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Foreign.
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Welcome to the first ever Practical Planner podcast episode. I'm your host, Thomas Kopelman, and I'm joined by my co host, Ann Rhodes. Ann, how excited are you to be doing this first ever episode?
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I am so excited, Thomas. I wish we could be in the same room. Right. But I've got my coffee cup so we can pretend that we're sitting around the same coffee shop and talking to each other. As you know, financial advisors and estate planners are want to do every so often working on the same client matters. I think there is a need out there for financial advisors to better understand what estate planning is and conversely for estate planners to understand kind of what you're facing day to day. Right. Talking to your clients about estate planning. So I'm just excited to be here with you.
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Me too. I. I think that we have a really well planned out podcast where we're going to take everybody from the basics to the complex. I think, hey, it would be really fun to hop into irrevocable trust and all the things that are going to save people on taxes. But we have to realize that for a lot of financial planners, there are the basics that cannot be overlooked. So that's going to be the focus of today's episode. But before we really jump into that, let's just kind of start with a quick intro of who you are so everybody can understand that why this is such a good duo for this podcast.
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Sure. So my name is Ann Rhodes. I am the chief legal officer at wealth.com, which is a digital estate planning platform. Prior to joining Wealth, I was an attorney at two of the largest law firms in the country that handle estate planning. I first cut my teeth at McDermott, Will and Emory, which is the best law firm. I think it's clear that I can claim that working with luminaries from the New York office. And then in 2019, I switched over to a law firm called Perkins Coie, based on the west coast because I myself moved to San Francisco. And so really throughout my years of practice, I've seen it all. I worked with families that were, you know, mass affluent, building first generation wealth all the way to $1 billion families that were doing highly complex wealth transfer strategies. And so I'm just excited to share the things that I've learned through many years of practice. And Thomas, why don't you tell us a little bit about yourself too?
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Yeah. So my name is Thomas Koppelman. I am the co founder and lead financial planner at Allstreet Wealth. We're basically a financial Planning firm for accumulators that are typically pretty high net net worth. So typically 30s to 40s most time business owners or in early stage companies where they got a lot of equity and now they have concentration, they have a lot of wealth. And so estate planning is honestly one of the biggest value adds that we have. And so I think this is like kind of a perfect combo. The goal here really is that we have both lenses, right? We have knowledgeable in the financial space, we have a lot of knowled in the estate planning space. And the goal here really is to educate advisors on the things that they need to know. And that, that kind of gets us started in today's first episode, which is really, you know, what is an estate plan and why do we need one? And I think this is the best starting place because I think if you go randomly talk on to somebody on Twitter, you know, maybe they're in their 20s or 30s, making a couple hundred thousand dollars a year, the thought always is, is I don't need an estate plan yet. I don't have enough in assets. But foundational estate planning documents aren't even really about assets, are they?
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You're completely right, Thomas. And so I think of estate planning, this two word term, as meaning two things. The first is the foundational estate plan that you're talking about. And that comprises usually of a will or a trust coupled with a trust and then a couple of, you know, directives. So, so that during incapacity, people have the power to help you manage your affairs. But then there's also, you know, something more complex. Right. And so that's the second category. That's where you have a client, somebody who is already starting to think about transferring wealth just in a very smart way, maybe through Trusts, maybe through 529 accounts, whatever it may be, but really starting to think about tax planning and wealth transfer. And so those are the two buckets that to me, you know, mean estate planning. And we're going to, to address both throughout this podcast, but just at different times. So we want to level set and basically, you know, talk about the foundational stuff. You know, I think everybody knows everybody in America should have a foundational estate plan. And it doesn't matter how many assets you have. But let's really dig into that, you know, why is it? And then move on to some of those sort of more quote unquote, complex planning.
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Yeah. Okay, so let's start right there. What are some of these foundational pieces that everybody needs to start thinking about? And I think that this is even, hey, you're 22, you graduated college, you're single, you don't own real estate, you don't own a business. There are still parts here that you need to start to consider.
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Right? Absolutely. And before I go into, you know, naming the documents, really it's about objectives. And so let's talk about why it is that you need a foundational estate plan, which are these legal documents that do things for you. And also, what can, what should you be thinking about when you're making these, you know, objective, driven decisions? And so the first thing is the objectives. So when people think about a state plan, they think, oh, it's for what happens when I die. And so, of course, if you're in your, you know, 30s, you're not really thinking about death, but it's actually more than that. It's about incapacity and it's about unavailability. And I think people lose sight of this and all of a sudden they're in this mad scramble because they're going out of the country on business or whatever it may be, and they need somebody, you know, locally at home to be able to sign a document for them. And they're like, oh, my gosh, I didn't realize I needed an estate plan to even do that. Right. And so again, it's about three things. It is about death, but it really also is about incapacity and unavailability. And the documents that do that for you are. Well, the first central parts of your estate plan will be a will, or if you need some sort of trust. Right. A revocable trust. Still need a will. That's called a pour over will. But those two, I kind of put in a bucket together. The will or the revocable trust.
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And that will be episode two is the difference between the two when you start to consider one or the other. So good, let's tease that. But let everybody know that. Go check out next episode here soon and you'll learn about the differences.
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Exactly. And we will, we will tell you what the legal differences are. And it's not just about net worth.
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Yep.
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So then you also have a handful of documents. They go by different names based on the state, where that person you know is. Is living or where they need that document. But generally speaking, on this podcast, we will call that the advanced healthcare directive. And it's exactly what it sounds like, you know, who makes medical decisions for you if you can't, and the financial power of attorney. And so those two documents are really central to making sure somebody is around to make decisions for you and you haven't yet passed away, right? Something's happened and you just can't do it yourself. And then, you know, I tease this a little bit, but the, the key objectives to think about within a foundational estate planning. And this is a conversation that you as a financial advisor should feel empowered to have, you know, to kind of prep the mindset of your client and to get them to realize how important it is to put these estate planning documents in place. There are basically two main questions, actually, I'll throw in a third for fun. So number one is, who takes care of your client if something happens to them? Right? And so again, think about the advanced healthcare directive. You know, who are the people they trust to make the right decisions for their themselves? And number two is who takes care of your loved ones if something were to happen to your client? And you have to think about how your clients probably has a lot of people depending on them, from a spouse to kids, pets, their jobs, Right. Maybe a business. As you said, Thomas, you have a lot of business owners among your client base. And so it's really important to be like, what's my plan if I'm not the person here today making these decisions for them? And I can tell you, in my family, my husband would have no idea how to log into Amazon prime or Amazon.com so maybe I should have a better plan about that. And then the third thing they have to think about is sort of bigger picture philosophically, how do they define themselves and their legacy? And those are things that, as you can imagine, are really tough questions to grapple with. And you as the financial advisor. But even broaching that topic, think of the ways in which you're creating more touch points with your client to have that kind of, of trust being built around these questions.
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Yeah, this is what I consider the basics, but they're not easy to answer. Right. I think when, when people hear like the basics of estate planning is these documents, in my mind, they seem easy. But then you always have the estate planner who's like, whoa, whoa, whoa, whoa. These are not easy things because they're really big decisions, right? Like to make the decision. I have some clients that we're having this conversation with, husband and wife, they have a couple of kids, they don't really have any family outside of that. The decision of who takes care of your kids is a really big decision. Right? Like, this isn't like, oh, well, my brother's going to do that, or hey, my friend's going to do that, like, let's never think about this again. That's a really big decision and it becomes really big in certain times. So I think the easiest example, something I just saw on Twitter was people are like, we're traveling out of the country. We just realized that we don't have this done, right? Like, if something happens to us while we're traveling, we don't have an estate plan done to set up at all what's going to happen to our kids and all of these things. I think we have to understand that the. It's not the most fun lens to look through and it might not be probable, but it is possible, right? Like one of my cousins, both her parents passed away when she was 16, her and her two siblings, right? Like, you know, it might not seem likely, but it still can happen. And you want to take the measures now to make sure if they do happen that it goes the way that you want it to go. I mean, at the basics, right? That's what the estate plan is. If you don't create your own, the state decides what happens. Nobody wants the state to decide what's going to happen to your kids, who's making medical and financial decisions for you. You want to own that and that's how you get started, right?
- [10:59]
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And Thomas, I think it's so helpful to talk about kind of what prompts your clients to be more receptive to talking about estate planning. You know, people don't like thinking about their deaths. And I remember this partner I worked with in California, you know, he said that he had pushed for ages for his client to get his estate planning done. You know, this was an elderly gentleman. And the moment they held this big, you know, signing ceremony in their offices, he, the client was shaking when he was signing his documents. And it was because, you know, he was so scared that what that might mean for him, you know, is that his death, he had to think about his death, right? But it doesn't have to be in those moments that you're thinking about estate planning either. And we don't want you guys to feel like, oh, this is such a morbid topic. How do I even approach this? Right? So let's give you a couple of examples. The first and most basic is just you are a financial planner and you're thinking about their financial well being, you know, hopefully in a pretty holistic way. You're thinking about things like, you know, do your dependents need you to have life insurance if something were to happen to you? That's, you know, you're thinking about what products that might be good for them, appropriate for that client to have. And a natural extension of those kinds of conversations are, you know, it's not just about the money, it's about decision making powers, flexibility for the people who are making those decisions for you. So the next question should be also, by the way, do you have an estate plan? And I think for you as a financial advisor, if you're not asking the question as an intake question, do you have an estate plan, you should go back through your book of business and say, huh, this is actually a natural touch point for me today to go back to that client and figure out if they have one and maybe get the conversation rolling again. Right. And so use it as part of like holistic financial planning to have that, that introductory kind of conversation.
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Yeah, I think, I think that's a really good call out for financial advisors. Like part of your process from the beginning should be getting tax returns and getting an estate plan. Like there, there are a lot of things that you need, but those are two, I don't even think that are like maybe you don't need that. Right. You need to understand both of those situations. And if they don't have an estate plan, it's got to be one of the very initial talking points to help prompt them to do that. And I think something that you're getting at here is it's easy to tell somebody to get an estate plan, it's harder to get them to do it. Right. So there are measures that you can take as a financial advisor. One is like making sure it's on the agenda every time you meet. Right. Another one is how do you loop in the conversation at periods of time that make a lot of sense? Like I think that example I had where I saw somebody on Twitter saying they're going out of the country. Right. If I'm helping my client plan for their 10 year anniversary to go to London, say, hey, this is actually something that we haven't thought about yet. We want to make sure it gets done before the trip because this is what could happen. Like there are those conversations and periods that can help rope people in to feel like it is more important.
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Absolutely. And so, you know, that was going to be my second point, which is you naturally learn things about your clients during your, you know, annual, quarterly. However often you're meeting with these clients, they'll tell you things like just about their family composition. That alone is, you know, an entry point into estate planning. The obvious one being they just had a kid or they just got married. Right. And so here's, here's a thought. If your client gets married and let's say, for example, you know that their parents really depend on your, on your clients or you know, that they're really involved with charities, well, having that spouse all of a sudden changes all of the default rights under what's called intestacy laws, meaning if that person passes away without a will, without a trust, without anything, then you know, these default laws step in and it's basically legislatures from probably decades ago who were thinking about the nuclear American family and weren't thinking about the complexities of, you know, people in today's lives just stepping in and being like, okay, everything goes to the spouse. Is that truly what your client wants? Do they want to make, you know, maybe a one time gift to charity to recognize that special work and relationship they had? Is it that they need to take care of the parents still? And so all of a sudden giving everything outright to the spouse is not the best outcome? You know, that alone should be a question prompt. And of course, if you have kids, right, guardianship, etc. Etc. And so those moments, family situations changing is one critical point where you can have that conversation, another one moving between states. You know, all of a sudden you have to update your, your database with their address, but that plan, even if they have an existing one, may no longer be optimal for the new state in which they moved into. And if they were to pass away with an old plan from an old state, you know, they've lost an opportunity to make sure that probate, the administration proceeding could be smoother for that new state. And so they need to update their plan. Right. So these are all kind of entry points that I'm sure you know, you have heard, but it is an ideal kind of touch point point for you to bring up the, the need for an updated or new estate plan.
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Yeah, yeah, great point. So it seems like, you know, the important parts are who makes medical decisions for you, who makes financial decisions for you, where your kids go. Other one we didn't talk about is where your pets go. I think that's an easy conversation sometimes too. Like I think in times it can be harder to get non families to do their estate plan. Right, whether you're single or you're just married. But an easy one is, well, don't you want to make sure that your pet gets to go to somebody you care about? You are oftentimes like really love your pet, similar to how you'd love a child. So I think that's another one Is there anything else that we need to hit on on this, you know, foundational documents episode?
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You know, the only thing that I would say is, of course we've heard from financial advisors, and here, I'm sorry, I'm going to get on my, like, soapbox a little bit and talk about how to put in place an estate plan. But we've heard from financial advisors that it's like, great. You know, I've had the conversation with my client, but I'm a little bit apprehensive about even bringing it up because the natural next question from the client is, okay, you've convinced me to do this, but now how do I do it? And they lean on you so much to provide resources to them to make available your network of, you know, other kinds of advisors who could help your clients. And so, you know, of course, this is a decision you need to, you know, make for yourself. But a couple of things I wanted to bring up here. You need to be aware that an estate planner is a licensed attorney, should be a licensed attorney. That's the number one thing. But they're licensed based on a state. Right. And so your clients may be spread, you know, all over the country potentially, but you need to be able to find an estate planner who practices in your client state. And that can be tricky, especially if you have a client base that's just very spread out. And so then it puts the onus a little bit on you to have to try to find the right people. And so I always advise, keep your ear on the ground, talk to other financial planners to kind of leverage their network. But at the end of the day, you know, a solution like wealth.com that's an estate planning digital solution that's nationwide, can also kind of help you fill that gap when you're making that kind of recommendation. And so you may need to be, you know, recommending three attorneys and letting your client choose. And always think that, you know, these days technology is stepping into this space as well to try to solve for that. And so I'll just give a plug to, you know, of course, my own platform, wealth.com but part of the reason why, you know, it can be awkward for you to have that conversation is then saying, well, do I know somebody in Florida or Texas that I can put in front of this person and just keep an open mind about, you know, the ways in which you can solve for that?
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Yeah, I think that's a good call out. I mean, if you think about it, there really are a few ways of getting this done. One is you go meet with a estate planning attorney in person or virtually. Obviously that becomes a bigger thing. Now you have digital estate playing tools which Obviously we believe Wealth.com is the best one to do it. Third one that I think that people don't always look at is a lot of times in your company benefits, you actually have estate planning paid for for free. Like I know some of the big companies, Google, Amazon, whatever, they have estate planning attorneys that they will pay the fee for that as well. So all three of those can be good options and really it's situational depending on what your need, which is going to be the best option for you. But I definitely think that's a really good call out and I think a really good way to wrap up our first episode. So, Anne, thanks for joining me. I know that we're going to be doing basically every single one of these episodes together and I really am happy with how this first episode went and I'm excited to do episode two and kind of get into the differences between a trust and and a will based plan.
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Absolutely.
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Thanks everybody for listening and we'll see you back next week.