Episode 12 - Mastering Estate Planning: Protecting Your Family's Future

Navigating the legal labyrinth of estate planning can be overwhelming, but the peace of mind it brings is priceless—Deb Meyer has seen the difference firsthand. Through heartfelt anecdotes, Deb unravels why every parent needs to take this act of love seriously, ensuring their children's guardianship and the handling of their affairs are well examined.

Join her as we delve into the often-overlooked yet essential steps of estate planning, from appointing decision-makers for your health and finances to the intricacies of selecting a guardian for your children. It's not just about wealth; it's about safeguarding your family's future.

This episode isn't just a discussion; it's a treasure trove of actionable insights. Tune in and arm yourself with the knowledge to protect your loved ones for generations to come.

Episode Highlights

(02:35 - 03:18) Planning for Your Family's Financial Future

(15:01 - 15:43) Selecting a Trustee for Financial Responsibility

(20:03 - 21:07) Finding an Excellent Estate Planning Attorney

(23:52 - 24:57) Retirement Beneficiary Designations for Trusts

Full transcript

Deb Meyer (00:04.622)

Have you ever heard the term estate planning and thought it was only reserved for the rich? Well, you're in for a treat. We're going to talk about estate planning and why that is a myth. This is episode 12 of the Beyond Budgets podcast. And I just want to emphasize that estate planning is important for any parent who wants to protect and provide for their children, regardless of how much money you have in the bank.

I'm going to start off with a story. We'll call my friend Joe. Joe and I grew up in Milwaukee together and Joe's an only child. His parents divorced towards the end of high school and he went off to college. And then shortly after he was about his mid -20s and his father unexpectedly passed away. And I flew and went to see him a few months after the funeral, trying to understand where his headspace was at.

He confided in me that he was struggling from a grieving perspective, but even more so struggling because his dad didn't have any estate planning documents in place. It was a time of chaos. It was a time of stress when he should have been going through an emotional grieving process. He was also trying to make sense of all the financial implications of being the sole inheritor of these assets and really stewarding them well going forward.

His dad had worked with an investment advisor, but that investment advisor was focused on investments and they weren't really doing holistic planning. So that's why his dad didn't have any documents in place.

And let's fast forward to 2022. I lost my mother in late 2022. And I was the financial advisor for her and my father. Obviously really devastating from an emotional standpoint and I wanted to properly grieve, but from an administrative and financial standpoint, we had everything buttoned up pretty well. I'm a fiduciary financial planner, which means I always work in my client's best interest.

And I'm also holistic in nature, trying to not just focus on investments, but really looking at the gamut of everything that touches someone's financial life, including estate planning. So we had beneficiary designations, we had a revocable trust in place. Everything was smooth from an administrative standpoint when my mom passed.

Those two different extreme examples obviously show that, depending upon whether estate documents are in place or not, it really can have an impact on the beneficiaries or the people in your family that will be financially holding the implications of your passing. So unfortunately, I know it's a morbid topic, but it is something that we need to think about and really plan for. And I do want to emphasize, I'm not an attorney, I'm a Certified Financial PlannerTM.

I’ve been working with a lot of different families over the years and don't draft any estate planning documents, but I do want to share some tips and just an overview for people who aren't as familiar with the process. Or if you're in that camp that thinks, okay, estate planning is not for me because I don't have a lot of assets to give, don't stop listening and turn this off. It's still relevant to you even if you don't have a lot of assets to protect.

First off, when you're thinking about hiring a state planning attorney, and I do recommend you hire an attorney, don't try to do this on your own or Legal Zoom it. There are some questions that you want to be thinking about ahead of time before you go into that meeting with the attorney.

First off, be thinking about incapacity. So let's say, again, sad situation here, but let's say you're in a tragic car accident. You're alive, but you're on life support or some other measure. You’re unable to make any financial or medical decisions yourself. Who in that case is going to be the person to make those medical decisions for you? Who's going to be the one to make sure your checks are getting cut for any balance due amounts on taxes or other financial obligations if you don't have it set up on auto pay?

Deb Meyer (04:42.446)

who are the people in your life that you know you can trust to make those decisions while you're still living but just not able to make those decisions for yourself. And if you're in the boat like me where you have a parent that's a little older in years, more experienced in years, you might be the power of attorney for that parent trying to help them if there was an event and you needed to step in. So...

be thinking about it in the context if you're in that sandwich generation and also caring for elderly parents, just understand who their people are. And then for your family, who would you want making the decisions for you if you were incapacitated? And then if unfortunately your medical deterioration, or I'm sorry, your medical condition deteriorates, who would you want to be taking care of your children if you pass away?

In this case, if you have minor children that it varies state to state, but generally speaking, a good rule of thumb is about age under age 18 for minor children. You do want to have a guardian in place. That person's really going to be responsible for the care of your children. So if you're married, you typically have your spouse as your power of attorney, as your guardian, your everything, right?

because you're sharing life together. But if you're single or divorced, widowed, whatever the situation, you do want to make sure you have other people in place. And even if you're married, just having that spouse listed is one thing, but you also want to be thinking about backups as well, other people in your circle that you can trust to make the decisions. Also know when you're making these decisions on medical and financial powers of attorney,

for the incapacity, it could be two different people. You might have someone who is really well -versed in medical decisions and someone else who's really financially responsible, and they both might be important to you, but they don't have to be the same person. When you're thinking about guardians, same kind of situation. You might have someone who you think would be an excellent person to take care of your children, their day -to -day quality of living, but you might think, hey,

Deb Meyer (07:03.822)

They don't always make the wisest financial decisions. Maybe pick someone else as executor or trustee to handle the financial aspects of the assets that you're leaving behind to your children. So again, I know this is a morbid topic. I'm going to try to make it as enlightening as possible, but these are things to be thinking about. And hopefully by the end of this podcast episode, you'll...

walk away knowing that, hey, you do want to get some estate planning documents in place if you don't already have them. Or if you're at a point where you have estate planning documents but they haven't been looked at or updated for many, many years, just trying to go through those documents, understand who the key people are that you previously appointed, and see if you still want those same people in your estate planning documents or if you need a refresh.

All right. So the other thing to think about with the backups is just having more than one backup. So in my case, I'm married. My husband is my surviving spouse. He's going to be listed as my power of attorney on medical and financial decisions. He's also listed as the guardian of our children, and he's listed as the executor of the estate. If I were to pass away, he'd be the person to take care of all of that.

But let's say, unfortunately, he and I are both in a car accident together and we both pass away. In that situation, we need someone else outside of us to be taking care of those matters, taking care of our children, taking care of the financial implications of our passing. And even if you know of an attorney friend, attorneys can be very expensive as you're administering in the state.

So anything that you can do to really...

Deb Meyer (09:01.774)

change course and think strategically through the other people that you trust in your life, that's going to be very beneficial as you're approaching this estate planning meeting before you even go meet with the attorney. All right, let's talk a little bit about revocable trusts. A lot of people think, again, it's only reserved for the rich or the people that have lots of savings right now. And that could be true in many cases. Most of my clients, when I worked at the multi -family office,

many, many moons ago, virtually everyone had a trust. Some of them are revocable, others were irrevocable, which basically means it's not changeable or not changeable easily. But revocable means you can change it at any point during your lifetime. So my husband and I did set up a revocable trust when we lived in Missouri and right before we had our first son. He's now 14 years old. So anything we have in those documents are going to be more dated. And

just because we started that revocable trust there. We have since moved to Florida, but talking with an attorney in Florida, it was okay if we didn't have any changes to the people in the documents just moving one state to the other. But again, if you end up moving a lot for your job or other reasons, just know that if you plan to stay in that state for any length of time, you probably want to meet with an estate planning attorney and better understand their specific state laws because...

Every state is different and an attorney in Missouri isn't necessarily qualified to do estate documents in Florida unless they went through the Florida bar. But they might be, because Missouri and Illinois are really close, they might be certified to do documents for anyone in Missouri or Illinois. So again, those are just some examples of estate attorneys and how you can work with an estate attorney. But let's go back to the topic of revocable trust for a minute.

One of the number one reasons people get a revocable trust is to avoid probate. And probate is a very lengthy process after someone passes away. It can be time consuming. It can also get very expensive. A lot of people want to avoid that process. And so they make a revocable trust to hold any assets that are created during the lifetime that, you know, they want to eventually pass on to their kids or potentially green kids. Now,

Deb Meyer (11:30.094)

depending on which state you're in, it's going to vary the difficulty of the probate process. So some states are a little more probate friendly, and then other states, it's a real drag to go through the probate process. You'll end up spending way more with an attorney in the probate process than you might if you just go and get some estate documents done today. The other thing to think about on a revocable trust is the level of assets. Obviously, you've done some savings today.

you have some assets stashed away. And when I say asset, it's anything that appreciates in value. So it could be a savings account, it could be a retirement account, maybe a 529 plan for college education. Any of those things are considered assets. But those aren't the only assets. If you have a life insurance policy, again, a revocable trust is only going to kick in if you pass away. So life insurance proceeds should be figured into the level of assets as well. And for a lot of people, especially

young clients of mine, you know, we might have a term life policy worth one or two million dollars, very low premium, but they're that's an asset that if they pass away, their family would, you know, inherit on top of whatever other assets they've saved. So those are some big numbers, especially if you have just one or two children, and you want to be putting as many protections in place as possible. So those beneficiaries are your kids that are

inheriting the assets don't squander them. The other thing to think about too is the flexibility to create sub -trusts. So in a revocable trust document, you can go into quite a bit of detail about who you want to financially benefit and to what extent. If you have someone, let's just say your kids are older and one of them struggles with an addiction issue, you might want special provisions around them.

So they don't have as much access to the trust assets or the income. But someone who responsibly manages money and you've already seen them do it through their day -to -day budgeting and other finances, you might make that person the trustee of the trust assets and really give more power and authority to them. Or you could separate out the trusts, just...

Deb Meyer (13:55.854)

for the benefit of each child. So there's all kinds of different ways you could structure it. And that's when it's best to really seek out the counsel of an estate planning attorney. Again, I'm not an attorney. I'm not authorized to practice law. I'm just giving some suggestions of things, just examples in real life that I've seen of different families, different structures that I hope will help you in your decision -making process. All right, the other thing to think about too, if it's a remarriage situation,

and you want to protect certain assets. So let's say your current spouse, you want to have a carve out for a family home or an annuity or something that they're going to be a joint life annuitant, but you don't really want them inheriting other assets that you might have accumulated during the lifetime with your prior spouse. That's going to be a situation where you do want to have special carve outs. And it's very hard to do that within just a traditional will.

It's much easier to do it within a revocable trust and really think of it as a multi -generational planning tool. There's estate planning attorneys that know ways to avoid the, what's called the generation skipping tax. If you have the right language in there, they can help minimize any taxes for going from, let's just say you're in your late sixties and you're passing it down to your grandkids who are in their teens.

Usually, there's a special tax imposed, again, if we're talking about substantial assets, and attorneys can do a great job of getting the right language in there to help minimize those.

Okay, let's talk about selecting the right trustee if you have a revocable trust. And if you don't have a revocable trust, it would be selecting the executor. So in either case, this is the person responsible for the financial aspects of the trust or the assets that you've left when you passed away. In either case, you know, a lot of people think about a close family member as being on top of mind to take over. And again, if you're married,

Deb Meyer (16:08.534)

spouse is usually the person to take on this role. If you're single, you know, maybe some other family member like a parent or a sibling, whatever you do, you want to find someone that's responsible, someone that's going to manage money in the similar way you do. And if you see that there's a spending problem or an issue when they're managing their own finances, they're probably not the best person to be taking on this kind of role.

That person may still be loving and wonderful and might be great to be a guardian for your kids, but they might not be the person to also manage the financial responsibilities of these assets. So again, think through their personality traits, their own habits with money, and have an open conversation with them. If you're thinking about appointing them as a trustee or as an executor, as a backup, you might want to...

at least have an open conversation to understand if that's even a role they'd be willing to take. Some people are afraid of the liability associated with it. There is some legal liability. If, let's say, you pass, you're married and your spouse passes, and then this family member, let's say a sibling, so my sister in my case, if she takes on the role of trustee and my kids grow up and say, hey,

you didn't distribute the trust assets the way you were supposed to, Aunt Julie, they could come back and try to sue her. And that's not a fun situation to be in. I'm not saying that happens frequently, but it is a possibility. So again, anytime you're picking an individual, like a family member or even a close friend that you think is conscientious and responsible with money, it's just important to be thinking about.

their willingness to do it as well? Do they have the time to do it? Those kinds of questions. And then if you're having a hard time finding that family member or close friend that would fit in this role well, there's a corporate trustee that can step in. That can be written into the documents. And the corporate trustee is basically an objective outside party. They're not going to have any family relation to you or...

Deb Meyer (18:29.294)

or friendship, so it can be a little bit cold from an administrative standpoint. But they should be able to make pretty objective decisions. They do get compensated. Usually, like 1 % of the assets that are being managed is a pretty standard management fee. Some corporate trustees are going to require a certain level of assets to manage. Most corporate trustees are going to require a certain level of assets. But I would say generally anything like $1 million and above.

and that includes life insurance proceeds, you can usually find a corporate trustee willing to step in that role. And then an adult child would be another option. Let's just say something happened to me when my kids are in their 20s. I don't necessarily feel a 20 -year -old or let's say 25 -year -old is responsible to fully manage hundreds of thousands of dollars, but I do feel like they could manage it with the existing

trustee. So in my case, if I pick a family member, let's say my husband and I are gone, we have a family member come in and help manage the trust assets, then my oldest son could be co -trustee with that person while he learns the ropes and understands some of the responsibilities. And then maybe by age 30 or 35, then maybe at that point he would be responsible enough to solely manage his trust assets.

So again, all of these things are considerations as you're thinking about trustees or as you're thinking about executors. Just know the difference between the two names, trustees associated with a trust, executors associated with a living will. And at a very minimum, you get a will, powers of attorney, or kind of the basic documents. Some people additionally choose to add on a revocable trust to their state documents. OK, let's take a break.

I do want to chat about the Family Finance Starter Guide. It is free and it's on the website. It's at www .worthiness .com slash wn -starter -guide. And that's a free resource I've developed. It talks about the top 10 family finance myths. And I think it would be important for you. One of the myths is estate planning is reserved only for the rich. So you're hearing that today.

Deb Meyer (20:56.75)

but it's a great resource for you to see some of the other myths out there and just understand that it's possible to forge a new future as a family. By doing that download, you also get on my email list. I do send out notifications any time a new podcast episode is released. So you'll get those notifications. And then additionally, I send out a lengthier email about once a month that highlights some other articles and things that I've read that...

seem of interest. So I think anytime you're able to get some free resources and get a new perspective, it can be really helpful. So I'd encourage you again to download the free Worthy Nest Starter Guide. It's at www .worthynest .com slash wn -starter -guide. And I'll also link to it in the show notes.

Deb Meyer (21:53.55)

Okay, so we talked about the estate planning process, revocable trusts, trustees, all of that kind of thing. Let's talk about actually finding an estate planning attorney. Smaller firms generally have more reasonable prices than larger firms. When I used to work at the multifamily office, I was working with some law firms that were charging upwards of $25 ,000 to do estate planning documents.

When I've been working more recently with clients of, I would say, middle incomes, middle levels of assets, we're usually able to work with an attorney for $2 $3 ,000 to get a very robust set of estate planning documents for a married couple. That includes powers of attorneys for both of them, just from a medical directive and financial standpoint. It includes a will, which would specify guardians.

And then typically that also includes a revocable trust. Fees are going to vary depending on which state you're in and which specific law firm you choose, but those are some good guidelines. And think about it as this, you are putting an investment in the future for your family so they don't have to go and have a bunch of extra costs later if you did pass and have to go through that probate process because there are no documents in place. There is nothing.

where they know what your wishes are.

All right. Then from an estate planning perspective, it's also important to find an attorney with that estate planning specialty. So if you have someone that tries to do it all as a small shop, they're issuing or they're helping with traffic citations and family law and all these other facets of law or corporate attorney helping with business buy and sell agreements. Like it's hard to be

Deb Meyer (23:53.28)

expert at estate planning if you're doing all of these different things as an attorney. So I would highly recommend trying to find someone that is at least somewhat attuned to estate planning specifically instead of some of those other areas I mentioned of law. And then if you're really stuck, one of the resources I like is called martindale .com. That's M -A -R -T -I -N -D -A -L -E.

where you can search by your geographic area for attorneys. Now that's going to have a broad plethora of attorneys, so all different specialty areas. It's going to be harder to find a state planning specific, but there is a way to do it. And again, visit websites and stuff that you can use that as kind of a starting point and then visit their websites to learn more about their specialty areas.

And then if you are just completely opposed to the idea of going to meet with an estate planning attorney and you just want something simple and quick and you know you're not going to do it any other way, there is a website called trustandwill .com that does have some estate planning documents, pretty basic documents. I wouldn't recommend doing a revocable trust through them.

But if you're even in that waiting period of like, hey, I know I need to go see an attorney in my local area, but I just want to get something basic in here. If something were to happen medically to me and I was incapacitated, you could use it for a kind of quick fix short term issue and then work with an attorney at a later date to get the more robust documents if something were to.

happen and you passed away and you want to have more of a discussion with the attorney as you're crafting those documents or as they're crafting those documents. The other thing I want to mention is most attorneys are going to offer a free initial consult. So during that consult, you want to make sure you understand their process, their timeline. It can take several weeks from the time you first meet them, even the time that you say, hey, I have these decisions made until the

Deb Meyer (26:10.862)

the draft documents are ready for you to review and ultimately sign. So it's not a super quick turnaround process. Maybe Trust and Will is online, but meeting with an actual estate planning attorney, it's not usually a snap it and it's done. The other thing to be thinking about when you're meeting with them is getting an upfront fee estimate. Again, if they have an estate planning focus, they should be able to give you a rough estimate of what it would.

cost to update those documents. If they can't and they're just like, oh, this is my hourly rate, it's hard to gauge how much time that could take, right? So I always prefer working with attorneys that offer more of a fixed fee package over an hourly rate. And then understand how they would guide you after the estate planning documents are done. A lot of attorneys, they'll give you these documents and then they'll be like, OK.

You go implement. And for me, working with my clients, I'm the one to help them implement because I'm usually managing some of the investment assets so we can update beneficiary designations and things like that. But it's not going to be a home run, especially if you're trying to kind of DIY the estate planning documents and financial planning process. If you have to go update the beneficiary designations yourself or...

get an account moved into a revocable trust account, things like that. It could be administratively more difficult to do all of that on your own. So you also want to understand, okay, will the attorney help guide me through some of that process after the documents are signed and executed? And then when you think about retirement plan beneficiary designations, I do want to go back just to one point for the revocable trust.

And you can use the trust as a beneficiary designation, but most attorneys are going to recommend that you use your surviving spouse as the primary beneficiary with a trust as a secondary if you have younger children. If you have, well, like let's just say in the case of my father, you know, it's just me and my sister now. And on his IRA beneficiary designation, it would have...

Deb Meyer (28:35.566)

My name listed as 50%, her name listed as 50%, and that's as simple as it is. We don't need to go through the trust. We can just be direct beneficiaries and have access to those assets if something were to happen. So again, an attorney will guide you through this process, and that's why when I gave the online resource, I wasn't suggesting you do it. I'm just saying if you're completely opposed to going and meeting with an attorney in person,

which most of the attorneys want to meet in person, then that is a kind of backstop solution to get some basic documents done, but it's definitely not the preferred way. Bottom line, I would love for you, if you don't already have estate planning documents, to consider getting some estate planning documents in place, if nothing else, just for peace of mind for your family, to help protect them. And then if you do have documents already in place,

Think about when you last updated them or reviewed them. Have there been any major life changes since then? Like a death in the family or a move to a new state, whatever the case may be. So again, usually when you think about the timeline to review, I would say every five to eight years is usually a good timeline unless you know for certain something happened prior to that five -year mark and you want to get...

some updates done sooner. You can obviously work with an attorney to evaluate the extent of what those revisions are going to entail. Okay, I hope this was helpful. Have a great day.

Deb MeyerWorthyNest LLCbeyond budgets, estate planning, revocable trust, trusts, parents, guardians, probate, legal counsel, financial legacy, estate documents, attorney selection, beneficiary designations, life events, estate plan updates, legal advice, estate planning attorney, estate plan review, estate planning tips, estate planning documents, estate plan, estate planning specialistComment