Let’s Talk About Wills – Episode 198

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[00:01] Welcome to the Prosperity Podcast, fresh alternative personal finance talk for independent thinkers who prosper outside of Wall Street. Here’s your host, bestselling author, Kim D.H. Butler and No BS Money Guy, Todd Strobel. Hey everybody, welcome back to the Prosperity Podcast. This is No BS Money Guy, Todd Strobel. Once again, we have the president of Partners for Prosperity and bestselling financial author and our co-host, Kim Butler, with us today. And today we’re going to be talking about wills. And more importantly, we’re going to be referencing the July edition of Money magazine. And they have an article of how to talk about getting a will. And I guess first question that I would have to bring up to Kim is,

[00:58] do you think wills are still necessary? Well, absolutely I do. Although a living trust is better, but typically a living trust includes a will. And so I would lump the two together. I think the questions that you’re going to ask are fabulous. And I can’t wait to hear about them and give my opinion on whether I think they’re helpful or, you know, different ways to look at answering them, et cetera. But I think we could almost just put the words will slash living trust, though we highly, highly recommend living trust. And we’ve got quite a bit of written material on this just recently. So I’m not knowing exactly when this recording will come out. The month of June in 2017 and maybe even into July, we have a lot of written material

[01:46] on this. But for those that like to listen, let’s tackle it. Super. Well, the number one thing that it says to do is to find out exactly what and where there is to go into your will. Now, this is interesting because not all assets are subject to your will, are they? No, because things that go by contract, like IRA beneficiaries and life insurance beneficiaries, go by contract. In fact, it does not matter what your will says. So your will could say 100 percent of all my money goes to my spouse. But if you have a life insurance policy and you’ve listed a adult child as a beneficiary, then no matter what the will says, that life insurance is still going to go to that adult child. Or if you’ve listed a particular person as an IRA beneficiary, that’s going to go

[02:45] by contract. Additionally, real estate would go by contract if you had, for example, a joint tenants with writer survivorship on a home. But and so that was to your spouse. But your will said all my money goes to my sister. Well, then the home would still go joint tenants to the spouse. So those are things that are by contract. So I think it’s important. Would you how important would you say having an attorney is at this point? Well, that’s a really good question. I will readily admit that if you’re a young couple or an individual person and you’re young and you really don’t have a lot of assets, but you kind of want to just check this off, like I want to get a will, be responsible, go through the process just for the experience or something like that.

[03:33] Then, yeah, you can probably get by with legal aid or legal zoom or prepaid legal or, you know, the office supply store, thirty five bucks on the web to some website, et cetera, et cetera. But if you’re going to do it seriously without a doubt, you should get an attorney. And we do have an attorney that is our personal attorney that handles living trusts, and he does have the capability of working in all 50 states because he can coordinate with a local attorney because these are very state specific rules and we highly recommend his process for anybody that’s serious about getting this done properly. I would bring up that there was a big attraction to wills many years ago when the estate tax was so high.

[04:23] Most of us will never have to deal necessarily with the estate tax, but there’s still a matter of the family disagreements. I’ve seen some of these things drag on for two, three and four years. And really, truthfully, the only people who got paid were the attorneys. So I would say not so much a tax move by setting up a will, but trying to keep your family together. Absolutely. And it just makes it so much easier for your family. We’ve talked in other podcasts about having funeral arrangements made or cremation arrangements made, but this is really making arrangements for your assets and that’s all that a will is, is a list of instructions about where you want your assets to go. And then a trust just takes that a few steps further by having some additional

[05:15] documents by avoiding probate. And I can share personally, I had to probate my grandmother’s will and it was six months and I don’t remember eight or $9,000. My mother, on the other hand, had a living trust, which cost more up front, but maybe $2,000 saved us a ton of money and made the transition so much easier. So for your family, for your loved ones, the living trust is paramount. The will is definitely better than nothing because if you have neither, then you die in test state is the proper term and it basically means without a will and it means that the courts are then going to decide what happens and you may not feel like you have any assets, but most people have something, you know, there, there could be a home that didn’t have clear

[06:12] title or there could be even a car or something like that, that ended up having to go through probate, which is just really an unnecessary formal process and expense that just delays things. One thing I would like to read just kind of word for word is they give a great, I think it’s great opening the line of how to open the conversation. And it’s I saw what happened to Jill’s family when she died without a will. What can we do to avoid that? I love it. That is perfect. And that’s a great door opener. And then I am really going to encourage people to keep going. So, um, if this article and I’m sorry, reference it again, so people can find it if they’d like. Um, it’s the July 17 issue of money magazine.

[07:04] Awesome. If this article is the start, print it out and put it on the table and dig out the elephant in the room and have a conversation one bite at a time. So the next thing that you need to decide is you’ve kind of decided what your assets are and which assets are subject to a will and which ones are subject to contract. The next is deciding who is heirs. Absolutely. So you’re probably going to typically have children and people have different opinions about that, but, um, also spouses and potentially siblings. Then the next thing that you need to do is to name an executor. All right. And so this one, you’ll want to have somebody be local, if possible, and somebody that’s familiar with your opinions and possibly even your

[07:57] family situation, and then, um, also somebody that’s got a good financial head on their shoulders. Of course, it depends on how complicated your asset base is, but that executor job can take a little bit of time. So you want somebody that knows what they’re doing. Well, and it does also mention that, you know, an executor does not necessarily have to be a family member. You could go to a local bank or have a professional executor. Correct. All right. Here’s some more talking points. Kara is old enough to support herself, but what about Jason? Who would look after him if something happens? So again, now you’re trying to decide amounts. Yes. And also you’ve got potential guardianship issues. So if you have children that are under age 18 or children that are adults,

[08:51] but would require care of some sort because of maybe mental or physical issues, then you’re absolutely going to want to list a guardian. And I think the attorneys typically tell you, you want a different person that is guarding the people than is guarding the money. So you would list one person as an executor and another as guardian for any children that needed extra care. And I think the scariest line in this article is, is that remember if you don’t make a selection of who is going to raise your children, a judge will make that decision for you. Absolutely. So without a doubt, if you have young children, you absolutely must have a will and potentially a living trust. But regardless, those documents need to identify a guardian because as you

[09:42] said, if you don’t, the courts are going to, and that is not a fun process. I had a chance to meet with Boomer Esiason, who is a quarterback since you don’t follow sports, but he has an autistic child and he has really just educated people on how when you have children, that there’s a great possibility that they will outlive you the special needs that you have to prepare for. Absolutely. Yep. That’s a big job with a lot of responsibility and I’m thrilled that he’s getting the word out there. All right. Let’s see. It’s tempting to split the money evenly between kids, but what if one is earning a lot more? Yeah, that’s a real values oriented question and there’s absolutely no right or wrong, but it’s something that you want to think about.

[10:39] And please remember that wills and living trusts can be changed, although if you don’t change them, then they aren’t changed. So you’ll want to revisit your decision every, I would say five years or so. A lot of attorneys will provide the service of revisiting your information every year or two, which is very, very helpful, but this is, as I said, a values judgment or a judgment call, if you will, in that there are many people that would just absolutely want the money to go 50-50, like that’s the way it should go, you know, that’s how we raised our family and that’s how we’re going to continue. Whereas others might feel that they would want to make a different selection, maybe 60-40 or 70-30, or maybe it’s 30 to the child that has

[11:28] more money and 20 to a charity and then 50% to the child that doesn’t have as much money. Again, it’s just something that you’ll want to think about in terms of what’s important to you only, because frankly, nobody else’s opinion matters on this. You can get other opinions, but this is really up to you and probably a spouse in terms of how you’d like this handled. These are some great questions though. Another one is, will biological and step-children be treated differently? Excellent. Yep. If you, again, can have that discussion with your spouse, think through it ahead of time before you get in front of the attorney to get the document done. That’s going to make everybody’s lives easier. All right.

[12:13] How about, do you feel comfortable giving the children their inheritance all at once, they are still so young, who knows what they’d spend it on? Yeah, that’s a good one. And also when people do have life insurance, it doesn’t really matter what age the children are. It can be something that needs to be addressed. So, you know, you’ve got 25 year olds. Do you want them getting $5 million or do you want it spread out over time? And so this again is something to think about. It’s also something to rethink about because maybe by the time you’re 80 and that 25 year old is now say 55, your opinion on that might differ. So again, the quest for consistently updating your wills and trust documents at a minimum every five years, if not more often, very, very important.

[13:10] And I had never heard this term before, but they bring up incentive trusts, which require, for instance, that an heir earn a college degree before part of it is dispersed. Yeah, that’s fun. And I’ve even been aware of people going so far as requiring drug tests, especially if somebody has a history with that as a challenge. There are certain amount of money that they must earn and then they can be matched. That’s another way to do incentives. There’s all kinds of things. If you’re into, quote, controlling from the grave that you can do with your money and help it do jobs for your children and grandchildren that you want done. So there’s a school of thought that says, yes, that’s very important.

[14:01] You should totally do that. And then there’s another school of thought that says, no, that’s not really what you want to do. You want to leave things more flexible. No right or wrong. Just think through it. Super. Can you think of any resources or anything that you would recommend for people who are kind of going down this train of thought? Well, I love the article that you found. Nothing comes to top of mind right now, other than I know we’ve written some actual blog posts on this subject as well, exploring the costs of getting a will, the cost of getting a trust, the cost of not doing anything. So I would refer to people back to the partners for prosperity.com slash blog location, so that’s partners number four, prosperity.com slash blog.

[14:49] And there’s quite a bit of information in June and July of 2017 about this subject that they can benefit from. And if you’re a new listener, we have a gift for you. And that is that partners number four, prosperity.com slash ebook, a book that’s called financial planning has failed and it’s available as a both an audio version and a print version. And it has some fun information about this subject as well. Super. Well, again, I hope this has helped people maybe ask some questions before it’s too late so that they can take care of, well, I guess the biggest thing is deciding which assets. This kind of surprised me that there are assets so that you need to make sure that not only your will is in order, but also these things like your

[15:38] 401k, your life insurance policies. All of them need to make sure that you’ve updated your beneficiaries because geesh, how many of those, I think how many policies I took out 20 years ago, and I don’t think I’ve looked at them since I have no idea who’s on there. Yeah, absolutely. Yes. Cannot recommend that enough that you revisit 401k beneficiaries, IRA beneficiaries, contract on your home and life insurance beneficiaries. It’s a great suggestion. Well, super. Well, this is Partners for Prosperity sponsored the Prosperity podcast. Sorry, had to say that all at once. Special thanks to Kim Butler. Special thanks to our listeners. Keep your questions coming and we’ll see you all again real soon.

[16:25] Thank you for listening to the Prosperity podcast. To take control of your money and have it work for you, visit us at partnersforprosperity.com. If you liked this episode, make sure you subscribe and leave a review.