Navigating Life's Uncertainties Preparing with Purpose

Prepare to uncover the often-overlooked essentials of estate planning with our special guest hosts, Sara Wolf and Jonathan Foster. Together, we unravel the critical importance of planning for both death and potential incapacitation, ensuring your wishes are respected during life’s most challenging moments. Have you ever considered who will make decisions on your behalf if you’re unable to? Discover the necessity of healthcare and durable power of attorney documents through the poignant story of Hisashi Uchi, a nuclear worker who suffered without clear care directives, illustrating the impact of planning—or the lack thereof—on those we leave behind.

In our exploration, we emphasize the foundational elements of estate planning, such as wills and trusts, highlighting how these tools safeguard your assets and intentions. We delve into how a well-crafted will ensures your assets are distributed according to your wishes rather than default state decisions, which might not reflect your desires. Privacy and specific instructions for minor children are prioritized through the strategic use of trusts. We also discuss why regularly updating your estate plan is crucial, taking into account life changes and the inclusion of trusted individuals or charities. Engaging your family or designated parties in these discussions ensures that everyone is prepared and informed, ultimately safeguarding your legacy and your loved ones' futures.

Learn more about Wolf Financial Advisory:
https://www.wolffinancialadvisory.com/

Disclosure: Robert Wolf, James Koenig, Sara Wolf, and Michael Rock are investment advisor representatives of, and securities and advisory services are offered through, USA Financial Securities. Member FINRA/SIPC. Additionally, Amanda Opulskas and Adam Wallace are registered non-solicitors of USA Financial Securities, A registered investment advisor. 6020 E. Fulton St., Ada, MI 49301. Wolf Advisory Services and Wolf Financial Advisory are not affiliated with USA Financial Securities.

The strategies and concepts discussed are for educational purposes only and do not represent specific investment, tax, or estate planning advice. Investing carries an inherent element of risk and it is in everyone’s best interests to consult a tax, legal, or investment professional. The opinions expressed herein are not meant to provide specific investment advice or serve as a prediction for future stock market performance. Past performance does not guarantee future results. Securities and advisory services are offered through USA Financial Securities, member FINRA/SIPC. A registered investment adviser. Wolf Financial Advisory and USA Financial Securities are not affiliated entities.

Transcript

Estate Planning and Power of Attorneys

Voiceover 0:00

The strategies and concepts discussed are for educational purposes only and do not represent specific investment, tax or estate planning advice. Investing carries an inherent element of risk and it is in everyone's best interests to consult a tax, legal or investment professional. Past performance does not guarantee future results. Securities and advisory services are offered through USA Financial Securities member FINRA SIPC, a registered investment advisor. Wolf Financial Advisory are not affiliated with USA Financial Securities.

Voiceover 0:33

Wolf Financial Advisory. When it's important to you, it's important to us.

Voiceover 0:40

This is the Wolf Financial Podcast. Here's your host, Rob Wolf.

Sara Wolf 0:51

Hi everybody, this is Sara Wolf with the Wolf Financial Podcast. We got a real special episode for you today regarding estate planning, and I am here with Jonathan Foster. Hello, Jonathan.

Jonathan Foster 0:57

How are you doing today?

Sara Wolf 0:58

I'm doing well, how are you doing?

Jonathan Foster 0:59

Doing good. Good to be here.

Sara Wolf 1:01

Good. So before I get into a little bit about what I want to talk about and a harrowing story, if you will really perfect for Halloween season here, why don't you tell a little bit about what you know about estate planning?

Jonathan Foster 1:14

I know that from the time that I've been here. It's not talked about enough. Of course, you always think of what's going to happen when I'm gone. You always think of what's going to happen when I'm gone. Well, that really needs to be what's going to happen if, say, I get in a car accident and cognitively I'm not there. What's going to happen with my medical decisions? What's going to happen with my financial decisions? Of course, when you're gone, you're gone. You don't really have a say in what happens.

Jonathan Foster 1:46

Well, when you're here, that's a completely different story. I know that I have a select few people that I would want to handle, not only my monetary things but my own personal possessions, and it's something that needs to be talked about more, not only when someone comes to meet someone like us, but amongst a family. Someone say it's a mom's getting everyone to sit down for maybe a nice dinner and just go over. Here's what our plan is. Now, of course, a lot of people don't have those in place and me being one of them, because we just don't know where to start.

Sara Wolf 2:22

Yep, absolutely. Death is one of the hardest things to talk about. In my experience as a financial advisor, it's hard to talk about finances. For most people which I got to talk about on a daily basis, politics would be the next one, and death as the last one. Those are the three big no-nos in conversation, but that's why it's so important to talk about them, because we're so afraid to talk about them.

Sara Wolf 2:48

Death is going to happen and we have to have a plan for it. You either do or you do not, and I just wanted to share a little special story. I heard recently that kind of ties into this whole estate planning process about what could happen if you don't put together a state plan and full disclosure. I don't know if this man did not have a state plan. All I can know is the story I'm about to share before you. So back in 1999, there was a man by the name of Hisashi Uchi and I probably butcher that name, so I really do apologize, audience Uchi, and I probably butchered that name, so I really do apologize, audience.

Sara Wolf 3:29

But the important thing is he worked as a nuclear fuel processing plant worker in Tokamura, japan. He experienced a huge burst of radiation after an awful accident at the plant. He was soon rushed to the hospital after experiencing extreme radiation poisoning, where he went on to experience 83 days in the hospital. Eventually he succumbed to multiple organ failure, but not after suffering a great 83 days, while many stood by not knowing what to do or when to pull the plug.

Sara Wolf 4:06

Now, obviously, that's an extremely harrowing and special story, but it gets us to think about when do you want these things to happen? If you were in his circumstance, would you want your family to pull the plug? All of this will need to be in writing through a power of attorney. If you don't have something like that and you're suddenly in a coma, your family is not going to know what your wish is. You have to outline that to them beforehand so they can understand what you want, because it's going to come, and it's going to come fast, and you might not have the chance to express your wishes as to whether you want to be kept alive as long as possible, hoping there's a chance to save you, or whether you just want to go peacefully and just cut your losses while you can.

Jonathan Foster 4:58

And a big thing about that, too, is it's not just about what if we're alive still and in a coma can't cognitively make those decisions on our own.

Jonathan Foster 5:09

It also still comes back to when we're eventually gone, and that's why I do believe it is extremely important to have just something made up that states what you want to have happen at that time, made up that states what you want to have happen at that time, just so it takes that emotional stress off of whoever has to end up doing that, on top of still dealing with your passing.

Sara Wolf 5:32

Absolutely, and that's just talking about the power of attorney for healthcare purposes. The other important document that you'll definitely want to have throughout this is the durable power of attorney for financial purposes, and what that does is that allows someone to take over your finances and be able to sign off on financial documents for you if you're not around. Durable essentially means that it's allowed to act right away, and the very important thing about this document is that it will only work while you're alive. If you are to pass, then the document no longer gives that person to power make decisions after you die, but again being durable being that they can concurrently do that while you're still living. You got to make sure that you have a very specific person in mind that you trust.

Jonathan Foster 6:20

That's the key word there trust. You don't want just any random person that you might've met two weeks ago, that you now have declared your best friend forever, to possibly having to make those decisions without them really even knowing your own wishes this story, but there was once a very powerful figure who gave yet another very powerful figure a durable power of attorney over his estate.

Sara Wolf 6:50

That second person in question actually abused his power, wrote all of his assets into his own name and got away with it before the original person who gave him that durable power of attorney ever found out. And that's just a little lesson to everybody you need to make sure that it is someone you trust with that power of attorney to handle your financial affairs, because if it's not someone you trust, they could get away with some nasty stuff. Now, of course they're going to. They are supposed to act as a fiduciary anytime you sign off on being a durable power of attorney, but just because you're supposed to, people break the law. It's going to happen. That's why you got to make sure you have someone you trust to follow that fiduciary code.

Jonathan Foster 7:32

And I think another very important aspect of choosing the right person comes down to you believe that they can make that decision at that time, because, of course, just because that you trust them does not mean that you know how they're going to handle it on the emotional side.

Sara Wolf 7:50

Oh, absolutely.

Jonathan Foster 7:51

Especially when it comes to, say, someone's in the hospital in a coma. They sign have someone be their durable power of attorney. Well, are they going to be able to make that decision when it comes time You're in a coma and the doctors don't see any resolution to it?

Sara Wolf 8:06

Yep, that's extremely important point. So let's just say you have two different kids. Maybe one is the more responsible kid. You know that they're going to handle all your financial affairs really well. They're going to be prudent with every decision you make, but in a time of crisis, they just freeze, they can't do anything, they just stop and they just go into an emotional panic. Well, maybe kid number two you're not the best at financial decisions, but in a moment, in a quick moment's notice, they are going to make the decision that you would want them to. Maybe you split the difference. You have one kid be the durable power of attorney for financial and the other be the power of attorney for medical. That is a way you can split things and you have to think about those decisions when looking at who in your life is able to best handle these things, because those are two very different roles that not everybody may have both of those skills to handle.

Jonathan Foster 9:02

Exactly, and of course we mentioned the kids being the power of attorneys. That's not how that has to go either. It can be a close friend, another relative, it could be anyone who you feel, in that time of need, is going to meet or exceed your expectations.

Sara Wolf 9:19

Yep, absolutely. It just has to be someone you know you can wholeheartedly trust. That is the most important thing Now when it comes to durable financial power of attorneys. That is the most important thing Now when it comes to durable financial power of attorneys. If you really do not have anyone in your life to take care of you, you can also trust a financial institution. There are banks out there who are willing to take on being a power of attorney. So it's important to do your research to know who you're going to make, or what organization you're going to make, your power of attorney to put that into place Because, again, these things can happen at any time. You never know what is going to happen tomorrow. So that's why you need to have a plan in place today to prepare for any event that may happen in the future. Any plan is better than no plan at all.

Jonathan Foster 10:08

Exactly, and I mean it's down to the basic fact of you're just starting off. I mean, for myself included, I haven't even started thinking about this process, and the best place to start is, I mean, even with finances. It's where you're at now, because you can't get started unless you take that first step and, of course, if anyone is looking to find those referrals or resources, you can always reach out. A lot of financial advisors us included have those professional referrals that we always send our clients to because we know that they're going to do a great job for them.

Sara Wolf 10:45

Oh, absolutely. And then also, if you just need someone to talk about it, talk through. Hey, I think this person might be a good fit for this role, but I'm not sure exactly how this paperwork would work. You're always free to talk about this with a financial advisor, but just know that the actual paperwork involved should need to be handled by a attorney, a professional attorney, by a attorney, a professional attorney.

Jonathan Foster 11:08

Exactly, and I mean the most important thing is just have something. I mean, even if it's just a will, just have something, because if you have something in place it's going to get followed by law, it's going to get followed, at least by the state. So it's crazy to see just how many people go through life. They hear about it. They may be a little bit, I guess, worried about starting these processes because of course it's a tough thing to talk about. No one ever wants to talk about a death of either their self or anyone in their family. I mean, it's probably the hardest thing to talk about.

Sara Wolf 11:46

Oh yeah, I would absolutely agree. But that's what makes it the most important thing to talk about, Because, again, if you die and your family does not know your wishes, that's only going to cause more burden and more stress upon them, and ideally that would be the last thing you would want for your family in that type of situation.

Jonathan Foster 12:04

Exactly, and I mean we've said it multiple times throughout this already. But just start somewhere, because the hardest part of that process is taking that first step, and I mean, as soon as you take that step, it's going to open a door that you never knew was possible to where you can and have a sense of ease, knowing that when I'm gone, I know exactly how this is going to work.

Sara Wolf 12:32

So, going into that, I also think it's an important thing to talk about explaining to the audience the difference between a will and a trust. So do you happen to know the difference or do you want me to go ahead and explain?

Jonathan Foster 12:43

You know, I hear about it just about every day. I know a will is really as basic as you want to get as far as estate planning, and I mean my own personal opinion on that is everyone should have a will. I mean, they have all the electronic sites you can go to just create one online. But as far as the deep diving details, I think you're probably be better to talk about those.

Estate Planning Strategies and Tips

Sara Wolf 13:08

All right, let me go into it a little bit. So the main thing that you need to know about a will is you are precisely right. It's the most basic document you can get, and I strongly encourage that everybody should have a will at the very least. What a will will do is it will designate who you want your assets to go to and kind of just vary out your estate, how you would want it distributed after you die. Now, the most important thing that someone needs to realize about a will is that it will still go through probate unless there are beneficiary designations involved with a will. A very good example of this is Michael Jackson and Aretha Franklin. They both died without trust and unless you have a trust in place, then all of your assets are still going to go through the probate court. So Michael Jackson, aretha Franklin they had very public estates. Anyone could find out what they wanted to about their estates.

Sara Wolf 14:13

If you want to keep your information private, a trust might be the better route for you.

Sara Wolf 14:19

It's a little bit more expensive, but again, it keeps all of your information private. You do not need to go through probate court and you can also go into a little bit more specific language of how you want to divvy out your assets. One of the things I see most often in a trust is if you have, let's say, two children and they are both 15 and nine when the trust is set up, you can say okay, if I were to die today, I want to make sure that the 15-year-old only gets a third of the money when she turns 20 years old. A third of the money maybe at 25, and a third of the money at 30. It's those types of decision-making and steps that are just a little bit more precise that can go into the making of a trust versus a will. So if that's something you're interested in having a little bit more of an advanced state plan where you keep things private and you really designate how you want your money to flow a trust may be better for you may be better for you.

Jonathan Foster 15:31

And I think another thing too is and I hear this a lot is people don't know that they should revise their trusts and estate plans Because, I mean, you get it set up and you believe everything is exactly how you want it at that time. But as life changes which it changes for all of us maybe that plan adjusts.

Sara Wolf 15:46

Because people are born all the time. You may have even more kids, you may have grandkids that you want to include in your estate for powers attorney. Especially, you'll want to renew those at least once per decade to make sure that a doctor would always know oh, this is the newest copy. There's not. You're not using an older copy and giving it to the doctor. You want to have it at least done once per decade so you can verify yes, this is the most recent document.

Jonathan Foster 16:15

Exactly, and it goes back to the power of attorneys too, where it doesn't have to be your kids or your family in that estate plan or the trust or the will If you've, maybe just you're a single person and that's how you're happy. If you've got a very, very close friend that you would trust anything with, you can put them in those plans.

Sara Wolf 16:37

Oh, absolutely. And that's even more of a reason to write a will, because if you were to die and you wanted everything to go to your best friend, if you died without a will, the state isn't going to know that they're going to give it to your best friend. If you died without a will, the state isn't going to know that they're going to give it to your next of kin. If you don't have children that could go to your parents Maybe you don't have a good relationship with your parents. The state is not going to know that and that's why you need to have that in writing.

Jonathan Foster 17:04

Exactly, and on the topic of that too, with having someone else be appointed in there, it's a big factor to also make sure that they not only know that this is happening, but have them maybe come in some meetings with the estate planning attorney, or whoever it is that you're talking about this stuff, so they really know what's going to happen if something were to happen to you.

Sara Wolf 17:29

Oh, absolutely. Here at Wolf Financial, one of the things we like to do is we like to have family meetings with people. So we'll have a client come in and they can bring their kids, they can bring their parents, but eventually it's a meeting so that you can sit down with those you love and say this is the plan I have in place and say this is the plan I have in place. I want you to know this plan ahead of time so that way, when the time comes and I do pass away, you're already prepared with the knowledge and not just reading it for the first time after I die.

Jonathan Foster 18:02

Exactly, and I think another point on this too is a lot of people just don't it's either. Maybe their children are doing really great for themselves and they don't see them ever needing the money or same to be said with that extremely close family friend. A lot of people are charitable too, and you can designate those charities as the beneficiaries.

Sara Wolf 18:24

Yeah, absolutely, and in many cases that could be a really great tool to do some tax planning with as well, because you got to remember, if you give money to a charity as an inheritance, they get all that dollar tax free, so you may want to allocate some of your pre-tax dollars to go to a charity. These are some of the things that you need to be thinking about.

Voiceover 18:46

Thank you for listening to the Wolf Financial Podcast. For additional information about our firm, please visit our website wolfadvisoryservices. wolfadvisorieservicescom. The strategies and concepts discussed are for educational purposes only and do not represent specific investment, tax or estate planning advice. Investing carries an inherent element of risk and it is in everyone's best interests to consult a tax, legal or investment professional. Past performance does not guarantee future results. Securities and advisory services are offered through USA Financial Securities member, FINRA/ SIPC, a registered investment advisor. Wolf Financial Advisory are not affiliated with USA Financial Securities.