Effective Estate Planning: Tips to Make Sure The Process Goes Smoothly And Money Goes Where You Intend

Effective Estate Planning: Tips to Make Sure The Process Goes Smoothly And Money Goes Where You Intend

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The Smart Take:

Estate planning is about more than just wealth distribution—it’s about peace of mind.

In this episode, Hear Tyler Emrick, CFA®, CFP®, cover the fundamentals to start or update your estate planning journey. We’ll discuss how your financial advisor is best to guide the process while your attorney ensures legal alignment. Working together makes the journey better for you and more likely at your intended destination while reducing risks of unnecessary taxes, legal costs, and family conflicts.

Here’s some of what we discuss in this episode:

  • A story about how a lack of estate planning could derail everything you hoped to leave your loved ones.
  • What we need to begin crafting the financial aspects of your estate plan.
  • The role your advisor plays versus what the attorney will do.
  • Tax considerations you need to be aware of so that you can ensure more wealth is passed along.
  • The many benefits to estate planning.

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The Hosts:

Kevin Kroskey, CFP®, MBA – About – Contact

Tyler Emrick, CFA®, CFP® – About – Contact

Episode Transcript:

Tyler Emrick  00:00

Estate Planning isn’t just about wealth, it’s about peace of mind. Today we’ll outline how to start an estate plan from documenting your assets to updating your financial projections and everything in between. We have you covered coming up today on retire smarter


Walter Storholt  00:20

Another episode of retire smarter is here. I’m Walter Storholt. Alongside Tyler Emrick, wealth advisor, Certified Financial Planner at True Wealth Design. Also a Chartered Financial aAnalyst, serving you throughout Northeast Ohio, Southwest Florida, the Greater Pittsburgh area but honestly just from wherever you are, you can find us online at truewealthdesign.com Check out past episodes of the show and lots of great resources on the web and even schedule a 15 minute call with an experienced advisor on the team. Just look for the Are we right for you button there at true wealth design.com What is going on Tyler? What’s happening in your world? My friend?


Tyler Emrick  00:55

Oh, hanging in there doing all right. Well, trying to recover from the weekend. My I have two little girls, and they both happen to have birthdays last month. And we did trouble? Yeah, I know. Right. So we had a little bit of a, I guess a tag team family birthday get together together for both of them. So you know, a lot of family in and out of the house over the weekend, which was, which was great.


Walter Storholt  01:21

That’s pretty fun, though. And they How long do you think that you’ll be able to get away with the combining of birthdays? Like I’m imagining that becomes problematic at a certain age where they want a little bit more of that individual break?


Tyler Emrick  01:32

Yes, yes. I don’t know. But I’m going to try to get it and keep it as efficient for as long as I shoot it might be next year. I don’t know a little bit out of my department. But you know, whatever my wife says we’ll make it happen right?


Walter Storholt  01:48

Just ride that train as long as you can. That’s right right now their own birthday All right, here we go.


Tyler Emrick  01:57

Yeah, it’s a busy month to say the least. But yeah, right now we’re just doing the double cake. Right? Yeah, we had the the Teenage Mutant Ninja Turtle cake and the ANA Elsa cake.


Walter Storholt  02:09

Now if you keep separate cakes, and so they’re both getting exactly what they want on that front. Maybe combining the rest of the parties works out okay.


Tyler Emrick  02:15

Yeah, well, we say that but probably not right. Which


Walter Storholt  02:19

which cake was better where the where the insides of the cakes the same or just the different frosting,


Tyler Emrick  02:23

An ice cream cake all the way so All right. We’re good. Little bit of leftover still in the freezer. We’ll see. Hopefully I don’t get into them. But they’re they’re fantastic.


Walter Storholt  02:32

That is amazing. Well, glad that they had a really fun time it sounds like and I got to visit with lots of family and pretty good way to probably have started off your June I think with those celebrations and got got a lot of things to look forward to this summer and it will be catching up on future episodes about travels and excitements and things like that happening in our lives. But hey, let’s get into today’s main topic, as we are talking to estate planning get teased us about this a little bit there in the beginning of the episode. And so this is a big topic, because I feel like it’s it’s kind of the one that gets overlooked a lot in financial plans. Because I think there’s a lot of financial advisors out there, Tyler that it’s just not an area that they know a lot about. So they don’t talk about it a lot, they maybe even skirt around it in their in their planning, kind of just push it off and say it’s not really our art department. And, and it is a little confusing just to kind of put myself in the consumers shoes, because it does seem like an area where advisors are involved. But also there are people who specifically do estate planning. So do I need to go to that separate person? Can the advisor handle it all? Should they work together, I can see how it could be confusing for someone just kind of stepping into this landscape a little bit,


Tyler Emrick  03:42

You got it. And I think that’s the premise of today’s podcast is to just peel back the onion a little bit and kind of paint the picture for you when it comes time for you to get serious about your state planning. What do you do? What do you need? And what are some of the things to think about as you start working with the appropriate professional, whoever that might be? And then of course, you know, we’ll give you a little bit of a perspective, from a financial planner and a financial advisor and how we might be able to fit in and help facilitate that, because I think you’ve mentioned it in the intro, but it can get pretty complex pretty quickly. When you start thinking about well, you know, tax consideration. There’s the actual costs of completing the documents and, you know, family disputes and complications and how do you communicate what so you can get down the rabbit hole pretty quickly. So we wanted to explore that a little bit. And, you know, I think, you know, every family handles it differently. What sort of prompted the podcast for us today is I actually had a good friend who I’ve known for a number of years. Last month had his mother passed away. You know, obviously they’re dealing with all the grieving and going through and trying to just wrap their arms around the situation and, you know, they tried to find all her estate documents and you know, trying to get a handle on what and needs to get done and what and, you know, he had given me a call literally the couple days after his mother had passed, and he’s like, Hey, I got a call from my mother’s employer. And they’re asking me what to do with her 401k? Do I need to do something with that? Like, how much time do I have there want an answer? And I kind of took a step racking was just almost floored me a little bit, Walt, because obviously, I couldn’t believe a couple days after his mother had passed, not that it’s the employers fault, by any means. I mean, you know, they’re obviously very transactional, and, you know, handling of the 401k does need to get done. But, you know, here he was, you know, a couple of days after losing his mother. And, you know, he’s got her employer calling, saying, hey, what do you want to do with this account? I just put myself in his shoes, and, you know, couldn’t imagine, wow, you’ve kind of almost like, leave me alone, right? Like,


Walter Storholt  05:48

there should be an embargo for that kind of contact, like once, when the, when the company gets that information, there’s gonna be like a two week embargo, before they reach out, or just something seems like shorter,


Tyler Emrick  05:59

Or something right? Or, well, and I think, you know, as I kind of put myself in your clients shoes, I could imagine most of them, that’s why they, you know, start looking at the estate planning and try to get their affairs in order and try to, you know, make it as easy as possible for their heirs to, you know, while they’re grieving help facilitate all these kinds of big decisions. And I think that’s the crux of what estate planning is and what you’re trying to accomplish. So, you know, as we kind of start in and kind of have to look into peel back the onion a little bit on this whole estate planning topic, I think a good place to start is really just Well, where do you start? What are the things that you’re going to need to get together and, you know, be thinking about what, before you start talking to your financial advisor before you start talking to an attorney about getting these estate documents put in place, and the first thing that comes to my mind is really just a general net worth statement. And that’s simply just a comprehensive inventory of your assets, and liabilities. So what we’re looking for in this net worth statement is just a list of all right, hey, here’s my house, here’s my mortgage, here’s the investments that I have, here’s the list of a bank accounts, insurance policies, while we can even get down into just, you know, material, personal possessions, you know, we’ve had some unique ones in the past where, you know, I think of, like big collections or hobbies, you know, some of those collections and hobbies, I think, you know, firearms, for example, some of those have some legal ramifications on who can own them and such. So, when I think about a net worth statement, it can get that granular, you know, not just your accounts, but some of those valuable material possessions that you want to have control, and start to think about who gets what, and what are some of the legal ramifications of them receiving it. But that’s, that’s a great first step, and a great first thing to do is just outlining that net worth statement, once you’ve got a handle on, Alright, hey, here’s where our accounts are, here’s what we’ve got, you know, now my mind starts to turn to or what I think individuals start to think about is, well, what are my financial plan projections, that one might not be as intuitive. And the way that I think about it is, you know, your estate planning should absolutely be done in conjunction with your financial planning. And really making sure that that financial plan is updated and reflective of your current and future lifestyle. So that way, we can make some reasonable assumptions on your life expectancy and growth of those assets over time, which I think is a big thing to get lost in something that’s extremely valuable as you start to head into these conversations. like, Alright, hey, I’ve got this financial plan in place. This is what that plan is telling me my assets are going to look like 10 years, 20 years down the road. And you know, I think sometimes when you look at some of those numbers, it could absolutely be eye opening. So when I think about, hey, things, we need to start this estate planning conversation net worth is number one, and then right behind it is that financial plan projection. So that way the professionals that you’re working with can have an understanding, and not only the professionals that you’re working with, but you as well, and understanding of how you think those assets are going to change over time. And you can start to wrap your arms around, well, what are these values looking like 10 years, 15 years, 20 years down the road?


Walter Storholt  09:30

It’s kind of like finding out where you are and then projecting where you’re going to be in the future seems like it’s following the typical financial plan, but just kind of doing it under this estate planning lens. I’m curious, Tyler, how else can maybe you make a determination of whether you’re going to likely be subject to the tax part of all this equation? I know a lot of people get concerned about estate taxes or maybe understanding the size of the inheritance and how that impacts beneficiaries. That That seems to be where a lot of the concern for folks seems to be pointed when they come in to meet with you, I’m gonna guess. Absolutely.


Tyler Emrick  10:02

And if they’re not, I think that should be on the radar. And I think, you know, getting that financial projection in place you get you thinking about what those numbers look like, and you hit the nail on the head, you know, we want to look at it from a tax standpoint, because as those numbers continue to grow, what that’s going to allow us to do as your as your professionals is to look at and say, Hey, do we have any estate tax considerations or issues that we need to be mindful of, even though you don’t have them now? Could you have them as your assets continue to grow throughout, you know, long, happy, healthy retirement, and then, of course, to the inheritance and the impacts to the beneficiaries and the amounts that might might come through to them? Speaking of the inheritance and beneficiaries, I think those beneficiary designations are the third item that you want to be paying attention to and getting together. And that’s simply put in saying, Hey, you have that you did this net worth statement, you have a list of all your accounts and your property and your assets. Well, how are those assets titled, whose name are they in? And where did they go? Once you pass, and your beneficiaries, your transfer on death payable on death instructions, these are the things that are going to give you a peek inside to where do those go, because of course, as you think about a beneficiary on your 401k account, or your 403 B account, that doesn’t go through probate. So if you have a beneficiary on those retirement accounts, and if something were to happen to you, well, then your heirs can simply just typically just have a copy of your death certificate, send it into the custodian of wherever that account is held. And then that account can be distributed, you know, to those beneficiaries on the account, however, you have them set. And that can be all done by bypassing probate and not done through the courts. So it’s almost an easy button. As you think about the errors. Those are called beneficiaries on your retirement accounts. And a lot of times with your checking accounts or your investment accounts held at your bank or investment institution, those terminologies are called transfer on death or payable on death instructions, essentially, they’re same thing well, but really, they’re just instructions on each individual account on Where does this money go, and who gets it and allowing you to avoid probate. So there are a wonderful starting point, to not only say, Hey, if you don’t have beneficiaries, or transfer on death and structure on your account, well, that’s a quick, easy step to start getting your state in order and putting those on and getting those updated. And we’re not, I don’t want to forget about life insurance as well, because those have beneficiaries too. But your retirement accounts, your life insurance, and your investment accounts are all things that you could have these on there. And when you go in and talk to an attorney, or your financial professional about getting that estate updated, we’re having an understanding of what’s in place now. And where those accounts potentially going to go, we’ll help you wrap your arms around. Is that right? You know, kind of paint that total picture of where you’re at right now.


Walter Storholt  13:05

Yeah, it’s a great illustration, I think of all those moving parts, and it always strikes me Tyler, if there’s one thing you’re gonna get right and estate planning those beneficiary designations get that right, that’s where you hear all the horror stories, right? It


Tyler Emrick  13:17

is it is well and and really think through those beneficiary considerations and saying, hey, who gets what, are they getting a percentage of the account? Are they getting $1 value on the account? What are the rules with that particular account? You know, there were some recent law changes with retirement accounts. So IRAs, Roth’s 401, KS, and the like to where now you’re not able to stretch out payments, or I don’t want to say you are not able to, but there are a small subset of individuals who can stretch payments over their lifetime, when they inherit those accounts, the vast majority of us now are going to have to be subject to that 10 year payout rule where those accounts have to be distributed within 10 years of less again, you qualify for one of the exceptions, and are an eligible beneficiary. But you know, that’s a big deal, you inherited a large retirement account, that is pre tax, that you have not paid taxes on, alright, the clock starts and you if you have to have that account, distributed and 10 years, now the situation becomes and says, Well, alright, you know, when do I want to take distributions that are taxable to me? Do I want to spread them out over time, you know, do it all at the end or whatever. So as you’re thinking about who you put on particular accounts as these beneficiaries, understanding some of those quirks and some of those options that the beneficiary will have, will maybe help facilitate who gets what and, you know, give you a little bit better tools to work with when you’re starting to make some of these decisions on you know, who’s the beneficiary or who’s the transfer on death on a particular account, but, you know, I think that’s a pretty decent list to start with. net worth statement, financial plan, projection, your current beneficiary designations, and then starting to think about the beneficiary considerations. You So those are four things that I think everyone can start with. And then as they start talking to their professionals, they’ll be armed and, you know, certainly be ahead of the game as they go into some of these conversations around. Alright, what needs to be updated? And what do I want to start happening with, with my estate? Which kind of leads me to the next point? What and that’s that relationship of like, well, how does your financial advisor help? And yeah, your does your franchisor draft this right? How does? How does that work? And in frankly, I think a good financial adviser should have most if not all, that information that we talked about above already, right, just given your relationship and those types of conversations that you have with your advisor, I mean, we are uniquely equipped to help facilitate that conversation. We may not, we might not be equipped to actually draft the documents, but certainly can help facilitate that conversation and give you a starting point, and help you through that process. Because you are going to have to go to an estate attorney, whether that is someone local to you, or that’s one of these online services that where you can get them done online at the end of the day. And attorneys, you should be the one drafting these documents for you. And a lot of times when I start talking to families about estate planning and their estate documents, I’ll go Yeah, I had, I had a conversation with an attorney like 10 years ago, we had a will we had some guardianships put up, right. Yeah, happens all the time. Well, and I think part of that has to do with that relationship between an attorney and their client is it’s very transactional, right? Once once you get your state documents updated, you might not talk to that attorney again, for a, either a number of years, or maybe not ever, you know, if you don’t go in and update those documents. So you when you go into this relationship, to get this with an attorney to get these documents updated, you want to really keep that in mind. And if you can go into that conversation with a financial projection and that net worth statement and an understanding of how your goals might change over time and and what you’re trying to accomplish, which your financial advisor has some unique insight to you, I think it makes that conversation and makes those documents that much more applicable. And really just put in place the way that you want them to be done. Yeah,


Walter Storholt  17:22

great illustration, I think of maybe how that relationship starts to evolve and in support people and kind of give them a little bit of a direction, I guess it just comes down to the nature of how people are working for you why they’re working for you, and the kind of the depth of of why you’re working with with one another. And that’s gonna vary from professional to professional.


Tyler Emrick  17:43

That’s right. I mean, your your attorney is not going to be running a financial projection on how your assets are changing over time. Maybe they do, but I haven’t met one that that does that yet. And I can’t tell you how many times while when we start to do some of this planning and have these conversations and you run that financial projection, for example, we alluded to it a little bit earlier in the podcast. But it’s like when you start looking at the actual dollar amount changes over time. I can’t tell you how many times you’ve heard, I’ve heard the comment, wait, my my kids are getting how much?


Walter Storholt  18:16

Hey, go spend some more. My


Tyler Emrick  18:18

uncle gets how much from $1 amount standpoint, you’re exactly right. I mean, I can’t tell you how many times having that type of conversation and understanding how those assets change over time, or what happens, you changes what you do with your money now, you’ll maybe they gift more now. Or maybe they start taking families on more trips, or whatever it is. But it absolutely has an impact not only on Well, hey, what happens with this money? And how do I want to set up these documents? And who gets what, from a dollars and cents standpoint? But how do I use my money? And what’s the best use case for my money going forward? It is so many of those conversations have changed. I think perspectives of the clients that we’ve worked with, happens all the time. And I think it’s most useful to see it almost as a visual or maybe a flowchart fashion to where you can actually start to see and get a handle on like, okay, who’s really getting what and how does this trickle down? If something were to happen to me in 10 years, or 15 years, or or, or 20 years? And then that way you can, you know, keep that in mind when you start choosing the language or the attorney starts drafting up some of these documents to get them in place.


Walter Storholt  19:24

All great points. Tyler, I think this is really helpful for anybody who’s had questions about estate planning before or what we’d love to achieve on this show is well pointing out the questions that you didn’t know you needed to ask. And I feel like we’ve Unturned or overturned some of those rocks, if you will, on today’s show. So all of it’s been helpful so far. So as you what else do we need to know about estate planning and these different kinds of questions that we need to be probing and thinking about?


Tyler Emrick  19:51

Well, I think it’s always important in anything you do to kind of understand the why and if it’s some families that might not be clear, like Well, why do I want to update these documents? Why do I want to have This plan in place and start thinking about this. And because it can be daunting, I mean, there’s there’s, there’s no doubt about it. But as I kind of think about the benefits and a little bit more into that, why, you know, one would be just general asset protection to make sure that your wealth is preserved and goes to your intended beneficiaries. I think that’s probably one that probably pops to most people’s mind at first. But then there’s the also the tax efficiency for the size of somebody the estates, and as we start thinking about how your state is going to change over time, does your state that you live in has some quirky tax rules that we need to be mindful of, you know, what does your asset value look like down the road? And do you run into some federal estate tax issues, to where the good old Uncle Sam is gonna get a piece of your estate? And are there things we can do now to do it so that tax efficiency, I think, another big, big lever, but for most of the families and the clients that we work with, I think it’s the big crux. And what they’re really trying to do is minimize those family conflicts, when something does happen, and their heirs are stuck kind of facilitating that transfer. If anybody as a listener is as had to go through probate court and manage an estate or has been an executor of a will, I’m sure there’s many stories out there of some of the challenges that can arise because there are a multitude of them. And I think that the number one starting point for most families, when they start heading down this path is to really just say, hey, what can we do now to make this as easy as possible on our heirs. So that way, you know, they can have time to grieve and handle what they want to and not necessarily have to be putting a lot of brainpower and a lot of time into managing this largest state and making some some decisions that might not be completely clear on what that individual or family wants to have happen. So minimizing those family conflicts, I think back to a client that I had actually been working with for a number of number of years, the spouse she had had, her father passed away a couple years ago. And her father had never talked to her at all about where anything was or what estate documents were put into place. And after his passing, she eventually found out that her father had actually gone through the actually the trouble of getting the state documents updated, and actually had a trust put in place for her and her siblings. But there was a reason why I’m which is not uncommon. But the reason why I am speaking to this situation specifically is because inside of that trust was a clause that actually said that she could purchase his home, and would have first rights to do that, above her siblings, because they had had some conversations with the past and with the family dynamics. He wanted her to have that that house. And she had always known that. But she did not know that that clause inside the trust at a time period that she had to look to other siblings know that she wanted to purchase that home. So within 60 days of his passing, she had to let her siblings know that she was going to purchase that house. Well, she didn’t know that there was a trust in place. And she certainly didn’t know that there was this 60 day window for her to do it. So she’s, you’re going through this state grieving, imagine. And then of course, she finds the trust and then finds this out. Well, after 60 days of his passing, she even called his attorney, and the attorney said, Hey, you call me when you get the death certificates. And then and then we’ll talk and, you know, there was no indication that there was any time sensitive language and that trust. So you know, I think about a situation like that to where, boy, you know, he wanted her to be able to have the opportunity to purchase that home. When he drafted those documents, that was probably something reasonable where he was talking to the attorney saying, Well, yeah, 60 days, they should be able to have this done, that’s fairly reasonable to put in from a language standpoint. And it didn’t really come to fruition, I think the way that her father had had expected it to, but she had no idea. So that communication wasn’t there. And I think that, you know, as you’re going through and you’re thinking about updating this, I think that’s one of the biggest advantages to getting these estate documents in place is not only having them, but also having them in a way and, and communicating in a way to your heirs to where, you know, they know where to go, and what to do and some of these unique things that you might want to have happen. So that way, everybody is on the same page, if something were to happen to you, and they would have to make some of these decisions. So that peace of mind, I guess, would be the last thing I think of as a estate planning benefit. So we talked about asset protection, tax efficiency, minimizing this family conflicts, and then, you know, just giving you the peace of mind that, hey, our wishes are going to be met and our state is going to be distributed in a way that you know you want.


Walter Storholt  24:55

Yeah, I don’t see any reasons why you wouldn’t want to go there. Through the estate planning process and and make sure that you’re being comprehensive here, those are all fantastic benefits and in uses of estate planning, and who wouldn’t want more peace of mind and have a plan that’s more efficient and avoid family conflicts and all those kinds of things, all positives that come out of that type of planning, I would imagine. My last question for you, Tyler is just is this something extra somebody has to ask for when they come in to meet with you and work with you? Is this an add on to the normal financial planning? Or this is just something that you’re doing for every client that works with true wealth design?


Tyler Emrick  25:32

No, it’s something that we’re doing with every client that works with throughout design. So normally, it would be start with a conversation of, hey, do you have any, what estate documents do you currently have in place, and then, you know, going back to those beneficiaries, and transfer on death instructions, you know, getting a handle and trying to understand what’s currently in place, we always ask that of every family that we work with, and every client that we work with, and then we go through those documents and start to facilitate that conversation, and really try to get to the crux of what does this individual or client want to have happen from an estate planning standpoint, and what is actually going to happen with what’s in place now, and just trying to be clear on, you know, what we see, based off what they tell us. And then we have, you know, a host of solutions on how to get those estate documents updated, that we go through and, you know, really take the lead on for, you know, the individuals and clients that we work with. And then once we get those documents in place, you know, it’s not always a set it and forget it mentality as well. So traditionally, about every three to five years, we’re going in and reviewing those documents, and really just having a quick conversation, and sometimes it is very quick. Hey, has anything changed? Is this how we have we see things set up? Is that still appropriate? Is that still active? Or as things change? Because, you know, as you know, things change. And we want to make sure that if they do you know we’re on top of it, and those estate documents reflect that change.


Walter Storholt  27:00

Sometimes we don’t have to make it more complicated than it is right things change. So we need to know and we got to address these things. So thanks for the great breakdown today. Tyler, really good stuff. And I hope it helps somebody learn a little bit more about estate planning how you can better prepare for your financial future, as well as some of these other nuances involved in the process. If you need help with your financial plan, and this estate planning piece of the puzzle, don’t hesitate to reach out to Tyler Kevin and the great team at true wealth design, you can go to true wealth design.com Click the RV right for you button. And that starts the process with a simple 15 minute call with an experienced advisor on the team. See if you’d be a good fit to work with one another. Again, true wealth design.com Click the RV right for you button. It’s very easy to do that we’ve got a link to it in the description of today’s show. You can also call if you prefer that way 855 T W D plan 855 TW D plan. That number is in the show description as well in case you want to call and have a conversation like that first. Well thank you so much Tyler for all the help and have a great rest of your weekend. We’ll be catching up with you in a couple weeks.


Tyler Emrick  28:06

Yeah, we’ll do he’s a pleasure. Alright, thanks


Walter Storholt  28:08

everybody. We’ll see you next time right back here on retire smarter until then take care.


Disclaimer  28:18

Information provided is for informational purposes only and does not constitute investment tax or legal advice. Information is obtained from sources that are deemed to be reliable but their accurateness and completeness cannot be guaranteed all performance referenced is historical and not an indication of future results benchmark indices are hypothetical and do not include any investment fees.