Announcer:
It’s time now on KROS for Financial Focus, brought to you by NelsonCorp Wealth Management. The opinions voiced in this show are for general information only and are not intended to provide specific advice or recommendations for any individual. Any indices mentioned are unmanaged and cannot be invested into directly. Registered representative securities offered through Cambridge Investment Research, Incorporated, a broker dealer member of FINRA SIPC, investment advisor representative Cambridge Investment Research Advisors, Incorporated, a registered investment advisor, Cambridge and NelsonCorp Wealth Management are not affiliated. Cambridge does not offered tax advice. Now here’s today’s Financial Focus program.
Nate Kreinbrink:
Good morning and welcome to this week’s Financial Focus, brought to you each and every Wednesday morning right here on KROS. Well this is Nate joined today with James Nelson, another beautiful mid November day out there compared to what we had say, I think last week when we were doing the program versus this week. I think we’re definitely back to a more normal average temperatures. That does definitely nice to walk outside to.
James Nelson:
Yeah, no doubt. And the snow is melting, so hopefully by the end of the week, all that stuff’s out of here. So yeah, much more pleasant than last week.
Nate Kreinbrink:
Can you see it all melting and you see that nice green grass below there. Everyone’s got their lawnmowers put away, hopefully they’re put away for good and we don’t need to get them back out again.
James Nelson:
Yeah, exactly.
Nate Kreinbrink:
Now I think to today’s program, I know James and I always talked as far as how to tie stuff into what we have been talking about and where we’re going to go for this week show, and one topic that we haven’t talked about in a while, and I think oftentimes it gets neglected, is just the general estate planning. Now most people when they think of estate planning, they think of wills, they think of trusts, they think along those lines and obviously those are all part of it, but we want to make sure that some of the other things leading up to it are definitely taken care of. I know when we sit down with clients, younger clients specifically, when we talk estate planning, they always kind of tend to tilt their head back a little bit and be like, yeah, we know we need to get something done.
Nate Kreinbrink:
We’ve talked about getting a will done, things along those lines, but it always seems to get pushed down that list until they going to go on a vacation trip where they’re going to be flying somewhere, there something happens where like, yes, we need to get this done. For older clients, it’s usually the old, well yeah, you know, about 20, 25 years ago we had something done and is that still good? And we’re like, well we probably need to make sure that we go over that to make sure that nothing has changed to make sure that what you had in place or what you thought you had in place 20, 25 years ago, is still relevant today with what things are. So, I get it, something that needs to be reviewed on a regular basis. But again, getting those things in place and understanding what it is that you have is extremely important.
James Nelson:
Yeah, and generally with that older population, it’s a health event or something that gets their attention that hey, maybe I do need to do something. And, generally, we like to do that planning before something like that happens, so we’re not running into issues, but yeah, like you said, it’s not necessarily just wills and trusts. It comes down to how accounts are titled to begin with, whether it’s in one person’s name or a joint name. That’s goes for checking accounts, savings accounts, titling on the house and vehicles and whatnot.
James Nelson:
All of that stuff plays into the estate plan. And then beneficiary forms. How do you complete a beneficiary form for a 401k at work, or an IRA that you may have opened up, or life insurance policy. All of these things tie together and the percentage is ridiculously high, the amount of beneficiary forms that do not match the estate plan. So the beneficiary form says give the money to so and so. And the estate plan says something differently, and that’s a huge problem and people need to make sure that those forms and those documents are current and coordinated together. So the right people that are supposed to get the money actually get the money.
Nate Kreinbrink:
Right. And I think that’s really key is that coordination part of it and making sure that the right hand knows what the left hand is doing and vice versa. As far as with all those things going together. And I know like when we talk a lot about this is that the importance of this estate planning, the perception is that well, I don’t have $5 million, so this doesn’t necessarily apply to me.
Nate Kreinbrink:
Whereas in hindsight it really does apply to those people, even that don’t have those amounts of money because the general person, when trust comes into play, whether a will comes into play, has a tremendous impact, and I think they’re really surprised to say if they don’t do nothing, this is what’s going to happen. And when they see the cost of things going through probate just to title things and to have things passed on to the people that they wanted it to go to, but for it to have it to go through probate, the costs that are associated with that, I think they’re, they’re eye boggling to these people to say, okay, maybe I do need to have this done. And it definitely is a worthwhile thing.
James Nelson:
Yeah, absolutely. And the other thing is when you go through this process of updating a will, updating and trust, most attorneys are going to update those powers of attorney. So those are in the event that of incapacity, somebody can handle the financial decisions, signing the check, signing the tax return, those types of things. And then there’s the healthcare POA for healthcare, power of attorney for healthcare. And that helps nominate somebody who’s kind of up to bat in line to make those decisions for you.
James Nelson:
So when you go through that process, you never know which document’s going to be most important because we don’t know what our future holds, but it’s not necessarily, oh, we got to get the will done. If there’s an end capacity or there’s an event that takes place, those powers of attorney may be the most important document or the HIPAA release, which allows family members to kind of know what’s going on from the healthcare providers. So again, it’s part of an overall plan. Those documents, it’s hopefully there’s not attorneys just drafting one without the other. We like to have all of those documents, whether you go the will route or the trust route, but having those documents, you never know which one’s going to be most important. It’s important to have all of those in place prior to the event.
Nate Kreinbrink:
Exactly. And I, as much as we said coordination, you just hit on, communication is right up there, as far as having an important. When we’re looking at healthcare powers of attorneys, those things, it’s important, too, that we communicate to the people that we are selecting to make sure that they’re on board with what your wishes are and exactly who is going to be assigned to those positions.
Nate Kreinbrink:
Because again, we fast forward into the unfortunate circumstances where a medical power of attorney needs to be enacted. We want to make sure that if we have that listed as our kids, that the kids are aware of what our wishes are and who’s all in charge of that. If there’s multiple kids, are they all listed as there and is everyone going to act together? Because again, everything is fine and dandy when we put this stuff on paper, but when we’re put into that moment, those are some tough decisions that may potentially need to be made, and we want to make sure that all people that are listed, are understanding of what your wishes are and they act accordingly. And again, not that something that we want to talk about during the holiday season, but sometimes holiday season is a great time to kind of pull those interested parties together and just say, hey, this is what we have in place, just wanted to make you aware of that again. So having makes sure that everyone is on the same page. Extremely important when we’re executing some of these things.
James Nelson:
Exactly. And likewise, with the power of attorney for a property, you don’t want the spendthrift child, maybe he, [inaudible 00:07:37] on the checkbook. You want to make sure you have the right person up to bat, as we say, just for those reasons. And like you said, Nate, I mean, the healthcare decisions, you could really throw somebody into the fire there if they’re unaware of being in that role and maybe not necessarily the best option for that role. You want to have that conversation up front. So they know your wishes like you had said and then so they’ve got at least some expectation of what they’re being asked to do. So all important things to talk about. Like you said, people might be home for the holidays and they might be a good time to bring it up.
Nate Kreinbrink:
And again, it really is, and I think it’s not a conversation that anyone really wants to have, but I think after you have that conversation and you make your wishes known to whether it’s kids, grandkids, whoever the case it may be, I think it’s just a big relief to know that everyone is aware of what’s going on, why you made the decisions. Because again, we’ve seen it to numerous cases and working with clients in situations where the unforeseen kind of happens and people are definitely caught off guard and there’s some hard discussions that we have based on some of this because they’re just left in the dark. So again, making those things known is definitely good for everybody. And I think when we look at all these things, it does come down to kind of the basics of a will and trust.
Nate Kreinbrink:
What kind of fits right for your situation? What may or may not potentially be covered or what you think may be covered. A lot of times people say, well, I’ve got a will, I’m good with that. But they don’t really understand the limitations that a will provides as far as while they may be living versus after they do pass away, where a trust maybe could come in and do that. Is a trust the right situation for everybody? Absolutely not. But I think it’s definitely something that needs to be considered.
James Nelson:
Yeah, exactly. Like you had said at the beginning, Nate, I mean a lot of people view trust as something that only wealthy people have trusts. Well, not necessarily anymore. That may have used to be the case, but not anymore. There’s a lot more flexibility and maybe a lot more control for those people that may need the extra assistance and it’s worth sitting down and weighing those options instead of the old traditional throw a will together and call it a day.
James Nelson:
The other important thing is when, transitioning back to those beneficiary forms, there are a lot of states, and Iowa one of them, that this could be implemented here in the near term, that if there’s beneficiary forms older than 10 years old, they don’t even recognize them. So it’s important to update those on an on a pretty regular basis. Even if you’re not changing anything, make sure there’s a current form on file for your 401k, life insurance policies because this seems to be the way the future. If a beneficiary form is older than 10 years, they’re not even going to recognize it going forward.
Nate Kreinbrink:
Right, and I think the life insurance policy is one of the biggest things that kind of gets overlooked is because they got this policy, they did it 20 years ago, it’s a permanent policy that they’re going to start that’s going to continue on that they forget about it per se, to know exactly who they put as beneficiaries.
Nate Kreinbrink:
And maybe the kids at that point in time weren’t old enough to be listed, so maybe they are, maybe there’s another child that came into play after the policy was done. So again, updating these things, as James said, is definitely key. Have questions, let us know and we can kind of sit down and can maybe try to guide you a little bit in what direction to go. So, wanted to mention real quick that every Friday NelsonCorp Wealth Management is wearing jeans for charity. Money raised in the month of November will be donated to the Shop with a Cop program of Clinton. James, thanks for joining me.
James Nelson:
Absolutely.
Nate Kreinbrink:
As always, Nate and James with this week’s Financial Focus. Thanks for tuning in and have a great rest of your week.
Announcer:
Financial Focus is a production of NelsonCorp Wealth Management in Clinton and Davenport. The opinions voiced in this show are for general information only and are not intended to provide specific advice or recommendations for any individual. Any indices mentioned are unmanaged and cannot be invested into directly. Registered representatives securities offered through Cambridge Investment Research, Incorporated, a broker dealer member, FINRA SIPC, investment advisor representative, Cambridge Investment Research Advisors, Incorporated, a registered investment advisor, Cambridge and NelsonCorp Wealth Management are not affiliated. Cambridge does not offer tax advice. For more information, visit our website at www.nelsoncorp.com.