Ep.160 – Wine Down – 6 Considerations for Your Estate Plan

When it comes to estate planning, some things are essential and required at all times to simplify the process for your family when you’re no longer here.

In this episode of the Secure Your Retirement podcast, we talk about the 6 essential and required things you need to consider when estate planning over a glass of Raphael prosecco sparkling wine. We explain the purpose and importance of having documents such as a will, power of attorneys, the HIPAA form, beneficiary form, and the transfer on death document.

Listen in to learn the purpose of having the durable and healthcare power of attorneys to make things simpler for your family in case you become incapacitated.

In this episode, find out:

  • The importance of having a will to simplify things for your loved ones when you’re no longer here.
  • Healthcare power of attorney – appointing someone to carry out your healthcare decisions for you if you’re incapacitated.
  • How having a healthcare power of attorney uncomplicates complicated situations for your family.
  • The durable power of attorney – appointing someone to carry out your financial decisions for you if you’re incapacitated.
  • Get both durable and healthcare power of attorneys prepared in advance and when in full capacity.
  • How the HIPAA form allows your family to have access to your medical records.
  • The beneficiary form drives where all your accounts funds go at the time of your passing.
  • The importance of having a transfer on death document to simplify things on your bank accounts.

Tweetable Quotes:

  • “Without a will, simple things become very complicated.”– Radon Stancil
  • “A power of attorney is being appointed to be your agent; someone that’s going to make decisions on your behalf in the case that you’re not able to.”– Murs Tariq


If you are in or nearing retirement and you want to gain clarity on what questions you should be asking, learn what the biggest retirement myths are, and identify what you can do to achieve peace of mind for your retirement, get started today by requesting our complimentary video course, Four Steps to Secure Your Retirement!

To access the course, simply visit POMWealth.net/podcast.

Here’s the Full Transcript:

Radon:Welcome everyone, to the Secure Your Retirement podcast. And it is the last Monday in May. Just seems like they’re just flying by. And today, is our Wine Down. You know how Wine Down works. I just want to say this though, we do have a wealth of information for you. We’re going to talk about six considerations for your estate plan, and why you need to know about these things, think about them, make sure they’re in place and up to date. But we also get to do this episode sipping on a little bit of wine. And so, Morgan, can you tell us what it is that we’re sipping on?  
Morgan:Sure. Today we are sipping on a Raffaello Prosecco, it’s an Italian sparkling wine. Wonderfully fresh and appealing notes of golden apples with a seductive bouquet of delicate spring flowers. So, sip on that.  
Radon:Well, fantastic. So, like I told you, we like to share a glass of wine on our last Monday. It’s why we call it Wine Down, but we do have some real good topics that we want to go through. So we’ve got six things that we want to discuss. And then Morgan’s going to help orchestrate our questions. So, Morgan, can you kind of outline the six topics?  
Morgan:Yeah. So the six considerations for your estate plan are: will, healthcare power of attorney, durable power of attorney, the HIPAA form, IRA, and 401(k) beneficiaries, and the transfer on death brokerage and bank accounts.  
Radon:Very nice. All right, well, let’s get started.  
Morgan:Well, let’s start with, why do we need a will?  
Radon:I always tell this story around this idea of a will. When I took the exam to become a certified financial planner, after doing all the school stuff, I did some prep courses. And what they told us and they drilled into our head, is, you could read this page and a half long question and scenario, and it says if the end result is the person does not have a will, when they say what’s the number one thing they need to do? You can forget all the other stuff they need to get a will first.  
 And the reason why is without a will, simple things become very, very complicated. Who gets what? That’s one part of a will, but also the legality behind it, rather, of how we get it into the next name. So if we have accounts or we have a property, and we do not have it specified who we want that to go to, and it could be as simple as I want it to go to my spouse, or I want it to go to my spouse and then my children, or I want to have it only go to one or two children, out of the four, whatever it might be. We get to lay all that out.  
 But if I don’t have that, it now goes to the court system and the court system, it’s the one who comes in and says where it’s going to go. And so I could either not get the will done, have the court system come in and say who’s going to get my stuff, or I can just simply do a will. And it is simple to put together a will. It’s not very complicated. We, Murs and I, work with all of our clients in helping them make sure that they have an estate plan put together.  
 We have a great system for doing that. It is super, super simplistic. And I say that over and over and over. It’s not difficult. It does take a little bit of time, but you can actually put together a pretty good will in about a half an hour of just filling out some questions and then having the documents populated. So I just tell you this, if you do not have a will, it is one of the easiest ways to have a complicated scenario if something happens.  
 Again, we never know what’s going to happen. You might be young. You might think you’re not going to have a problem. But if you do, in fact, have one, you just leave a mess for somebody else. So anybody listening that does not have a will, should go out right now and get their will.  
Morgan:Yes, they should. What about the healthcare power of attorney? What is the purpose of that?  
Murs Tariq:So let’s break it down into the two words, healthcare and POA, power of attorney. So power of attorney, that is someone that you are granting essentially, power over certain types of decisions. And if you throw in the word healthcare in there, then you know what that is. That’s medical situations. And so a power of attorney is being appointed as kind of, to be your agent. Someone that’s going to be able to make decisions on your behalf in the case that you’re not able to, whether it’s due to disability or incapacitation. While you are living, a power of attorney can make those decisions for you.  
 And so the healthcare power of attorney makes it a little bit more specialized in the medical world, medical type decisions. So don’t think about finances, think about if you have a certain type of condition or if you’re incapacitated, what type of medical procedures would you like to have done while you’re not able to make those decisions? And so the healthcare power attorney is going to lay all of that out. So you take the time to think through all the different scenarios that could happen. You take the time to essentially put down in words, how you want things to play out if you’re not able to make decisions.  
 What’s nice about having this document is that you’ve thought it out. You’ve thought through all the scenarios. You’ve thought through all the situations. And then you’ve also appointed someone who you trust to carry these decisions out for you. And what’s nice here is let’s go to the picture of you being incapacitated, whether it’s a stroke or a coma or whatever, some very difficult decisions are going to have to be made. And this is where it can be a lot of pressure on the family to be making these decisions for you.  
 If you have it all well thought out, well laid out in this legal document, all of a sudden the pressure comes off, because it says clearly right here, “Hey, this is what he or she wanted.” There’s no arguments that need to be made. The family doesn’t need to fight over, “Well, this is how I think he or she would’ve wanted this to be done.” It’s all very well documented or well laid out. So it takes the pressure off of the family, takes the pressure off the power of attorney, and just helps in what is typically a very difficult situation. So that’s kind of the healthcare power of attorney. You got anything to add to that, Radon?  
Radon:Yeah, I was just going to say, I had a scenario where there was that specific situation. You had a person who had a bad thing occur, had a stroke, and he was put on in all essence of feeding tube and a device to help him breathe. He couldn’t communicate. The doctors basically said he is not going to have any brain activity. He’s not going to be able to be functioning ever, and that was the outcome.  
 But the question was between the, his wife and his children, and in this case, the children were, I mean, his children, they were second marriage. So they were not her children. And she had the power to make the decision because she was his spouse, but there was some conversation back and forth because there was one side saying, “I don’t think he would want to live this way if this was his only option.”  
 And then there was some saying on the children’s side going, “I don’t know. I think if dad would want to have this opportunity.” And so it just prolonged that scenario for quite a while. Finally, the decision was made to have to take him off of that. But it was this stressful situation for the family. So I just say, “Look, why not take that away from them?” Because if you lay your wishes out and say, “If I got to be on life support, I don’t…” If that’s your wish, “I don’t want to live under those circumstances.” You now take it out of the hands of them. They don’t have to make that decision. They don’t have to wonder what you thought. So I think that one’s a really, really important document to have.  
Morgan:Yeah. A really loving thing to do for your family to take one more stressful thing off them in an already stressful situation. So what about the durable power of attorney? How does that work?  
Murs Tariq:So the durable power of attorney, again, power of attorney, you’re appointing someone that you trust to carry out your wishes, your desires. Now the durable is going to cover more of the financial side of your life, financial or business, or basically anything that involves decisions outside of healthcare, if you want to put it that way. So that could be having access to various accounts. It could be to bank accounts, to investment accounts, to 401(k)s, having the ability to sign a check in someone else’s place, having the ability to make some financial decisions.  
 And I mean, as far as, it can be as much or as little as you want. So one thing that’s nice about the durable power of attorney is you can state in there what all controls that that power of attorney has. You can make it so that they can change beneficiaries if you wanted to, or update account information, if you wanted to. Or you could take that away from them. So it’s really, you’re giving someone, again, a lot of power and a lot of control over your essentially your finances, your assets, and giving them the power to do things with them within reason of what they would see fit.  
 Again, they’re acting in your interest. So having this person, typically it’s a family member or a very, very close friend, or a loved one that is able to, again, help out in a scenario where you are not able to do something for yourself. The thing about both of these power of attorneys that we’ve discussed, healthcare and durable, they need to be done in advance. So go back to Radon’s situation. If you’re already incapacitated, well, then it’s very, very difficult to get a power of attorney approved, because you have to be of sound mind and ableness to actually be able to have these documents put in place. Anything to add there.  
Radon:I got a question for you. So IRAs, that’s an easy one for us to talk about. IRAs have to be in an individual’s name. So I could be married, and if we each have an IRA, mine has to be in my name. It cannot be joint. So what’s the first thing you would say, Murs, if let’s say a husband called up and said, “Hey, I need you to do something to my wife’s account.” Let’s say they call, you call Fidelity, you call Schwab, you call anybody asking them to do anything on your wife’s account. What are they going to say?  
Murs Tariq:Yeah. That they can’t, not unless there’s a power of attorney in place, a durable power of attorney in place and on file with the custodian. Again, with IRAs or with marriage, you kind of think, “Hey, that’s my spouse’s account. So I should have equal access to it. I should have equal powers over it.” Well, in particularly IRAs and 401(k)s, those are individually held accounts. The IRS doesn’t care. The government doesn’t care if you’re married or not. What they care about is that legal document that will give you access to them.  
 So definitely the durable power of attorney, and of course the healthcare are going to be two things that make your estate plan simpler, makes your family’s life a lot easier.  
Morgan:Okay. And then what about the HIPAA form? Why would you need that?  
Radon:So the HIPAA form is kind of, it’s in addition to what you would do with the healthcare power of attorney. The healthcare power of attorney is basically you describing kind of things that you, your wishes. The HIPAA form though, allows the doctor at the hospital or in a doctor’s office to share their medical information with you. So if you don’t have that in place, then that could restrict them on what it is that you would actually have access to.  
 So when you have a HIPPA form and you give it and you say, “Look, I want my spouse to have access to all my medical information, if needed.” Well, now they’ve got that document there that can help them. Maybe though let’s say you don’t have a spouse and you want one of your children to be able to have that access. They cannot talk to them about your medical situation, unless you have given them that HIPAA form.  
 I’ll give you another example that I learned about. I just, a year or so ago, had my son turned 18. He’s now 19. Once a son, a child rather, turns 18, if they get into a wreck or something happened and they’re in the hospital and you come in as the parent saying, “I need to get information. What’s going on with my child?” Once they’re 18, the hospital now is locked down and what they can share with you.  
 So I had my son do a HIPAA form, so that it would basically say, “If something happens to me, my parents, I want them to be able to get that information.” So that’s what a HIPAA form does. You need to do that, whether it be that scenario or for your spouse, or if you have not got a spouse and you want to have a child, whoever you want to have help you in that situation, you need to have that HIPPA form in place.  
Morgan:That makes sense. So, as far as beneficiaries on IRAs and 401(k)s, what do you need to think about as far as that goes?  
Murs Tariq:So the beneficiary form is very, very important, and we believe you should revisit that on a regular basis, annually, every couple years. Definitely if anything has changed in your life, life changing events. What the beneficiary is going to do is it’s going to basically drive where the money goes, where funds go at the time of your passing. And so you have the ability as an owner of an IRA, or a Roth account, a 401(k), you have the ability to go ahead and set up your beneficiaries while you are living.  
 Sometimes we get the question of, “Well, won’t my will take care of that?” And in a way, the will, will eventually take care of that, but there could be costs involved. There’s going to be courts involved. There could be probate involved. The beneficiary form is going to avoid all of this, which is a relief to the inheritors and the family in general.  
 Typically, what you’re going to be appointing on from a beneficiary perspective is a primary beneficiary, and then a contingent beneficiary. And sometimes even a second contingent beneficiary if your company allows. Kind of the way that could go is that it could be a spouse is primary, the kids is contingent, and then maybe the grandkids at second contingence, or a charity or something like that.  
 The more that you have your beneficiary form laid out and pretty much fully explained as to who’s it going to go to? What’s their date of birth, Social? And then also the percentages, and as much information as you can provide. At the time of your passing, all of a sudden the inheritors, it’s so much smoother of a process.  
 Couple terms as well, when it comes to beneficiaries, one is called a per stirpes designation. The other is called a per capita designation. Per capita, in a quick explanation, this is probably a podcast in itself. But per capita means that you’re basically going across the board. And so if one of your beneficiaries is not there, well, then their portion is going to go to the other beneficiary on that same line.  
 If you were to say, per stirpes, and that one beneficiary is not there, well, it’s actually going to go down that one person’s lineage to potentially their kids or grandkids. So definitely per stirpes, per capita, something that you want to understand as to what it means, and how it could work in your situation. But we would say all accounts, not just IRAs and 401(k)s, but all accounts. If they have the ability to have a beneficiary on them, we definitely want them on there because it’s going to make the estate process so much simpler ,and so much easier for the ones that you’re leaving behind.  
Morgan:Okay. And what about the transfer on death? How do you set one of those up?  
Radon:So on that, now, so let’s just talk about two different things here. One of those is a joint account. And a joint account, let’s say I have an account with my wife. If it’s joint, at my death or hers, it automatically becomes the other one’s, their account. That part’s easy. The part that’s a little bit more complicated though, is what if something happens to both of us or I’m not married, or I don’t have a person that I’m on the joint account with.  
 Then what happens at that point? If I don’t have the transfer on death, or like Murs just talked about, then all essence, a beneficiary designation. It now has to go through the will, which is not horrible, but it just adds a layer of complexity to it. Whereas, if I have that brokerage account or that bank account transfer on death, which means I have a beneficiary designation, it is super simple.  
 All that person has to do is fill out a form, have a death certificate, and they’re going to be able to get access to that money without having to go through all the different aspects of fulfilling a will. So we like to have them all there just cause it simplifies it. We’ve had to unfortunately help folks in that area. And it is super complicated and difficult when we don’t have those.  
 And when we have them, they’re super easy. And we’re all about trying to make it simple. So that’s pretty much what we’ve got. Those are the six elements. I do want to say this, because you might be thinking if you’re listening to this, “Why didn’t they not say trust?” Well, a trust is optional. You may or may not need it. You may or may not want one. All these six things we’ve listed, we believe are in all essence, essential and require, at all times. You need all six of these.  
 These are things that are important, no matter what. A trust though, you could make some decisions about what you want to do on that. We wanted this to be all about the things we believe should be in place. So if you’re missing any one of these six, or they’re out of date, or you’ve had them for a very long period of time, this is essential. That is something I would tell you needs to be at the top of the list.  
 So if you’ve got any questions about this, or if you want to know how we can help you in this way and do it super simple, very, very, very easily. Then you can set up a call and you can go to the website, go to the top right hand corner and you can just click on the button, complimentary phone conversation. Our schedule will come right up. You can get right on the phone with myself or Murs, and we will walk you through step by step, exactly how to do this.  
 We believe it’s important. We will help you with this. We will not charge you for this. But we just want to make sure that we help you get this in place. We believe it’s essential. So hope this has been helpful. Thank you very much, Morgan, for facilitating with us today. And we hope you have a great week. We’ll talk to you again next Monday.