Hello, and welcome to the Life By Design podcast, brought to you by Strategic.This podcast is all about helping you live your great life.Hello, and welcome back to the Life By Design podcast.I'm joined again by Greg Matticola, senior advisor and partner here at Strategic.Very, very good to be back, Jay.Yeah.Uh, this is episodeProbably like our 5th, 6th episode we've had you on- I think so.which is pretty exciting.Yeah.Am I leading the league?Am I, am I in first?Yeah.Fantastic.Yeah.That's all I strive for.Yeah.Uh, outside of Doug.Yeah.I'm not counting him.Doug's a pretty- Doug, Doug isThere's no way to surpass that.No.He's on every week.That's right.Um, but this week, we're actually going to talk about a pretty relevant topic, I think for everyone, which is estate planning.It is, uh, I know the most burning topic on everybody's minds.They, everyone wants to think about and dwell on their own demise and what happens after.And by that, I'm being very facetious-but, uh, most people procrastinate this topic, and they procrastinate acting on this.Because obviously, like I just alluded to, it's not fun to think about.Yeah.Um, it isn't fun to think about the very end.Like, on any level.On any level.Yeah, it's like, every topic.No, it's not one, not one fun thing.Nope.Yeah.And so, what we're hoping today isUh, I don't know that we can make it fun, but at least we can make it relevant- Yeah.and hopefully, um, just get you at home thinking about it, because it is one of those things that, too often than not, by the time it's important, it's too late for people.And so, we're hoping to get this ahead for everyone listening, and hope you think about where you're at with your estate planning, and, and we can give you some tips and, and hopefully keep it top of mind.That's exactly right.I mean, really the goal is just to kind of, kinda stir the, stir the thought process and, uh, you know, hopefully s- make you say, "Hmm, I really do need to do this."Yeah."Um, I either haven't done it, or it's time for a review."And if, if that, if we achieve that, then we'll have, we'll have done something good here today.All right.Well, let's see what we can do.Let it rock.So, when y- people hear "estate planning," what's like a common misconception?Yeah, so that term, estate planning, right?When you think, if you just take it word by word, and the, the optimal word there being estate.I think people, um, come away with a misconception that you must have massive assets, uh, to justify, quote unquote, "estate planning."And it's really just kind of a catchall word.It's not meant to denote, uh, upper echelon wealth, and multiple properties, and millions and millions of dollars.That's not what it's meant to imply or, uh, describe there.Hmm.It's really, what do you own, and how do you want those assets to be dispersed, directed upon your death?That's really what estate planning is.It's having a say, having a, aGuiding the, the rudder, so to speak, in terms of how things are distributed, which direction they go, versus letting the laws of intestacy decide that.And that, what that means is if you were to die without a will, um, there's all these rules that come into place as to where it goes.If you don't want it to just go that default way, you wanna put some estate planning into place.Hmm.So, so like, basically, if I was gonna reframe it to be like, simplistic, it's just having a say in what happens after you pass.That's exactly right.I think that's great.Yeah.Listen, I like having a say in what happens with my stuff, so- Yeah.this is, yeah.And you've worked your whole life, right?I mean, that's the thing to think about here.You, youFor most of us, we start working literally as teenagers.That continues on 'til retirement.That retirement could be 60, 65, 70, 75, whatever it might be.And then whenever it is that we shed this mortal coil- Mm-hmm.and go on to the next life, all these things that we worked for, all this, all these assets, don't you want a say in, in where it goes and, and how it goes, so to speak, to your heirs?So, that's really what it's all about.And, you know, when you get into the really nitty-gritty, do you want it to pass in the most efficient way, so that those that you love are getting it kind of in the best way, versus maybe paying taxes that don't necessarily need to be paid, or, uh, with restrictions that shouldn't n- necessarily have been on there.So, things like that.So, let me ask you this as kind of a 2parter.What is, for you, in your experience, what has been the most common triggering effe- event that, that has had people start to act on an estate plan?And then secondly, what should it have been instead?More often than not, you see it, uh, when they have their first child.Hmm.I, the- I think, when I think back to practicing law, uh, for 20 years prior to coming over to Strategic, I think probably the first catalyst, the first impetus for folks to get something into place was-their first child.Mm.Um, because now, God forbid, something happened to both parents, who do you want to be the guardian of that child?That's the most important thing in that will, right?They may not have massive assets yet.Uh, they may not have a whole lot that they need to worry about how, where it goes.But they have something, and they have this child, and who is going to be the custodian or the guardian of this child, and who's gonna be in charge of that child's financial affairs?By the way, doesn't have to be the same person.Mm.Oftentimes, I would see people say, "I have so-and-so, my brother, who is a whiz at finance.He should be the trustee of the, any money that's in trust for the child.My sister, the most loving, maternal person on the planet, she should be the guardian for that child."Mm-hmm."And she should, she should care for the child."So, a lot of different ways you could go there, but to, back to the question, what would be the, one of the bigger catalysts for getting an estate plan in place?A lot of times, it was that first child.Mm-hmm.So, kind of talking about that, uh, you know, uh, w- with that in particular, when naming guardians for, for minor children, uh, what are some critical things that people need to know?And then also, how, how can folks plan financially for that guardian role?Mm-hmm.So, there's a lot of different ways you could go there.Um, just taking it bit by bit, for the guardian, right, that's someone who you want to raise this child, right, in your stead.Mm-hmm.So, ideally, it should be somebody who shares values, who shares common, um, you know, beliefs.If you've got very definitive beliefs about religion, um, or education, you want somebody who, uh, is going to honor those beliefs or who shares those same beliefs.Those are considerations to think about.Mm.You also, obviously, it, you know, often in life, things come down, a- at least in part, to money, right?Would you leave your child with someone who is simply not financially equipped, um, in any way, shape, or form to take on that responsibility?Mm.Now, granted, this leads into the second part of the question, what do you put into place so that there's money to, to accommodate this, to accomplish this?Yeah.Your assets, right, you can dedicate to go into what's called a trust for the benefit of that child.That trustee, as I mentioned before, can be the same person as the guardian, or it could be a different person.Um, but it's going to have provisions that they are allowed to, you know, disperse money from the trust for the health, education, maintenance, support of that child.They call that a HEMS provision in a trust.Um, say you are just starting out in life, and that you don't really have a lot of assets accumulated yet, but, but by, you know, doggone it, you wanna make sure that that child is protected and, and cared for, um, should you and your wife meet a very, you know, untimely death.You could put life insurance in place to fund a trust for the benefit of that child as well.Um, that's often very achievable with, you know, term life is, can be gotten at a ver- very affordable price, and that can fund the trust and fund the upbringing of that child on top of whatever assets you own already.So, how does that kind of shift or, or change when addressing dependents with maybe special needs?Sure.So I mean, you know, then, then you, then you're getting into a special needs trust.Mm.Right?And there's some very specific provisions in there, um, that have to be in place so that you are not, uh, rendering that child ineligible from any needed government assistance, right?So there's very specific things that have to be met for a special needs trust to, to care for, uh, a child in that situation.So that, in that situ- so in all of these situations, by the way, you need an attorney.Yeah.And, and whenAnd I get that question a lot, in terms of, "Hey, can I use"I'm not gonna give any product names, "blahblahblah.com?""They say that I can just get an easy-" Yeah." will there."Sure.In theory, you can get a will that will pass the legal requirements of, uh, you know, and get through probate from one of these sites.that's theAnd it, that would be, I would say, in, in its most basic sense.And so often, uh, more often than not, there's going to be things unique to you that you're going to want to get the opinion of somebody who has been practicing law for however many years and is well-versed.So, special needs trust, testamentary trust for minors.Uh, it could be you have very special things that you want done in ch- in terms of charitable, uh, donations, and, and there's different charitable trusts that could be put into place, or provisions within a will.All these things, in my view, you want an estate attorney.So I only play one on TV now.I'm, uh, no longer practice.Seek, get to a, a reputable, you know, experienced estate attorney for these things.So along those lines, like, w- what are some beneficiary mistakes that you see most often on, like, retirement- Mm-hmm.accounts, life insurance, and that, that sort of stuff?Yeah, so the biggest one, I would say, is not reviewing them regularly.When we sit down with our clients, a regular, uh, agenda item is reviewing beneficiaries.Uh, and their retirement accounts, like IRAs, uh, and their life insurance policies.Um, anything that has a beneficiary designation, we try to review it and make sure it's current.S- Because when you think about it this way, think of all the things that can change.Uh, you get divorced, or you get remarried, or you have a new child, or, um, you know, something, you knowThere's another financial situation in your life that nowOr, or an asset that would now say, "You know what?I don't need to account for them in this way, with, with these percentages, on this insurance policy or this IRA.I can go about doing that a different way."So it's kind of reviewing them regularly and making sure that, uh, things are going in line with how your life is currently.Mm-hmm.You know, we've had situations where a gentleman or, or woman was single for many years, in their adult years, and they had designated a charity to receive the vast bulk of their estate.Um, and then got remarried, and kind of had forgotten about the beneficiary designation, and then passed.And now their new wife or new s- new husband is getting a fraction or nothing, and everything was going to that charity.If they had rev- if they had reviewed it, they probably would have said, "Oh, I still wanna take care of that charity, but I am now married, I also wanna take care of the spouse."Yeah.Um, so any life change, any- anything that's, that's different in your world, um, you wanna look at those beneficiaries.And even if there is nothing different, in a, in a massive way, you know, divorce, remarriage, death, et cetera, you still wanna look at it- Yeah.because finances change.And doing a state flow, right?That's something that we do for our clients.And we will map out exactly whoUnder c- under how everything is set up right now currently, we will map out exactly who gets what.When people see that in black and white, uh, it goes from this esoteric, kinda nebulous thought, like, "Oh, yeah, they're all being taken care of," to, "Holy cow-" "you know, they're getting way more than that one.Like, it's currently uneven.It's not the way I had thought of it in my head."Yeah.So, mapping it out like that is really helpful.Yeah, and, and you know, it's interesting, uh, as I hear this around the, the firm and stuff.You know, it strikes me asAnd I like using analogies on this podcast, 'cause it helps me understand things.And so hopefully the listeners.But like, you know, it strikes me as similar to like a, an oil change for your vehicle or like a checkup with your doctor where, hey, things happen- Things change.within the year.So going back to your doctor, getting that checkup, going back to your mechanic, getting that checkup, making sure that e- if things have changed, that you're adjusting to those changes, right?Like you're getting older, so now, you know, you got some different things you have to do in your life- Mm-hmm.for, for like medical reasons to make sure you're healthy.And so this is one of those things where-I think, like an oil change, like a doctor's checkup, we put it off because it's annoying, uh, mostly.You know, and it's like, "I don't, I don't have time for this.I've got a thousand things going on."But it's one of those, uh, things we need to do re- to recur so that we can make sure we're, we're still healthy financially with our, with our estate or our, you know, our will and everything.Absolutely.And, um, as important as that physical is, and I canI-I'm the first person that can give you the best example of that.I skipped a physical during COVID.And by the time I'd gotten back to my doctor 2 years later after the last time I'd had a physical, I had cancer.Yeah.And it could have been detected earlier.Same goes for this, right?If you are reviewing this regularly, you can avoid some mistakes or pitfalls and have things in place preventatively, proactively, that'll save you a lot of, you know, heartache and- Hmm.and, uh, pain down the road.And, and what I think people should remember is that for the majority of, uh, Americans and, and people walking the planet, it doesn't have to be this complex, massively expensive, uh, endeavor- Mm-hmm.to get a, a, to get a decent estate plan into place, right?We talk about kind of the, you know, the, the, the bare essentials or the starter kit, right?You need a will.A will directs where things are going.Uh, you would want a health care proxy.You would want to name somebody as to who can make decisions for you if you're incapacitated.In accordance with that, you want, you know, what's referred to as a living will or health care directives.Do you want extraordinary measures taken?Do you wanna be kept on life support?Do you want organ donation?All these things.All morbid topics, admitted.However, what it does is it takes a lot of stress off your loved ones when it comes time for that.Um, I've lived that.I went through it with b- you know, my mom, and, and knowing what her wishes were ahead of time- Mm-hmm.makes it a heck of a lot easier to make those decisions.And I don't mean to oversimplify this, but I just wanna ask this- Yeah.question since we're here and it just popped into my head.Let's say, for instance, in my case, I have 4 kids.Mm-hmm.C- Can it be something as simple as, like, instead of going through all my assets and everything, just sp- just split it 4 ways?Is thatCan- C- Can it be as simple as that?It can be that simple.Okay.I- It absolutely can be that simple.It can be- So I don't have to go and go through all this rigmarole- No.and, like, I could just go, "Hey, just split it 4 ways between all my, you know"Yeah, so I mean, and it, and it would be, you know, it would go accordance with, you know, monetary assets and also personal belongings, right?Yeah.So, you could leave everything to your wife.Mm-hmm.If she predeceases, it goes to your 4 kids equally.Yeah.If there's a bank account, it would be split 4 ways.If there's a investment account, split 4 ways.Then you get down to kind of the, who gets Dad's watch?Yeah, yeah.Who gets Dad's, you know, favorite, uh, arcade game, whatever it might be.Knowing you- Yeah.you like arcade games.Yeah, yeah.Who gets my Luke Skywalker figure?So there's 2 different ways.There's, there's, I guess 3 different ways you could go about the personal possessions.I did and saw when I practiced, people who wanted that item by item- Mm-hmm.for items that were important to them in the will.Okay.I would always talk against it because what happens if you sell one?What happens if 1 Mm-hmm.goes away or you get something new?Now you're gonna need to amend the will every single time.Mm-hmm.Not recommended.Another way would be along with the will, they would simply put in the envelope in their safe and where they showed people where their will was.This is a list of the personal stuff.This is who I want.You get mom's engagement ring.You get grandpa's hunting rifle.you get my prized watch.I split it up relatively evenly according to interests and who likes what.This is who gets what.Honor my wishes."99 out of the 100 times, that works great.The other way to do it is just simply say, "I'm gonna be dead.You all fight it out."Figure it out, yeah.Look- The, the, you're gonna get the money equally as terms of, in terms of the knickknacks and the possessions, I don't care.Oh, right.You all figure it out- Yeah, yeah.amongst yourself.So there's a, there's a few different ways, uh, to go-about that.So I gue- And I guess where I was going with that, right, from my head space was, it can be as simple or as complex as you want it to be.Yeah.And so, you know, and I liked what you said there were like, "Hey, if, if, uh, I, you know, if my wife is still alive, just give it to her and then she'llShe can figure out what to do with it.And then or if, if she's, if she goes before I do, then just split everything 100 even."That's exactly right.Yeah.That's a- Okay.And you see that in many wills, it's very simple.Um, and it does the job.Right.And it does the job.And, you know, also beneficiaries play a role there, right?If you've got someone named as a beneficiary in a life insurance policy, that passes outside the will, just goes right to 'em.Yep.Okay.Uh, joint bank accounts, it goes right to 'em, um, things like that.So, there's this whole thing about probate versus non-probate, avoiding probate, et cetera.Um, probate is not a bad thing.People- So what is, so what is probate- Sure.really quick?Yeah.So I mean, you see all these commercials, "Avoid probate."Yeah."Get a trust, get this, get that."Probate is surrogates court, okay?So in New York State, we have a court, every county jurisdiction has one, that's designated solely to this subject matter, estates.And if somebody dies with something in their possession, okay, in their nameSo if I were to pass away tomorrow and, uh, my house is solely in my name, it's not in m- both mine and my wife's name, um, or a bank account, or some other asset, it's goingand I have a will, that will is going to have to be probated.Mm.All that simply means is an attorney is going to submit the will to surrogates court along with the affidavits of attestation- Mm-hmm.and a f- and a filled out application, and say, "I am submitting this will.I want so and" you know, per the will, so and so should be named executor.Uh, we want what's called letters testamentary, permission to distribute this will.Surrogate court's going to have one of their attorneys look it over.They're gonna say, "You're missing X," or, "You're missing Y," or they're going to say, "Green light, let it rip.Here's your letters testamentary."And from there, they can go forth and distribute the will.Um, it's actually, surrogates court actually serves a very good role.It's a second set of eyes.It's kind of a check and balance to make sure that the will was done properly- Mm.that fraud wasn't involved, um, and that the, that the person's wishes are being followed.So it's not, it's not overly time-consuming.It's not overly labor-intensive.It, it's none of the evils that, that have been kind of attributed to it for purposes of selling really expensive trusts.Yeah.And that's really what you've seen.You've seen commercials on television, people advertising really expensive trusts to avoid probate.Sure, there are advantages to avoiding probate.It's public.If you want your estate settled completely privately, you would, you would go the trust route.Yeah.That makes it a non-public event versus public.Um, and- And you mean public, it's just published for- Public knowledge.Yeah, yeah, yeah.Somebody could go there and, and, and pull those documents.So- Information.Yeah.Yeah.Exactly.And pull it out.Okay, okay.That's exactly right.SoNot like it's on TV.No.Okay.Right.They don't have a, yeah.There's a, there's- There's not a CSPAN show about it.I know it sounds ridiculous, but that was where my head went.I'm like, "What is?What?"Yeah, yeah."What happened there?Sure.It's on TV?"Yeah, yeah.No, there's noUh, could be a good reality show, I guess.I think.I've seen some juicy ones.Um, yeah.So I mean, it'sThe, the basics of an estate plan, right?We were talking, you know, you've got a will, you've got a healthcare proxy, you've got a living will, you've got a power of attorney.This one, I find, is prone to, uhthe word I'm looking for?Uh, mishaps.Mm.Uh, sometimes.Power of attorney is designating somebody essentially sa- giving to somebody all the power that you have over your finances- Mm-hmm.while you're alive.While, right.Yes.More often than not.There is something called a springing power of attorney.And that means it only comes into effect if you're incapacitated.Okay.But more often than not, when folks are doing their estate plans, they are doing what's called a durable power of attorney.And they are saying, "I, Greg, give you, Jay, carte blanche to act as me to do all banking, investments- Mm-hmm.securities, insurancereal estate, whatever it is that I can do, you can do.Mm-hmm.Now, most folks, and by most, 99.9%, only intend this to be used if they become incapacitated.Mm-hmm."I'm giving it to my kids.God forbid something happened to me, if I'm laid up in a hospital, I can't talk, I can't communicate, whatever it is, you now can go do my banking, and do whatever needs to be done to keep things going."But that's not what it's limited to.Mm-hmm.Right?So, I would, when doing those for folks, I would give them a very kind of s- cautious warning and say, "This is a really important document.You don't just go hand this to your kids.I don't care how much you trust your kids.You hold onto this document."Hmm.You tell your kids, "If something should happen to me, this is where you can find these things."Yeah.But you would not necessarily just hand it over and say, "Let it rip," because I saw situations where folks were taken advantage of- Yeah.by their people that they trusted, including their own children, using their, that power of attorney.Um, because really, when it comes down to itNow many banks will sometimes question it and ask for a second, you know, form of authorization.But if you really get right down to it, a bank is supposed to just accept it.It's a, it is a- Right.legal designation of your authority to go do these things.And s- some banks will just simply take that power of attorney and do whatever that person is asking if they show proof that they're the POA.So, it's a very important document.It can, it can serve a lot of good, but it can also be misused- Sure.if you're not careful.Yeah, and- and to be clear, power of attorney is while I'm alive- That's right.which is completely different from executor of the will.Exactly right.So power of attorney terminates upon the grantor's death.And, that's an important distinction because I would have folks come into my office a month, 2 months, 3 months after somebody passed away and say to me, you know, "Well, I've just been paying their, uh, utilities and mortgage and whatnot, so while, you know, while we're getting all this squared away."And I'm like, "Well, how are you doing that?"Uh, "Well, with the power of attorney."And I'm like, "That power of attorney is invalid.Did you tell the bank that they passed?""No."Hmm.So, that's not right.Yeah.That's a no-no.You, upon, you know, just like here, we have an automatic responsibility to notify Schwab if a client passes because at that point, certain things immediately- Right.click in, right?And the same goes for banks and other financial institutions.You have an obligation to let them know, you gotta let Social Security know, right- Right.if checks are coming.Yeah.You gotta, if there's a disability check, a Social Security check, they all need to be notified.So yeah, the power of attorney ends when the person ends, so to speak.And at that point, if the passing of the baton goes to the executor of the will, uh, it is now their turn to come into play, might still be the same person- Right.to deal with those, uh, deal with the affairs.Hmm.Yeah.All right.Well, not to end on a morbid note-but I think that might be a good place to end this- Yeah.episode, and we'll pick it up in the next one.Fantastic.All right.Well, thanks, Greg.My pleasure.This podcast is for educational and informational purposes only.Please see the full disclosure in our show notes for more information.