In this episode of Retirement Unpacked, Al Smith delves into the essential aspects of estate planning. Discover how proper planning can protect your loved ones and ensure a smooth transition of your assets. Learn about the tools available, such as trusts and beneficiary deeds, that can help avoid the probate process, and the importance of having updated beneficiary designations.
Welcome to Retirement Unpacked with Al Smith, owner of Golden Eagle Financial. You want a retirement plan that alleviates your fears about the future so you know your money will last. As a chartered financial consultant, Al Smith will help you find a balance between the risk and reward of the market and the safety of your retirement income. And now, here’s your host, Al Smith.
SPEAKER 01 :
Well, thank you for listening. Another program today of Retirement Unpacked. There’s a lot of different things that we talk about in my show. We talk about taxes. We talk about Social Security. We talk about the importance of having a plan. And one of the things that I talk about probably not as often as I should is estate planning. now i’m not an attorney i don’t prepare wills or trusts or anything like that but i do come across many different circumstances where i realize estate planning is either needed or it should have been done a little bit differently or more in detail when someone has already passed and obviously that’s too late to do estate planning and most people don’t get up in the morning and think in terms of well i should you know create a better newer will or maybe the wife and i should get a trust or what’s going to happen to our rental property if i were to pass on most people don’t get up in the morning and think about those things But I have found that when estates are well planned, things can go much, much more smoothly. And it’s a question of not only having things go smoothly, but protecting those that you love. And protection can mean a lot of different things. And right at this particular time, I have a client I worked with a while back, and he owned his condominium and had an IRA. And he passed recently, and his son and daughter will inherit his IRA soon. But what I have found, they’re both beneficiaries, so that won’t go into probate or anything like that. But there really wasn’t any communication from my client to his son or his daughter who were his beneficiaries. And I think communication when it comes to estate planning is incredibly important. um without the requirement of an attorney and don’t get me wrong i’m not saying you don’t need an attorney but there are some things that are more common sense there are some things that can be done by whoever your financial advisor is that can enhance things already being done by an attorney. An attorney is obviously necessary when it comes to preparing a will or a trust or things like that. But having the conversation with other family members and having the beneficiary designation structured on your financial products, that’s extremely important and those don’t necessarily require an attorney so to speak and one of the things that might have helped this particular family that I’m working with is if there had been a trust because when his property passes on to his two children it’s going to go into probate and then the property may be sold and so There is something that, in addition to a trust, could have made this go much, much smoother, and that is a beneficiary deed. There’s a document called the beneficiary deed where you can will your real estate to someone or to… two people in this case, so that when you pass on the title of your property, your real estate will go to your son or your daughter or equally shared between those two as opposed to going into probate. And that’s one of the advantages of having things documented well. the other thing is a trust completely avoids probate so if you’re thinking in terms of should i or should i not have a trust there’s a lot of reasons to have a trust not the least of which is privacy when someone passes on and things go through the will there is probate and that’s not necessarily a bad thing and some counties it goes rather smoothly in colorado it’s easier than in a lot of other states but it is a public event i don’t know if any of you have ever lived in any smaller communities or smaller counties but there are public notices when someone passes on and those public notices are obviously published, and you can see when someone passes, and it will say if there are any claims against the estate of George Peterson, please come to the Elbert County Courthouse and present your claim before the probate judge kind of thing. That does not occur when someone has a trust. So those are just some things… to think about. A lot of reasons to make certain that you have your estate planning in order. Now, some people will say, well, what if I’m a single person? Do I really need to do estate planning and that sort of thing? Because maybe… i really don’t have many assets and maybe my ira i already have a beneficiary designated for that well estate planning for single people is rather important because if you don’t have a will the state of colorado will determine where your property goes And I don’t think the state of Colorado is high on your list to inherit your property. Not that they’re going to keep it, but they’re the ones who would determine it. Because when you die without a will, that’s called dying intestate. And that’s where the rules of the state determine where your assets go. Another thing that’s rather important is once children reach the age of 18, then let’s say if one of those adult children were to be in a severe accident or something like that, The parent, if that adult child does not have a medical power of attorney and a directive, the parent would not be able to intervene with regard to the medical wishes of his son or daughter or the couple’s son or daughter. So estate planning for single people is rather important, even though you think about more in terms of when there are children and things of that nature. and unmarried couples it’s very important also because if there are couples who are together but aren’t married Colorado has common law you know marriage rules and things of that nature and in the absence of estate plan things could get you know very tangled up and I don’t think that’s in anyone’s best interest to have their things be tangled up just because you know someone someone passed and that’s clearly something to think about again I think about the son and daughter who will be coming into my office, and they’re going through probate and having to go through all the documents that are required for that, and that’s something that could have been avoided had their father set up a living trust, which is not… terribly expensive, but it’s part of a plan that can make things go much more smoothly for heirs. So a lot of things to take into consideration when we think about estate planning. And I know a lot of you listeners may be in your 50s or 60s and you may have parents. And your parents may not want to talk about that sort of thing. But it’s incredibly important that there be a conversation. And sometimes parents will have a will to. that was prepared maybe in another state, and it was prepared when their children were small, things of that nature. And I think what’s equally important to having a good estate plan is to having really good communication with those who will inherit your property. That means sons, daughters, things of that nature. And some of that are just some basic logical steps that, again, aren’t required by an attorney. But let’s consider, for example, just beneficiary designations. If an individual or a couple has an account, and they may have sons and daughters as named beneficiaries, and those sons and daughters are grown, and they may have children of their own, grandchildren. Well, there is a provision that’s included in a beneficiary designation called per stirpus. And per stirpus is an alternative designation for contingent beneficiaries that will require proceeds to pass down what we call a bloodline. The alternative is, and basically under that circumstance, let’s say if… There’s a couple, and the man’s spouse is beneficiary for his life insurance or for his annuity or his IRA or something like that, and the contingent beneficiaries may be their two children. Now, if one of those adult children were to die before the spouse, and then the primary person died and and the spouse died then instead of those proceeds going to that contingent beneficiaries children they would go totally to the other beneficiary So it’s really important that those two little words per stirpus be included when there’s contingent beneficiaries to be considered because that has things go down to grandchildren rather than having everything go to the other grandchild and which would disinherit the grandchildren. More things about…
SPEAKER 04 :
estate planning how incredibly important it is after the break al smith of golden eagle financial can help you protect the estate you built so your assets don’t disappear in paying for long-term care as people are living longer there’s a 40 chance you’ll need care later in life that’s more likely than your house burning down Yet we all buy homeowners insurance without question. Life insurance is useful for much more than paying for funeral arrangements. People don’t talk about life insurance because they assume it doesn’t apply. But in retirement, your income may literally depend on you staying alive. What happens to the pension, Social Security, or your overall plan if you pass on? Al Smith at Golden Eagle Financial is not just a financial advisor. He knows how to evaluate your specific needs and build a plan that takes the right steps at the right time. He’ll ask questions you haven’t thought of and help you leverage what you already have. Sign up for a free no-obligation consultation with Al Smith of Golden Eagle Financial on the kozradio.com advertisers page. Investment advisory services offered through Brookstone Capital Management, LLC, Registered Investment Advisor, BCM, and Golden Eagle Financial Limited are independent of each other. Insurance products and services are not offered through BCM, but are offered and sold through individually licensed and appointed agents.
SPEAKER 01 :
Welcome back to the second half of Retirement Unpacked, and we’re talking about estate planning and how important that is. And again, I’m not an attorney. I don’t prepare wills or powers of attorney or trusts or anything like that. But estate planning is an important component of financial planning, so I can help guide people in the right direction with respect to their estate plan. And if there’s a question that you have that has to do with beneficiary designations or anything like that, give my office a call, 303-744-1128. Also, we’re having a tax and retirement event in Bennett this Friday from 1.30 until 3. And there’s no charge for that event. There will be refreshments. And it’s going to be a purely educational event. We’re going to be talking about some of the tax traps that people face in retirement. Now back to estate planning. One of the things I had talked about earlier that I will continue talking about is the importance of communication. Because whatever parents have planned for their estate needs to be communicated to their children. In very specific terms, sometimes one child out of three or four or two or three or something may be named as an executor if there is a will. Or in Colorado, they refer to it as a personal representative. In other states, there’s an executor or an executrix or something like that. Now, in some circumstances, parents have said, oh, we’ve made a will or we did a will ourselves or something of this nature. And if it’s been a considerable period since your parents have prepared that document, I would encourage them to review what they have, meet with an estate planning attorney, and see if what they have already prepared is adequate because, you know, things change. People’s circumstances change. And so in addition to making certain that their documents are up to date, it’s wise, very wise, to communicate with adult children what is going to be in their best interest. We talked a little bit about the difference of having a will or a trust. Having a trust avoids probate, but it can also make specific arrangements because many times when I meet with couples who are, let’s say, well into retirement and they have adult children, it’s not at all uncommon to have maybe two out of three adult children doing extremely well and maybe one is financially struggling. And it may be because of poor decisions. There’s not really any sense in pointing blame on it, but it’s often the case that one child is not doing nearly as well as the others. And perhaps that child also has not demonstrated any ability to handle money. That’s an extremely… obvious example where a trust can be incredibly important because the trust can make certain that the child who does not handle money well can receive a modest income over a long period of time, whereas the other two children who are doing well could receive a lump sum. If the children are much younger in age, you could structure that for all of the children. A trust can structure distribution of assets at various times during the lives of adult children, such as when someone’s married, buy a house, things of this nature. That way the principal can be preserved. It’s preserved from creditors and so forth. So if one of the adult children… ended up in a difficult financial circumstance, and if their inheritance is still in a trust, it’s naturally protected from creditors. Another tremendously important example where estate planning becomes really important is when there are second marriages. It’s very common that when I work with couples and I ask them, well, how many children do you have? And it’s often a response, well, I have two and he has three and so forth. And I think the estate planning there becomes extremely important because maybe one of the two in this second marriage couple may have significant assets and the other may have leaner assets, for lack of a better word. And I think it’s important for both people in the second marriage to take into consideration what would I be expecting if you died and what would you be expecting if I died? Because I have heard some examples where One party says, well, if I died, I’m going to leave it all to my new wife, and then I know she’s going to distribute it with good wisdom and guidance to my adult children. In reality, if that’s not made in the will or the trust with a bulletproof document, then what could happen under a scenario like that is if when the first of two parties in a second marriage pass on, the surviving party you know may come to the conclusion well i really never liked his kids very much and so i’m just going to see how this money that he left me can benefit my children so estate planning when there are second marriages is incredibly important and the other major part of an estate plan that’s extremely important are powers of attorney, both medical powers of attorney and durable powers of attorney. A durable power of attorney permits people to act on someone else’s behalf while they are living so that if someone were to become incapacitated, having a durable power of attorney would permit someone whom they trust to pay their bills and make their financial decisions for them. And the medical power of attorney would permit someone to make medical decisions on their behalf. And there can also be a directive. I’ve heard terminology like a DNR referred to, do not resuscitate, and that sort of thing. So I think communication those wishes of someone in both a regular power of attorney and a medical power of attorney, I think that becomes extremely important. And as far as whom to designate for those, obviously the medical power of attorney. You don’t want someone who is younger. I’ve heard of circumstances where someone is appointed medical power of attorney and who’s substantially older, and I think that’s okay when the parents are in their 50s and 60s or something like that, but under most circumstances, you would want someone who is younger so that if someone’s capacity were diminished because of a stroke or something like that, the person who has both the durable power of attorney and the medical power of attorney are younger, so We don’t have to worry about the incapacity of the person who has the medical power of attorney and so forth. Sometimes people also say, well, gee, if I give someone power of attorney, then they can do all of these things and steal my property or money or something like that. Well, if you have that concern, then obviously you wouldn’t name that person for your medical power of attorney. The other thing is you can have… I don’t mean medical, I mean a durable power of attorney would permit someone to access someone else’s accounts and so forth. But I think what’s important is that you fully trust that person. And if you have some kind of concerns, you can have a durable power of attorney, but not have it in the possession of the other party. Have it be somewhere where it can be accessed if the primary person person we’re talking about were to become incapacitated from a stroke or dementia or anything like that and I think part of estate planning isn’t just planning for what where are my assets going to go when I die but how will I be cared for and how will that be paid for if I were to become incapacitated and I think that’s a separate planning thing of its own but it should become part of an estate plan because when people pass sometimes they die in their sleep or they may die after a few weeks in the hospital but it’s not terribly uncommon and for someone, especially women, to spend a few years in a nursing home prior to their passing on. And I was fortunate, both my parents passed after brief periods My father did have dementia, but he was taken care of by my mother. He did ultimately go to a nursing home, but he was only there for literally a few weeks before his health deteriorated and he died at age 94. But I have known other circumstances. I even had someone on my show where a parent and a grandparent, between the two of them, spent over 10 years in a nursing home. And an enormous amount of assets were depleted. There was a property near the coast in New Jersey that had enormous value that The worth of that property ended up going toward long-term care rather than benefiting any of their adult children. So I think estate planning is something that needs to be on the forefront of financial planning. And again, if you are saving toward retirement, if you’re putting money in your 401 , if you’re funding your IRA and you want to get an opinion or some guidance, is this going to be enough or the money I already have now, how is that going to last me in retirement? Give my office a call so we can have a conversation. 303-744-1128. Thank you for listening. God bless you. And let’s thank the good Lord for peace in the Middle East, which appears to be happening right now. Again, God bless you. Hopefully you’ll be here next week. And have a great day.
SPEAKER 02 :
But are offered and sold through individually licensed and appointed agents.
SPEAKER 03 :
The opinions and advice on the preceding program are those of the hosts and guests and do not necessarily represent the views of this station, Crawford Media Group, its staff, management, or sponsors.
