In this engaging installment, financial consultant Al Smith sits down with Michael Bailey to discuss why so many families face financial turmoil after the passing of a loved one. They explore real-life stories where outdated or non-existent estate plans wreaked havoc, highlighting the need for thorough preparation and clear communication. Learn how a well-structured estate plan and open family dialogues can ensure a smoother financial transition for future generations.
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 03 :
Welcome to another program of Retirement Unpacked. I wanna thank you for listening. I have some good information for you this afternoon. Before we dive into that, I wanna put an invitation out there because a lot of folks that I sit down and have a conversation with have been really good savers, but they haven’t added structure. In other words, they haven’t created a plan. They have a nest egg, but how that’s going to last through retirement is something they’ve not thought it completely through. Now that’s where I can be of a lot of help to people. You can reach me at 303-744-1128. There’s never any charge for a first consultation, and we can sit down and learn how I might be of help if you’re under one of these circumstances that we often talk about. Today we’re really fortunate because my guest is Michael Bailey, the mobile estate planning attorney. He’s had a show on KLZ actually longer than I have. He has a lot of clients as the estate planning attorney. He helps people prepare their documents and take their hopes and wishes for what they want to have happen to their assets and put them down on paper for the next generation. Michael, tell me what is, when you have to communicate with a new client about the importance of an estate plan, what’s maybe the biggest hurdle that you encounter when you have that first conversation?
SPEAKER 04 :
Um, not sure that there’s just one big hurdle. I mean, when I first talked to people, I mean, there’s several things they like to be concerned about. They have to be concerned about, you know, well, why do I need this and what does it cost and how long is it going to take and all those type of things. Um, I think most people kind of grasp the concept that they’re going to die, but they don’t think it’s going to be any time soon. Because nobody believes that their number is going to be up or their ticket’s going to be punched anytime soon. And that includes the 10-year-old, the 20-year-old, the 80-year-old, the 90-year-old, the 100-year-old. Maybe the 90 and 100-year-old have a better sense of that. But there’s almost like there’s a lack of sense of urgency to get things done because they think they’re going to live forever.
SPEAKER 03 :
No, people don’t normally get up in the morning and think about, what do I need to do to prepare for my death? People don’t think about that.
SPEAKER 04 :
No, it’s not top of mind. No. As well it shouldn’t be. No.
SPEAKER 03 :
After they’ve gone to the bathroom and walked the dog, they might be thinking about what they’ll have for breakfast or lunch. Are they running late for work or something? Those are more common things. What are the consequences? Because you sometimes come in after the fact if someone does not have an estate plan. By that I mean maybe they don’t have a will or if they have a will it’s 40 years old and hasn’t been updated since they’ve remarried or something like that. What are the consequences if either there’s no estate plan or the estate plan is highly outdated?
SPEAKER 04 :
So highly outdated doesn’t mean invalid. Highly outdated means you still follow that. So I have had various people who’ve called me, you know, the most kind of the highest dollar one I saw was had a person who called me and they said, oh, well, you know, we need to fix this because my dad died. And he left everything to his first wife that he married his high school sweetheart. They got divorced five years later. And then he went on to become a pretty successful businessman and died worth something in the neighborhood of $8 million. But his first wife was listed as the beneficiary. on um retirement plan he’d started and his first wife was listed as the who’s supposed to receive things under the will so his first wife was hey i’m gonna get that eight million dollars even though they had not been married for 40 some odd years and so that’s that’s still there well um his current wife who’d been married to him for the 42 years she could elect against the estate to Because if they’d been married for more than 10 years, she was entitled to 50% as a spouse. So it didn’t end up being my case. But in that case, the current wife ended up with about $4 million, and the ex-wife from 40-some-odd years ago ended up with $4 million. So it was a $4 million mistake to not update the estate plan.
SPEAKER 03 :
Exactly. And it still gets executed, even if it’s not the wishes of the person. And if you have wishes, but your will is based on what your wishes used to be and not what they are now.
SPEAKER 04 :
Your old wishes.
SPEAKER 03 :
Yeah, exactly. That doesn’t matter. So obviously those documents are extremely important. And one of the things I thought about as, you know, I talk to people, some of the people I work with, And we work with their IRAs and their investment accounts, and there may be life insurance or annuities and so forth. And if they ask me, because they need a will or a trust, I refer them to you. And if they follow up, they may or may not. One of the things that I think is lacking, and I don’t know if you find this to be the case, but is a conversation between the older parents who have a reasonable amount of wealth and their children. Do you find that is sometimes lacking?
SPEAKER 04 :
A lot of times it is. People don’t want to talk. You say people don’t want to wake up in the morning and think about planning for their demise. Most of us… really aren’t particularly good at talking about our financial situations or talking about money with our parents or parents talking about money with their kids. I mean, my kids, they know that we are… able to make our bills. They know that we have, you know, we own a house, you know, the townhouse that we still own, which was the first house we bought, you know, we’ve moved out of it and we’re 25,000 upside down. So we became unintentional real estate investors and unintentional landlords. You know, they know that we have some of that, but You know, my wife and I were talking the other day. We were getting our taxes, and I’m like, okay, so we did this and this, and my 16-year-old walked by, and she said, I’m sorry, how much did you say that we made last year? And I told her the number. She’s like, huh. And her comment was, that is so much money. And I’m like, it’s really not. But when you’re talking, you know, when you’re a 16-year-old where she hasn’t had a job yet or, you know, my 18-year-old who’s off at college and, you know, she worked and, you know, I did her taxes the other day. She made like $6,500 last year working as a, you know, part-time as an employee at Chick-fil-A. But, you know, $6,500 to a college student is an amazing amount of money. $6,500 to a 16-year-old who doesn’t have a job is an amazing amount of money. $6,500 to you and I where I’m paying for a house and, you know, with my now two weeks removed from my daughter starting driving. You know, she’s… So, you know, we got the… the extra bill for adding her to the car insurance she said oh how much was it and i said it was a thousand ten dollars and 47 cents she’s like oh that’s so much money i’m like well that’s for the next six months it’s not every month i have to pay that but if you’ve got 6500 and 2000 goes towards car insurance and then a house and everything it just doesn’t exist as much so you know My number wasn’t that high. But my kids and I, we don’t necessarily talk about, oh, hey, we’re… I’m like, well, I’m not rich. I’m not poor. I’m kind of somewhere in the middle like everybody else. But especially for the older generation. So my parents are… My mom… My grandparents were Depression-era, you know, they grew up in the Depression-era. My mom and my dad are the children of Depression-era parents. And so they don’t really want to talk too much about finances and how much money they do or do not have. And, you know, like my father-in-law, he’s always pretty sure that, you know, he’s going to make it work. And, you know, whatever he does, there will be money there. Right up to the point where… They lost a house and they needed to borrow money from the kids to be able to, get into their next house that they’re renting. And so having that conversation, I know it’s an uncomfortable conversation, but it’s a good conversation to have of, okay, where are we at? Because my dad has had quadruple bypass surgery. My mom has had a seizure and been non-responsive. So both of them, their health means they might end up in long-term care. So if they’re going to end up in long-term care, that puts me and my siblings in a necessary spot to take care of them and take care of their finances. And so we kind of need to know a little bit about what it is, and then also know a little bit about know how much it is so that we can say, okay, Yeah, but we’re going to go into long-term care. You know, there’s kind of the bare bones. This is a long-term care facility. And then there’s the, you know, kind of the Ritz-Carlton. It’s not called the Ritz-Carlton, but… The Erickson. Yeah, there you go. It’s the high level that’s going to cost you $20,000 to $25,000 a month. Well… For most people, $20,000 to $25,000 a month is outside their price range. Heck, for most people, $3,000 or $4,000 or $5,000 for assisted living is outside their price range. But $3,000 or $4,000 or $5,000 a month is more doable than $20,000 to $25,000 a month.
SPEAKER 03 :
Well, you’re exactly right, and an interesting thing I like to tell other people about is I, well, I say I had two clients. One has since passed, but they had no children, but they were federal workers, and they accumulated a considerable wealth during their lives, and they had it in a whole lot of different places. And the man of the house, he had what he called a croak book. And he thought this was quite humorous because he was, at the time, late 70s, early 80s, and he knew he wasn’t going to be around forever. So he had in this book where his assets were, the account numbers. and whom should be contacted for every circumstance, including the CPA, the estate planning attorney, the investment advisor, the banker, and so forth. And I did meet with his spouse when she passed. And it made things incredibly smoother for her. And I still remember in order to get his benefits from his pension as a federal worker, they wanted so much information. They wanted her marriage license. She got married in the 1970s. And fortunately, she had a brother-in-law who was there helping her. And while I was helping her complete some forms for her to get her pension, he looked up online and within 15 or 20 minutes was able to find a copy of her 1972 marriage certificate. I thought that was fantastic. But, yeah, that communication becomes extremely important. important. Do you sometimes tell people when they’ve put together a plan how they should instruct other family members? Because I know if someone knows their parents have money and they’re going to inherit it, they may say, oh, gee, I don’t want to talk to mom and dad about money, you know, make myself sound like a money-grubbing daughter or something like that. But I think it’s important that they know what’s coming their way and how it will be coming.
SPEAKER 04 :
Well, I agree with that. I think that the best possible way to upset people is to spring it on them as a surprise. Ha ha, here’s what’s happening. I mean, sometimes I’ll have, you know, when you have clients and, you know, they’ve got three or four kids and they’re like, we’re just going to split it up equally. I’m like, well, that’s not going to be a huge surprise. But some of the surprises can come in, where are things held and how are they being taken care of? And what’s going on with them. So, you know, my dad has a three-ring binder. It’s not his croak book, but it’s just, it’s like, where is everything located? Where can we find it? Because not everybody, you know, I mean, I have bank accounts at a couple different banks. I have investments at a couple different places. I have a couple different relationships. permanent life insurance policies that I use as my retirement plans just because, you know, personal feelings on IRAs, 401ks. And I really have a jerk for a boss. He will not match my IRA, 401k contributions. He’s just like, no, I’m not going to do it. He’s like, well, if I contribute half as much, will you? He’s like, no, I won’t do it. And for those who, yes, I am self-employed and I’m talking about myself. But where do we find those? So I have homeowners insurance through farmers. I also have a life insurance policy through farmers. Well, who’s going to know to go look at farmers insurance when I die? Well, nobody unless I tell them. And so in something like a trust, at the back of a trust, there will be what’s called a Schedule A, and it’s assets that are in the trust. And I have people use that as like a worksheet of, as they put things into the trust, they will… They can then write in what they’ve put in there. So like, oh, hey, you know, my account at Fidelity, account number 1234, or my account at First Bank, account number 5678. And so you kind of build that list of what assets there are so people know where to go looking for them. And if you don’t have that in the trust or you don’t have that in the will, you can… do a three-ring binder, you can do a book, you can put together an Excel spreadsheet, or Google Sheets spreadsheet, just that shows what you’ve got so that people have that information of where to find.
SPEAKER 03 :
Now, one of the potential problems with that is I work with Charles Schwab, and whenever I fill out an application for opening a new account, they have a special section called Trusted Person. and trusted person doesn’t mean they can access their money but it means they can communicate with schwab and find out about their money they can’t withdraw it but they can find out about it so that if someone becomes incapacitated or if there’s cognitive impairment this trusted person can contact charles schwab and ask them what do we need to do to generate income from dad’s account so that he can pay for assisted living, the person at Charles Schwab can talk to them without them being named as part of an application like that. They would say, we can only communicate with the account holder unless someone can show us a power of attorney. or something like that. But there’s a lot more details we’ll talk about, Michael, after the break. I’d really like to hear some of the stories of some interesting cases that you had.
SPEAKER 04 :
Sure, we can do that.
SPEAKER 01 :
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SPEAKER 03 :
Welcome back to Retirement Unpacked. We’re talking to Michael Bailey, the mobile estate planning attorney, who is also a KLZ partner. We’re talking about some of the important reasons to have a good estate plan. And Michael, what are some examples of things you’ve experienced where Either someone had no estate plan or the estate plan was improperly prepared and it didn’t reflect the wishes of the person. And once he passes, obviously there’s no change that can be made.
SPEAKER 04 :
Right. So I’ve already told you the story of the first and second wife.
SPEAKER 03 :
That’s a good one.
SPEAKER 04 :
I did have a client several years ago who he promised me he would put everything in his trust. And then when he died, he had put nothing in the trust. So his family were trying to figure out where these assets were and how they could find them. And in a trust or in a will, you don’t necessarily list out all of the assets. So they came to me and they wanted to know how they could figure these all out. And I said, well… kind of you have to watch the mail for the next quarter or so. And, you know, your investment company or your bank company, the bank’s probably going to send out monthly or quarterly statements. So you’ll know where to go looking for stuff. And so, you know, they’re just kind of, and of course they were thoroughly annoyed with me because I was supposed to know everything because apparently estate planning attorneys are omniscient. And I think we both know that there’s only one omniscient being, and it’s not you or I, is it Al? Yeah.
SPEAKER 03 :
No, it is not. And you would have to charge a significantly larger fee if you had to physically take the title to the man’s vehicles, change them to the trust, physically change his bank accounts to the trust, physically change the ownership of his precious metals. If you had to do all of that in addition to preparing the documents, you’d have to charge an amount that would be considered exorbitant. But in the absence of that, you have to depend on people saying, yes, I will change the ownership of my home, my investment accounts, and my vehicles, and my precious metals to the trust so that the instructions or the provisions of the trust can take place rather than the rules of intestacy.
SPEAKER 04 :
Right. And so, you know, in this particular case, they did end up, I think, they went off on their way to try to find stuff. But I’ve had other clients. I had one who his daughter called me, and I went to visit him on a Thursday. And I wrote everything up and emailed it out to them on a Friday. And we were scheduled to sign everything the next Tuesday. but he passed away on saturday so he had had uh some sort of form of kidney cancer for two and a half years before he called me and he’d had multiple strokes and things like that so i mean he was trying to like they were trying to get the house specifically to one child and not to others and so you know that’s what they wanted to do and that’s what we were trying to do and by the time i got involved i moved as quickly as i could to get things done you know, the less than a week turnaround time is really not on the plate right now for me. I’ve become much busier.
SPEAKER 03 :
That’s an incredibly short period of time to prepare an estate plan. So if they were expecting that, that was highly out of the ordinary. And so is it also for somebody to die a few days after you have your first meeting.
SPEAKER 04 :
Right. But in this case, so because of the way that it He didn’t have any sort of estate plan set up. We just hadn’t had a chance to get it all signed, witnessed, and notarized. The intestate rules took over so that I was going to get split up amongst his kids, and the house that was supposed to go to the grandchild was not going to be able to get to her because we had to play by the default rules that the state of Colorado has established for us in the intestate statute of what happens if you die without a will. The state of Colorado has a whole set of rules that they say this is what you have to do, And, you know, sometimes those work, sometimes they don’t. In this case, he wanted to give his house to his granddaughter and not to his children. But unless the children got together and said, oh, we’ll go ahead and give that to the granddaughter, then he wasn’t going to be able to get what he wanted done because it hadn’t been signed, sealed, delivered, so to speak, and done the proper way.
SPEAKER 03 :
Well, an estate plan is a little bit like life insurance. You have to take care of that before the fact.
SPEAKER 04 :
Correct.
SPEAKER 03 :
And you can’t wait until your health deteriorates to buy life insurance. And in the case of an estate plan, obviously you need to do that. You have a little longer to wait than buying life insurance, but it must be done while… People are cognitively aware. Have you ever had any circumstances where someone’s cognitive abilities have declined before they completed their estate plan?
SPEAKER 04 :
Yes. I’ve had many people call me and say, oh, well, you know, I mean, actually I had people who call me and be like, oh, you know, my mom or dad is in hospice and, you know, we need to get it done. And I’m like, well, how’s their mental state? Well, they’ve had Alzheimer’s for the last 15 years, so they don’t really know who we are. And I was like, well, we might be a little bit too late. Yeah.
SPEAKER 03 :
Does that mean a conservator needs to be assigned?
SPEAKER 04 :
Could appoint a conservator or a guardian. You have to go to the court and apply for such things. And that takes time and money and effort, too. But the sooner that you have and, you know, that’s one of those where you don’t want to play the game of, oh, do I do it right before I die? And so I don’t have to worry about it forever. I mean, doing it sooner rather than later is always a good thing. Like I said, life insurance. Well, when you’re in your 20s and you apply for life insurance, you’re much more likely to get a favorable rate and an affordable premium than if you’re in your 70s or 80s. It’s not quite the same with an estate plan. I’m not going to charge you more if you’re in your 70s or your 80s like a life insurance thing would. But since we never know when our time is up, it’s hard to play that game of, oh, well, I’m going to be around for forever or I’m not or things like that.
SPEAKER 03 :
Well, exactly, and an estate plan for some people might be a listing of their debts, and for other people… Debts to be discharged in death, right? Yeah, exactly. For other people, it might be the distribution of a significant estate, and I… can’t remember specific instances but i do know of a few where there was a really really loving christian family and there was one gal who spent the last 10 years being the caregiver for the person who passed and a larger much larger part of the estate went to her and this loving christian family was all of a sudden very hostile to her, even though she was the one that provided the care for her father. But that’s a whole other story. Michael, thank you so much for being here and providing some information about how important it is to have an estate plan. How can people reach you if they don’t have a will or if they think they may need a trust?
SPEAKER 04 :
So they can call me at 720-394-6887, or they can find me online at mobileestateplanning.com.
SPEAKER 03 :
And if you’re driving, when you’re listening to the show, you can find information about me, Al Smith at Golden Eagle Financial, or about Michael Bailey, estate planning attorney through KLZ. Well, God bless you for listening. Thank you for listening. Let’s continue to keep the folks in Israel safe. in our prayers and hopefully we can get the fighting stopped in both Israel and Ukraine and have a bit more peaceful world again God bless you for listening hopefully you’ll be here next week
SPEAKER 02 :
Thank you for listening to Retirement Unpacked with your host, Al Smith of Golden Eagle Financial. Set up a free consultation with Al today at klzradio.com slash money. Find your purpose in retirement with Golden Eagle Financial. Investment advisory services offered through Brookstone Capital Management LLC, a 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.
