He been going through the coursework and the proof of money projects, you know that I did a teaching course on life insurance and how to set up a life insurance plan. And today I want to talk about estate planning. This is one of the courses that I thought about that, you know, I want to I want to include this information. And let me let me say up front, I'm not an attorney, nor am I trying to play one on a video teaching course. Okay, so I'm not an attorney. And all I want to do is teach you the concepts of estate planning.

So that when you go in to see an estate planning attorney, when you've selected we'll talk about that as well. When you go into see the state planning attorney, you're going to know exactly what to ask, and the questions to ask and you'll conceptually understand what's going on. Because of that, because of going through this video. So keep in mind, we're not talking we're not getting into the broad based details of how these things are set up. And the technical aspect of it. We're just talking about we're talking about the Broad Street of estate planning.

Now what is estate planning estate planning is simply this is the transfer of assets from one generation to another generation. And if a husband or a wife precedes their spouse, that that transition of assets stays within their family, meaning automatically goes to the surviving spouse. But when the second spouse, that's the survived passes away, then those assets transfer from one generation to another generation. And that generation could be made up of a blended family. That generation could be older adult children, that generation could be kids. The bottom line is there's got to be a mechanism in place to transfer those assets so that legally you can take ownership of it, whether that's an investment account, whether that's 100 Whether that's a piece of real estate, whatever the whatever it might be, the state planning process is very important.

A lot of people think I don't have enough money to do a state planning estate planning is only for the rich, I would totally disagree. Now, estate planning for people who are pretty wealthy is a very important task to go through because it's access into a protection mechanism. There's a lot of aspects of it though. They go to work with their size of an estate. This is basic estate planning that I want you to get this is for the average person. This is for us.

We're going to talk about what makes the most sense, and how it all works. Now, I will say this, that as I go through this, my generalizations and observations of how this work might make an attorney cringe My apologies ahead of time, but I think you'll get the idea of what I'm talking about. Let's start with the basics. ie create a will. If you create a will that is better than having nothing at all. But that is a way to talk about and dictate what your wishes are.

The problem is a will, is easily challenged in a court of law. If there's if there's a misunderstanding of what the the meaning of the will there could be challenges from any of the years, there can still be problems. It's better than nothing. But the bottom line is it can be challenged plus it has to go through what's called the probate probate process. And a judge signs off on it as a Yeah, this This can take place. And so the executor of the will will take care of the assets, it's better than nothing.

And if you have an I talked about three different scenarios, the most important scenario is the one where you have small kids or even teenagers, that in the event that something happens and I call it the nuclear option. Something happens to both of you, the husband and the wife you pass away at the same time. It's a low probability of happening. And it's still a probability of happening. And I know in talking with people through the years that they worry about this, I worried about it until I got my estate planning set up to make sure that my kids were taken care of as I wished them as I wanted them to be taken care of. So the best way to do that is to create a trust inside of a trust.

You can this just kind of crashed. So you have to excuse me, but you get the point. It's a it's it gives you the ability to control their environment from the grave. This it's not just a wish list. It's an ironclad legal document that has provisions in it to tell exactly what you want to happen for your kids. And in the event that I call the nuclear option, where both parents nothing happens to them and they will the kids are left without parents.

Then this trust, which is administered by a trustee will have all of your wishes listed out down to the very detail of detail. And by law, that trustee has to administer that trust based on the language in the trust. It's a great planning tool. And if you got kids, you, I would advise to make sure that you had this mechanism set up to make sure that they're taken care of. Now, what a trust dictates the following it talks about when they can get money. So let's say yeah, you could leave two teenagers, or two younger kids, you could leave them a million plus dollars through life insurance, both of you have in life insurance policies, modest even life insurance policies at home, you name it, so you want to dictate when they can get that money and how they can get that money.

So it comes down to most people set it up to where their college education is taken care of their living expenses are taken care of reasonable amount for a car. If, if an 18 year old comes to the trustee and says hey, I want to buy a an $85,000 Porsche, probably not reasonable to the trustees probably gonna turn that request out based on the languaging of it. But it, it makes it does talk about the provisions of how they get money. And it just dictates everything as far as what happens to the kids financially. It can't take care of special needs. If you have a child with special needs you can take you can set up a special needs trust to take care of them when the money is distributed, and most importantly, it also identifies the guardians.

And there's there's no discrepancy a bit about who the parents wanted to be those guardians. Now, I always advocate selecting a team of people. What I don't advocate, and I'm sure most attorneys would agree with this, is that you take one person say, hey, you're the guardian. You're the trustee and you oversee the money. That's given one person too much power. There's no checks and balances nobody to oversee their actions as trustee, or as the person taking care of the money, it might be that they get into a debt situation.

And they choose to take money out of the trust to pay off their debt, with the good intentions of paying it back, but nobody's watching. And anything could happen. People change over time, especially when it comes to money or can change because of money, maybe the person develops a gambling addiction. And, and they run through half a half of the amount of the trust, who knows what could happen, but have a trustee, have a separate person who's the Guardian, and then have a person who is overseeing the investments and the planning of the money? Now, what I see happen with most people, is it comes down to just shutting the process down automatically. When the attorney looks at and goes, who's going to be your guardian?

Who are you going to select to take care of your kids The first thing that comes to your mind for most people is there's nobody as good as me to taking care of my kids. And you're probably right, there is probably nobody that's going to take care of your kids, like you're going to take care of your kids, but they're going to be as close as possible. So you're looking for that person that's as close as possible and new, but no one will be as good as you. So don't spend a lot of time arguing over and debating who it should be. Just pick the person that has they closely that comes close to resembling the values and the the goals that you would have for them, and select them as a person and you also have backups to in the event that the nuclear house option includes the people that you chose as guardian.

Estate planning for adult children. I've unfortunately witnessed many times where a second parent passes away. The assets are there to share shift to the adult children and the adult children have a bad relationship. Or they own all or some have bad relationship between each other. And there's a lot of arguing and fighting in Bad Blood over who gets what. Now the will says, This is what's supposed to happen.

But the eldest son says, Well, yeah, but dad told me that I was supposed to get that piece of property, no matter what, because I'm the oldest child. I know what he put in there, but obviously, he's mistaken. So I'm going to challenge the will. It can be an absolute mess. You don't want your adult children to have any ability to challenge to make decisions. That's why setting up a trust is still a great gift to give your family even with adult children because you can break everything down.

This is what I want. This is what who gets who gets what, Trustee administer this, as I've said, case, closed case done. And that's the benefit of the trust for adult children. estate plan. For a blended family now, this is what can get really toxic. When you've got a second marriage and two sets of kids, those kids could think that they're, that they are entitled to certain things.

And this is also a good conversation for the husband and wife to have about how their own kids are going to get taken care of. But do make sure that you do go through this process if you have blended families because it does take the decision making out of their hands, the challenging out of their hands and just says this is who gets this is what who gets what this is set in stone. And this is the way the trustee is going to administer it. One other important document is the power of attorney. And I just want to illustrate you know, a power of attorney is it comes into effect when a person cannot make decisions for themselves. It's a very important document to have because you never know what could happen to where they could make decisions for the Masters make decisions for themselves.

Now, considering The most people had the bulk of their net worth tied up in individual retirement accounts or 401k plans. Without a power of attorney, this could be a problem. And I just want to identify this one particular situation, because it's a scenario that could end up being a huge problem. So let's say that the husband has a million dollars in an IRA, and that million dollars is there for their future. The husband goes into a coma, cannot make decisions for that million dollars. Guess what happens that million dollars in that IRA gets frozen.

The wife can't touch it without a power of attorney. And it's so very important to make sure that you have that in place. And there's some You also want to make sure that you get a power of attorney written by someone who does estate planning. So there's no mistakes that's very reputable, because a broker a brokerage company or Any company can say we don't feel like that power of attorney is valid. And so they don't have to accept it. But if it's done right, that eliminates that starts to eliminate that particular promise you got to know that that it is also one of those things that where you get that power of attorney done you give it to your financial advisor and saying you know, make sure that this is acceptable in the eyes, eyes of the broker dealer in to make sure the who's who makes the decision on this so that you know that you'll have a problem with it but a power of attorney very important to have specially in a situation where you have all the assets tied up in a spouse's name, who can't make decisions for themselves.

What about do yourself estate planning there's a big industry out there that says buy this software, plug in the names and you're done. Too much room for error that you could you can make the laws are different bytes each day. You can make an error you can make it the document invalid And plus, do you You think a judge wants to look over a document, say it's a will. That is homemade, versus one that's done by an attorney? Do you think there'll be any biases there could be, to me it's not worth the cost of savings. Get a legitimate attorney to do the will to do this, the the trust if needed, and to get it taken care of the right way.

Now find a good estate planning attorney. There's all types of estate planning attorneys, as I said, you know, their estate planning attorneys that they work with the average Joe, there's estate planning attorneys that work with very wealthy people, ask around because you don't have to spend a lot of money. Be able to, you know, if once you've figured out who you're going to use, make sure that when you go to the meeting, that you're able to name key people, The Guardian, the trustee, the person who oversees the money and their backups, because that's required as well. What I find is is that people go into estate planning meetings very unprepared knowledge wise nest, the whole courses, the whole lot. Did his teaching course be able to talk about your wishes, say, here we are, this is where we would want to be in the event of the nuclear option or the event of a second death.

And whatever you have to do to connect a and b, that's what we want to do. Once you finally get the documents done, or executed or signed or notarized or witnessed, make sure that they go into safety deposit box where somebody knows where they are, or a safe, or somebody can get access to it. Because I've seen too many times where originals get lost, and makes it for a very complicated situation. best piece of advice that I could give you is to do it now. Make sure that you've you've gone through the estate planning process. You know the fact I think that there is no excuse for any family, especially a family with young kids.

There's no excuse for not going through this process. There's not a there's no excuse for not getting into the life insurance aspect of the estate plan put into place because you just don't want to take that chance with your kids. You want to make sure your kids are protected. You want to make sure your adult children are protected. And the transfer of estates from one party to another party can be tricky. So it's important to not put it off to get it done now, to make sure that your family is protected in the event