Episode No. 13

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Episode No. 13

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What do you think about trust fund kids?

Most of you are probably picturing spoiled brats driving expensive cars and living in mansions as we see on TV and social media.

In this episode of Share The Wealth Show, our guest Portia Wood busts the myth surrounding the term and tells us why we all deserve to be trust fund kids (but without the attitude). Portia is a generational wealth planning attorney and she discusses the importance of having an estate plan at the age of 18 regardless of whether or not you have any assets. By planning ahead, we can protect ourselves and make sure that our legacy lasts for generations to come.

Based in Los Angeles, Portia leads Wood Legal Group, LLP, an African American woman-owned and operated law firm specializing in estate planning, probate, and elder law that she runs with her mother and law partner, Robin Wood. They are passionately focused on helping all families grow and protect wealth by being a trusted resource for accurate information and comprehensive, culturally competent estate planning.


[00:01 – 07:36] Who is Portia Wood? 

  • Transitioning from journalism to law
  • Her passion for empowering marginalized communities to take agency over their legacy


[07:37 – 14:48] Avoiding Court Interference

  • If you’re over the age of 18, nobody is allowed to be your legal representative
  • The basics that you need to prepare
  • Property power of the attorney
  • Health documents
  • Distribution plan


[14:49 – 24:32] Normalizing Intergenerational Wealth Transfer in Black and Brown Communities

  • Setting up distribution structure
  • How Portia created a multi-generational trust structure or a legacy trust for her son
  • The conditions she put in place
  • Creating banking concepts within your estate plan


[24:33 – 31:10] Protecting Your Intergenerational Wealth

  • You need time and protection for money to grow
  • Making a subtrust


[31:11 – 32:08] Closing Segment

  • Watch out for part 2 of our conversation with Portia!



Key Quotes 


“Everybody’s estate plan is customized to their situation, but if you’re over the age of 18, you have to have at least a minimum.” – Portia Wood


“We should all want to be black trust fund kids right. It’s important. What it means is that somebody has planned for you.” – Portia Wood


“It’s about Intergenerational wealth protection, right? Like my goal is to make sure that everybody who comes down the line from me is taken care of.” – Portia Wood



Connect with Portia Wood! Visit the Wood Legal Group website and follow them on Instagram, Facebook, Twitter, and LinkedIn. Want to know about how Portia can help you? Here are 3 Ways Estate Planning Can Help Close the Racial Wealth Gap.


[00:00:00] Portia Wood: We should all want to be black trust fund kids, right? It’s important. What it means is that somebody has planned for you. It’s not this idea that we have in our head about trust fund babies, right? The thing that the media has presented. It’s like these spoiled brats driving these like incredibly insane cars and, like, living in mansions, and they got billions of dollars.

[00:00:18] Portia Wood: And we immediately say, that’s not us. I don’t have that much money. Trust fund’s not from me. That is false. That is a media portrayal that says to us about, you know, why we shouldn’t believe that that’s what we want or need or deserve, but everybody should be a trust fund kid.

[00:01:02] Nicole Pendergrass: Hey everyone. Hi, welcome back to another episode of Share The Wealth Show. I am your host, Nicole Pendergrass and today, oh my goodness. We spoke to Portia Wood and she is a generational wealth planning attorney based out of Los Angeles. And the discussion that we had was so. One point in timely. And we really talked about a gamut of things from how everyone at the age of 18, you need a state plan, regardless of if you own assets, or if you think that you don’t have anything that would be worthy of having the state plan, you still need one, all of the different loopholes, the different mindset around having a state plan and generationally being able to pass wealth onto your heirs, how to create black trust fund babies, but without the attitude, right? So we talked about that. We talked about so many details with, she has set up in her trust for her son and how to be able to pass that on with restrictions so that it’s not squandered in a couple of generations.

[00:02:07] Nicole Pendergrass: We talked about the road to 2053, where it is projected that the black net worth will be zero. And so there’s just so many things that we need to plan and have in place so that we are not left behind even further than we already have been in this journey. You know what? I can’t even explain more. Into what, how impactful this conversation is, you really need to listen in, grab your pen and grab a paper, stop what you’re doing.

[00:02:39] Nicole Pendergrass: Listen to this. This is a masterclass and you need to listen to this when you have the capacity to really pay attention and to take notes. Not while you’re driving, not when you’re at the gym, not when you’re washing dishes. Sit down at a table and listen or watch and take notes. Let me tell you a little bit more about her bio.

[00:02:58] Nicole Pendergrass: So she leads Wood Legal Group, African-American owned and operated law firm specializing in estate planning, probate, and elder law that she runs with her mother and partner Robin Wood. They are passionately focused on helping all families grow and protect wealth by being a trusted resource for accurate information and comprehensive, culturally- competent estate planning learn at woodlegalgroup.com. We will have all the links in the show notes, but just from this conversation, she definitely takes a comprehensive approach and touches on a lot of things that you need to think about with regards to estate planning and passing things on generationally and really making your legacy last.

[00:03:43] Nicole Pendergrass: So please stay tuned and let’s get this show started.

[00:03:47] Nicole Pendergrass: Hi, everyone. Welcome back to another episode of the Share The Wealth Show. I am your host, Nicole Pendergrass and today we have with us Portia Wood. Oh my goodness. I am so excited to speak to this woman. You guys have no idea. I know that you’re in for a crazy treat. So Portia. Hi, thank you for joining us.

[00:04:09] Portia Wood: Hi! Nicole, thank you so much for having me. So excited to be here and to share the wealth with everyone.

[00:04:17] Nicole Pendergrass: I love it. So Portia and I met because I helped co-host a weekly Clubhouse room called Eliminating the Racial Wealth Gap. And she joined us in the room one day and she was just spending so much knowledge in gems.

[00:04:32] Nicole Pendergrass: I said, okay, I need to reach out to her because I need to have her on the show because I know she’s going to add so much value to you guys. So you don’t want to miss this. So Portia, I gave a high, like, level overview of your bio, but kind of dig in and say like, let us know, how, what were you doing before you were turning?

[00:04:51] Nicole Pendergrass: Did you always want to be an attorney? How does this specialize into this particular niche of, you know, asset protection? Just give us the whole, how you got to where you are today.

[00:05:01] Portia Wood: Yeah, so, I didn’t know that I always wanted to be an attorney. In fact, I wanted to be a journalist and public relations and to tell stories, particularly our stories.

[00:05:11] Portia Wood: I actually come from a newspaper family, my 130 years ago my great, great grandfather founded the AFRO American Newspapers which is the longest continuously running black newspaper family owned black newspaper in the country, 130 years this year. So it’s always been about sort of storytelling and really being advocates for our community and synthesizing information.

[00:05:35] Portia Wood: I was not going to be an attorney. That was not my goal, but I was in college and I was rear ended by a drunk driver. And I found myself needing an attorney and also needing an internship because I could not go to New York for the internship that I was set up for in public relations, I worked for my cousin’s law firm in Baltimore city, and they were in the midst of a police brutality case.

[00:05:59] Portia Wood: A gentlemen had become a quadriplegic while in police custody. And I got to be a part of that trial and seeing how that work in practice. I said, I am going to be a voice for the voiceless. Like this is where I see my space, not just telling our stories, but being an active advocate. My junior year, I sort of switched my focus from public relations and journalism into the law.

[00:06:22] Portia Wood: And before specialized in here, I was in litigation. So I was doing real estate litigation and probate litigation. And realized how much we, as a community, we’re losing by a lack of planning. And the more I sought out information about who was speaking to our community about planning more, I realized no one, nobody was talking to us.

[00:06:43] Portia Wood: And in fact, the pushbacks I kept getting was that we didn’t have enough to plan, or we didn’t, we weren’t going to do it. And obviously those are from my colleagues of another position. And I realized that there was an opportunity to share what I knew and be an advocate for my community in that way. And so I’ve really been focusing on closing the racial wealth gap and providing quality information to educate and activate our community and historically, and systematically marginalized communities to really take agency over their legacy and preserve a what they’re working for, so that’s how I got here. Long story short.

[00:07:17] Nicole Pendergrass: Oh my God. Like. And good thing. You said how you went into the estate planning side from the litigation and advocacy side, because I wasn’t gonna ask that. So what that argument that we don’t have enough to get started, that we don’t have, like, I don’t have anything, I shouldn’t have an estate plan.

[00:07:35] Nicole Pendergrass: So why should someone still have an estate plan if maybe they don’t own assets? Or what should that look like for people who maybe plan to have assets, but don’t have anything yet, should they even start with an estate plan? Like how does that look?.

[00:07:48] Portia Wood: Yeah. So first of all, the argument that we don’t have anything is BS and it’s really just a way to keep us separate from the legal protections of our wealth.

[00:07:57] Portia Wood: We do, we have assets. And the problem is, is that most of the estate planning attorney, if it’s. older white men, right? That they dominate that space less than 1% of estate planning attorneys or comprehensive estate planning attorneys are people of color. And so when we talk about, when should someone get started, everybody needs an estate plan at 18.

[00:08:19] Portia Wood: I don’t care how much money you have because an estate plan is not just what happens when you die. It’s also what happens if you get sick, what happens if you’re in a car accident? What happens when you get shot? What happens if you are not around to make decisions for yourself, if you’re in a coma, if you have a heart attack, stroke, dementia, all things that are on the rise in the black community, particularly in younger ages, what happens to your family if that happens to you? Well, most people don’t realize that nobody’s legally allowed to step up and take care of you. You have to ask a judge for permission, it’s called a conservatorship or a guardianship proceeding, depending on where you live. And so when we think about estate planning, it’s not just about how much money you have.

[00:09:01] Portia Wood: That’s not the barometer. If you’re 18, there was some form of estate planning that you need. It’s just not going to be the same one that I need or that you need, or that the person down the street. Everybody’s estate plan is customized to their situation, but if you’re over the age of 18, you have to have at least a minimum.

[00:09:19] Nicole Pendergrass: Okay. So imagine that I’m 18. I know I look, for people who are watching. So if I’m 18, then what is the minimum that I should have to get started?

[00:09:30] Portia Wood: Yeah. So it’s really going to be three main things, right? The first is it’s going to be your property power of attorney, and this might be called something different in your state or jurisdiction.

[00:09:39] Portia Wood: But in essence, what it is is legally authorizing to step up and handle your financial and property affairs if something happens to you. Nobody can legally sign your name. So if you’re in a coma, who accesses your bank accounts? Who pays your bills? Who makes sure your rent is paid or that your car note is paid so it doesn’t get repossessed while you’re in the hospital? Who is able to call and start a lawsuit on your behalf if some car hits you down the street, right? You need to make sure that you have a legal representative that can step up. And people say to me, Hey, it’s my spouse or my parents. And the reality is if you’re over the age of 18, you do not have a legal representative. If your kids are in college and something happens to them on college campus, that school while taking your tuition check is not going to talk to you. That landlord, unless you’re signed on that lease, it’s not going to let you in because they legally cannot.

[00:10:29] Portia Wood: And so you need to have a property power of attorney that says, if I am unavailable, this is the next person who has legal authority over my assets and my estate and me as a person, right. That’s number one. Number two is going to be your healthcare documents, who makes your medical decisions? If you are in the hospital and you need some form of long-term care or treatment plans, who decides if they pull the plug on you, right?

[00:10:54] Portia Wood: Again, people go, oh, my spouse will do it. Or my parents will do it. But the reality is neither one of them actually has the authority over the other, nobody.. And if we remember there was a case in, is Terri Schiavo case. I don’t know if, you look young, so I don’t know how old…

[00:11:14] Portia Wood: But there was a case. It was the Terri Schiavo. Okay. Since she, you know, had a brain injury, she ended up in a vegetative state. She had recently been married about two years right? And her spouse was like, we talked about it. She wouldn’t want to live this way. We should pull plug. And her parents were like, we think you put her in this state, right?

[00:11:32] Portia Wood: No judgment. I don’t know, right? But her parents were like, we think you put her in this state. So we’re going to give our daughter an opportunity to fight. Who wins? How do you pull the plug? If the person themselves didn’t say what they wanted, who win? And what happened is nobody won, right? They fought for 15 years.

[00:11:48] Portia Wood: It went all the way up to the Supreme court. It became this like right to life case. It got kicked back. The court did not decide on giving one person the authority over the other. Just said, not everybody has a good spouse. Not everybody has parents, not everybody’s married. We can’t set a blind rule. If you’re over the age of 18, you need to decide who makes your medical care, your medical decisions.

[00:12:07] Portia Wood: And if you don’t, then a judge needs to sit down and look at the characters in front of them and make a decision from that point. But we’re not going to set a bright line rule that says automatically, you get to be that because everybody’s situation is different. And so what we know from that case, and what we know from other cases is that if you’re over the age of 18, you need to make those decisions.

[00:12:28] Portia Wood: Otherwise, it goes to a judge. Nobody has an automatic right to do that. The third thing that comes into play is your distribution plan. And this is what most people think about estate planning. They think the distribution plan is it. And it’s not right because the first two have zero to do with how much money you have and everything to do with the fact that you are now a legal adult in our society. So nothing to do with money and everything to do with age. The third one is where the variety comes in your distribution plan. It varies because if you’ve got 10 cents in the bank, your distribution plan is probably going to be really simple, right?

[00:13:03] Portia Wood: It might be a simple will that says everything I own goes to these people, whatever it is close to my closet, my car, if I have one. That’s it, or if you’ve got minor kids distribution plan may be more complicated. It’s likely going to include a trust that says, you know, how do I protect these assets for my minor children if something happens to me. If you own real estate in most states, you need a trust to avoid the probate process. Probate is a 100% avoidable process. If you have the right estate plan for your asset levels. And so if you own real estate, you’re likely going to want to have some base a trust-based structure.

[00:13:37] Portia Wood: Now there are differences, right? But as an overarching role, it’s pretty good basis, right? If you have lots of millions of dollars, you probably have multiple trusts as well as business structures, as well as other things that are going on. That’s your distribution plan. And that will depend on how much money you have, what your assets are, right.

[00:13:58] Portia Wood: Your family structure. Are you in a blended family? Do you have minor kids? Do you have adult kids? Do you have special needs children or beneficiaries? You have no children, right? And then what are your goals? What is it you’re trying to achieve with your estate plan because you might have less assets, but a more complicated structure because you’re trying to create intergenerational wealth.

[00:14:17] Portia Wood: And so you may do a more comprehensive structure because you want to preserve what you have. And so it just depends, but everybody over the age of 18 needs those three things, a property power of attorney, healthcare directives, and some form of a distribution plan, a plan that is going to at the bare minimum avoid court interference.

[00:14:37] Nicole Pendergrass: Okay. Whoa, that was a lot. Okay. And I could probably just listen to you talk all day. So with, there were so many different ways I wanted to go. So I’m trying to think where I want to go first. I guess we were talking, you were mentioning having for children being able to distribute to the children or setting up the proper, like wealth-building structures for your kids.

[00:15:01] Nicole Pendergrass: So how does look, especially with distribution because I’m trying to have trust fund babies, but I don’t want them to have a trust fund attitude. So how do I do that?

[00:15:10] Portia Wood: So I don’t know if you know about my passion project, but I have a club on Clubhouse as well as a TikTok channel and that is the BlackTrustFundKids.

[00:15:16] Portia Wood: And so it’s really normalizing intergenerational wealth transfer in black and brown communities. Because we should all want to be black trust fund kids right. It’s important. What it means is that somebody has planned for you. It’s not this idea that we have in our head about trust fund babies, right? The thing that the media has presented It’s like these spoiled brats driving these like incredibly insane cars and like living in mansions and they got billions of dollars. And we immediately say, that’s not us. I don’t have that much money. Trust fund’s not from me. That is false. That is a media portrayal that says to us about, you know, why we shouldn’t believe that that’s what we want or need or deserve, but everybody should be a trust fund kid, because what it means is that somebody, A, planned for you, right?

[00:15:58] Portia Wood: Planned for how wealth is going to be protected and preserved for you. It means that they have planned to keep you out of a court battle, right? They’ve decided that when they die, they’re not, you’re not going to have to go through probate court to get those assets transferred to you. They’ve decided we’re going to minimize taxes right on whatever these transfers are.

[00:16:19] Portia Wood: None of those things have anything to do with being a spoiled brat. Now, inside of your trust, you can say all kinds of things. You can have it so that the assets are distributed outright, which is not necessarily recommended because typically assets are squandered after receipt in our community, about three to five years after receipt.

[00:16:37] Portia Wood: And so that’s not helpful for building generational wealth. You could stagger the distributions at certain ages, but you’ll lose some of the benefits of creditor protection of divorce protection and also control over those assets. So maybe not, that will work for you. Depends on your circumstances. My personal favorite is a multi-generational trust structure or a legacy trust.

[00:16:59] Portia Wood: Where my trust creates a sub trust for my son who’s four, right? And from that perspective, I get to say, who manages it until he reaches a certain age in my trust at this point, it’s 35. I need him to get to the 35. I need to him to get over the fact. I’m no longer here. I need him to have enough maturity to be able to appropriately manage it.

[00:17:22] Portia Wood: I need him to have learned something. So had some life experiences, paid some bills on his own before he starts managing what I’ve got going. But I also put in some other restrictions, like he has to successfully complete a financial literacy course. I don’t know what the financial markets are going to look like by the time he’s 35. He’s four. Bitcoin is at $40,000 a point. 12 years ago, nobody knew what Bitcoin was. Zero idea what the financial markets would look like. And I don’t have know. Because I’ll be dead, but he has to know because he’ll be the one managing it. And how do I ensure that he will know? I make it a requirement. And I say, Hey, you have to take a course that’s going to teach you about how the markets are working today so that you understand and not just take it, successfully completed. That is a term, it’s a condition of my trust so that you can understand how to manage what I’ve left you, right? Cause not just what to do with it, but how to deal with it and how to continue to build it.

[00:18:22] Portia Wood: I’ve also put restrictions on sale. Can’t sell my real estate, unless it’s for another piece of real estate with a higher return on investment. You’ve got to do that calculation because for me, I believe that real estate is an important part of an investment portfolio. You’re not making any more dirt. It is constantly increasing in value and people always need a place to live.

[00:18:42] Portia Wood: It’s also an asset that you can continue to leverage over and over again. One piece of property can create generational wealth in one family, generation after generation, after generation, if it’s properly protected and leveraged, so you can sell it. But I gave him a formula I say, but you can take money out of it. You can refinance it up to 75% of the fair rental value. So if you can get $2,000 a month on that property, your mortgage can not be more than 75% of that on a monthly basis. That’s how you take out money every 15 years to be able to fund businesses, education or their real estate without putting the property underwater.

[00:19:21] Portia Wood: So I’ve restricted him, but then I’ve given him a formula to use that property so that he can’t squander it, even if he wanted you, because he’s not allowed to sell it. He can’t do it. And so when you set in those parameters, you are protecting what the assets are inside the portfolio. When I think about, you know, the stocks and things of that nature, again, I don’t want you to sell anything, but you can’t take a portfolio loan that’s more than this. Why do I want him to take loans versus sell the asset? Taxes. You sell that. You’ve got to pay capital gains on that house. You take a mortgage on that house or you refinance it. Guess what? That is tax-free. So now it’s tax-free money that a tenant is paying back that you just went into use to buy other assets that you can take out money from tax-free, and then somebody else pays back and it just perpetuates, right? So from that perspective, but it’s in my plan. So comprehensive planning it’s in my plan. Should he pass away and have children? My plan will continue. My plan will continue for his children directly. It bypasses any spouse. So it will go to his children directly with the same parameters that I’ve put in for him.

[00:20:25] Portia Wood: They will have to be 35. They will have to take a financial literacy course. They will be restricted on sale. They will, all of these different pieces that we’re talking about will continue generation. For, not just my son, but my grandchildren and my great-grandchildren. And so what I’ve done is created the perpetuation of wealth just by ensuring that the assets that I have stay with my family, right.? That’s it. So take it one step further. I also have life insurance. Because I know that if I die, someone’s going to have to pay to care for my son. And that’s my responsibility to ensure that there’s money for him, right? My guardians that I’ve named in my estate plan are not planning and saving to send a kid they did not have to college, right? Or to pay for his education. So that’s my job. So my life insurance pays into my trust. So then it is subject to all of these restrictions. So that, those dollars, right, let’s call it, you know, $2 million that goes into the trust. And then it’s subject to whatever restrictions put on it, how he can spend it? What it can be used for?

[00:21:24] Portia Wood: He can not go out and buy a Maserati, but he can buy a reasonably priced car that’ll get him from A to B and be responsible for his own insurance and gas. It is in my trust. It is specifically written down to make sure that a there’s enough to cover his basics. He will never not have food in his fridge. He will never not have a roof over his head.

[00:21:43] Portia Wood: He will never not be able to afford medical care, right? But it’s not enough that you can sit on the couch. You have to keep working because you can have that car, but if you don’t have any insurance, you can drive it. Like those kinds of things. There’s also provisions that every new baby in my family that’s born.

[00:22:01] Portia Wood: So if he has children, my trust will buy his children life insurance. And so it just continues to ensure that every generation, every time somebody passes away and by the way, my trust also already owns life insurance on my son. So every generation, when somebody passes away that trust gets a reinfusion of cash to be able to be used for other things within our family.

[00:22:23] Portia Wood: But there’s a provision. Every baby born in my line will have a life insurance policy that comes off of my trust. And because whole life insurance policies, when they’re babies are super cheap, right? Cause you’re gonna have, you never have a longer life expectancy than when you are a newborn, you know, they’re cheap and easy to get.

[00:22:40] Portia Wood: They have a longer time to cash compounds and you can borrow against them, right? Tax-free and so, you know, you’re creating these banking concepts within your estate plan. So how do you plan for kids and keep them from being quote unquote trust fund kids? You restrict the heck out of them. But then you created a formula so that they can be successful and do whatever they want, right? The idea is to give you time for options, how creative, how innovative, what could you accomplish if your basics were covered? If you didn’t have to worry about being on the streets, how innovative could you be? Could you cure cancer? Maybe if you don’t have to worry about research funding, right?

[00:23:17] Portia Wood: Could you get us to Mars? Probably, I mean, look at what Elon Musk is doing, right? If you did not have to take a job out of sheer necessity and you could get out of this mindset and get into an abundance mindset, what couldn’t you accomplish? And that’s really what it means to be a black trust fund kid, right?

[00:23:35] Portia Wood: Not this media portrayal of spoiled brats. And that might be in some circumstances, right? Cause it’s not really what it means when we say it. It’s about creating opportunities and access for us to thrive.

[00:23:46] Nicole Pendergrass: Oh, my God.

[00:23:47] Portia Wood: I’m sorry. I know I’m long winded, girl. You can’t ask me questions so that’d be like go. I told you I used to be a litigator so I’m so used to microphones.

[00:23:57] Nicole Pendergrass: I love you. Everything that you said.

[00:24:03] Portia Wood: Oh, thank you.

[00:24:04] Nicole Pendergrass: Oh, my God. I have so many notes. If you guys listen, weren’t taking notes, you’re absolutely crazy. Stop it right now and rewind everything and take notes. Like I don’t care if you’re listening in the car, whatever you’re doing. Save it so you can rewind that.

[00:24:18] Nicole Pendergrass: Okay. Crap. I had so many questions now. All right. I had my notes. So firstly, the fact that you bypass the spouses, so it goes just to the kids and not whoever they marry. Super smart. And then the life insurance. Okay. So I’m in the middle of the, I have estate plan, like the whole estate plan that I got set up and we got the packet in December, it got mailed back to us, but then there, we were going through it cause we knew there were a few things we had to, you know, finalize and yeah. And I’m going through it and I’m like, oh crap, this is much more than I even thought. Like we have to get things notarized. We gotta like, I’m just like, oh my goodness. I don’t even know where to start. So now we still have it.

[00:24:58] Nicole Pendergrass: It’s not officially sealed because we haven’t notarized and signed some things. And we’ve got to get on that. And even this whole, like, I take all your notes about, I need to talk to you more. Oh, my God. Like so many notes because I’m trying to come up with re, ways to make it, the trust be generational. I do have a life insurance policy.

[00:25:20] Nicole Pendergrass: I need to change the beneficiary from my husband to the trust. And then the idea of, it’s almost like a Rockefeller method with having every baby, like, so people do it different ways and I’ve tried to figure out what way would be best, not necessarily best, but you know, that would kind of help it still go on generationally after I’m gone and having the life insurance money go towards helping to purchase the new life insurance policies for new babies that are born.

[00:25:50] Nicole Pendergrass: So kind of how so let’s say I have life, let’s say and get life insurance for my two kids. I have a two year old and four year old. I give them life insurance policies, their life insurance policies, the beneficiary would then be the trust.

[00:26:02] Portia Wood: Yep. So your trust would own it and your trust would be the beneficiary of it.

[00:26:06] Portia Wood: They would be the insured. They’re the insurable person, but your trust owns it. And then your trust is the beneficiary.

[00:26:13] Nicole Pendergrass: So if the trust owns it, then how am I taking a loan from it?

[00:26:17] Portia Wood: Cause you would be trustee of your trust.

[00:26:19] Nicole Pendergrass: Okay.

[00:26:19] Portia Wood: So you get to make those investment decisions about where and how you want to move money.

[00:26:24] Portia Wood: You really can’t take a loan from a life insurance policy in the first, you know, 10 years, right? Because there’s just not enough cash value. I mean, it depends if you’re over-funding maybe right, but there’s just not enough accrued cash value for that to be substantial enough. So again, it’s a time element, right?

[00:26:42] Portia Wood: Yeah. We are fortunate enough to live in a stable, arguably stable economy, right? And so what we know about money is that when we have a stable economy, all you need is time and protection and money is guaranteed to grow. So the protection element or the protection vehicle is for the quote, unquote almost guaranteed dividends that come off of life insurance, right?

[00:27:00] Portia Wood: For the last a hundred plus years, they haven’t skipped a year. So you can almost rely on that, right? Historical data does not say anything about going forward, but if you look at the historical data, you can sort of rely that there may be these dividend outputs. In addition to what you put in, it’s going to take time before that grows, because the first few years it’s mostly administrative costs.

[00:27:21] Portia Wood: So there’s not as much going into the cash value of your policy. So you’re not really going to take a loan right away. For your kids, they probably won’t even take a loan until after they’ve graduated from college or if they entered their thirties, right, time for what the investments are to cash compound, especially if you’re just getting started.

[00:27:38] Portia Wood: But once you’re into the grandchildren’s generation, if you’re buying them million dollar life insurance policies at the time that they’re born, you’re putting that in, it’s probably 500 bucks a month, assuming that they’re healthy so that your trust is covering it. So whatever you investments and things that you’ve made, those are investments of the trust that are going out to this.

[00:27:57] Portia Wood: And, you know, maybe you pay annually, they will cash compounded much quicker because they’re putting more into it. When your child passes away, right, and that trust money there, that life insurance money that you’ve been paying on for years and years and years goes back into the trust to help fund other things going forward.

[00:28:14] Portia Wood: Well, guess what? Now you can put $2 million on the next babies that come out, right. Because there’s more resources and then you start to catch compound much quicker.

[00:28:23] Nicole Pendergrass: Do you actually put that in your trust? Like saying okay. After certain generations. I want you to double the amount of the life insurance as possible. We kind of leave that up to …

[00:28:32] Portia Wood: It just depends. Yeah. So for me, I put a lot of that in my estate planning letter, as the instructions to my successor trustees, what I want from them. So it’s important to remember right? How your trust functions is based on what the distribution says in that section. So when you go back and read your trust, how does it distribute to your kids?

[00:28:50] Portia Wood: And that’s really where they’re going to tell you whether or not you have a legacy trust or a staggered distribution or probate avoidance or some combination thereof, because you can’t do this strategy really with a distribution or a probate avoidance, because your truck stops ceases to exist at some point, right?

[00:29:07] Portia Wood: You have to have a trust. That’s going to continue generationally for this to even work as a strategy.

[00:29:12] Nicole Pendergrass: So the, you said something about you have, you have it set up so that your son, when you pass, the trust creates a sub trust. How does that work?

[00:29:21] Portia Wood: So basically becomes an irrevocable trust for the benefit of my son.

[00:29:24] Portia Wood: He then, the portion would family trust for the benefit of Emerson James Wood, right? So it’s still mine, which is the beautiful part about it because it’s still mine. I get to control what happens with my assets because let’s remember nobody is entitled to what you’ve worked for. Nobody. Not your kids. By virtue of accidental birth, right?

[00:29:44] Portia Wood: I like the fact that I’m accidentally your parent or you chose me, whatever. However you want to go about it. I don’t have to give it to you because I want to give you a leg up. Then that means I can give it to you with restrictions. So if I keep it inside of a trust for your benefit, that is an irrevocable trust, you can’t change it. You’re stuck with my terms and conditions, right? Then I can say things like you can’t sell my real estate. That’s how I’m giving it to you. I’m giving you real estate for you to use that you can’t sell it. If you don’t want it, disclaim it. And it’ll sit in my trust until you have kids.

[00:30:17] Nicole Pendergrass: The kids, and then the grandkids will get them.

[00:30:21] Portia Wood: Yeah. And if you disclaim it, my successor trustee, those resources, we’ll just go back to the trust. Okay, it’s fine. But the point is right. That you can set it up in such a way that there is some flexibility, right? My son will eventually be his own trustee at 35, assuming he meets my conditions. So he’ll make the investment decisions for the assets that I left behind subject to my restrictions, even though I’m, if he doesn’t meet my conditions for how I’ve set it up for him to take over, the other people that I’ve picked will always manage his trust and he will never manage the assets I’ve left behind. So either you do it or you don’t, right?

[00:31:01] Portia Wood: So he can, he’ll still be the beneficiary of some of the assets so that he’s not struggling, but he just won’t have control to manage it because he didn’t pass certain…

[00:31:10] Portia Wood: If he didn’t pass certain grounds that I set out, then he will not have the ability to manage it. And again, it’s about intergenerational wealth protection, right? Like my goal is to make sure that everybody who comes down the line from me is taken care of.


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