Jennifer Winstel: Welcome to the Purpose Unlocked podcast. We are your hosts. I'm Jennifer Winstel, and.
Leslie Kincheloe: I'm Leslie Kincheloe.
Jennifer Winstel: We're with the Winstel Kincheloe team in Charlotte, North Carolina. You can reach us at Jennifer Winstel at UBS. We are financial advisers with UBS, one of the largest wealth managers in the world.
Leslie Kincheloe: We are so excited to have meaningful conversations with a variety of guests. We'll be exploring their passions in business, entrepreneurship and philanthropy.
Jennifer Winstel: Our mission is to bring purpose to life beyond the numbers.
Jennifer Winstel: Welcome back to the Purpose Unlocked podcast. We are pleased to have Brad Van Hoy join us in today's episode. Brad has over 25 years of experience in estate and tax planning, advising on estate and trust administration issues, providing counsel with respect to closely held business structuring and succession, and advising family offices. Brad, thank you so much for being here today.
Brad Van Hoy: I appreciate you all inviting me. Thank you.
Leslie Kincheloe: We love to ask our guests about their background and the purpose behind their career. So, would you tell us a little bit?
Brad Van Hoy: I will,
Brad Van Hoy: Went to Chapel Hill for undergrads and had always planned to go through the business program there. In about midway through the business program, I decided that it wasn't quite for me. So, I decided to go and get an English degree instead. And then when I finished that, I thought, well, what am I going to do with an English degree? And I decided to push pause for a little bit and went to law school thinking that I would figure out my business career. Once I got done with law school, what I discovered in law school is that the estate planning courses really interested me. They were a good combination of business and transactional work. And what's interesting is that my dad, who's a lawyer, a significant component of his practice, is estate planning. And so, it just kind of seemed to make sense for me that that would be a good area to follow. And so I think my father was really a big influence on me in choosing this line of work and, um, what I, what I, I don't know that I went to law school with the purpose. I think I have discovered my purpose as I have been doing estate planning and have gotten to work with clients, especially in this field, because when you are working in estate planning, you are.
Brad Van Hoy: Providing advice to clients over very sensitive family issues. They're having to deal with their mortality. And it is a,
Brad Van Hoy: I think a stressful conversation for a lot of clients.
Brad Van Hoy: And what I've learned along the way is when you can provide them advice and direction and, um, guidance in these areas, it helps give them peace of mind and a confidence about what's going to happen if something happens to them. And so over time, I have learned that that is an incredible way to be able to serve other people. And it really has been, uh, a rewarding kind of, uh, Discovery?
Leslie Kincheloe: Yes, I think so. That's super meaningful when you can change someone's life that way.
Brad Van Hoy: It is. You all get to see it too, because you're helping on. Yeah. You're helping to advise them in a very similar way.
Jennifer Winstel: So, I think we're going to jump right into the myths of estate planning. Okay. Brad. And a shout out to Andrea Markus, who we were having coffee with. And as a former estate planning attorney, she's now at Pendleton's Square Trust. She was talking about just the myths behind what you do with clients. And really, who does need an estate plan? Is it for the ultra-wealthy or is it for every person? So, if you could talk to that a little bit.
Brad Van Hoy: I think there is probably a belief, a misconception out there, that estate planning is only needed by those who are ultra-wealthy. And the reality is everyone needs an estate plan. Not everyone needs the same estate plan or the same kind of planning, but everyone needs an estate plan because everyone at some point in time is going to pass away. And so, they need to have a plan in place to help
Brad Van Hoy: give direction for what happens with their estate when that happens. Uh, so for those people who think, gosh, this is only something that a wealthy person needs to do, I don't need to think about it or worry about it. I would say that's probably one of the single biggest misconceptions about estate planning.
Jennifer Winstel: Can you break down probate versus if assets are real estate? What if what you have is passed down directly? I think that's a big question we get frequently is what's private versus public?
Brad Van Hoy: It is probate is the process that and it's an esoteric process. But probate is the process of taking a deceased persons will to the clerk of court. And having that estate opened for administration to help decide what creditors have to be paid, what expenses have to be paid, and then whatever's left over gets distributed to the decedent's beneficiaries. Probate is a public process, and what that means is the will that you have if you have a will, is a part of the public file. Now, anyone can go down and ask to see an estate file, and they're able to see the will itself so they can see the terms of the will. Who was named, who received for what. They'll see an inventory of assets that pass pursuant to the terms of the will. So, if you have an estate that is passing solely by the will, people can see exactly what you had and the value at your death, and they can see what people received. There are ways to avoid that public disclosure of what you have. You can't easily avoid having the terms of your will made public, but if you don't have much in your will and from a terms perspective, because you've set up your estate plan through other means, then you can really provide a lot of privacy for what your beneficiaries are inheriting in that case.
Leslie Kincheloe: So, what would you say to those who say, okay, well, I've done my estate, I'm done. Right. It's just a one-time thing. What would you say to that misconception?
Brad Van Hoy: Well, normally I want my first question would be how did you do your estate. What do you have in place. And they said, well, we've got a will. Then I'd want to look at the will, but I'd also want to look at their balance sheet, their personal financial statement. Because what often happens is someone has a will. Maybe they got it done 15, 20, 30 years ago when they had small children because they wanted to be able to name a guardian there. And they knew when they had a child, they needed to provide for something to happen in that case. But what often happens is you have a will and your assets the way you hold them. The titling beneficiary designations don't line up with the will, and if they don't, the will almost becomes secondary. It may not accomplish the plan as you think it's going to accomplish it. And I would also say, and I think everybody knows this life changes so often and so quickly. And what you may have had a lawyer put on paper of 15, 20 or 30, even 5 or 2 years ago may not fit your life situation at the moment. Maybe your children have grown. Maybe your balance sheet has changed in composition or grown. Maybe relationships with family members have changed and what you had put into the will from a perspective of its terms, and maybe who you appointed to serve as executor or trustee of trust. Those things may have changed over time. So, it's never going to be a one-time only kind of plan. It's a constantly evolving discussion that needs to be had between you and your advisors.
Leslie Kincheloe: Well, and laws and exemptions change pretty frequently.
Brad Van Hoy: All the time. Yeah, all the time. I mean, you can, uh, we were talking earlier, but you brought up the one big, beautiful bill had a lot of changes, um, across the tax spectrum, but some of it was estate tax changes. State laws change. Um, local laws can change at times. So, it is a constantly evolving landscape and people have to respond to it. Or if they don't, their estate plan may not do what they think it's going to do.
Leslie Kincheloe: Yes. Now, what about those who just say, hey, I'm married? Everything's going to go to my spouse anyway. I don't need to. I don't need to have a will.
Brad Van Hoy: Got an anecdotal story for that. And what I think again, maybe not a misconception, but, uh, an unknown, uh, about, uh, North Carolina rules, especially if you don't have a will in place, if you don't have a will in place that is referred to as intestacy. So, if you die without a will, you have an in-test data state. North Carolina. Like probably every state in the United States has statutory laws in place to say how a decedent's property is going to pass if they don't have a will. Well, the way North Carolina statutes work, it depends on the composition of your family at your death. If you are married, your wife or husband may get your property if you are married with children. That changes the dynamic quite a bit, because now all of a sudden, the North Carolina intestacy laws say that your spouse does not get everything that you own. Now, some of it immediately upon death, is going to become your children's property as well, which is rarely the structure that people would want. I've got a situation, and it's rare because most of our clients come to us because they want to do planning to avoid situations like this. But there was a, I guess he wasn't a client. Um, a friend of his was a client, and this gentleman died unexpectedly. He had a wife and two very small children. He would have expected that everything was going to go to his wife, and instead, she got roughly one third of the property, and two thirds of the property was split into guardianship accounts for each of his minor children, which require a lot of reporting with the clerk of court’s office. They're going to get the property outright when they turn 18. It is not the situation that this gentleman would have wanted, presumably, but because he didn't have a will. That's the process that's in place. So again, regardless of your level of wealth, if you want to be able to determine and control where your property goes, how it passes to your loved ones, and who's going to be making decisions when you can't. Having an estate plan is such an important thing.
Jennifer Winstel: So, myth number four. All right. All right. Estate planning is too time consuming.
Brad Van Hoy: It does require time. And it does require, I think, thought. And it requires clients to deal with their mortality, which are rarely things that individuals want to do. But I would say that the time that is spent doing this ends up one being rewarding, because you're going to get a piece of mind, you're going to have a lot more certainty about what's going to happen after you pass away. You're going to know with much more certainty that you've left your loved ones in a, um, in the place that you want them to be left in, that it's very clear who's making the decisions. It's very clear what they are receiving and
Brad Van Hoy: the time that you invest in creating that plan and having the right documentation in place is going to be a lot less time than your loved ones are going to have to spend cleaning up the mess. If you don't have a well-structured plan in place, and the level of stress that they will undergo is, um, I think, you know, significantly outweighs the time that's invested on the front end, making sure you've got a good plan in place. And we've seen that play out. And I know you all have too, that you've got clients where they'll come back and say so sometimes. In fact, the best clients are those who have been
Brad Van Hoy: kind of appointed or put into a position where they have to administer in a state that was not set up well. And they will look at me and probably look at you all and say, I never want to put my loved ones through that. It was, you know, just a miserable experience. Uh, so I'd say, yes, it is investment. It is time consuming, but probably not as much as you might think. And the peace that it provides you with and the certainty and the confidence in the amount of time it will save your loved ones is well worth it.
Leslie Kincheloe: Well, we often talk about the importance of powers of attorney. Um, I think there is a misconception around just because a child is your child, that you still have that power even when they're 18 and older. Can you talk about that? I can for a minute.
Brad Van Hoy: Fact I'm going through in a moment where our youngest daughter just turned 18, and we used to be able to make medical appointments for her. We can no longer do that. We can't access her medical records. She is a legal adult. And so, she gets to, uh, she gets to take on that role now. Uh, it has I think, um, times have probably changed to when we went to school. I think parents were still able probably to access information in things at, you know, at college, uh, colleges no longer do that. They are actually following the rules the way they're supposed to now. So, when a child becomes 18, they are legal adults. They're legally responsible for themselves. And unless they have appointed someone as a health care agent or as their financial agent under a power of attorney, the parent really doesn't have the legal right to get involved. And that can be shocking at times because lots of times, especially for 18, 19, 20, 21-year-old parents are still paying the bills, but that does not give them the legal right to be able to
Brad Van Hoy: make legal decisions or represent or get information on behalf of minor children. And powers of attorney is a good thing to bring up to. I
Brad Van Hoy: think people often think of estate planning as an at death issue. Part of estate planning is also putting into place documents that allow for
Brad Van Hoy: appointed people in your life, to be able to make decisions for you if you become incapacitated. We're seeing a lot more dementia and Alzheimer's out there. People are living longer, but they may not be able to make decisions for themselves, either financially or from a health care perspective. And you want to be able to make it very clear. If I get into that circumstance, in that situation, who do I want to be able to make decisions for myself? If you don't have a health care power of attorney or a financial power of attorney, it becomes very murky and very, very complicated in terms of appointing someone who has legal authority to make those decisions on your behalf. So
Brad Van Hoy: I guess what I'm trying to say is, I'd like to clear up a misconception that estate planning is just an at death thing. It's not just a will kind of thing. It is also an in case I become incapacitated kind of, uh, aspect as well.
Jennifer Winstel: Is your, um, is your recommendation that an individual work with an attorney on power, attorney creation or,
Jennifer Winstel: you know, there's a lot of do it yourself out there.
Brad Van Hoy: There are. And it's going to be. It's going to get even more, um, I guess. Pervasive is what I will say with AI out there. There are a lot of do it yourself, uh, opportunities out there. You know, I see commercials all the time for, um, you know, will and trust. Com or something along those lines. What I have found anecdotally, when I have reviewed documents that clients have prepared through a service like that or have just gotten something online, is that they rarely work the way the client thinks they're going to, or they rarely put in place what a client intended them to do. So, when I ask a client if I will say, I've reviewed your documents and this is what they say, more often than not, the response is that's not what I was trying to do. That's not what I thought they would say. Those documents also don't take into account changes in circumstances, in changes in laws. Very well. An attorney is going to help guide, uh, a client. They're going to be aware of changes. They're going to be aware of the impact of language they're going to see. Um, where there might be inconsistencies, they're going to ask questions. If a client says, this is what I'd like to do, an attorney is going to be able to say, to ask questions, to make sure that's truly what they want, that that's the
Brad Van Hoy: right decision for that client. You're not going to get that kind of back and forth with, uh, and do it yourself kind of plan in that case. So, you may get the plan you want, but you may also get something that is completely, uh, counter to what you were trying to do. Yeah.
Brad Van Hoy: Granted, I'm biased as an estate planning attorney, but I wholeheartedly agree it is not worth the risk. Yeah.
Jennifer Winstel: Well, as a practicing, you know, practitioners, I should say I agree with you. I would recommend a client not take the risk and they seek professional advice.
Brad Van Hoy: You know, probably.
Jennifer Winstel: Like Doctor Google you know.
Brad Van Hoy: Y'all probably have the same situation in circumstances where clients have documents that made me. They've done it themselves. And you'll ask them the same questions that I would hate. Is this really what you want?
Jennifer Winstel: Absolutely. And we've seen, yes, some things out there that were not effective and weren't as the client intended.
Leslie Kincheloe: So
Leslie Kincheloe: can we talk about tax a little bit here?
Brad Van Hoy: Absolutely. We want to make sure we put the listeners to sleep. Right.
Leslie Kincheloe: Well, and this may not be the case in North Carolina, but there is an inheritance tax in some states right.
Brad Van Hoy: There are a few that still have that.
Leslie Kincheloe: Yes. We will often get the question; do I have to pay a tax when I inherit?
Brad Van Hoy: Okay. Yeah. There are some states. I believe New York still has an inheritance tax, and that's actually a pretty expensive one. There is a federal estate tax. Estate taxes and inheritance taxes can be somewhat different at times, but ultimately the purpose is to tax the transfer of wealth. Um, I'm going to focus more on the federal side of things because fortunately, North Carolina got rid of their estate tax many, many years ago. But there is a federal estate tax out there and it will tax the transfer of wealth. I guess I should say estate and gift tax. That it's the same tax structure, but it taxes the transfer of wealth either during life or at death. When that transfer is over $15 million. Well, beginning January 1st of next year, it'll be $15 million. It's just under 14 million right now. What that means is very wealthy individuals have to worry about an estate tax depending on the structure of their state, if they are transferring wealth over 15 million. And it's not going to a surviving spouse or it's not going to charity. And that tax is $0.40 on the dollar once you get over that, that amount. For the vast majority of individuals, though, there is not going to be a tax when they receive wealth. uh, it's going to be sheltered by that $15 million federal exemption. And so, they will get their inheritance estate tax free.
Jennifer Winstel: I think you just touched on an important point, and that's the government's role in estate planning and how things can change under any administration. Can you speak to that a little bit? Because what we have in place today isn't necessarily what will be in place in ten years.
Brad Van Hoy: That is true. Every administration has maybe a different viewpoint. And I think, um, I'm sure your listener base is probably fairly, uh, aware that Republicans also often approach taxes differently than Democrats do. Uh, we were scheduled before the one big beautiful bill. We were actually scheduled to have the estate tax exemptions expire beginning January 1st of 2026. A new administration comes in and is able to get those laws changed. And so now we have an exemption that is theoretically locked in in perpetuity for at 15 million per person. But when a new administration comes in, if they have the ability through the legislative process and they've got a House and a Senate that is able to do it and they are looking for tax revenue, it is always possible that the laws could change in that case. So, while we hope that this will stay locked in in perpetuity, I think there's always a good chance that, you know, a new administration could change how the tax structure is and whether they're going to make state tax changes or not. You’d just have to wait and see.
Jennifer Winstel: So, based on that, how frequently should somebody review their estate plan? I mean typically we've said five years. But what is your recommendation.
Brad Van Hoy: My normal recommendation is to pull your plan out. Or hopefully maybe you have a summary, because trying to go through and read those documents again can be painful, but if you have a summary once a year, I think it makes sense to pull that out and make sure that everything still lines up with what you have in mind at the time. Um, if you have big life changes and that can be, uh, the birth of a new child, the death of a loved one, uh, family dynamic issues. Because those often change. And you may have named individuals either as beneficiaries or to serve in a fiduciary role, like a trustee or an executor or an agent and or power of attorney. If you have a family dynamic change, you want to make sure you're looking pretty immediately at that. But at least once a year, I think it's a good idea to just look and see if the plan still makes sense. I think it's probably a good process if you are working with an estate planning attorney or wonderful advisors like yourself every 2 to 3 years to talk with them Uh, and see if there are any changes in the laws that might impact you that you might not be aware of, but at least once a year, kind of dust off the documents to make sure they still look the way you want them to.
Jennifer Winstel: Good.
Leslie Kincheloe: I think most people working today have retirement accounts, so maybe we could touch on the importance of making sure you get the beneficiary designation set up for those properly.
Brad Van Hoy: Yes. So, the default if you don't have a beneficiary is to go through your estate. And that is a
Brad Van Hoy: rarely a tax efficient way and rarely a probate avoidance efficient way of having your account set up.
Brad Van Hoy: One of the nice ways to be able to avoid probate is to have beneficiary designations on accounts, and IRAs 401k’s automatically come with those. Um, the typical structure is going to normally be spouse surviving spouse if you have one and then, you know, after that, maybe you're dividing, dividing it amongst your kids. You may have charitable beneficiaries that you want to name there, but the beneficiary designation is the way. It's the mechanism for distributing those funds. And
Brad Van Hoy: because those 401K's and IRAs, unless they've been converted to a Roth 401k or IRA, they're going to be taxable to every beneficiary. That's a really good conversation to have with your advisors, to make sure that the beneficiary designations, that structure that you have set up, makes the most sense from an income tax planning perspective and an estate planning perspective within kind of the overall estate plan that you have in place.
Leslie Kincheloe: Okay, Brad, thank you.
Brad Van Hoy: Thank you all. I really appreciate the invitation to come and get a chance to talk to you.
Jennifer Winstel: Brad Van Hoy with Moore & Van Allen and we'll include your contact information on our website.
Brad Van Hoy Great.
Jennifer Winstel Thank you. Thanks for being with us.
Brad Van Hoy: I appreciate it.