licenses and have taught continuing education classes for licensees to renew their license every two years. Our show is dedicated to helping buyers and sellers understand the process involved in a real estate transaction. Our special guests will talk about legal issues, escrow, title, getting on loan, surveys, home inspection, insurance, contracts, wisdom trust, and much, much more. We're really honored today to have a very good friend of mine and someone that I've known, Brian Lee. I've known him for over 50 years if you can believe it, and he and his wife and family are like family to us, but I gotta tell you, Brian is one of the best estate planners in Hawaii. So let me give you a little bit of background before I ask Brian to tell us a little bit more about him, but he's the principal of E-Bus Consulting LLC specializing in estate planning. He has been assisting Hawaii clients for over 45 years, designing and executing their estate plans. He was recently a 2021 and 2022 star advertiser finalist for Hawaii's best in estate planning, and in 2019, he's recognized by the Hawaii State Legislature and Governor David Ige as one of the National Kidney Foundation of Hawaii's great Gatsby honorees. So Brian, thank you so much for being with us today. You're welcome. By the way, like I said, Brian's not just a business friend, but a family friend. So I'm really honored to have him. And by the way, we're not going to finish everything that he's got to tell us today. I guarantee you we're going to have two or three more segments because of all the knowledge that he has. So Brian, tell us, how did you get involved in, well, tell us about your family first and your education, where you grew up, and how you got started. Well, you know what? I took this huge exam and I passed it. So McKinley High School said I could come to their school. So yes, I went to McKinley. I graduated. Then I went to school up on the mainland, started a family. And in 1972, started in financial services. Basically, I was in the life insurance business and back in that time, was extremely successful, as you know. But I got to the point where I wanted to do more. So I left the insurance industry and did what I always do. I get up two o'clock every single morning and study to the point where I try to specialize and master the area of estate planning because that's what my clients needed. And over a period of time, got recognized nationally and ended up for some of the largest financial institution in America, writing the manuals and teaching nationally. I had an apartment in Covington, Louisiana, I was in Orange County and my address, there was 888 Disneyland and I was on the mainland two weeks out of every single month. And I became a Nestle instructor, which means I certified all of the accountants in America, as well as a CFP instructor and recently been hired by the Hawaii Association of Realtors to teach specialized classes for them. And here I am, that's what I do, basically doing estate planning and business planning. And Brian, without bragging too much, and I'm going to brag for you, but this is all self-taught. Yes it is. Right. There was, when I was going, there wasn't a class that was given. So my expertise is kind of unique. I get hired by law firms on the mainland, that's what I was doing. They would send me out to meet the clients because they had their hard time. And because of my background in said business succession planning and tax planning, I would often meet with the CPA firms. So my specialty is, there's about nine specialties that I have that I get called in. So yes, I have different specialties that are working. That's amazing. I've been in Brian's seminars, by the way. I sit in the back and listen to him. I go, holy mackerel, these guys are walking in psychopedia. So let's talk about, what are some basic estate planning that you would recommend too? Well, you know, for one thing, you have to understand something. This is the one single biggest decision our family has to make for legacy planning, for transferring assets down to your children. The estate planning today is not about dollars and cents because the fact is, from a federal guidelines, the maximum amount that you can have without being any taxes is close to $13 million per person. So when you've got a husband and wife, that's like $26 million from a federal level. When you take a look at it from a federal point of view, less than three tenths of one percent of all the citizens in America will ever pay a transfer tax. Now, that's on a federal side. In the state of Hawaii, people worry about inheritance tax, but by the way, Hawaii does not have an inheritance tax, but it's only a play of words. Inheritance tax means the one who's inheriting fake tax. But Hawaii does have a transfer tax. So if you have in a state that has about more than $6.2 million per person, then you pay about a 10% anything above 6.2 husband and wife, we're talking about $12.4 million. So when you take a look at a citizen in Honolulu in Hawaii, there's very few taxes that start to be paid. So what are the problems that we face? Well, the most common problems that we have today that causes a huge problem is a relationship problem. See, when you talk about lawsuits, there's what is called a civil lawsuit. That's where I'm offending you and things like that. You know, 45% of all the civil lawsuits is sibling rivalry. And you know what? You're in real estate. Real estate is the only, only asset that has a bill of rights. People know what the bill of rights are. That's the rights that you have to citizen with your relationship with the government and what the government can give to you. Real estate is the only asset that have their own bill of rights. People don't understand that when in fact mom and dad loves their children, besides that they're going to split the property equally between three children, they don't realize that problems can come up all the time. Common problems. Divorce is one huge problem. Immature death, bankruptcy, sibling rivalry, all of these things. I often asked, I was at up. I was speaking for AIG with 700 people in there and I asked this question, how many of you by the raise of hand, when you die, you're going to transfer all of your assets to your children either equally or unequally, everybody raised a hand? And I asked this next question, how many of you, if you have the opportunity, you're going to business with your brothers and sisters along with their spouses and children. Guess what? Out of 700 people there, only eight people raised their hands. And I said, how many of you are the only child, half of them were? See, here's the problem. You wouldn't go into business with your brothers and sisters, but you do the same thing to your children. And under the bill of rights, if in fact, three or four of us own the same property and I come to you and I say, buy me out. So under the summary of partition rights, I can sell the entire property with or without your permission. The problem that I have is when I get put into that position, my siblings become a relationship only in name. And since COVID started, because I am not an attorney and I want to make that clear, I'm a strategist, I'm a designer. I'm like the architect. I have settled five sibling rivalry, different families. Every single one of them above age 65. And right now, just right now, within the last week, I got hired by a group of people here, which I can imagine names as you know, because they're very popular, six children. And I'm talking about litigation from back 20 years, they couldn't solve it. And I finally got hired by them to go in there and mediate. And I have a pretty good feeling that I can solve the problem. So estate planning is more than the dollars and cents. Estate planning is all about relationships. The relationships that we create that we leave back, that we're less going to leave lasting wounds or it's going to build relationships. By the way, one of the cases that I settled pre-COVID had Thanksgiving last year. First time in five years, the children had Thanksgiving because we solved the problem. So yes, but on the same token, is it better to have a plan than not to have a plan? Yes, it is better. But you've got to also consider this, you know, 99% of all the estate plans are identical. I mean, literally, it's identical because they're on a software. Cannot, I don't believe, do a very good estate plan in two and a quarter hours. Well, what does the two and a quarter hours stand for? It is the average time that it takes nationally for someone to go and see, someone to do their estate planning, typically an attorney, from LOL signing up and completing their estate plan. You know, it takes you maybe 20, 30, 40, 50, maybe two generations to make a decision the decision that you make on your estate plan can go 80 to 100 years. How can you logically make a decision to do an estate plan in two and a quarter hours? You know what's even more interesting in life? When you've got two, three children, four children in your case, you better go, you know, Abe doesn't have television, besides so many children up there, but he's got so many children. But the point is when you have so many children over there that live under the same house, under the same conditions, maybe live in different economic conditions because the first one and the last one, but what is interesting, somewhere along the line, they're all different. And who they marry is different because you create culture, tradition, and when they get married they create their also. But when you design an estate plan and they're all coming together in the same plan, it doesn't work very well, it doesn't work very well. That's why it takes time to do a proper estate plan. The best kind of estate plan is not based on the answer, it's based on the question. It is incidentally more important to ask the right question at the right time in planning than knowing the answers of the universe. So yes, you do need estate planning. Doing estate planning is very, very, very difficult if you do it the correct way. But another problem is the people don't really know if the estate plan is going to work or not because they're dead. One of the first things I did in 1974, before I got started, because I knew I wanted to go into this area, when I spoke to my dad I was going to change, one of the first things my dad said to me was, you know, you may want to check with the people who the estate planning was done for, not with. So I did research. I went to see people who estate planning was done for and found out why the estate plan didn't work. What was the problems that the trustee ship created? How did this positive provisions was? All of those things was so important. That's the reason why we identified the 15 areas of estate planning. Estate planning is not only about dying, it's about living. That's what it's all about. But this is your show, so I gotta at least take a walk. You get me going to turn this thing on and I'm going where your question is, yes, there are a lot of stuff. One last thing is estate planning is not about dying, by the way, okay? Not only about dying, that's why the 15 areas has those things inside there. So if you look at it, there are a lot of stuff prior to that that you gotta do. People get sick, you know, when you talk about retirement benefits, the new secure act change, a whole bunch of that stuff, all of those things gotta be incorporated into your estate planning stuff, one fit all. Well, I remember Brian having attended some of your seminars. When I went to your seminar, you had 10 areas of estate planning, and now you've expanded to 15, right? So one of them you said was about sibling rivalry. And that's really important. But what are some other areas that you feel that you covered that maybe most estate plans don't cover? One of the single most important areas of estate planning that is not covered is actually the funding of the trust. You see, what happens here is that you can create all of the trust, and the trust, let me say that a trust is the main document you're gonna work with. Now, by that, I mean this. The trust is one of the few documents where you can convert a wish and a desire and make it enforceable, okay? So by doing that, you get what you want for your family. But it does not work unless you put the asset inside of the trust before you die. If you don't do that, it's going to trigger a probate. And let me cover a myth, okay? Every time you turn on the television, every time you go to estate planning, I always hear this, you got to have a will. You got to have a will, okay? A will is a document made prior to your death stating where you want those assets that you control or is going to go after you die. Unfortunately, the will is the one single document that has to be authenticated. And the process of authentication is called probate. Now, there's three things wrong with probate. A, one, it becomes a public document. It's going to name all the people what they're going to get. Number two, there's a title A. In Honolulu, maybe an average of 22, but the case that I'm going to settle is 24 months, 24 years they never settle, okay? And number three, the probate process has a fee. And funny, the fee is predicated on the gross amount, not the net amount. Now that's only domestic probate. Because if you own property all over the United States, there's another kind of probate called ancillary probate. And that, oh my gosh, it takes three times longer. It takes, it's three times more expensive. If in fact someone made your estate planning and they don't sit down with you and go over all of the assets, make sure that it gets funded, believe it or not, and I'm not trying to point fingers at somebody, but whoever is pulling your document, get paid three to four times more to settle in the state by not putting it in the trust and putting it in the trust at the same time you do this. So after the documents are signed, one of the things we have is an asset allocation meeting to go over every single asset and figure out which one should be in the trust, who's going to pass it and write it down so that we know. That is extremely, extremely important. If you don't do this, it can take months and months and months and months of going through and settling. You know, I remember 20, 30 years ago, an article came out about the brothers up on the big island that you were involved with when you were working with me. And remember the guy died and did settle the estate. He wasn't in the trust, he didn't even know. And what happened is that the taxes was due and the values went up and they ended up losing all the property to brothers. Okay? I don't remember that, it's too bad to be here. I do. Yeah, so the fact is it is extremely, everything has to do with those small little stuff that you put inside there, making sure that the T's are crossed and the eyes are dotted and then the plan works very well. If they follow, you know, my personal feeling is when I do these seminars and I talk to people, I tell them out front, just take the ideas that I'm giving you. I don't have to do the estate plan, but get someone to do it. Take all of this information and then get it done. It is much better to get it done and not to get. Question that I have, Brian, and I've been in your seminar where you said that your children will not own the assets in the trust, but they'll control it. The question you asked is about ownership versus control. Maybe you can talk about that a little bit. Okay, remember this, how can you lose something if you don't own it? Okay? So the idea here is this. The way that I designed the trust, and this is not mine, I have to ask the question. When you have an asset and you want to protect it, you don't necessarily have to give it to the children. If you put it into the trust and make them a beneficiary of the trust, if they go through a divorce, lawsuit, premature death, bankruptcy, alienation, they can't lose all any of their stuff because they don't own it. And the best part is this. How can the government tax you on something that you don't own? So by leaving you that, a good example of that is the Campbell State Trust. You see, the Campbell State Trust was approximately 100 years old. Who ever heard of Kwananaa 4? Yes, we heard. But all of a sudden, the trust had to end. Yes, she had 300, 400 million dollars, but all of a sudden it came out. When it left the womb of the trust is when the protection gave out. Okay? You can actually protect your children by putting all that into the trust and separate the trust so that they don't have to be touching each other's asset. The idea is don't own it, control it. That's what the idea is. So I remember you saying that when you and Susan passed away, that your children will be controlling and be the beneficiaries, but they will not own the trust. So should they get divorced or get sued, and then the ex-spouse or the creditor cannot go after the assets because they don't own it? Yeah, there's one caveat that you've got to be careful for. Because although the principle cannot be touched, there's a flow of income coming out of the trust. Okay? And if there is a divorce, a lot of times the in-law, which is going to turn into the outlaw, if you know what I mean, my son in-law now is an outlaw, okay? What's going to happen is when they go to court, they're going to ask for what is called a standard of living that they're accustomed to. And in some states, the standard of living, the definition of income to a family is all income, including trust income, coming from outside forces. So we sometimes put a provision inside there that says, hey, in order for you to qualify in order to be an income beneficiary in trust, this spouse has to sign a post-noctural agreement, be represented by their own attorney that says, in case there's a divorce, they got to sign off saying you cannot use the income coming from grandpa or grandma or moms or dad's trust to determine standard of living. And once they sign that off, then they can't touch the money. So in protecting the principal and the income in the trust, put a benefit of your children. Yes, if that's what you're asking me, those are some of the things that we can put inside there. Now, it is true that I've spoken to many, many divorce attorneys. Half of them said I can always break it. The other half says nobody can, but every one of them agreed with one thing they all had in common. It is better to write that provision in there because when the judge look at it, they're going to look at it and make a different decision maybe. So yes, that's some things that we add to a trust document that if it's important. Brian, I know you talk about really what I call sophisticated issues like generation skipping trust or other types of what I call the more advanced trust. Do you cover a lot of that in your basic estate planning or is it for maybe more wealthier clients? Hey, just one thing I don't differentiate. That's the difference between the zeros, okay? So I get the same kind of service, same kind of time with somebody that has 50 million as somebody who might have $5 million, okay? The difference of course is somebody has $50 million and the issue is going to be taxes that's thought to be paid. There are some sophisticated tax programs that we have to go put in that costs more bucks, but we're saving them way, a lot of money that has to be done. But yes, I don't differentiate because actually the thing about it is the guy who puts on his pants the same thing, whether it's so did gold or cotton, they still get the same problem. So I always bring up the same issues. And so just because you got more dollars doesn't mean you get better planning. You just got more dollars. So don't differentiate, I don't differentiate at all. Now you also talk about asset protection in your estate planning. And I know that when you have the revocable living trust you're subject to lawsuits and creditors, current once that trustor or the person dies, then they're pretty much immune from losses and creditors if they don't distribute all the assets to the children. Well, you know, there's something that people don't realize. Hawaii is one of the 29 states that has PE protection. Okay? That is by the entirety. And then the basic three characteristics of PE property is that you got to be married. You can't sell property without your spouse. And if one of you gets sued, then you're protected. Now, a lot of times when people are doing an estate plan in Hawaii because we're separate property, you got two trusts. So a lot of the attorneys will recommend that we split the property in tendency and common and then we'll fund the trust. But as you know, when you split the property from PE and TC, you lose the protection. But in the year 2012, April, our legislators changed the law. They said, we still can have the asset protection by putting in the specialized wording in there. And the specialized wording will provide the protection that is important. So that's what we're looking at, putting in that specialized wording inside there. But what a lot of people don't realize is this because nobody asked the question. So what happens if you and Sally set up a trust, and each one have your own trust, you change it to tendency and common and you die eight. Now, one of the three characteristics is no longer around. So you don't have the protection of the TE. That's not correct. The law says that if you have it in TE and it's in trust and you die, if Sally gets sued, it's still protected. But that's the beauty of having TE property. The other thing is this, if you have a lot of assets, okay, you do wanna put a special layer protection. And that's where putting up LLCs are concerned, understanding charging orders, making sure umbrella insurances are there. And the one thing that people don't recognize in lawsuits is there's a huge difference between inside lawsuit and outside lawsuit. So what I'm teaching about asset protection, setting up asset protection programs is important that it's not just one pill is a cure-all, okay? That's why it's important for you to get understanding. And if you notice in the past, I've said the key to doing proper estate planning is education and education takes time. I know we're running out of time, because I'm frosting at the mouth, because now it's like that, because you know that this is my passion, this fight. So the other thing too, Brian, is if someone did their estate planning before 2012, then they were married, then they might wanna reconsider switching it to TE in a trust rather than TC. Right, and the law says that if you add it in TC, in order to get back the 509 protection, you gotta spend twice. You gotta change it back to TE and then back to TC with the 509 provision inside. And by the way, I hate to say this, but we find quite a bit of those mistakes, they're terrible. So, you know, that's basically what it is. You know, Brian, like I said, this half an hour was well spent and we ran out of time, but we will bring Brian back, folks, because we still have about 12 areas of estate planning that we didn't cover yet. Class, Brian specializes in what we call retirement planning and about distribution of assets and what happens when you have a business. So those are some areas I think in the future that we might wanna talk about. But Brian, I can't tell you how grateful I am for you spending some time with us. I know you're busy, so please, yeah. So make sure you come back again because we're gonna do phase two and three, I'm sure. But thank you so much, folks. If you really enjoyed Brian's talk, go to ebusconsulting.com and also if you wanna know more about real estate classes, go to ablyseminars.com and tell your friends about this wonderful seminar or this video and we'll have more in the future. Brian, thank you so much. Appreciate it. You're welcome, babe, anytime. Okay, a lot of love, folks. Thank you so much for watching Think Tech Hawaii. If you like what we do, please click the like and subscribe button on YouTube. You can also follow us on Facebook, Instagram, and LinkedIn. Check out our website, thinktechawaii.com. Mahalo.