Estate Planning Pitfalls of Going Online with Jason Salinardi & Garrett Griffin
Estate Planning Pitfalls of Going Online Show Notes
In Part One of my conversation on wills and estate planning with Modern Wealth Management estate planning attorneys Garrett Griffin and Jason Salinardi, we discussed the basics of wills, estate planning, and the tricky legal situations families and beneficiaries can find themselves in after you die or become incapacitated. Click here to listen to episode one if you haven’t yet – I highly recommend you do before listening this episode.
Today, we continue our discussion by diving a little bit deeper. We focus predominantly on how DIY planning often leads to massive complications for survivors, how events like divorce can lead to serious estate issues after one family member dies, and why you need to work with a counselor or advisor who truly understands the nuances of estate planning in order to ensure a successful transition of your assets.
In this podcast interview, you’ll learn:
- Why “do it yourself” estate planning sites, like LegalZoom, often lead to estate attorneys needing to clean up massive messes.
- The reason changing assets and transitioning from will-based to trust-based plans can unravel your estate plans – and why it’s crucial to keep them updated.
- Why estate planning attorneys can’t plan in a vacuum – and the reason you should make planning a part of your work with a multi-person financial team.
- The typical costs of getting professional help to plan your estate – and why you can either pay now or have your loved ones pay (much more) later.
- “There’s an emotional component in planning. Not every family situation is great. There’s always some difficulty, and computer screens can’t handle that.”
– Garrett Griffin
- “This is a dynamic process. There are so many times when people say they just need to check this box and get this plan in place and they don’t have to think about it again. That’s not the case.”
– Garrett Griffin
[00:00:11] Dean: As always, thanks for listening to the Guided Retirement Show. I’m your host, Dean Barber, Managing Director at Modern Wealth Management. We know there’s thousands of podcasts for you to listen to. We appreciate you choosing to listen to the Guided Retirement Show. Today, we’re going to continue on the discussion with Garrett Griffin and Jason Salinardi on the importance of having a proper estate plan put together. In the last episode, Episode 8, we talked about the basics. If you haven’t listened to Episode 8 yet, I encourage you to go back and listen to Episode 8 before you listen to this episode today. We’re going to dive in just a little bit deeper into some of the intricacies of estate planning. We’re going to introduce the thought process of trust planning and again, we’re not going to cover all the data in this episode. There’s going to be several episodes where we’re really going to dive in deep and help you understand what you can do and what you should do when it comes to your overall guided retirement system. Enjoy.
[00:01:14] Dean: So, we’re back here with Jason Salinardi and Garrett Griffin and, guys, last time we were talking about the probate process and a will-based plan and how a will is basically going to guarantee that any of your probate estate is going to go through probate. It’s a lengthy process. It’s an expensive process. I want to talk about some more of the mistakes that come out there. One of the things that blew my mind from our last conversation was you said that roughly 60% of people in the United States that pass away do so without any type of plan. And one of the things that struck me on that conversation was this advent of this I want to call it the do-it-yourself estate planning whether it’s LegalZoom or one of the other ones that are out there that say you can come online and use this document and it’s going to be as good as any attorney because, of course, we have attorneys that wrote these documents and so it’s gold.
So, I want to start. Jason, if you ever run into one of these do-it-yourself plans that you’ve had to deal with the estate settlement or have had to clean up a mess?
[00:02:33] Jason: Yeah. It happens. It’s happened a few different times and just a couple of examples and one is through a colleague of mine where when you have a will even if you do it through a LegalZoom or a Quicken WillMaker, or whatever it is, there are certain statutory requirements on the way it has to be signed. For example, it has to be a will here. It has to be signed in front of a notary and two independent witnesses, independent being they’re not beneficiaries or direct heirs and that is the gentleman was deceased and the child brought in the will that was notarized, but there’s no witnesses. It wasn’t a valid will.
[00:03:17] Dean: Now, did your colleague try to take this through their…
[00:03:21] Jason: Tried to get the court to accept it even though they weren’t the witnesses and basically, the judge said, “Clearly, you know, the statute’s the statute. I can’t accept it.” I had another years ago a more extreme example where clients came in and they were bringing your existing plan and they handed over the envelope from LegalZoom and I took it out and I said, “Okay.” I was flipping through it. I said, “Okay. Where is the signed will?” And they said, “We didn’t know that you had – we just thought when we got it delivered in the mail by going through the process that that was it. We were done.” And they had this for seven, eight years. So, for seven or eight years they thought they had a valid will but had never really opened the packet to make sure that it was to follow any of the instructions or anything in there.
[00:04:13] Garrett: Yeah. I think to Jason’s point on the fact that there are some formalities with regard to signing these documents, I had a similar situation. LegalZoom and the clients they bring in the packet of the documents for me to look at and review and one of their biggest issues was, so we actually did open it and we read that how we need to sign it and the notarization, etcetera. And we took it to the bank and the bank wouldn’t notarize it.
[00:04:40] Dean: Why not?
[00:04:40] Garrett: And so, you run into a lot of times where that the bank notaries for I think fear of basically notarizing something that they think they’re attesting to the person’s competency, which really isn’t exactly what they’re doing. The notary is only…
[00:04:56] Dean: Guaranteeing the signature.
[00:04:58] Garrett: Is only guaranteeing the signature. You are the person who is signing the document but a lot of times that they think that they’re notarizing and attesting to some competency on the part of the person signing the document which they’re really not. Usually, it’s the witnesses that are somewhat doing that and the notary is notarizing all of the signatures. You are the person you say you are, and you did sign this document but there’s a fear because they were not exactly sure whether they should do it or not. And so, the banks just turn them away and say, “Well, no, I’m not going to notarize those because I don’t want somebody to come back and sue me because they said that you weren’t competent and I’ve notarized and said you were.” And so, you run into that issue in terms of the formality of just getting the document signed correctly.
I had one similar to Jason where on the witnesses and this was client had passed and we get copies of the will and the husband and wife had witnessed each other’s. So, now you’re talking about independent witnesses and we didn’t have independent witnesses. And so, again, now we’re at a point where we thought we had a will and who was going to get what but now the will is invalid and so we’re back to what we call that intestate estate where we have no will to present to the court.
[00:06:21] Dean: So, I guess, but the documents could be right, but they could be not valid, correct?
[00:06:27] Jason: Correct. The document may accomplish what they wanted to, but we don’t actually have a valid document because the formalities of it were missed. The other issue is you’re basically going through a preset interview process which can’t take into account. It’s not fluid. When I’m meeting with clients, I could ask questions and I could ask difficult questions that because maybe they said something or maybe I saw something and maybe one spouse said in answer and the other spouse I saw a reaction. Well, now I need to dig down deeper because there’s something there. Obviously, you can’t do that through a computer screen.
[00:07:13] Dean: Right. There’s no AI that’s going to make that happen.
[00:07:16] Jason: Right.
[00:07:17] Garrett: You lose, I mean, one of the things, you know, they call us attorneys, but they also call us counselors at law and I mean that’s part of what we do is we do counsel.
[00:07:27] Dean: I like that term better.
[00:07:29] Garrett: Yeah, right? I mean, we do. We counsel because there is. There’s an emotional component in this planning for sure because not every family situation is great and there’s always some difficulty in some dynamic and again that computer screen, those interview screens, they may get some basic things, but they can’t handle that element.
[00:07:52] Dean: Okay. Let’s take a quick break. This is the Guided Retirement Show. I’m Dean Barber. We’ll be right back.
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[00:08:32] Garrett: I had another client came in and they were bringing your existing plan and they handed over the envelope from LegalZoom and I took it out and I said, “Okay.” I was flipping through it and I said, “Where’s the signed will?” and they said, “Oh, we just thought when we got it delivered in the mail by going through the process that that was it, we were done.” For seven or eight years they thought they had a valid will but had never really opened the packet to follow any of the instructions or anything in there.
[00:09:10] Dean: So, I want to tell you guys an example of something happened to me. This has been five or six years ago. My wife’s really good friend, her husband was diagnosed with brain cancer and at the time he was diagnosed with brain cancer, it was terminal. So, it’s obvious he wasn’t going to make it. He’s a young guy. He’s in his early 40s and had two young kids. And so, my wife is like, “You should call her and talk to her, make sure that if she needs any help with anything.” So, I called the gal and I said, “Hey, I want to make sure that you guys got everything lined up as far as the estate goes,” and she’s like, “Yeah. We got an attorney and he drew up a will for us so we’re all good.” And I said, “If you need anything, if you want me to look over anything, bring it to me. Let’s talk about it,” and she’s like, “No. We’re all good. Everything’s fine.”
Well, as it turned out, this guy had a $1 million life insurance policy through his employer and he had purchased the million-dollar life insurance policy before he and his wife got married, before they had kids, and so he named his father as the beneficiary on this life insurance policy. Now, the will clearly state that all of the money that he had was supposed to go to his wife. But as you all know, that’s not what happened with the million-dollar life insurance policy. So, this is, in my opinion, one of the biggest things that can happen in just do-it-yourself type planning, or even just a simple will base planning. It’s not understanding that a beneficiary designation on an annuity or a life insurance policy or retirement account ignores whatever the will or whatever even a trust might say. So, give me some flavor on that and help our listeners understand what happened there.
[00:11:05] Jason: Yeah. I mean, I think the biggest thing to just take away from that story and we see it all time and I think is that the beneficiary form, whether it’s the life insurance policy or last time we talked about an IRA, that’s going to control where that money goes. It doesn’t matter what whether there’s a will, no will, trust, no trust. That beneficiary form in almost all scenarios will control where the money goes. That’s why it’s so important part of our process is to make sure that whatever your plan says, whether that be a will or a trust that those beneficiary forms are following that plan as well.
[00:11:42] Dean: Right. But if you’re doing this on your own and you’re just going on a LegalZoom and maybe didn’t even open up the document, how are you going to know that you’re supposed to change the beneficiaries on your different accounts?
[00:11:51] Jason: You don’t. There’s no counseling.
[00:11:53] Garrett: And we call those beneficiary designations and sometimes the joint ownership, non-probate transfer so we’re attempting to avoid probate. But again, if there’s a disconnect in what those documents say and what you had intended to happen and what might be contained in your will, you’ve got this disconnect and I think it goes back to our statistic of not only is there 60% who don’t have a plan. When something goes through and if Allianz is the one conducting this research, and I ask a bunch of people and they’ve got some of these plans and they think they have a plan, they’re not part of that 60% but now after we get to the 80% they either don’t have a plan or their plan’s outdated. And so, here’s somebody who in your situation, Dean, where they have a will and a validly executed will but now, we have this big disconnect in the plan and that a major asset is not consistent with what the intention was. It’s going to another individual. So, now we have a plan that’s it may be valid, but it certainly isn’t updated and is not what the clients want.
[00:12:59] Dean: So, here’s where the problem comes in. So, now that the father-in-law gets the million-dollar life insurance. That’s his money now, right?
[00:13:11] Jason: It’s his money.
[00:13:13] Dean: And there’s nothing that says that he has to give this money to the wife.
[00:13:19] Jason: Absolutely nothing. It’s his money.
[00:13:20] Garrett: It’s his.
[00:13:21] Dean: And if he does choose to give the million dollars, that creates a whole another set of issues in the gift tax filing and all that, right? Let’s talk about that because I don’t think people really understand how complex these small mistakes can become.
[00:13:38] Jason: Yeah. I mean, say he turns and gifts the million dollars to the spouse. He could absolutely do that but now we’re going to be doing gift tax returns and obviously depending upon what the tax laws are at the time, we may have gift tax owed. Under current law, we wouldn’t have that issue with the million dollars but there’s absolutely now we’ve got reporting requirements, the IRS.
[00:14:02] Garrett: It depends on what he has personally on top of that.
[00:14:06] Jason: Right.
[00:14:06] Dean: And are the states different than the federal estate tax and gift tax. So, the state gift tax are different?
[00:14:13] Jason: Yeah. Obviously, whenever we’re doing with any tax, we’re always worried about not only at the federal level, but the state level. Luckily, where we’re at here in Kansas, Missouri, we don’t have separate estate and gift tax is but again, depending on where you’re at, you need to know what your state-specific tax laws are with something like that.
[00:14:31] Garrett: And I think as we as we look at, you think about these statistics about either not having a plan or having an outdated plan or missing these beneficiary designations, I think what it really gets to is this is a dynamic process. There are so many times and I know Jason hears this all the time, “I just need to check this box. I needed to get this plan in place and now I’ve got it and I can put it away and I don’t have to think about it yet,” and that’s not the case because…
[00:15:00] Dean: Because they think it’s done.
[00:15:02] Garrett: Yeah. Because what happens is, okay, at one point they had these three bank accounts and life insurance and 401(k)s and IRAs and then they changed job and they moved and they got a different bank account and they got a different 401(k) and now they got an IRA that came from the old job. And so, all of a sudden within a pretty short period of time in your life all of the assets that you’ve dealt with whether it’s under you’re doing just direct beneficiary designations or you moved on to a trust-based plan, all of a sudden, your plan can unravel pretty quickly even though you may have a valid document that says, “Here’s what I want to have happened.”
[00:15:41] Dean: Because the assets have changed.
[00:15:42] Garrett: The assets have changed. Yeah.
[00:15:44] Dean: The property location may have changed.
[00:15:46] Garrett: Yeah. And so, you look at it and you say, okay, you go with an interstate-based plan. That’s one thing but from a will-based plan to a trust-based plan that there’s that process is still dynamic, no matter which way you go. You’ve got to stay on top of every asset to make sure it’s consistent with what you want to have happened in the plan standpoint.
[00:16:08] Jason: Another example with regard to not updating the beneficiary forms where I’ve seen all too often in my experience which happens common is divorce, you get divorced…
[00:16:24] Dean: The ex-spouse got the money?
[00:16:25] Jason: And all of a sudden that ex-spouse is still in that life insurance because he or she never updated the beneficiary and depending on how the situation, it’s his or it belongs to that ex-spouse.
[00:16:41] Garrett: Yeah.
[00:16:42] Dean: Wow.
[00:16:43] Garrett: Yeah. And you want to talk on those beneficiary designations where you potentially have issues and we’ll kind of talk a little bit more about this and as we kind of dive down into that probate process but when you’re talking about minor children and you’ve got younger people clients who are buying life insurance and typically they’re going to make the spouse the primary but here’s the two scenarios that we see a lot of times. They either name the individual then minor children as the contingent beneficiaries or they’ll name like their siblings and they’ll say, “Okay. Well, I’ll put my brother, John, on as that contingent beneficiary because he’ll do what’s right with the money.” Well, that’s not much different than the situation where dad was the beneficiary because ultimately one of two scenarios are going to play out. So, if the wife is predeceased or a common accident or something and all of a sudden, the children become the primary beneficiaries.
[00:17:44] Dean: They’re minors?
[00:17:45] Garrett: Yeah. And they’re minors, what normally is a non-probate asset, the life insurance proceeds now because they’re minors, they can’t hold that money.
[00:17:53] Dean: So, where does the money go?
[00:17:54] Garrett: So, now we have to have a conservatorship set up for each one of the children.
[00:17:59] Dean: And who controls that?
[00:18:00] Garrett: Well, it’s going to be determined by whoever happens to be the conservator. The court is going to run and do that. It’s a…
[00:18:06] Dean: The court will appoint a conservator?
[00:18:08] Jason: The conservator will go through a conservatorship process and now that conservator has to report to the court at least every year accounting for here’s how the money was invested, here’s how I spent it, and the judge is going to approve that accounting. So, every year they’ve got to do that so they…
[00:18:25] Garrett: They got to have a bond. If they happen to go spend the money, there’s a bond.
[00:18:30] Dean: So, there’s an ongoing fee for all of that.
[00:18:32] Garrett: So, there’s an ongoing fee about the conservator and you got, again, court cost and all those types of thing. So, what was a non-probate transfer because you had beneficiary designation all of a sudden got dragged back into the probate court because now you have to have this conservatorship.
[00:18:47] Jason: I want to take that one because here’s the other thing because guess what age that conservatorship is going to end?
[00:18:52] Dean: Eighteen?
[00:18:53] Jason: Eighteen or 21 depending on the state you live in. Well, say the example million-dollar life insurance policy. I’m just squeezing myself as an example, if I got $1 million at 18 or 21, I promise you, I would not have a million dollars today.
[00:19:07] Dean: Right. You’re going to spend it.
[00:19:09] Jason: I’m going to spend it. I’m an 18-year-old kid with a million dollars.
[00:19:11] Garrett: Right.
[00:19:12] Dean: You’re going to be everybody’s best friend.
[00:19:14] Garrett: Right. He’s popular and here he talked about those predators one of our risks. And so, on the flipside is let’s say I need my brother and I said, “Okay. My brother’s going to be that beneficiary because I know he’ll do the right thing,” and so my wife and I are killed in a common car accident and he gets the million dollars that had been intended for my two children. And for whatever reason, he’s going through a rough patch and so he – it’s his money, again, technically his money. He can do whatever he wants.
[00:19:43] Dean: That money gets into his bank account.
[00:19:44] Garrett: It gets into his bank account and maybe all of a sudden, hey, you know what, I’d like to pay off this and pay off that or whatever the case.
[00:19:52] Dean: I’ll make sure the kids get some education or something.
[00:19:54] Garrett: Or he gets sued. He has a car accident and all of a sudden somebody figures out he just inherited a million dollars, so he becomes much more of a target now for that plaintiff to come after.
[00:20:04] Jason: Or what if he gets divorced?
[00:20:07] Garrett: And his spouse says, “I’d like 50% of that.”
[00:20:10] Dean: Wow. You guys are bringing up all kinds of problems. Okay, let’s take a quick break. This is the Guided Retirement Show. I’m Dean Barber. We’ll be right back.
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[00:21:32] Garrett: Again, technically, his money. He can do whatever he wants.
[00:21:36] Dean: That money gets into his bank account.
[00:21:38] Garrett: It gets into his bank account. Maybe all of a sudden, “Hey, you know what, I’d like to pay off this and pay off that or whatever the case.”
[00:21:45] Dean: And I’ll make sure the kids get some education or something.
[00:21:47] Garrett: Or he gets sued. He has a car accident and all of a sudden somebody figures out he just inherited $1 million. So, he becomes much more of a target now for that plaintiff to come after.
[00:21:57] Jason: Well, what if he gets divorced?
[00:22:00] Garrett: And his spouse says, “I’d like 50% of that.”
[00:22:12] Dean: Welcome back to our program. I’m Dean Barber. So, we started this whole podcast talking about these do-it-yourself kinds of estate plans, the online will, and those don’t address any. It’s a document that says what you have today, where you wanted to go, but then you said, “It’s got to be properly executed. All the statutes got to be followed,” but it doesn’t address all the things that we’re talking about and all the complicated issues that can arise.
[00:22:40] Jason: Right. I think that’s where it’s important because we’re able to use these examples we’re giving and educate and give people just the education and things that you don’t think are going to happen or you don’t want to happen but at least make them understand that they could happen and this is why you should maybe consider this or do that or just give them the education they need to make the best decision for them.
[00:23:02] Garrett: Well, I think it goes to the underlying misconception which is if I have a will, I avoid probate and a lot of clients think that. They think, “Oh, well, this document guarantees that I’m not going go through the probate process.” Again, it’s clearly false. It’s just the opposite. That is the document that you file with the court to start the probate process.
[00:23:21] Dean: So, I think one of the big problems is that so who is it that should be helping people understand this process? And when you get into the financial planning aspect of what we do through our guided retirement system, really I think the responsibility of making sure that those documents are correct, if you’re working with the financial planner, that financial planner should be going through a discovery phase on what’s going to happen at the end of life and making sure not just checking the box, “So, do you have a will?” “Yes.” “Okay, got the box checked there. Do you have a trust?” “Yes.” “Okay. Check the box there,” and move on because all they want to do is worry about selling some financial product. Something was missed by somebody somewhere and that’s the biggest problems we see.
So, let me give you an example. You guys may remember this court case. It’s about three years ago. I think it was 2016 or 2017 out in California where a guy had lost his wife and so on the beneficiary form at his 401(k), he went in and he named his three daughters as the beneficiaries on his 401(k). He then went and did a trust stating that he wanted everything to go to his three daughters. A few years later this guy falls in love. He gets married. Six months after he’s married, he passes away and the daughters go to the 401(k) and they file the claim for the death proceeds so that they can get the 401(k) assets and the 401(k) plan providers says, “Ho, ho, ho, wait a minute. You’re not the beneficiaries on this,” and they said, “No, here’s the beneficiary form. It’s right here,” and they said, “Yeah, but your dad got remarried and his new wife didn’t sign a spousal consent waving her rights to that money.”
[00:25:22] Dean: So, this new spouse of six months winds up with over $3 million of what the father clearly intended the money to go to the girls and even the trust document said the money was to go to the girls. He didn’t know, and the attorney didn’t advise, or he didn’t ask the attorney, “Is there anything I need to do when I get married?” because he thought he had everything done. And so, there’s another thing where it’s a little blind spot but that woman refused to give the three daughters any money and this thing went all the way to the California Supreme Court and the girls got nothing.
[00:26:01] Jason: And again, that’s the tricky thing because now we’re talking about a 401(k) which is controlled by federal ERISA rules and under the ERISA rules, once you are married, your spouse is the 100% beneficiary unless he or she has a written consent not to be.
[00:26:21] Dean: They have to waive their right. Let’s just say they have to waive their rights to a pension if a person…
[00:26:27] Jason: Exactly.
[00:26:28] Garrett: Yeah. So, that’s spousal election.
[00:26:29] Jason: That’s where you’ve got to work with…
[00:26:31] Dean: A counselor.
[00:26:32] Jason: A counselor or advisors that understand the difference between because, again, if that was an IRA that’s governed under state law, it’s a different outcome.
[00:26:42] Dean: Right. Because the IRA just goes by what of the beneficiary forms says.
[00:26:46] Jason: We were talking about a 401(k).
[00:26:47] Dean: Because it’s not an ERISA.
[00:26:48] Jason: Exactly. So, that’s where you got the spade trumps, the heart spade trumps the diamond. Well, in those situations it’s other way around. You’ve got to work with people that understand.
[00:27:00] Garrett: And I think what’s important too to look at in that situation from an overall planning standpoint is you’ve got to work with usually more than one professional. We as estate planning attorneys can’t go plan in a vacuum even when we’re sitting with the clients. I mean, it helps when we’ve got other professionals that they’re using.
[00:27:20] Dean: So, you want to sit side by side with a financial planner and with a CPA.
[00:27:24] Garrett: Absolutely.
[00:27:26] Jason: I tell clients all the time I stay in my lane. My lane is estate tax planning. I don’t know what we should invest in. I don’t know what type of life insurance you should have. It’s outside of my expertise and I think it’s crazy to think that one person can have all that knowledge.
[00:27:46] Dean: It’s impossible.
[00:27:47] Jason: There’s no way.
[00:27:47] Dean: Well, I’ve been doing this for 32 years and I know a lot of the things that you guys know but there’s no way I would pretend to ever say I could practice law and I could do what you do. But we work well together because lately because there’s things that I have expertise in that you don’t and things you have expertise in that I don’t.
[00:28:05] Jason: Absolutely.
[00:28:07] Dean: Right. So, let me just go back to this whole idea of the do-it-yourself plan. Is there ever a scenario where those are a good idea?
[00:28:17] Garrett: Boy, I don’t know. A lot of times you hear well it’s better than nothing although I’m not sure it is because you go through some of these examples that Jason and I were talking about and the doing nothing, you’ve got intestacy but that’s clear. Then sometimes were these other issues arise where you have more of an opportunity I think to have some kind of fighting and a host of other fallout issues that that happen. And so, I think it’s a knee-jerk response is to say, well, it’s better than nothing although I’m just not sure we’re sold at this.
[00:28:51] Jason: Yeah. It’s hard to say. Yes, I think that gut reactions, well, something is better than nothing, but I tell people lots of times outdated is worse than nothing.
[00:29:02] Dean: Because then you could have real problems, right?
[00:29:04] Jason: I see situations where outdated where, as well when I filled out that beneficiary form, I had two kids. Now I have three and I never get around adding the third. Guess what, the third is out.
[00:29:20] Garrett: Right. I think what the outdated does is you look at periods of time you say, “Okay. Here was a plan that was put in place at this period of time based upon the family’s facts and circumstances,” then you go to future and you say, “Okay. Now, what’s happened is now there’s expectations and now expectations may not be consistent with what the old plan says.” So, now if these individuals have been promised something or they are expecting something and that’s completely different than what the plan says, now all of a sudden that’s where like Jason said it, outdated could be worse because now the expectations have been set, but it’s not consistent with what’s really going to happen and now you’ve got to fight.
[00:29:58] Jason: And I think the way to tie this into this whole do-it-yourself is I’m making an assumption here that Quicken WillMaker, LegalZoom they’re not sending you an email out three years later saying, “Hey, it’s time to come back and redo this,” whereas I know part of all our planning process is we follow up with client to say, “Hey, it’s been a few years. We have to talk to you.”
[00:30:18] Garrett: “What’s changed?”
[00:30:19] Jason: “Let’s chat and make sure everything’s up to date.”
[00:30:21] Dean: Right. But they may think that they don’t need to. I mean, there’s again, this whole thing that I think your examples of like, “I get my will done and I checked the box.” It’s like that old life insurance policy that you pull out of the paper and all of the letter that’s sticking to the, yeah, I mean, and you got old outdated stuff that while it might have been okay when it was originally done, it’s not okay now. It’s got to be reviewed. It’s got to be updated. And even if it’s just a look over and a questioning process, what’s changed, and maybe there’s nothing that needs to be updated but if you don’t go through the process, how are you going to know? It’s like changing the oil in your car. I mean, it’s still running. Why would you change the oil?
[00:31:05] Garrett: Because really, you’re looking at two different components. You’re looking at your assets. Okay. Are they titled appropriately? Are the beneficiary designations what I want them to be and are they consistent with what my documents say? And then there’s what do the documents say? I did this so many years ago. Is that what I still want to have happen? Are the individuals that I’ve given various roles and responsibilities and functions to, are those still the people that I would want to fulfill the plan? Are the beneficiaries the right way? And so, you’re looking at both assets and the actual documents because even as Jason and I reviewed enough plans, a lot of times even interpretation client walks in and says, “Well, I think my plan says this and this is what I want to have happen,” and then we sit down we look at it and we go, “I’m not real sure that’s what it says.” So, you even have some of those disconnects.
[00:31:54] Jason: And I think as a third aspect is laws change.
[00:31:57] Garrett: Absolutely.
[00:31:58] Jason: Especially the tax laws. I mean, I’ve been doing this about 16 years and I think these estate tax laws have changed 10 or 11. So, there’s that aspect of it too that what you did 20 years ago the law is very different. So, we had to account for that as well.
[00:32:18] Dean: All right. So, I’m going to get you guys to theorize for me for a minute. Before I get you to theorize, what’s the difference in cost, doing one of these LegalZoom things, a will-based plan through a LegalZoom or one of those versus going to an attorney to get a will done? Is it a significant difference?
[00:32:28] Garrett: It’s fairly significant. I mean, if you look I think a LegalZoom and you pay $175 for a trust I think is probably pretty close to I think what they’re charging. Now, you may get chunk some of the other little ancillary documents that go with that plan, but I think the trust is about $175 versus – and in Jason and I’s world, usually somewhere between 3,000 and 4,000 will get you that essential type of trust and other documents.
[00:33:06] Dean: But we’re just talking about a will here today. We’re not talking about a trust. We’re just talking about a simple will, which is where I think the vast majority of people go because they have that misconception. We talked about in our prior podcast that the will is going to do what they need, right? So, if 60% of people aren’t doing anything then there’s going to be a vast majority of the rest of them that think, “Well, I don’t need a trust. A trust is only for rich people. Well, I just get a will.” So, why would they go do it? Is it all because it’s cheaper or perceived to be cheaper?
[00:33:40] Jason: I think there’s definitely a perception that it’s cheaper but what they’re missing out on with, again, as we talked about this last time is the cost of probate. So, it’s either you pay now or you pay later. The big difference is you pay now or your loved ones pay after you’re gone because none of that happens until after you’re dead.
[00:34:00] Dean: But I think the whole thing is it’s an estate shrinkage no matter how you look at it because the monies going to go someplace.
[00:34:06] Garrett: Right.
[00:34:06] Dean: Right? So, the question is do I want to spend 1,000, 1,500, whatever the cost is to get it done right now knowing that at the end of the day my loved ones are going to get far more, their probate’s going to be minimized, etcetera? Or do I want to give a 5% of the probated assets that could be $20,000, $30,000, $40,000 $50,000 or more?
[00:34:26] Jason: I mean, say the cost is going to be exactly the same whether you pay for it now or you pay it in a probate process. If you ask people, okay, cost is equal but your loved ones won’t have to deal with all of this time and effort and emotion and all that. Is that worth doing it now than later? I would be shocked if not every client said, “Absolutely. I’d rather do it for them now.”
[00:34:51] Dean: Well, because the reason they’re doing it in the first place is because…
[00:34:53] Jason: That’s why they’re doing it. So, yeah, it’s, either way, somebody’s paying. The cost is there.
[00:35:01] Dean: Okay. So, the moral of this podcast is put down the mouse. Walk away from the computer and let’s get some professional help. I think most really good estate planning attorneys will have a conversation with you about what you’re trying to accomplish without charging you a fee because they haven’t done work yet. Actually, most attorneys would.
[00:35:26] Jason: Accurate, yes.
[00:35:27] Dean: Yeah. So, before you decide that the best thing that you’re going to be able to do is just go online and fill out the LegalZoom document and have the possibility that’s going to be inaccurate, incomplete, not valid or potentially outdated at some point spend a little bit of time and actually talk to someone who specializes in estate planning, but don’t try to do it cheap. Don’t try to do it easy. Guys, in our next podcast, what I want to do is I want to get into some more of the intricacies of what a proper estate plan looks like. Is this going to take us a few different podcasts to get through what a proper estate plan looks like because there’s so many different tentacles that come off of a good estate plan? So, in our next podcast we’ll break down the difference between a will-based plan and a trust-based plan and we’ll try to make that pretty simple for people and then we’ll start diving in the more of the intricacies of the trust and what it can do and carry on here.
So, I think great thing is that here on the Guided Retirement Show we’re going to get people where they actually understand what they should be doing and the questions that they should be asking as they go talk to I’m going to use the term that Garrett used counselors of estate planning to make the right decisions.
[00:36:49] Garrett: Yeah. Sound good.
[00:36:50] Dean: All right. Perfect. I’m Dean Barber, Managing Director at Modern Wealth Management. I appreciate you joining us for this episode of the Guided Retirement Show. You can find links to this episode’s show notes and giveaways all in the show description. You can also visit us at GuidedRetirementShow.com/9. That’s GuidedRetirementShow.com/9. Don’t forget, get subscribed to this podcast. Share it with your friends. Everybody needs a guide in the complexities that surround your retirement and that’s why we’re here on the Guided Retirement Show.
Investment advisory service is offered through Modern Wealth Management, an SEC-registered investment advisor.
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Investment advisory services offered through Modern Wealth Management, Inc., an SEC Registered Investment Adviser.
The views expressed represent the opinion of Modern Wealth Management an SEC Registered Investment Advisor. Information provided is for illustrative purposes only and does not constitute investment, tax, or legal advice. Modern Wealth Management does not accept any liability for the use of the information discussed. Consult with a qualified financial, legal, or tax professional prior to taking any action.