EP04 - WealthSmarts - The Power Of Proper Estate Planning | WealthSmart

EP04 – WealthSmarts – The Power Of Proper Estate Planning


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I honestly believe that if we leave too much to the next generation that we just spoiled that generation. And honestly, if we’ve done our job, that generation is going to be doing pretty well on their own. This is, well, smart, where you will gain the financial capabilities and confidence to achieve the goals that matter to you. Now here are your host, Richard and Matt. So there’s something called estate planning. There’s one specific. There’s a few specific problems with this solves. But basically we all love taxation or love taxation, right?

But without a proper estate plan, your family could end up paying a lot of taxes and maybe end up fighting over your assets. And that’s actually even worse. Yeah, I think that’s the worst part. Joke about taxation. Rather have taxes and having having a disaster in the family. Yeah, so you know what? We all work very hard in this life to build a legacy, to build a life, and in many cases, and a state could be completely destroyed because of a lack of a plan. I think the more important thing to think about estate planning is a proper estate plan will protect your wealth and guide your family in preserving your legacy.

How do you feel about a state planning? I love the name for the document that tells everybody what has to happen when you die. It’s called a will. It is a representation of your will, your desire for what needs to happen when you pass like we’re all going to die. Okay, everybody gets a crack at this, only one crack, and there has to be a plan for what happens and normally were around. And we can direct what’s going to go on. As we know in life, there’s a lot of moving parts, but when we die, boom, our decision making capacity is over, and people are actually left high and dry, trying to figure out what’s going to happen next.

Or they’ve got a guide by their side that tells them this is what the will of Matthew Vetter, Richard Vetter, whoever is going to be, and it tells people give specific guidance to what steps need to be taken. And I guess if that document isn’t in place, the big warriors who will make the decisions for you if you get incapacitated or you die. Yeah, yeah, And incapacity is a big thing to tragedy can strike and we don’t die. And that means, like, I might not be mentally able to make decisions, So somebody’s going to be able to make them for us.

But I think we need to talk about something deeper about estate planning, and this is always a difficult topic because most of us fear our mortality. But I think beyond our mortality, we often fear that we will be forgotten. Ah, then that’s a tough one. Because not only do we kind of fear being forgotten, but the people that we love, there’s also a fear there that they might forget us. And this worry can actually keep us from the progress that we’re trying to achieve. We see this all the time, and we don’t see it at the surface.

But deep down, we know and we are cognizant of our mortality on a subconscious level. And if we don’t have a plan like, I know that prior to us get our will is truly an order. I was always worrying about that, like what happens next, but that will is there, and it’s actually going to direct, and now you know, we’ve had changes in our circumstances, and I know that we need to review this again because the business has gotten to this place of. It’s a significant part of our estate and we need to make plans for how that’s going to be continued if anything happens to us.

So it’s a moving target and that estate plan doesn’t remain static. It has to be reviewed on a regular basis. You told me something once that boat, and I’m familiar with this and it relates to the large endowments. And there’s been talk once. And I think it was Harvard, that they had studied this whole idea of. Hey, what would happen if rather than depend on people’s ability to pay tuition at Harvard, we actually enrolled on the basis of capability in other words, attracting the smartest people in the world to Harvard because the Harvard Endowment is actually big enough to fund them full ride.

Talk to me about that, I think, and and this goes back to being remembered right? I think in many cases, yes, this money is there, and maybe the people who donated this money wanted it to go toward funding education for those who aren’t able to pay for it themselves. But in many cases, that money goes towards building a building in that person’s name. And was that truly their intent? We don’t know. We do, and that’s that’s another thing we don’t know, like I don’t know if I’m building something up.

Do I want to know ahead of time and when I’m gone and I have faith that I’d be able to look back hopefully and see what’s going on that I’d be able to say, Hey, that’s doing what the job that I wanted it to do Because this group of young people here have a crack at making a real impact in this world because of the education that this endowment, which I funded, has provided for them. Or do I just want a big building or something built in my name?

I don’t know. Again, We’ll never know. So, ah, let’s look at the downsides. What happens if we don’t act on an estate plan? I’ll let you speak to this. I could say Don’t worry about it because the province has a will for us that makes me worry about it. I know, you know, and it’s basically known as an intestine C will. It’s under the Wills and State Succession Act. I believe it is, and the province basically tells us what our will is going to be. And this isn’t the evil empire or anything you know, dictating things on us.

It’s basically the province saying, Look, we need a default switch here you know, like a default setting that if people don’t take responsibility for their lives and put a will in place, we the province can’t just let it ride like we actually have to have a plan for how to dispose, how to distribute this person’s assets when they pass. So they generally take care of the interests of the spouse and the Children, but it starts falling apart. In event of second marriages, it starts falling apart. If a spouse pre decease is us, it starts falling apart on so many different levels that there’s too many things to account for, that it cannot do.

No, it’s and they know that it’s like our example of the template plan, right? The template plan won’t work for everyone. Exactly. Nobody can account for how different your life is from what they think. Your life is absolutely out of necessity. The provinces in testis e will is going to result in a lot of fees. It’s not just the probate fees and everything, but it’s getting legal help in getting accounting. Help in putting all the documents together and everything like that, and it will actually cost more than if you’re will would have been planned first.

So in regards to the will, a lot of people have concerns about the cost of having a wills drafted and everything. And I would say that Hey, you pay a little bit now or you pay a lot later on like take your pick, pick your poison. I’d rather take the hit now and have a proper document put into place. So, estate plan, where do we start? We’ll always love the forces. You know, the forces being make a commitment, have some courage going through it, get some capabilities along the way, and the end result was we’re gonna have a lot of confidence.

So number one make a commitment that you’re going to do this. That’s the most important thing and follow it up with some action. You know, some people might consider this unorthodox may be uncomfortable, but I think it’s actually important to have open and honest discussions with the stakeholders, and that’s with your family. And I think the most important thing about this discussion with your family is to really identify what you value and what is important to you and how you want to be remembered. Like these are very difficult topics to think about, but they have to be thought about sometime.

I think the reason we’re uncomfortable with this is you know what? When we talk about it at a real heart level, um, the tears will flow. Yeah, I’m I’m a big cry baby. Me too. I am, too. So not only do we need to have that discussion with your family about the things that you value, but ask them about not only when you’re drafting well, how you want to be remembered. But ask your family. How do you wish to remember me? Mm, that’s going to get pretty heavy.

But that conversation that dialogue is going to open up so many different levels of the relationship and respect within that estate plan that you know, that the end result is going to be something that that family will honor and cherish. I think maybe as a bonus tip to this or as an add on one of the most important things to consider in this is gratitude. In my mind, this is the key to honoring and continuing a legacy gratitude. Well, you know, you’re the grandchild and your brothers are the grandchildren of immigrants, right?

Yeah, like just that level of being grateful for what those immigrants went through and coming through to this country. But not only that, but the gratitude of their parents and what they had to go through in order to convince their Children that they needed to move away from that into another place like there’s so much that we have to be grateful for at so many different levels. Like with all of that in mind. With that gratitude in mind and with that whole desire for how we want to be remembered, we then need to craft a plan, and it’s not a complicated plan.

You can do this by yourself, but just an outline of what you ideally wish to happen with your wealth when you pass, and that can involve some charitable giving. I honestly believe that if we leave too much to the next generation, that we just spoil that generation. And honestly, if we’ve done our job, that generation is going to be doing pretty well on their own. So all we’re gonna do is continue to add surplus upon surplus that just makes the generations wealthier and wealthier, and we can see where that goes.

It leads to down the road, generations down the road, just entitlement issues and things like that. But instead, figure out How can we have some kind of an enduring legacy where we we have an impact in this world. So charitable giving, I think, is a big part of it helping grandchildren with educations and different things like that. There’s so many different things that we can do with our estate. But we need to outline how that’s going to look and then work with a financial advisor. The financial advisor is not going to draft the documents or anything, but because there’s so many moving parts that, for instance, a lawyer may not be aware of.

We need to review the whole situation, the values and all of the different buckets. All of the insurance policies that are They’re reviewing current wills on a 30,000 ft level rather than a granular level beneficiary designations that are all on your accounts because sometimes we can unwittingly disinherit people in our family if our beneficiary designations are not properly aligned. Because beneficiary designations operate ex probate, they operate outside the auspices of the will. So other things that come into bear There are employee benefit plans that employee benefit plans have insurances, etcetera.

So work with an advisor to establish a high level outline. When somebody is deciding who is going to continue their legacy and enact, there will what is important there. The word trust comes to mind. Okay, somebody that you can trust, making those decisions on your behalf and somebody who may have the capabilities or access to the capabilities and act in an impartial manner. These are the executors, right? Last year I took a course called the Certified Executive Advisor Program, and it really introduced me to the depth of responsibility that an executor has, and it’s not a responsibility to be taken lightly, and I don’t mean to scare people off because sometimes that can be an impediment to putting a will in place, because the fact is you have to have a willing executor and trust me, the job of an executor is not easy.

And sometimes you need to build into that estate plan a fee for the executor If they’re not family, they need to be compensated for their efforts. And your advisor and your lawyer can help you define the level of compensation that’s appropriate for that. I guess this is a tough thing, because I know that there’s these cases out there, too. But what happens if you don’t have anyone to trust with being an executor? I see this very often happen in couples that may not have any Children in a case like that.

What they’ll often do is they will appoint a lawyer, a legal firm, to act for them as executor and trustee. They may appoint a trust company to take care of those assets and distribute them according to their wishes. We’ve got some clients and the beneficiaries of their estates are a number of different charities, but they have a trust company named that is going to be in charge of doing that rather than a person and trust companies. Actually, they do this stuff like backwards and forwards all the time.

They know what they’re doing. What happens if someone is incapacitated? How can we work around that? Well, like we discussed, tragedy can strike and we die. But tragedy can also strike and we don’t die. And that means seeing physically, mentally incapacitated. It can happen in cases of a stroke in the cases of a degenerative nerve disease and like so many different levels that we need to have something put in place where somebody that we trust can make decisions on our behalf. And so, for example, we have a number of households where we’re managing wealth, and the person who is named on that account is no longer making decisions because they are unable to.

So they have a power of attorney acting on their behalf, making decisions. Now, Powers of attorney can’t do anything nefarious, like change, beneficiary designations and stuff like that. They can’t do that, but they can work to help manage the assets that are there during that person’s life, So that’s actually critical. Everybody young and old, should have a power of attorney because disaster can strike anybody and render them incapacitated to make decisions. Now there’s a lot of different documents. Power Attorney’s one. There’s also advanced directives or representation agreements.

Do we talk about this? Yeah, I would. There’s a lot of suspicion, sometimes around them, because a lot of people will call them living wills. And many people are actually against the idea of assisted suicide and things like that. And there’s fear about living wills. Being involved in that, but truly representation agreement or an advanced directive is simply giving somebody the authority to make medical decisions on that person’s behalf. Now I’ll give you kind of the difference. The representation agreement is basically like Zen and I. We have representation agreements.

It gives Zine the authority to make those decisions for me at that time, depending on the circumstance. And I trust her because she’s a former registered nurse, right? She knows that just because she’s your wife, well, I trust her because okay, But in contrast, an advanced directive is basically me saying upfront before the event happen. This is what I want to happen, and there’s pros and cons to both. But in our case because I trust her so implicitly. I want her to make those decisions because she knows me sometimes better than I know myself.

And I think with all of these documents, and especially at an estate plan, the most important thing is to review these regularly to sure they continue to reflect your wishes and your values. Without a doubt, there’s all kinds of life events that will cause us to needs. To go back to those documents is it’s still appropriate. Does this still fulfill our plan? So what does this look like? Oh boy, it’s a thing of beauty when you have a proper estate plan put in place because it results in that confidence in that assurance that not only is there going to be harmony when you’re gone, but your estate will not be eroded from taxes and costs in the way that it could be, Your legacy is going to be intact and you will be remembered.

You know, it’s it’s a difficult topic to talk about, but it’s essential, and I know for a fact that when people have a proper estate plan put in place, they’re going to have confidence to live life to the full in the years that we have. I think it’s very intimidating and overwhelming to think about an estate plan, but I hope that this episode has kind of gone into helping people understand it a little better. So maybe it’s a little more approachable. Absolutely. Thanks for listening to today’s episode of Well, Smart.

Be sure to check out the show notes on our website for more information. If you’re not already subscribed, please subscribe or wherever you get your podcasts, yeah.