first of all my name is Ted Meyer I'm a financial advisor I'm an insurance agent
I have my securities license I work with attorneys and accounts and all that
stuff and so it's a natural fit for us to talk about estate planning because we
talk about that with our clients all the time but today is not about Coventry
it's about sofa so we're not gonna really talk too much about specific
products it's gonna be at a higher level more basically the topic of estate
planning what it's all about what you should be looking out for what are some
of the pitfalls that are out there what are the differences on some of the
things so let me just start off today with a really pretty simple question
all right and that question is what is estate planning what do you guys think
what what is estate planning anybody I think you're the first person I've been
doing this for almost 15 years it has summarized it very clearly
because most of times I get the answer estate planning is I'm gonna get a will
or I'm gonna get a trust or someone says estate planning is I've got to make sure
I don't run out of money but nobody ever really says it's both pieces and it is
both pieces so one it's the management of your assets management of assets and
if you guys want to take notes and all that stuff
no problem while you're alive because I'm now retired I've said goodbye to a
paycheck most likely I've got my assets my 401k my brokerage account I might
have some real estate I've got to find a way to live on that stuff I've got to
make sure that the standard of living I've grown accustomed to doesn't change
in retirement okay and then part two it's the process of distribution
distribution one to you how do I take constructive receipt of my assets
there's ways to get things on long-term capital gains ordinary income tax
short-term tax free tax deferred all that stuff so how do I take constructive
receipt of that and then at the end of the day when I'm no longer here how do I
make sure these assets go to whoever I want whenever I want and as soon as
possible and that in a nutshell is really what estate planning is all about
and so there's a couple other seminars that go on here that talks specifically
about wills and trusts and they're just going to compare those two today is a
little bit more general that's gonna literally talk about estate planning so
we're going to talk about both sides of the spectrum all right and so as we go
through this stuff if you guys have any questions please feel free to shout them
out ask any questions on all of this stuff alright so we're gonna take this
so we're gonna break it down into two two sides of the coin basically and the
first side of it is going to be issues I'll face while I'm alive we call them
living issues and the first living issue we always start off with is something
called guardianship and conservatorship guardianship is the management of
another person so for example I've got a fifteen year old and twelve year old at
home boy and a girl and every time they want to go somewhere on a field trip
with school what are they bring home permission slip and information sub says
your guardian your mom and dad have to sign off on that so we can take you on
the trip so the guardianship is really the management of another person's
finding another person's well-being okay the conservatorship side of it is more
the management of somebody from a financial side of it and these are very
important things to have in today's world to be honest with you I'll hear
stories of folks you know let me stop right there and just say one quick thing
at caveat we're going to be talking about some legal issues today I am NOT
an attorney I am NOT a paralegal I am a financial advisor this so this is
in no way construed as legal advice but this is going to be in general
talking about a lot of legal issues so we're going to talk in very high-level
general terms on this stuff but it's important for you guys understand this
so guardianship and conservatorship is a management of another person and like I
said with my kids when they want to go somewhere Davi I've got they've got to
get a permission slip signed by me or the mom and says hey they go places it's
conservative conservative sure ship is the management of the financial
well-being these are actual businesses here in town and you see them every once
a while does anyone in this room know anybody who has had to apply for someone
to be their guardian or their conservator and it was not good okay
that's typically what I hear guardianship and conservatorship if you
need to have someone take care of you who typically do you want to do that
your spouse your spouse your kids your sibling somebody you know whatever you
want small you hear a story of someone who didn't have anybody or they didn't
take care of the appropriate documents ahead of time and then somebody had to
apply or I should say they had to ask somebody to be their guardian and
conservator and there are businesses here in town then that's all they're do
that's all they do they're fiduciaries and for a nominal fee they'll provide
this business for you now how many of you out there think that's a good idea
to have some business make health care decisions for you and financial
decisions for you i I don't know too many people that don't want to go that
route and it's unfortunate when it does because typically that's what I'll hear
is I'll hear the stories of it's not good you know it's not happening they'll
in the way they want so this really happens in in our neck of the woods when
somebody falls ill they become mentally challenged I have Alzheimer's they have
dementia they get in a car accident and somebody has to make a decision for this
person who's not able to now they're they're incompetent or unconscious and
they look for powers of attorney how many people in this room have powers of
attorney set up right now that says if something was to happen to me
this person takes care of me if they can do it this person if they can't do it
this person quick show of hands how many people have it 1 2 3 4 about 5 people in
the room have about 6 okay this is what we're talking about right
here nobody I know wants somebody that they don't know to make these decisions
for them they typically know someone my brother will do it my sister will do it
my spouse will do it my neighbor who I've known for 20 years will do it they
just don't want some random stranger it make those decisions for them and that's
what's happening now okay so the way you get around these is you will get powers
of attorney okay in Arizona there are three distinct powers of attorney some
states only have two most states only have two in Arizona there's three
distinct ones one is a financial power of attorney financial one is a
healthcare power of attorney and the other one is mental healthcare okay a
lot of states still today this mental healthcare that started in Arizona I
think it was about 2008 2009 when that came around most states will have a
paragraph inside of their healthcare power of attorney that just talked about
if I am mentally incompetent here's what I want to have happen Arizona being a
place where a lot of retirees seniors come to live took it upon themselves to
say no we should have a standalone mental health care power of attorney
that gets a little more in depth about facilities and care centers and things
like that so Arizona has three very distinct financial power of attorney
health care and mental health care and they do exactly that
my financial power of attorney makes all financial decisions for me I give them
the power to make the decisions for me as if I was competent and acting for
myself pay the bill pay the hospital bill make sure the mortgage taken care
of pay the utilities things like that because I could be in a situation where
I can't do that for a while health care something happens I have a
medical event I have an accident I'm now unconscious and somebody needs to make
decisions that the number one cost typically for a lot of physicians and
doctors out there is malpractice insurance
there's a huge cost that our practice they do not want to be sued so when it
comes time to making these decisions they would love somebody else to make
those decisions for them so that they don't have to do it and we'll talk a
little bit more about that down here in a minute
so they want someone to make those healthcare decisions and after all who
do you want to make your healthcare decisions for you your spouse your
friends your family people you know and then the same thing with a mental health
care one this is brand new Alzheimer's and dementia as a society we are living
longer aren't we yeah once we're a married couple and we get to be 65 it's
something like a 50 or 60 percent chance that one of us lives to be I think 93
now well we are living longer but are we living longer better sometimes sometimes
we're just living longer in pain and suffering things like that medicines
getting better and better but it might not be ideal so we want to make sure
that we have these things set up so the powers of attorney will help you
overcome any conservator and guardianship issues some of the
questions we get on this is I've just moved here from Washington or I've moved
here from Nebraska will those work yeah I mean typically those things work from
state to state but it's a good idea to have those reviewed by an attorney every
three four or five years whenever things change I can't tell you how many times
we've sat down with folks and I'll ask them who is your power of attorney and
they'll say well it's gonna be this person and we read the document and it's
actually somebody else it wasn't the spouse maybe it's a new
marriage it was one of the kids who maybe now the kids are having some
challenges of their own they're not paying their taxes they might be
dependent on alcohol or drugs and like yeah I think I need to change that stuff
so like all of this stuff every several years it's a really good idea to sit
down and spend an hour reviewing all of this stuff making sure that your wishes
today are still the same wishes you had when you set that up a while ago okay
there's one more piece that goes along with these powers of attorney and it is
called a living will
okay anybody tell me what a living will is that's awesome I wish I had something
to give you that's a great answer it is a will for when you're still alive but
the condition in which you're alive is I'm incompetent I'm unconscious I'm on
I'm on life-support things like that so that's where the living will comes into
play it's what are my decisions in the event
I find myself typically its on life support
do I want drastic measures taken to keep me alive do I want certain blood
transfusions do I want you just to let me go give me pain pain medication give
me water fluids would ever just let me go you saw this in the news several
several years ago there was a woman down in Florida named Terri Schiavo know if
you guys remember it but she was a young lady when something had happened to her
and I'm not quite sure what happened but she found herself on life-support and
the husband wanted to turn off the machine and get on with his life and
said let's go the doctors have said there is no hope this is over you know
it was quite a bit of time had gone by well the parents wanted to do what they
were keeping her life we're keeping her life and so when she didn't have a
living will set up and the doctors had the husband wanted to do one thing and
the parents wanted to do another thing what did the doctors do nothing they
kept her alive they didn't make a decision either way because if they made
your decision you'll sue me if I made your decision you'll sue me so they
basically kept her alive and I think she was on there quite a while I mean long
long time and then she finally did pass away but it all could have been taken
care of with a living will and so depending on what you want or what you
don't want or even in some cases what your religion allows you to do it makes
a lot of sense to take care of these things up front and say in the event
something happens this is what I want okay
and so these four documents all together kind of encompass what's what's included
in the power of attorney whenever you talk to most attorneys in this town
that's what they'll put together for you and say here here's what it is this will
help you on some of these issues and they'll make sure that if something
happens to you at least you've named somebody that you want to take care of
you instead of finding yourself in a guardianship and conservatorship issue
okay most attorneys in this town will probably charge you somewhere around
five to seven hundred bucks to do something like this okay the way I look
at legal documents again not in his attorney is if it's a legal document and
there's a chance it may end up in court one day I would prefer that an attorney
drew it out because then I know that the attorney will most likely stand behind
it okay when you go to legal dr. parris when you go to office max and you get
them for 2995 and you fill them out I though should work but if I'm gonna do
legal documents I'm gonna call in the legal profession to help me out okay so
just a little caveat on that we will continue moving on with a few more
living issues let's talk about financial issues on the living side okay this is a
big one it has started to come up here and it's getting more and more attention
all the time which is good when your parents or your grandparents retired
about how long did their retirement loss last before they passed away seven
twenty twenty-five years that's a long time about ten years I know for example
like my grandparents retired at 65 and they had both passed away by 73 and so
retirement income retirement planning wasn't a big deal all those years ago
because we typically had a job we had for 30 or 40 years at the same company
we got a nice pension from that then we had a Social Security payment that was
coming in and then we had some money in a retirement account and so that
retirement account that pension and Social Security made up the three legs
of our retirement and we had enough money to
last us for the 7 10 15 years but now with the statistics statistics I just
gave you retirement is no longer a 5 to 10 year
deal it's typically a 25 to 30 to 35 year deal how many people in the room
knows somebody who's alive and they're over 93 ands up everyone everyone in
this room knows somebody who's 93 I know you do we all do I've got three or four
family members that in their late 90s okay so I want you to think about that
because they retired when they were in their mid 60's and now they're in their
mid 90s that is 30 years I get folks all the time telling me it's not gonna be me
I promise you well statistically it is gonna be you one of you is gonna get
there again when we have a married couple that is 65 and they're together
someone there's like a 60 to 70 percent chance one of you gonna get to 93 okay
and so we have to now plan for 25 30 years in retirement we don't want to
plan on 10 years of retirement and then get to our 75th birthday and run out of
money do we know so we're not gonna get into any financial products or thing
like that I'm just gonna make sure you guys look at your retirement in a way
that I think makes a lot of sense after all retirement income and retirement
money it's all a math problem let me say that again retirement is a math problem
it is not the way you feel about your money it's what your money is actually
going to do so I always have our clients do this when they first come to us
retirement should look like this I've got my income and what kind of
guaranteed sources of income do we have in retirement Social Security pension
okay if you have an annuity yes that could be a guaranteed source of income
anyone else have anything else as a guaranteed source okay
401 K I'm glad you brought that up that is not a guaranteed source of income it
is a payment that you have to take out on a guaranteed basis once you hit 70
and a half but that account can run out IRA same thing as a 401 K that account
can run out so just because you have that I always take that over I put that
over here okay in your assets and so we have IRA we have your brokerage account
we may have real estate what else is out there guys bank accounts checking
savings things like that REITs stock bonds all that stuff's over
there so we've got our income and the average Social Security payment is
anyone know it's about 1,300 it's about 1,300 so we've got 1,300 on
him and we've got about another 700 on her
so that's $2,000 pension how many people in this room have a pension
congratulations not many new pensions have been created so a view of a pension
today congratulations on that I'm just gonna say let's let's throw out another
thousand bucks on a pension when you have that pension make sure that that
pension is guaranteed for you and your spouse we'll talk about so she and
second on how that works and then an annuity let's just say I've got in there
five hundred a month coming in on annuity okay over here I've got my
expenses okay so I add all this up I got 13 that's two thousand that's three
thousand that's 3,500 that's what I have coming in every single month guaranteed
that doesn't include my RMD IRAs my broker's account withdrawals none of
that this is just the stuff I have coming in that's guaranteed over here
I've got expenses and let's just say I've got expenses of now expenses I'm
talking about requires expenses like a mortgage
utilities and groceries and then things like discretionary expenses like I'm
gonna go see the kids I'm going to a movie or going to spring
training all that stuff I'm sorry gasps let's just say that's around 5500
when I add that up every single month the easiest way to come up with your
expenses because nobody I know loves doing a budget so don't do it but take
your or brought your bank statement where your checking account is because
most everything most your paychecks go into your checking account in most your
bills come out of your checking account so just go in there and look at the very
first page where it says debits and credits and go to debits and withdrawals
over the last six months and add them all up and then divide that by six and
that's what you've been spending the last six months on average now if it's
way out of whack because I had to buy an air conditioner I just bought a car we
just took a cruise okay well those are the exceptions take those out but find
out what your expenses how many people in here know within a couple hundred
bucks what your monthly expenses truly are awesome that is very important to
understand but let's look at this scenario so I've got income of thirty
five hundred I've got expenses of twenty five hundred so what am i short two
thousand a month so where do I go get that two thousand from I go here donate
how many of you know since you have this number most of you and most of you
already know this number whatever yours is if I was asked a question how many of
you know how long this will last if you're taking out this amount of money
every single month how many of you in here I've sat down and said I'm gonna
run on the money when I am you got it good you got your number to take you all
the way to 100 okay we want to get these to a hundred in the security site we
used to do illustrations for folks and we used to show an 8% rate of return and
if you get 8% rate return this is great you know what that rate of return is
down to today about three saying three percent you got a hundred grand you have
$3,000 so what we want to find out is let's
just say I've got 500 grand in here I need $2,000 a month how many months can
I do that for I can do that for 250 months right 250 times 2 is 500 well
there's 12 months in a year how many years is gonna last me 20 something like
21 years and change and I am 66 years old today okay I got some things to
consider I got some things to take a look at the whole idea in retirement is
I don't want to run out of money nobody wants to and let me tell you really
quickly our thoughts on retirement retirement is not about your assets it's
not it has nothing to do with how big this number is does it it has to do with
how big choose me this number is because if I was to ask you right now would you
want $8,000 a month or a million dollars which one would you take eight thousand
a month for life or a million bucks who's gonna take the eight thousand
who's gonna take the million take the million take the million you'll take the
million okay I'm a little older I have less time most people I know will say
give me that eight grand a month why because I like the guarantee I want
the income I want income coming everyone when you were working what did you get
every other Friday a paycheck when you retired
what did you say goodbye to and when you were working you are saving
money you're putting money in your brokerage accounts and your IRAs and all
that stuff and when you retired did you start going there to the next month say
okay now I'm gonna start taking money out or did you sit there and go no no
I'm programmed just put money into it I don't want to take any money out of it
and so you just have to look at this stuff on the financial side because the
number one concern aside from some of this legal stuff we talked about is
people come to us and say I don't want to run out of money you know the Social
Security down here let's look at that scenario real quick so you guys got this
idea here find out what your number is how long is my money gonna last now
granted I did all of this at zero interest so if you say hey I'm making 5%
on this okay well then we can factor that in oh hey down here on my pension
or my annuity I've got a cost-of-living adjustment on there so it goes up every
month okay well that's great all I'm telling you is you better know what your
numbers are because you got things like inflation on this guy right here so your
expenses are going up by about two or three percent a year are we getting two
or three percent a year on our so scary payments no we're not three last six
years we got what Zippo are we typically getting a
cost-of-living adjustment on pension accounts those are level so if I'm here
today I'm 3500 in and that's 5500 well that 3,500 not going on that 5500 is
going up and the longer I live the longer that has time to run up so I want
you to think about that stuff and here's the other thing I want you to think
about on the income side of it social security all right her social security
of payment is seven hundred his social security of payment is twelve hundred
combined that's nineteen hundred a month what happens when she dies what does he
keep so if she passes away
how much does he get he gets 1,200 perfect thank you he gets to keep his
1200 what did he just take he just talked he just took a $700 a month pay
cut he gets her 1200 but he just lost $700 a month
okay now let's flip that around he dies
what does she get she gets his she gets the larger of the two so she gets 1200
it's actually two checks she gets her 700 and then she gets
another 500 bucks that comes in the fight Cameron or what they call it but
it's like a survivor's benefit so she'll get the 1200 but again what did she just
take she did not get a raise she got a cut because combined they had 1,900 now
she's down at 1200 that's a really bad 12 sorry about that so she just lost 700
dollars a month or 8400 a year okay she lost she just lost 8400 with the
potential for 2 or 3% a year of colas we're not get them every year cuz the
government's just not giving them to us so it's really important to understand
how that works how many of you have turned on Social
Security there are seminar after seminar after summer out there about maxing your
Social Security you want the secret how to max it just wait it's not a secret
it's not a seminar but that's not what's right for everybody because what's right
for everybody is how much do I need and when do I need it what are the health
concerns I have to be worried about nobody in my family lives to be 80
nobody and I've got a heart condition so I'm not gonna live that long so do I
want to wait and maximize it maybe but these Social Security seminars out there
they say I'll show you how to maximize Social Security the answer is both wait
till 70 have a nice day okay but you need to consider things like Social
Security when you turn Social Security on early you just permanently reduced
your payment and you permanently reduce your survivors benefit to your spouse
and most advises I know don't tackle that problem they just go just turn on
when you get to 62 and let's move on that's typically not the right answer
okay so if you want to help its Social Security get with someone who's a
special that specializes in Social Security understand why that's an
important piece okay and then the last piece I'm gonna talk to you about on the
financial side and then we'll move on there's two piece them I talked about if
I've got $500,000 in my account and I need to get more money out of there or
it needs to make more money I'm gonna need more money in retirement because
I've already I've already shown through this little scenario we did it I'm gonna
run out when I'm 86 what are my two choices to make this last longer what
can I do I can spend less thank you I can reduce my expenses that was that
number down here or I can my increase my return right because I don't think going
back to work as an option is it that's not why we retired so how do we reduce
expenses just from a generic standpoint how many of you in here on mutual funds
and all of your stuff okay mutual funds are incredibly expensive
Google there's a Forbes article out there that talks about the average cost
of a mutual fund is north of three and a half percent all in stuff that they
don't talk to you about Advisors don't talk to you about that I'm an advisor I
know this stuff because I've looked at that number and said why is it why is
the fun telling me it's getting eight and my statement shows I'm getting five
point three two why is that number coming in there because there's all
kinds of fees there's fund fees there's marketing fees 12 b1 fees there's cash
dragged in there there's all kinds of stuff mutual funds are an incredibly
expensive way to buy the market etf's aren't incredibly inexpensive way
to buy it so you can exchange your mutual funds for ETFs and probably save
you somewhere in the neighborhood of 2% year maybe a little more
well what's 2% on 500 grand over 30 years
that's a lot of money it's a lot of money so look at the way you're invested
when you reduce expenses that's one of them right there
the other one is increased return increase return I've got to take more
risk that's not the one most people in retirement want to take most my clients
are accounting me saying bet the farm I need more money let's go let's start
buying individual stocks and buying and trading this stuff okay so you need to
look at this how it's invested because the goal is it is your money it's not
your advisors money it is your money you should be having these conversations how
do I get more return out of this how do I reduce my expense
most people we sit with have no idea the funds that they own why they own them or
what they're paying I can't tell you many folks I sit down what they give me
a brokerage statement I go can you read it I'm like I can read it but it's not
my money can you read it for me they go nope all I do is I kind of open it up
and look at the number on the first page and if it's a good number will you go
out and have dinner if it's a bad number I put over here up file in that drawer
and every six months I pull them all out and put them in a binder and I move on
and I don't ask any questions it is your money please check with your
advisor and make sure that understanding this takes the biggest risk in
retirement which is running out of money off the table okay 401ks in here too if
you have a 401k you were working for a company and they were advising you on
that you had funds ah / - you had choices inside of their 401ks are
incredibly expensive if you've retired the best thing the optimal thing to do
is take that 401k roll it into your own IRA and then you have tens of thousands
of choices to invest it in when you work for a company they probably just give
you a menu of 10 15 20 maybe up to 100 different funds here pick what you want
and what you do is you look at last year's performance I like that that
looks good pick one or two when you throw it in or maybe five so that's
called chasing returns those did really well last year on buying those okay if
you roll any drone four into your own IRA you can open one account at a
fidelity or a Schwab or bang guard wherever you want ulsan you got every
imaginable fund available to you and you can say let's do this let's do that
let's buy that okay so if you're not working for the company more you left
for a reason it might be a good idea of your money leave - okay any questions on
that last piece on income and then we're going back to legal stuff I've got about
five more minutes on this let's talk about taxes there are four places known
to man where I can get tax free income and the reason I bring up tax free
income is because we all have taxable income we all have IRAs or 401 K s so
that's a hundred percent taxable I have my Social Security payment that comes in
that's taxable I have a pension check that comes in if I'm fortunate that's
taxable so I sit down with too many folks in retirement that you have a huge
IRA account they're excited it's in there every time they want to touch that
guess what happens tax tax tax tax so just for your general
information where are the four places that when I've put money I can pull them
out tax-free perfect Roth IRA is one of them I've put money into a Roth IRA I
pull it out it's free I paid the tax on it already where else can I get tax free
income
how about muni bonds you guys hear about muni bonds all the time my guy wants me
to buy muni bonds muni bonds yes they are tax free but the income the interest
from that goes on my federal taxes and it does increase my provisional taxes so
it's not a hundred percent tax rate yes sir okay very good so it's kind of a
half because it's kind of tax free but it's kind of not anywhere else cash
value insurance cash value life insurance I've got a life insurance
policy and there's fifty thousand of cash in there depending on the cost
basis that might be fifty thousand of free cash for you to take out last place
home equity why do I bring up home equity I bring up home I Cody because of
this how many of you out there have a long-term care insurance plan just so
you know I sit down with folks all the time that are now in their 80s coming to
me and saying the premium has gone up again and again and now it's
unaffordable I don't want it anymore I always look at your home as your
long-term care insurance plan not your policy but your plan see if I need
long-term care I need to have a bucket of money I can go get but I'm not sure I
want to buy a policy to cover that because even though the statistics say
that 50% of us over the age of 70 are gonna be in a long-term care facility
and all that good stuff how many of your friends truly are sitting in long-term
care facilities not as many as dads are the statistics we have you believe and
if you go sit with somebody who sells long-term care insurance to talking
about long-term care insurance what are you gonna get long-term care insurance
that's what you're gonna get if you go to Jiffy Lube on the corner what are you
getting when you go to Jiffy Lube can an oil change you might get some
other stuff you can oil change because that's what they sell when you go to
talk to a long-term care person about long-term care we're gonna say a
long-term care policy I'm just telling you from where I sit the reason I
understand this or I know this is I have a lot of clients that I've picked up
that I have a doctor right now the premiums were 2,200 for him and his wife
they just hit 80 it's now 78 hundred a month it's 78 hundred a year premiums
going up and they don't think they're gonna use it for a long time and all of
a sudden they're like I got to pay this every year and every year it starts
creeping up I can count up in the business 16 years I can count on one
hand the number of clients that bought a long-term pilot policy where at the end
of the day we looked at and said it worked
you used it you passed away and it paid some bills the rest of the time I get
that I know I don't want this I'm paying too much I other things I want to do
with that money so I bring this up because well
talk about living issues and making sure you don't live your money long-term care
insurance premiums are a big deal you want to have a plan that if I need
long-term care where could I go access the money your home equity is a great
place I got a house free and clear even a second house free and clear and I need
long-term care I'm probably not going on those vacations anymore to my summer
home I will use the equity from that house to pay for it just a thought all
right any other questions on living issues financial issues powers of
attorney any of that stuff and again today really guys it's just about
getting you to think a little bit differently than the way you've been
thinking before and I don't know too many advisors that look at it this way
okay as an advisor my stuff's at Schwab all my client stuff is at Schwab if I'm
a swab advisor I only talked to you about that Schwab account I don't care
about home equity long-term care powers of attorney I'm not talking about tax
free distributions or income I'm typically not I'm trying to gather as
many assets as I can if you go talk to an attorney about an estate plan they're
gonna talk to you about a will or a trust you're not gonna talk to you about
your finances they're not going to talk to you about how to make sure you don't
outlive your money so it's important that when you entered perhaps the
biggest phase of your life retirement the most critical with your money that
you have advice that's specific to you you know we talked about do you guys
wanna a lump sum or that income coming in there's those commercials out there
ing used to do it I think it's void now really sit on a bench and they'd ask
them what's your number how much money do you have eight hundred fifty thousand
a million to a million three at the end of the day you can lose that dumb money
correct but you can't lose that income eternal so to me retirement is all about
it guaranteed income stream that comes in and the reason I know this is because
when I look at my client base my happiest clients are those people that
have income teachers firefighters people with pensions out and about doing stuff
because they know that check shows every month people that are not enjoying their
retirement are people that have lots of money that go where do I get the money
from this month what's the return on this
doing how long is this gonna last so just something to think about all right
now let's talk about the most fun part of the day death the death issues all
right so when it comes to estate planning and it's time for us to go now
we're not gonna be here any more we'll have ideas about who we want to
get our stuff when they should get it how they should get it whether it's just
give it to them all at once or give them income over years or hold payments for
certain periods of time so those are all variables those all change but the one
thing I can promise you we all agree on is that we're all trying to avoid this
guy that sound about right so since we're all trying to avoid that
what is probate can anyone tell me what it is you're very very close it's when I
go to court and the judge decides what's gonna happen with my stuff yeah yeah
that's that's kind of what it is it's a form of private taxation and I use that
term because you choose to go through probate by the way you set up your
estate but the things that you do ahead of time you're electing to go through
this process there's two ways you get into a probate the first one the easiest
one is the kids find your will or you don't have a will and the kids pick up
the phone and they call an attorney and they say mom and dad are gone what do we
do and he says I'll be right there we're gonna open up a probate and you
know that because if you've ever purchased a will in your life
standard last Testament will you know that his business card in his numbers
all over that document in multiple places because he wants you to call him
he needs you to call him because that's where he gets paid he gave you that will
four three four or five six hundred bucks but now that you're gone he's
gonna your estate and that's where he's gonna
get paid I'll come back to the in a second that's step one step two is I try
and sell something I don't own so I'll use my parents for an example I'm one of
five kids my parents live in North Carolina and at the end of the day they
say take this house sell it and give 20 percent each of you five call it a day
so they pass away we put the house up for sale we hire a real estate agent
someone agrees on a price we get all the way down to the date where we're gonna
sign off on the deed and they pull out the deed to mom and dad's house and
whose name is on the deed from mom and dad's house mom and dad and where are
mom and dad so who's gonna sign off on that deed nobody I don't have the right
to sell that house while they're alive I certainly don't have the right to sell
that house when they're dead anything that takes their signature to sell I
will not have access to unless I go through probate and I get a letter from
the courts that says we've satisfied a probate on this we know that the house
is free and clear we know all liens and levies have been settled there's no
judgments about this estate and this money is now free to go but that process
takes a long time so just so you guys know that's the probate process that's
what looks like and you just get home from school back in high school my mom
would love to watch Rockford Files and Barnaby Jones and the very first step is
just like those TV shows let's read the will and let's see who's getting what
see probate is a form of private taxation because it's expensive all
right inside of here there's accountants Isis ORS
there's the courts there's letters to creditors there's time so probate on
average is somewhere between on the low end maybe three or four percent and on
the high end it may be eight nine percent something like that
so let's just use six percent as an average six percent probate cost and
it's going to take say 18 months to get this through
and my estate is worth a million bucks when I add up my house my investments my
raise brokerage counts things like that my life insurance that I had on me my
second home so a million bucks times six percent is $60,000 that's where these
guys get paid the probate itself that business every year that's a really bad
example right there fifty billion dollars goes through the probate process
every year they give you that 300 or $400 will because make no mistake they
want you here that's where your attorney gets paid it's an annuity for him when
law firms are bought and sold they do check the drawers of wills
how many drawers of wills does this firm have why cuz that's future business and
when you bought that will you said to the attorney I do not want to go through
probate because I've had this conversation with folks before and the
attorney has guaranteed me I won't go through probate is he correct is he
correct yes he is where will you be you will go through a probate but your
estate will you're not there's no probate between husband or wife you just
brought out we talked about powers attorney something happens to the
husband the wife gets everything in the state community property sometimes a
wife husband typically gets everything there's no probate but once the second
spouse is gone boom that's when probate starts and then the kids are in charge
of running it through here and they're gonna go through all the legal steps and
they hire an attorney and God forbid you own property in more than one state
because I have I live here but I've got my summer home in northern Minnesota
your Arizona attorney most likely is not licensed in Minnesota so you may have to
find a Minnesota attorney to probate that asset up there this is what
everyone's trying to avoid they're all thinking I've got to find a way to get
around this guy right here okay so let's talk about a few ways to get around it
the number one way to avoid probate is to be broke and I say that facetiously a
lot of folks tell me I'm gonna spend that last dollar on that last day I've
got it planned you know when I'm going most of us don't know when we're going
and now that I have a 12 year old and 15 year old I understand my parents
predicament of I gave him 20 bucks they'll go get lunch and all a sudden
lunch cost all that twenty bucks thank you my money back so I know you guys who
have have kids out there I've given money to them that you've never seen
again and so if you decided to take this route
and say I'm gonna gift money to the kids it's a way to get around stuff just be
careful because if you ever need that money back history tells me they may not
have it okay so be very careful about being broke how about does anyone know
what this is cool we know what that is that's typically how most folks have
their assets titled in Arizona joint tenants with rights of survivorship or
because we're a community property state they may have it as community property
in a joint tenant situation I've got a house and mom and dad are on that house
as joint tenants with the rights of survivorship and dad passes away does
mom get the house sure she does and I'm gonna pick on the ladies for a second
cuz it's typically what happens I won't say typically but this does happen so
dad passed away and mom got the house and she got the house because he was on
the deed with her she was on the deed with dad and then she says I'm gonna get
enjoying tenants with my son and when I go my son gets my house because he's on
the deed is that true
for the most part that's true the most part is true sure if mom guys hadn't put
son on the deed and mom dies that his sons house what he loses is he loses the
step up value that you typically get on real estate
that when a parent the parents pass away you get a new value that house it's
today's value so he would lose that but here's other things that can happen I
know personally of some of these have happened because we've had clients come
to us moms on the deed with Sun and then sons 18 year old son
so grandson gets in a car wreck and somebody wants to sue not the 18 year
old because he has no money so they're gonna sue the 18 year olds mom and dad
which is this guy right here so now grandma's house isn't grandsons
lawsuit okay or mom is on the house with the sun and then the sun and the wife so
her daughter-in-law decide to get a divorce and mom never liked her anyways
but now he's in court fighting with her over assets guess what else is in court
half of Mom's house is in court no because he's half owner of that so it
does and it can work but it can also be a disaster all right so just be careful
about joint tenancy so the most common thing that people do you see them all
the time and all these seminars is they do what's called a living trust a living
revocable or revocable living trust so inside of a revocable living trust first
of all it's living it means it goes on living even after you're gone
it's revocable I can change it I can amend it I can do whatever I want with
it it's my stuff you can change your trust any time you
guys want right and you can change yours as well and it's held in trust for me
it's a lot like a corporation the easiest way for me to explain it is
everybody knows Microsoft correct everyone kind of knows you're Bill
Gates's founder of Microsoft I don't know if he's still in the day-to-day
operations of it but if he is and Bill Gates was to die today is Microsoft dead
because he died no Board of Directors gets together and
they find a new Bill Gates and they go you're our person and that person signs
off on the assets of Microsoft as Bill Gates did Microsoft doesn't die same
thing with your family trust I put all of my assets into my trust and the fact
that I died doesn't trigger a probate because my
assets are held in a trust and when I'm gone we just named a new successor
trustee to manage our fingers and then that person has the power to sign which
was the same power we had when we created it that makes sense so back to
my example about mom and dad when they had a house and it was owned
by mom and dad and I wanted to sell that house and I couldn't cuz I wasn't on the
title well one of the things you'll do in a trust is you'll change the title
that house and you'll say that house is now on my last name is Meier so they'll
say it's owned by the buyer or trust and so they simply this is an example of a
trust right here they pick up the trust they go in there and they say yep the
Meier Trust is in full effect this house on the deed it says it's owned by this
trust and it says that the original trustees are mom and dad I give a couple
death certificate mom dad are gone and inside the document
it says okay the successor trustee ironically is not me it's actually my
brother the successor trustee is my brother and he provides ID and says yep
on that guy right here and they go wonderful sign off on the deed house is
gone no probate that's what this is all about that's why people are going this
route so there's a couple people in there that are important the first
person is the grantor or the trust or the person who's putting their stuff in
the trust if his mom and dad's trust it's all a mom and dad's stuff it's
their houses it's or cars or bank accounts all of that stuff goes in there
and then because it's their stuff they have to name somebody who's going to be
the trustee well if this is mom and dad who do you think once the manage mom and
dad stuff while mom and dad are alive mom and dad so mom and dad are here and
if something happens to one of them the other one's got full control
and then when they're gone there is somebody called a successor trustee and
there's other people called beneficiaries sorry for the writing it's
a little low the successor trustee is somebody that they say when mom and dad
are no longer here the successor trustee then takes over for me and a successor a
sole job is to take those assets and get them to the beneficiaries in the way
we've laid it out and that's important way we laid it out not on how they want
to do it they can't change this thing because once mom and dad are gone guess
what this is no longer a revocable trust it's irrevocable because the people that
put it together aren't here to make changes so nobody can change it so
they're in charge of making sure these assets get to these people okay you had
brought up a great comment a couple of minutes ago about the successes about
the federal estate tax exemption at six I think it was six hundred grand well
back in the day when they created these trusts there are several different types
of trusts there's q-tips and dynasties and disclaimers and simple probate
avoidance and a BS and A's and AAA there's a bunch of different trusts out
there and when this was out there a lot of attorneys or a lot of clients I
should say we've got what was called an a/b trust which to your point when one
of us died the trust got split into two trusts an A and a B to take care of the
taxes well just because tax law has changed doesn't mean your trust changed
so we do say have some folks that come into our office and go I still have an
a/b trust I don't want to have to divide this and live on half of the assets so
just like you know we talked about those power of attorneys reviewing those find
out what type of trust you have to make sure that you understand how it's going
to function when you're gone okay so it's important to understand what type
of trust you have out there okay so we sit down with a lot of clients that we
ask simple question if you were to look back
on your estate plan and your distribution of your assets 10 years
after you were gone what should have or must have have have happened for you to
say that was smart and I tell people you can do that you can control that right
now so just getting a trust together and saying I got three kids a third a third
a third have a nice day oh no no no how about a third and I'll
give you some of it now and I'll structure some of it for income or I'll
let it lump sum grow until you're 65 or it will pay for stuff or I want to pay
off your bills so instead of you just getting this money the trustee is gonna
ask you for your bills and the first thing where I do is I'm gonna pay those
off with my money I think that's a good use of my money I just want you to get
further in debt if you are have a child or a beneficiary who may be addicted to
something you know that giving that money as a bad idea so simply darling
doesn't mean you should give it to him it should be set up in a in a way that
it benefits it enhances their lives depending on your estate value if you
had kids that they could retire with mom dad give them all the money right now
and when we tell them that I'm tangoing yeah it's not what I want so how do you
want to give them this money do you just want to give it to them right now and so
you all have a goal or a vision of how you want to give the money to kids
you've got one kid that's I know he's in taeeun investing right away and he
doesn't need the money and this one over here oh I'm gonna blow that tomorrow
and this wife over here this son of mine oh my god I can only imagine what
they're gonna do with it this is a tremendous gift you giving
them your assets that you've worked your whole life for make sure they use that
money accordingly and so that's just a really long answer your question about
how long a trust lasts because you can set up stipulations to say hey kids I'm
gonna do something for my grandchildren okay you can do that the stuff that goes
in a trust is called funding where you are
actually change the way the asset is titled it's anything with a deed a title
or a registration a deed on real estate a title on bank accounts registrations
on boats planes things that if you think about right now
all the stuff that takes your signature to sell would go into your trust I don't
need to put my coffee table in there or my refrigerator but I do have to my
house I don't have to put my clothing or my jewelry that gets covered by the will
that's inside of the trust but I do need to put down my brokerage account and I
do need to put down all that stuff the stuff that does not go in your trust
401ks IRAs or insurance and why not and you won't tell me why but a big extra
you don't put those inside of your trust perfect you've already got a beneficiary
designation beneficiary designations supersede whatever your trust says you
want to work with Advisors they kind of understand the whole picture and how you
just want to have a plan for everything I don't need to buy a long-term care
policy I gotta have a long-term care plan I may not need a revocable trust I
just have to have a what's my back-up plan how do I get rid of this stuff so
let's do this guys it's it's 12:30 I really appreciate you guys working with
us as we came in thank you very much guys I appreciate you coming in
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