Ep. 28 - Comprehensive Estate Planning Guide - Part 1

GSLAW-Episode 28 - Comprehensive Estate Planing Guide - Part 1

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[00:00:26] Ledly Jennings: Welcome back to The Good Steward Law and Wealth podcast. Glad to have everyone here today. Uh, today we have a great episode here and I'm gonna record this episode today as kind of an evergreen. Uh, content piece where we can circle back to it over and over again. Um, up until now, we've done a lot of in detail, um, topics on various topics, but I don't feel like I've ever really pieced it all together into one, uh, continuous planning process.

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[00:01:22] Um. And I'll go over all the legal concepts, but generally why people come to me because really the actual legal document itself is becoming more of a commodity, um, with all the softwares and AI out there. But what they pay us for is for the actual advice. So what they're getting is my experience and my advice, and that made me think of, um.

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[00:02:06] Um, so that's the kind of the same thing that I want my clients to do for me. Um. And that's what we're gonna talk about today. So like examples of that. There's something in the legal estate planning community called Rule Against Perpetuities. You may have heard of this. I very rarely ever talk about this with clients.

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[00:02:44] So even though that's something that's covered in every estate plan I do, we don't really talk about it. So that's kind of what I'm gonna go over today is just I'm gonna show you the problems and how we fix 'em and what documents I recommend, and generally what makes up a good estate plan. So first [00:03:00] off.

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[00:03:22] It could be car wreck and you're unconscious for a little bit. It could be dementia or Alzheimer's, and your long term. Um, incapacitated. It can be an illness, uh, for kind of a medium term, but at some point in your life, everyone is incapacitated so that, that's why it's important to plan for that. Um, the documents that come with incapacity in an estate plan, there's four of them, is a financial power of attorney, a healthcare power of attorney.

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[00:04:14] That document that does that is the financial power of attorney. So what it does is it allows you to name someone you trust to make financial decisions for you when you're incapacitated. And I always say it doesn't take any powers away from you personally. It just gives someone else powers to act on your behalf.

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[00:04:55] And I said, no, that's my wife. She said, well, she's on the account so I can only speak with her about it. [00:05:00] And luckily. She's alive and well. So I got her on the phone and took care of it. But think of how that could have went the other way if she had a stroke and couldn't talk. Um, how difficult that would be.

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[00:05:37] Um, so that's usually kind of the main document that you need to protect you against incapacity. And usually what some people ask is, when does this document kick in? Um. And I say there's two options. It can kick in when you're incapacitated or it can kick in immediately when you sign this. [00:06:00] And most people would raise their hand and say, oh yeah, I want it to kick in when I'm incapacitated.

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[00:06:24] And that's called a springing power of attorney, meaning it springs into action when you're incapacitated. But I'm gonna say here today that that is the wrong answer. Um, you need your power of attorney to be active today, as soon as you sign it. Um, example I use is, say I'm in a car wreck, I'm in the hospital and my light bill is due.

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[00:07:02] And he said, yeah, he is in the hospital over there. Uh, and they said, well, we're not going to see it. You gotta get a doctor to sign a form saying this. So then son goes back to the hospital, asks the doctor, Hey, can you sign this form saying that my dad's incapacitated and I can, uh, access his money? The Dr.

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[00:07:41] And the obvious objection to this is. Well, he may do things while I'm living that I wouldn't approve. Said, well, you don't need to name someone you don't trust. You name someone you trust, and the fact that you're incapacitated shouldn't make a difference in whether you trust that person. They would act in your behalf whether you're, uh, alive [00:08:00] and breathing and competent, or whether you're incapacitated.

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[00:08:32] 'cause if they can't access it and the doctors can't see it, then it's almost like you don't have it. Um, so make sure they have access to it. Another concept. Kinda gets in the weeds on the various powers, but I think it's important to emphasize, to show the importance of a good document is there are multiple types of powers within a power of attorney.

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[00:09:12] Beyond that, those actions have to be explicitly stated in the power of attorney. An example of this is a power to make a gift, so say. My parents are going to the nursing home and I need to gift or move assets around to get them qualified for Medicaid. Now that isn't technically for their benefit. If I'm moving an asset outta their name, then I'm gifting it to say myself or a trust.

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[00:09:59] I won't name the [00:10:00] names, but they are rejecting power of attorneys unless they have specific language in there that they have pre-approved. And how do you know what each institution is pre-approved? It's almost impossible to know, but we have a lot of experience and we've seen the major ones, so we. Know what language to put in there that hopefully should cover us.

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[00:10:43] Beneficiary. Was, is, uh. Brain disabled and is now on disability and can't manage his affairs. So while that parent was still living, we wanted to use the power of attorney to change the beneficiaries. So we didn't leave all this money to someone that couldn't handle it, [00:11:00] whether we left it to a trust for their benefit, but we couldn't change the beneficiaries because it wasn't specifically authorized in the power of attorney.

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[00:11:27] And naming someone you trust, um. I, I, I kind of think of incapacity planning like insurance. Um, the reason you buy insurance is to cover risks that you can't or don't want to afford. Like your house, you know, you pay your premium every year. 'cause if it's wiped away by a storm, I. You can't afford to replace your entire house.

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[00:12:11] So it's a form of insurance if you really think about it. And that is all the, the financial side. And again, like I said, there's healthcare documents as well. These are equally as, as important, just a lot less nuanced. Um, so there's the three healthcare documents, the healthcare power of attorney, the HIPAA authorization, and the living will.

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[00:12:49] So you don't wanna name her as the, uh, financial person, but you do healthcare. Um, and side note on that, the healthcare power of attorneys are always [00:13:00] springing because if you're using a healthcare power of attorney, you're in the presence of a medical professional who can sign off saying, yes, I know they're incapacitated.

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[00:13:32] If that's what's in your best interest. They know you don't wanna be on. Prolonging procedures if you can't recover. So then they can make an end of life decision for you. So that is kind of the, um, part one of the estate planning process, uh, planning for incapacity. I. And we'll go into a little more depth in part two.

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[00:14:13] I appreciate everyone listening, and we will see you on the next episode.

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