Bullshit on Stilts: Tackling the bullshitology of financial decisions.

Estate Plans: Debunking Myths & Unpacking the Crap Spackle

• Keli Alo & Mark Robinson • Season 1 • Episode 20

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Think estate planning is just for the wealthy? Think again! We bust this and other common myths wide open in our latest episode, where we blend humor with insightful analysis to make estate planning a topic everyone can understand and appreciate. You’ll learn why estate planning isn’t just a financial tool for the elite but a vital step for anyone who wants to ensure their wishes are respected and their loved ones are cared for, regardless of the size of their estate. We even throw in a playful playlist of estate-themed tunes to keep the mood light as we tackle this serious subject.

We dive deep into the essential documents that form the backbone of a comprehensive estate plan, from powers of attorney and living wills to trusts and beneficiary designations. Discover how these important tools empower you and your designated individuals to manage your affairs during times of incapacitation. We aim to equip you with the knowledge to confront life's uncertainties with confidence, ensuring your assets are distributed as you wish and providing peace of mind for you and your loved ones. Join us in navigating through these essential conversations with a mix of levity and gravity, challenging conventional wisdom and empowering you to set up a solid plan for the future.

We love to hear your thoughts, questions, and ideas. Send us a text!

Developing your financial bullshit sniffer one episode at a time.

Speaker 1:

welcome to bullshit on stilts, a podcast hosted by two guys with vast financial backgrounds and great bullshit sniffers who call out the cliche crap, spackle and flapdoodle spood by so-called experts across the landscape of financial advice identifying as doctors of bullshit ology. You can count on your steam hosts, maybe knuckleheads, to bring you a lively, if not deadly, mix of serious analysis, hijinks and tomfoolery, all within a 99.1% bullshit-free safe space. Let's get after it. Welcome back to Bullshit on Stilts.

Speaker 1:

Today, on Bullshit on Stilts, we're going to head back to applying our bullshit sniffers on a little old topic known as estate planning. I know it's not a favorite topic. I mean, really, who wants to talk about becoming incapacitated or dying, or maybe infighting of our adult children upon our passing, because one wants something and the other one's going to get it, and so forth and so on? We talk about transferring of assets to our loved ones and our charities upon our passing. We talk about minimizing taxes, about action plans if I become incapacitated due to accident or an illness, even action plans if I become terminally ill and the types of health and medical care I desire in that condition. We provide for the management of my financial responsibilities as well as my health and medical care if I am incapacitated. We think through and identify guardians to my minor children God forbid something happens to me and their parent and ultimately reducing delays associated with the probate process and the publicity of probate itself. So it's a big deal that none of us really want to talk about. It can be a tough discussion for folks and oftentimes, when it is a tough discussion emotionally or psychologically or what have you, you know, people often will respond with the idea of this perfect plan. And the perfect plan, remember, is simply denying the reality of life. Well, I'm not going to die early. Well, I'm not going to become incapacitated. Well, I won't have an injury when I'm skydiving. Well, I won't have an injury when I'm deep sea scuba diving. We love, especially men, to believe in the perfect plan Nothing is going to hurt me tonight.

Speaker 1:

Wouldn't it be great, since this is such a tough subject for people to talk about, wouldn't it be great if we could just put a record or CD on and listen to songs about this stuff, since it's so damn dry and it can be sometimes a little boring. Oh, that's right, kelly. Listeners will be treated to over 47 hours of the least listened to love songs recorded by some of the least musically inclined estate planning attorneys, located in some city I just can't recall. Who can resist grabbing their partner and swaying slowly to songs like take my kids and raise them by the birthing units, or I want you to have this by the eclectic group the gifters. And who can forget, make my decisions for me, because I can't performed by that one-of-a-kind rock band, the forgetfuls? How about the unnominated song Power of Attorney? I got you by Funs and Heal and my personal favorite, the disco platinum song. Trust Me, I Love Ya, but you can't have it all in one lump sum.

Speaker 1:

So what is an estate plan? What is that whole thing about? And I'm going to really simplify this one Not an attorney, I'm not a legal advisor. Anything that we're talking about today is just general information and knowledge to help develop your bullshit detectors. When it comes to thinking through, do you need an estate plan? The answer is yes.

Speaker 1:

Talking about estate planning, thinking through it, those are just tough discussions. We talk about maybe becoming incapacitated or dealing with chronic illness or maybe a terminal illness that may have us sticking around for 6, 12, 24 months and or we pass away unexpectedly. So all of those things have to do with life events that will have us call upon our estate plans to help protect our wishes, our values and how we want to be cared for in some of those tougher time frames of life. So first, let's kind of think about some of the biggest myths out there when it comes to estate planning. So we'll talk about I don't know five or so. So first is only the wealthy need an estate plan. Second myth a last will and testament, that's enough, I don't need anything else. Third is estate plans are only for older people. Fourth, you don't need an estate plan if you're married. Everything's going to go to your spouse. And fifth my family will inherit everything automatically. I don't need to do anything.

Speaker 1:

So let's begin by agreeing about a universal truth when it comes to life, and that truth is very, very simple. It's one word Uncertain. No, uncertain, life is uncertain. While Benjamin Franklin once said there are two certainties in life death and taxes, and obviously I think that's a pretty accurate statement. But I think life being uncertain is something every single human being throughout their lives will experience and ultimately it's an irrefutable fact uncertainty.

Speaker 1:

So what's uncertainty, right? Unfortunately, the future is unwritten. It's unknowable. We don't know what's going to happen. We do know the sun will rise, but do we know, beyond a shadow of a doubt, we will rise? Do we know that tomorrow we're going to feel good or will we be coming down with some kind of an illness? We don't know. It's uncertain. Will I have a good night's sleep tonight or will I get up 38 times to go to the bathroom? It's uncertain.

Speaker 1:

Sometimes words hit a person a little bit off and we missed the intended meaning. So just in case we're not on the same sheet of music, here's a few words that are similar to uncertainty Misgiving's one, anxiety's another and oh, by the way, doubt, I don't know. So uncertainty right, we just don't know. Now, the opposite of uncertainty is assurance, conviction, confidence. These terms are something that we want to achieve through planning our estates.

Speaker 1:

So before we move forward and start talking about some of the legal documents that make up a person's estate plan, let's just kind of tackle some of these myths real quick, you know, the first being estate planning is only for the wealthy. Well, the reality is, estate planning kind of makes us think about someone having a chateau and a castle, and maybe men in arms and all these wealthy folks. But the reality is, estate planning is a heck of a lot more about making sure that if you become incapacitated, if you have a chronic illness, a long-term care illness, terminal illness, that your wishes, when the health care system is caring for you, are followed, acknowledged and fulfilled. That's a big part of estate planning. So, whether you're wealthy or not, you're still a person. You're a human being that has all sorts of beliefs, views and values when it comes to, for instance, being resuscitated or not resuscitated if you're a terminal ill individual. So estate planning isn't just for the wealthy, it's for everybody out there that faces a health care system that can keep us alive far longer than maybe any of us want to be kept alive, right? So estate planning, it's for everybody.

Speaker 1:

The next myth a will's enough. In reality, a will is one of the key documents of an estate plan, but it's not just enough. There are pros and cons to the will. In fact, for most people, a will really deals with two, let's say three key things. One, it ensures that any of the assets that are owned in your personal name will be given or inherited by the specific people you list within your will. You list within your will, so if you own your house personally and you pass away, your will will govern who gets the house and or who splits up the value of the house. If you have more than one beneficiary in your will, the other part of the will is you get to name someone that gets to represent you after your passing. And thirdly, if you have minor kids, that will is where you're going to identify the guardians of your minor children if you and their biological other parent were to pass away simultaneously. It's a pretty important document, but it's not the only document an individual needs.

Speaker 1:

Next myth was some people think that it's just for older adults and while older adults are certainly folks that tend to pay attention to their estate plans more, put the time and effort in and putting documents in place, the fact is is in America. Fact is is in America, once you turn the age of 18, in most states across the union, you are viewed in the eyes of the law and the medical and healthcare communities as an adult, meaning that your mommy and daddy can't make decisions for you and your spouse may not be legally authorized to make decisions for you. That means that if there was nothing in place from an estate planning standpoint, from legal document standpoint, your family would have to go to the family courts in the county that you live in to file a case where someone is identified by the court to be your conservator and or guardian. So think about the cost of attorneys and court cases, the time delays and all sorts of other things. And oh, by the way, there's no guarantee the court's going to identify and select the individual that you would have had you had some time to think about this. So it's not only for older adults, it's for anybody 18 and over.

Speaker 1:

Next myth you don't need an estate plan if you're married. Well, every individual adult needs an estate plan, whether you're married or not. And we go back to the other one that I just talked about, you know, for older adults. All of those reasons require each individual adult to have some form of an estate plan put into place. Another myth my family will inherit everything automatically. And unfortunately, that's a highly inaccurate statement. You see, if you don't have an estate plan, if you don't have a will, if you don't have any of the other documents, the state that you live in, that will decide who gets what out of your overall assets, your personal assets, that is, it'll decide who gets your house, who gets what percentage of your personal assets. That is, it'll decide who gets your house, who gets what percentage of your personal assets, and you have no control over that, so the state will make your decisions.

Speaker 1:

If you see fit not to think through and prepare your own estate plan and, lastly, I can do it all online without professional help. There is certainly some truth in that. There are a lot of online platforms that you can prepare much of your estate plan with, whether it's Law Depot, legalzoom, legalshield I mean, the list is pretty exhaustive out there. But here's the one thing A person needs to consider that, while you'll save a lot of money by going online and preparing your own forms, those forms may or may not be precisely what you need at the moment that you require your estate plan to spring forward and protect you, your values and your wishes. So it's always recommended to seek out competent legal professional advice when it comes to doing your estate. Nothing stops you from putting together your documents on an inexpensive platform and then scheduling a meeting with an attorney to discuss those documents and see if there's anything else that needs to be done anything else that needs to be done.

Speaker 1:

Let's take another step forward and get a little bit more familiar now with the documents that have to do with estate plans. While there's a number of different legal documents that basically become part of an individual's estate plan, the first document we've talked about a little bit already is the last will and testament and, like I said earlier, that document really applies to assets that you own personally, and it gets kind of confusing when it comes to this stuff. Right, someone just made me very angry. So a personal asset is, you know you go out and buy a car, the car is titled in your name. That is viewed by the legal world and the estate planning world as a personal asset. Your name's on it. If you go out and buy a house and you own it in your name, that is a personal asset and, as a result, everything in the house along with the house will be viewed as a personal asset, and thus, in my two examples a car and a home and the contents inside the home the last will and testament, based on owning those things personally, would govern who gets what and or what percentage of the value of all those assets, who will get what percentage of that. So that's where the will is going to step in when it comes to your assets and making sure those assets are passed to loved ones and or organizations that you personally choose, rather than leaving it up to the state, your estate upon your passing the executor of that estate. It also gives you the ability to identify different people and or organizations that you want to receive some of or all of your assets that you personally own. And, lastly, if you have minor children, the last will and testament is certainly somewhere where you identify guardians that you want to have take over raising your children. God forbid you and their parent pass away unexpectedly A critical document.

Speaker 1:

But we're not done there. There's so much more when it comes to estate planning. The next document we'll talk about we'll talk about actually two documents here, and it's called a power of attorney, power of attorney or POA. A power of attorney is basically a legal document that you have put together for yourself that identifies an individual, or maybe a series of individuals or organizations that will have the authority if you become incapacitated, unable to communicate, unable to make decisions clearly for yourself. The power of attorney is used to allow a person that you identified to step up and begin to manage, in the first case, your financial picture paying bills, even, if necessary, potentially selling your home, other assets, your car, your boats and so forth. Within the power of attorney, you get to decide how much authority and what type of authority that power of attorney will have if and when you're unable to make decisions or incapacitate and can't communicate. The other power of attorney that's part of an estate plan would be a power of attorney for health care, much like the power of attorney for finance. You get to identify someone maybe not the same person or organization, but you get to define someone that's going to be there in order to make decisions on your behalf when it comes to your health care and treatments because you're unable to make decisions or communicate. So two powers of attorney power of attorney for finance and power of attorney for health care. So two powers of attorney power of attorney for finance and power of attorney for healthcare. In my mom's world, I happen to be the power of attorney for finance, while my brother, who's a police officer and a former nurse's, aide in ICU when he was in college, he became the power of attorney for healthcare Because he had more experience and knowledge when it came to healthcare. Where I for healthcare because he had more experience and knowledge when it came to healthcare, where I clearly have a little bit more experience and knowledge when it comes to finance, it does not have to be the same, all right. So we've gone through the last will and testament real quickly, obviously. We've gone through the powers of attorney for finance and the powers of attorney for healthcare. So we've gone through three documents so far.

Speaker 1:

The next document, critical, critical document especially given our medical system and our science and our technology, that has the capacity to extend life far beyond what we ever thought it could just 30 years ago. So this document is known as a living will. So this document is known as a living will. It's also known as advanced medical directives and other titles, depending on what state you reside in. A living will is really a will that focuses on the medical treatment and care for an individual given certain incapacities and or terminal illnesses that create some degree of incapacity where, again, we're unable to make decisions for ourself. We might be unable to even communicate for ourselves. So living well will identify things like do I want to be resuscitated or not, do I want to have life prolonging care or not, or do I just in the case an example of a terminal illness like my mother had do. I just want the medical health system to keep me comfortable, to reduce pain and suffering as much as they can with their science and technology and medications, and allow mother nature to take her course, because this terminal illness is gonna win. So the living will is probably some of the most difficult discussions a person will have, because you'll have to think through all sorts of different things when it comes to medical care. And do you want that or not? Living Will fourth document really, really important document.

Speaker 1:

The next document we'll talk about is a trust, and I'm going to do this very quickly, thank you, because not everybody needs a trust and there are certain reasons why a person has a trust and so forth. But a trust is simply a legal entity that I can create that is separate from me, the individual. Now, for my purposes, that trust, if I have an investment account inside the trust, where the trust is the legal owner of the investment account, I still control everything, but the trust is set up so that certain benefits accrue to me, the creator of that trust, certain benefits like gee whiz. It provides language for if something happens to me, I can identify someone else to manage my trust if I'm incapacitated, if I'm unable to make decisions and so forth, if I die, the trust has language in it and it identifies who the beneficiaries of the trust's assets will be my children, maybe my favorite charity may be involved. It can also have very specific language by asset. For instance, I've put my house into my trust. In other words, my trust has been titled in the county as the owner of my house and within my trust I can identify that I don't want my house to be sold because one of my children will have the right to live in that house after my passing, for I'm making this up 15 years. So I can have very specific language in a trust and I can even protect my loved ones from themselves. Let's say they can't keep money in their pocket long enough. Well, I can put verbiage within my trust to protect that one individual from spending through their inherited assets from my trust by only allowing them so much per year as an example.

Speaker 1:

Trust is a very powerful tool but not everybody needs it. But it is a key component and part of a complex estate plan complex estate plan. Is there anything you'd like to talk to me about that we haven't discussed yet One document that we haven't talked about. It's really not a document that comes from an attorney's office. It's not that type of a legal document. It's known as a beneficiary form or a beneficiary designation. So earlier we talked a lot about the last will and testament how, in the last will, I can identify people and or entities, organizations, that I want to receive the assets in my estate once I pass away.

Speaker 1:

Well, those personal assets are things that I own in my name. There are other investments and assets that I will own that are in my name, like retirement accounts or a 401k account, 403b, 457 accounts, life insurance policies, annuity contracts, potentially. So there's all sorts of accounts, not to mention bank accounts, checking and savings accounts. So there's lots of accounts out there and with those accounts comes a form that allows me to identify my beneficiaries to that account's assets if I pass away. It's a pretty powerful form and it's critical as part of the overall estate planning efforts because, depending on how complicated your world is, you may be able to have a beneficiary designated for every single asset you have and not have to worry about anything really going through the probate process upon your passing and everybody that you want to receive a share of your assets. They will already have been identified on these beneficiary forms associated with accounts, policies and contracts Really really important form.

Speaker 1:

Definitely get very good at reviewing them. Looking at them and keeping them up to date periodically is another critical step. So let's wrap this whole discussion up today by just reviewing really the whole point of the estate plan. And ultimately, the estate plan exists so that, in the event of a person becoming incapacitated or in the event of their death, that all sorts of financial, health and medical-related decisions are taken care of and they're planned. There are people identified to step up when and if certain things occur.

Speaker 1:

And in order to accomplish that and bring some certainty to this thing we call life and all of its uncertainties, we collect legal documents as part of an estate planning process that includes our wills, our living wills, our powers of attorney for finance and healthcare maybe a trust. Living wills, our powers of attorney for finance and health care, may be a trust and certainly utilizing the power of beneficiary forms to make sure that our loved ones and organizations that we hold close to our heart are able to and will receive whatever we want them to receive from our estate and our collected assets over our lifetime. Thanks for listening. It was great. Hope you enjoyed today's session. I know it was a little bit more academic, but hopefully we'll be touching base with you soon in our next episode of Bullshit on Stilts.