0:00 it up hello and welcome to trust and Estates weekly uh starting just a a minute or two late here with with a little technical difficulty so I'm your host Kevin bemel um and you know for those of you who are longtime Watchers of the show you're you're looking at me you say what again with with the eye yes I am I'm not going pirate my my vision problem is is back and and people tell me that my eye looks horrible so I figured I'll just block it off so you don't have to be tortured by it um but I'm very pleased this uh today to have a guest um
0:38 Robert carpus uh Robert is an accountant based in Tula California he's been in the accounting field for a long long time and um freshly off of tax season um Robert agreed to uh to come on the show and talk to us about one of his uh specialty areas of practice which is dealing with trusts and Estates um it's you know it's always good to to get you know the another professionals um
1:13 perspective on especially some of the difficulties and challenges um that they' faced in in handling their you know their part of um administrating or dealing with a trust in estate so so Robert first of all thanks for uh coming on the show thank you for having me good good to good to see that you know you're still smiling after tax right we were talking a little bit before the show so um before we get into specifically um the the the issues related to trust and
1:50 Estates um if you would take a couple of minutes and and and talk about your background so viewers can you know understand who you are and what your experience experiences are sure sure um I was born and raised in Hungary immigrated in the early 990s to the US uh spent a couple years in Austria got my paperwork there and my Visa Refugee Visa spent two years in a refugee camp there then moved to San Francisco um early on realized that intellectual property is a lot more
2:25 valuable in the United States than um than physical labor which is the reverse of Eastern European countries that's very interestingly you know teachers or or administrators or CFOs or those kind of individuals didn't get paid as much as the contractors or or plumbers or those kind of people very interesting yeah so but I started working as a mover and I realized early that there's no way I can move furniture when I'm 40 years old so
3:00 like I gotta go to school because my my my backck is gonna give up give you out any time you know imagine moving out these posos grand pianos in San Francisco and two three or two three level um homes you know on the streets that are like 16 degrees and so like no I can't do so then I moved to that did limo driving and then I talked to some of the executives I was transferring from East Bay and to Silicon Valley and everywhere else and and realized that's when I
3:36 realized that intellectual property and and then being being a you know working with your mind rather than your hands is pays a lot more so I realized I need to go to school went to school college in Notre Dame in Belmont California oh graduated there and then while I was working I had the option to go either public account or corporate accounting and I worked in a corporate accounting field in various hospitals and and different Industries and I realized that I don't like that area is just very mundane and and task
4:14 oriented and re repeating everything month over month year over year so it wasn't my forte so I went into public accounting basically doing tax returns tax and tax returns first so smaller companies worked in um worked in San Francisco in the Bay Area for until 2000 and then life changed moved to LA from 2001 I continued to working in the entertainment industry for L of the
4:49 large Entertainer John bonjovi was one of our client that I worked on uh and various other ones you know these large companies that have East Coast and West Coast um uh presentence and um I likeed that very much and then in 2005 I I went out on my own so and 2005 we started a business my business partner I grew up to a good size over 300 clients we had at one point wow actually when I sold then I in in pandemic came another life
5:24 change and and U my business part wanted to sell out so I told her to go ahead and buy me out she did then I moved to Tula two years ago now we have um I work for my my home home office business clients trust in Estates um full service accounting and um and we also have two airbnbs that our clients come and U just stay for the weekend and enjoy the quietness and the view and and the burst chirping and
6:00 no [Laughter] light I think apple picking and wine right in tacul yeah exactly they have a lot of wineries we have a lot of um weddings that people come to some people just like I say come to do nothing some people come to party all day and then come for come up for the weekend exactly just home at night and then go back next morning to the city and do a little bit more of it so my mother lives in Oceanside and she goes to tacul period Al for the wine and the app and this and that so right right the other side exactly yeah that's where we get our all
6:35 of our breeze so yeah exactly yeah ocean Brea coming from oceans side and from the Pacific Ocean so we got a nice cool little weather on this side yeah so just as a a side note um I I was in Hungary in the early 1990s um and and so it must have been around that that time that this must have been around the time that you left um and I remember it was one of if not the hottest summer on record that I was there it was it was
7:12 brutally hot but it was a um um we I was in Budapest of course then we went to deiton and and some of the um smaller towns um kind of out in the countryside quite quite a beautiful country and a tremendous amount of history so yes yes yes yeah I was one of the last ones actually who uh came out was able to escape from the country before the Wall came down so I was able to get my refugees so after after January of ' 89 basically or April is or the spring
7:48 of '89 is the Wall came down and nobody else was able to leave the well not leave leave the country they were able to more therefore they couldn't get the Refuge Visa because didn't have the restrictions as right as we did before yeah yeah interesting yeah two weeks before I'm sorry two weeks before I was gonna get drafted to the Army before I was able to leave yeah wow so I was really down to the wire basically that's the reason that's the reason I left because I didn't want to serve in the Army you know for necessarily so right I
8:23 left so you're really you are really the the classic American success story right come from a you know Refugee from another country and and come here and you know work hard and and and figure out your path path to success so basically exactly so so let's let's focus now um on um the the the trust and Estates part of your business um how did you get involved with that and and what kinds of um matters have you dealt with um in in that part uh well I started
8:58 early one of the firms I worked with they did as most accounting firms do trust and Estates for their clients so when they pass away you know that's one of the required things before we had these large exemptions was to do a trust inate do an Estates basically a 706 and and prepare and and if there any any if there they're no no um surviving spots basically then pay the required um required estate taxes right and then
9:33 pass down the remainder of the estate to the beneficiaries so I worked for few firms that had older clients and um I had various I've done various estate tax returns as small as $5 million to as big as 7 million Estates so that's how it kind of fell into the business is just by doing it by having exposure to it and realizing early that that's something I liked and enjoyed finding the assets valuing the
10:08 assets putting the paperwork together you know finding all those things finding out what the clients had and everything else so this $70 million client had a large U car collection so we had over 30 Old 1960s cars so wow yeah he had um I remember he had a uh Shelby a Ford Shelby that was yeah and I didn't see what but I didn't know what that was before but the price was extra
10:43 amazing huge I think a couple hundred thousand dollars or something oh my God what is this car right yeah so yeah so that was I still in my mind was like oh Shelby Corvette and interestingly enough just this weekend we had the Tula car show the antique car show and they had one of the sheli Corvettes I mean not Corvettes um Mustangs Mustangs on on on on display over here I was like oh that's the car that this guy was like wow it was $200,000 15 years ago wonder how much it
11:18 is now so yeah wow it beautiful but I'm sure it's fast so that's kind of how I fell into the business and and as I as I grew my business I started my business I continued to do um same thing basically you know as uh clients passed away and then then we have to do the 706 and lately didn't have to do a lot of 706 because of their large large exemption so the only time we did 706 and then that's what I'm
11:53 doing right now is just to do the um do um the portability right exemption portability since we don't know what's going to happen after 2026 with the new government coming in we don't know how big of the exemption is going to be could be two million some people say five million but if an estate is over $5 million and they can have an extra 11 10 11 million of exemption it's worth doing paying an extra you know paying $115,000
12:29 for a just put together a 706 and file it with the government just in order to be able to claim that potentially claim that exe exemption later on that could save what 40% on $10 million so sure 40 45% right up to 55% so it could be 4 to 55,000 right I mean 4.5 to5 A5 million could be potentially so so if you if you don't mind for people who not um real familiar with the concept of portability would you explain what that means so
13:06 people can understand uh better what what what it is that you're talking about sure so when the first P dies um each P has a exemption right estate tax exemption that started around 10 million and I believe we're up to not over 11 million right now so it's a big number right yeah I think 13 1.6 if I'm not mistaken 13 okay so uh if you file a 706 within five years of the death of the first The
13:42 spouse's death or the person passing away then the the surviving spouse can carry over that 10 to13 million exemption with themselves so when they pass away the entire estate will get the exemption the current exemption when the surviving spous passes away plus the port ported uh exemption for the first bosses uh passing away basically so the
14:17 exemption can be anywhere from 10 million to $18 million let's say if the new law new law is at $5 million let's say right right reported transferred over another 10 million for the first B that would be a $50 million exemption or up to today is $13 million in 2024 so it could be an $18 million exemption it's a huge it's a big difference right right right yeah yeah so so that's what I'm doing right now just to make sure just follow something
14:52 with the government saying hey we have a first spot passed away here's the estate half the estate that was that belong to the spouse here's the exemption we want to carry over that exemption because it was below the exemption so they didn't use any of that exemption the surviving spots would like to carry that over with them to to their passing away basically right right and so then the estate can continue to grow um but still be protected from estate taxes exactly going forward wow exactly so the so the Survivor or the um beneficiary is could
15:29 be kids grandkids or basically those two right or or other family members whoever or Charities whatever they can get more of the of the remaining a state right and that state is not going to be eaten up by large tax bill basically or 45 to 55% of the estate right that's a hug difference yeah I mean I have a a case I'm working on right now where unfortunately the decedent didn't do really well he did some estate planning but he never put the estate plan in
16:06 force um passed away and now the uh estate is going to get hit with a huge estate tax bill because there was no provision made you know to cover the estate taxes whether it's through you know life insurance or you know whatever right so the estate is going to lose probably somewhere between 2% and a third of its value wow yeah exactly yeah it's huge that's huge and it's a huge hit for the for the kids or the grandkids for the Next Generation to you know right that they
16:42 could have grown further and have a larger estate for to to to to continue you know continue Liv basically right right and in in and in some ways um you know the the the air is is lucky because the um Val the estate is heavy on real estate and the value of the real estate has dropped considerably over the last few years so you know the estate tax bill has dropped concurrently yeah the value the real estate of course can recover but once once you have to
17:17 sell something to pay taxes you know you can't get that back so um you know it it's there there have been some sort of you know um aelor if you will to the problem but but yeah so and and it's it's just it's it's very unfortunate that you know he didn't finish this estate plan anded in it so um what want to go back to um you mentioned the estate with um with all of the classic cars so um you know one of the key things um as
17:55 I understand it that an accountant can help with is establish ing what the stepped up basis is for assets right at the time um someone dies so um if if you wouldn't mind talking about that and for something like these classic cars how did you you know figure that out right and in in in serving you know your your client or in serving the estate well we always require a a a a professional appraiser
18:31 especially especially with rare cards Collectibles coins something that's not ready readily available on the market right we need somebody who can who can value that that has has the professional uh experience to Value these things and that we can put in front of the IRS or actually not put packag it with the 706 so when the IRS looks at it and say oh it's not joeo or we got Googled it and and find it on on the website right what the value is but
19:08 rather re hire the professional appraisal and this is their professional opinion to value that estate otherwise the clients can get into a large long and expensive battle with the IRS because you know like I saying you were saying 25 to 45 55% tax rate mhm that's big money for the IRS so they all they always not always but especially larger the estate the most likelihood that there could be an audit so if you don't appraise this car
19:43 correctly and just say hey I think the value is $250,000 or actually you would say $50,000 but in fact the IRS look at some other auctioneers and and valuations and they come up with a $200,000 value right you're gonna have you're gonna have an IRS audit in your hands and and you're going to have to prove it why you think your car is only $50,000 versus $200,000 and and it's going to cost you a lot of money
20:18 defending it going to court you know going to the IR Tax Court and everything else because it's big money so we always require professional apprais whether it be real estate cars anything of value large value because we need to attach we always attach those to the 706 so that that that that that's not going to be an issue if the there is then now they have to bring the fight up with the appraisal versus us as as the
20:54 CPA it wasn't our opinion it was a third party independent third party that had no involvement in this case that had no attachment to it or to the outcome so that's how that's how we always do it CR our cross our tees and Dot our eyes right right I wouldn't want of my clients to get into an IRS audit if that's what the estate that's what it is and that's why it's good to have put an estate in in in in in Plan before date of death right so that you can avoid these things set up different trusts set
21:30 up different transfer assets into irrevocable trust before date of Doubt especially those assets that could could uh grow increase in value stocks real estate maybe these old old cars right collector cars so that you can keep these out of the Estates or like you were saying buy an iset right rable U life insurance Trust basically MH that where the trust puts money in to um uh not the trust but the the owner of
22:07 the Trust basically puts in pays for life insurance right that's outside of the estate because it's irrevocable trust and when they when he passes away th trust receive this large sum of money from which they can pay the estate taxes if there was no other choice or there were no other Estates uh estate planning ideas come out came out right right right right exactly I you know and I remember another case um I I was involved in and I was actually in doing uh the real estate appraisals for it and
22:44 the the estate lawyer called me up and he said hey do you any do you know anybody who can appraise um it was a particular breed of horses things right because it was a one of the major assets was a ranch where these horses were so I said well I don't but I said look I'm you know I'm in the appraisal business so let me call around and I'll I'll get you a referral and I called several um uh livestock appraisers across the country um and without identifying you know the the the property or or the deeding or anything
23:20 they all said to me well you know the really the only person in the country who can appraise these horses properly uh is such and such who was one of the heirs to the estate oh wow okay right and so you know I I noted all of these down excuse me um it was like I said three four you know of these um livestock appraisers across the country I went back to the lawyer and I said you know what everybody is saying that um the the top person for doing this is you
23:55 know one of it was one of the children of the deceit she's the one who knows this and I said my recommendation is have her do it and then let the IRS try and find someone right who can do it better than she can um and look as long as she's you know putting her apprais her hat on so speak you know you you probably have the best valuation that's what he ended up doing and in this case I think the IRS you know because of the back the background checking we did and submitted to them they you know they accepted it that's that's a rare um
24:31 exception to to the rule that I think you the rule that you gave that I think is absolutely true which is you want these third-party um valuations in order to make sure that you know an IRS challenge is not going to be successful right right because on once you're once you're in that realm you're you're you're you you may win eventually but it's going to be very costly and if you don't then now you've got penalties and all of stuff right so so um we have um only a few minutes left so what are some of the
25:08 other challenges that you've uh you know dealt with from the accounting perspective as you've dealt with various uh you know trust and estate matters well the other account is is the the Estates when the per first person dies or only their only person passes away right there needs to be some accounting done for the courts so that the courts know what the values are what the what the assets are liabilities are and everything else right so those are one of some of the issues that deal would do deal with is creating these accounting packages for
25:43 the courts so that the courts know exactly what is what can be distributed what the values are how much money is owed who are the who are the uh the creditors that's some bigger bigger issue as well making sure you find all the creditors because once we distribute that money it's going to be hard to get money back from beneficiaries they spend the money they they do whatever they do in their lives right and and uh and um and the money is gone it's going to be hard for you to collect some of that
26:19 money back and pay it to that creditor so you got to make sure that you hold some of the money back and you don't distribute the entire State out do waiting for the waiting periods make sure no new creditors coming coming out and say hey oh by the way this person still owes me make sure you go through bills find all bills make sure they're all paid off request some kind of a payoff memo showing that the count is paid off in full there's no anything no residual am on do everything else so that's how I deal with the Estates
26:54 making sure that by the time it goes to the court everything is backed up we have a backup for everything we always have you know documentation just like you did in that phone call three or four people say this is the person for us we have the documentation from either a final bill either a statement latest statement showing it was paid in full or if it's paid off then we just send them the copy of the check and we get another statement showing that that's that's full and then close down the account or make sure also to close those account
27:30 down because so they new no new charges come afterwards right somebody using the credit card or everything else then that creates a bigger bigger nightmare who's the one using it right one of the beneficiaries you have to take it out distribution they're going to be not happy so and that's the other thing one more thing is the beneficiar is they won their money right away you know immediately when can I get my money when can I get my right and it's it takes a process it takes 12 months to 18 months sometimes or more to effectively close down an
28:07 estate you know and some people cannot wait that long you can give them a little bit of money if you're trustee but I suggest hold the biggest most amount of money in until you go through the entire process and the courts approved everything not that I'm I'm not involved in that but I'm accounting side of it is I get ready everything for the professional fedas like you to to present the front of the court right right yeah absolutely I I and I I couldn't agree with you more on on that advice to really set the you know set
28:46 realistic expectations for the beneficiaries from the get-go um I'm I had this I had this issue in in another case that I'm dealing with where um one of the lawyers was saying oh you know we're going to have this done in a in a couple of weeks or we're going to have this done in a few months we'll probably have this whole estate wrapped up in you know three to four months and I'm like I'm like it's that fast just you know I mean get yeah go ahead I'm sorry sorry I was gonna say you can't even get into the court in three or four months right
29:22 right probably take you six months to get into court yeah ex exactly exactly even even if you're going on a you know an emergency X party it's still you know the courts are busy so you know you gotta get in line Y well well Robert um unfortunately our our time is up but um I really appreciate you coming on and and sharing your expertise with us um talking about um you know the some of the challenges that you've dealt with um I think it gives people um first of all a motivation to get their own estate plans uh you know
29:58 in order right to avoid some of these things abely but also helps them understand you know better how this whole process works um and and and also by the way I really appreciate you you sharing your background coming here and um and and talking about you know getting getting yourself you know established here in in the United States it's it's really it's it's an inspiring story um and uh you know it's it's it's really wonderful to hear those kind of things we hear so many you know stories of of of of trouble and and and all of that that it's it's you know it's it's it's good to hear that uh you know that
30:35 that that um for for you you know this this country really um you know live lived up to uh um her her um I guess better Angels if we will absolutely absolutely yeah so if you don't mind I'm gonna I'm gonna wrap up the show but I'm gonna have you hold on I actually want to talk to you about a a potential um piece of business for you after we uh after I sign off here so so folks thank you very much for joining us I I appreciate it and I I know you got a lot out of um hearing uh Robert's expertise
31:10 and and and some of the stories that he told so um if you have any questions um or if you want to get in touch with with Robert you have um uh you know an accounting matter that you'd like him to handle I'll put his contact information in the show notes after the show posts on our YouTube channel um so feel free to check it out there um and you like I said you can get in touch with Robert and and I'm sure he'll be happy to um speak with you and and um and and help you out and uh you you you can hear uh what a what a solid uh professional
31:46 Robert is so so I would encourage you um to to get in touch if you have questions and and things that you need done so um looking forward to the rest of the we week real quickly tomorrow at uh on Tuesday at 10: a.m. Pacific time is my show business lessons from the military and then on Wednesday at 10: am is my show people making money my guest is Adam wisman he's a media and entertainment attorney based in New York and I I think he will have um a fascinating story to tell just like
32:22 Robert did and so I invite you to uh join me on Wednesday and my talk with with Adam um and and this I think this is the first time we've delved into the media and entertainment business so um and and Adam is is very very sharp in in that regard so again that's on Wednesday at 10 AM Pacific time and then a week from today of course next Monday we'll be back with the next edition of trust and Estates weekly so once again thanks so much for joining us wishing you a wonderful rest of the day and signing off as I always do
32:58 Marie darling you are my bell all the best folks