Don’t Skip This Step!
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One of the most heartbreaking things I’ve seen over 24 years advising families is a surviving spouse or family member dealing with an unorganized estate. Not having your affairs in order puts a huge burden on your family and compounds the stress of their loss.
According to a recent survey, 61% of people don’t have a will. Even those that have a will have failed to organize their financial information to make it easy for their loved ones to act. Don’t be one of them.
Leaving a big mess of your affairs and estate plan will make life suck for your family when you die. A messy estate can take major financial and emotional tolls on your family.
Take the simple steps outlined this week and give a beautiful gift to those you leave behind.
Here Are Your Action Items for the Week
- Listen to episode 50. We discuss the basics of organizing your estate.
- Review these worksheets. These 3 worksheets will give you the basics to make things easier for your heirs:
- 9 Important Estate Planning Steps
- What Your Survivors Need to Know
- What to Do When A Loved One Dies
- Compete these to give your spouse or family the gift of an organized estate.
- Organizing Your Financial Life
- Create an I.C.E. Plan
- Family Love Letter
- Ask questions. If you’re stuck or unclear about something, shoot me an e-mail. I’ll do my best to answer your questions. Simply click here and ask your questions.
Don’t Miss Friday’s Webinar
Don’t forget to tune in to the “Can Carl Retire? Results Webinar” this Friday at 3:00 CST.
You’ll watch live as Carl finds out whether he can achieve his ideal retirement.
Plus, you see live as I stress test Carl’s plan against the most common worries in retirement:
- Bad market returns
- High inflation
- Long-term care costs
- Outliving his assets
Special Note: If you can’t attend Friday, still sign up to receive replay information.
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The Retirement Answer Man Episode #50
Holy cow! Fifty episodes! Where did the time go?
Well, thank you so much for joining me today! My name is Roger Whitney and this is the Retirement Answer Man Show where we are dedicated, committed to helping you dream up, plan out, and live your ideal retirement. How cool would that be?
This is an important day. This is Step Four, the last step of the “Can Carl Retire?” series that we’ve been hosting throughout the month of January where you had the chance to plan alongside Carl, a fellow listener, as we walk through a retirement planning process.
There’s still time to sign up. You’ll have a little catching up to do but you can go to rogerwhitney.com and sign up in the upper right-hand corner and you can get all the resources that we’ve been sharing to plan alongside Carl as we walk through each week his retirement plan.
Today is the last step, Step Four, and this is all about not leaving a mess for your family. It’s all about cleaning up your mess. When we live a long life, we end up leaving a little bit of a mess that we’ve got to make sure we clean up at the end so we’re going to talk with Carl about organizing his estate plan and I’m going to share with you five or six resources I think it is this week on how you can organize your financial life and estate to leave a beautiful gift for your family.
I want to get going here. We’re going to go right to the disclosure and I’ve got to turn down this happy music though. My attorneys do not like happy music when I talk about the all-important disclosure and that is only you know your financial situation so you need to consider this podcast and my website and, well, really anything you read on the internet as helpful hints and education because we don’t know anything about you. Before you make any decisions, talk to the people that do know you and that could be your legal advisor, your tax advisor, or your financial advisor. That’s just not common sense, that’s a fundamental principle of planning well in your life.
Okay. Before I get to today’s show, I want to talk about Friday. Friday is the results show webinar of “Can Carl Retire?” We’re going to have a one-hour webinar – it’s totally free if you’ve signed up – to walk through Carl’s ideal retirement scenario. What we’re going to do is we’re going to walk through Carl’s entire plan and I’m going to review my confidence in his achieving his ideal retirement, and I haven’t even done the analysis yet so I’m not sure. I’m going to work on that today.
If necessary, if we can’t achieve his ideal retirement, we’re going to walk through making adjustments to that plan and you’ll be able to watch right alongside Carl, and this is really cool because Carl’s never seen any of this. He doesn’t know the results of his ideal retirement scenario so he’ll be watching and talking to me along with you as I present it.
Once we get to a retirement scenario that we’re comfortable with, during the webinar, we’re going to stress test Carl’s plan against some of the most common retirement worries. We’re going to stress test his plan against bad markets, what happens if there’s high inflation, what happens if there’s a long-term care event that’s really expensive, what happens if Carl lives much longer than we expect? Is he going to outlive his assets? We’re going to stress test his plan through all of these scenarios and you’ll be able to watch live and type in questions that we’ll work on answering throughout the webinar.
If you would like to attend this webinar, it’s totally free even if you didn’t plan alongside Carl throughout this month. You can go to rogerwhitney.com/dream and sign up for the webinar. It’s going to be this Friday, January 30th, at 3:00 Central Time.
Now, Gabrielle sent me an email and asked if there’s going to be a replay available because she’s going to be working at that time and, yes, there will be a replay available. You just need to sign up for the webinar and I will send out replay information after the webinar takes place. If you’re not able to attend this Friday but you still want to watch the replay, just go ahead and sign up anyway and I’ll make sure that you get that information.
Before I get to this week’s segment, I want to go over a question I received or some comments I received from a fellow listener. Steve. Now, Steve said he is 59 and he concurred that, yeah, that earnings curve in the corporate world which we talked about in last week’s episode really does hit between 45 and 56. In fact, he said he saw his financial situation vastly improved once he hit that high earnings period and it sounds like he walked a similar path as Carl, working at a major corporation for a long period of time. He had the comment that it’s really hard to walk away from a pay check that is quite large compared to the earnings history when you really start to hit that high end of that earnings curve.
He says, “If you leave in your early 50s, you’ll need to accept that you may have one-half as much in investments,” and this was a comment he made in regards to Carl’s situation. He said, “You know, looking back at when I was 50, 51, I probably didn’t realize that and I’m really glad that I continued to work as much as I could on my own terms,” because it vastly improved his financial situation and that was a little guidance he wanted to give to Carl, that Carl may not realize how much he’s giving up in terms of financial potential of growing his net worth and feeling more secure by leaving so early in his early 50s and this is Steve talking as a 59-year-old looking back on it. He wanted to give Carl a little perspective there, at least from Steve’s journey. That’s awesome, Steve.
Thank you so much for sharing and thanks everybody for all the comments and questions that you’ve shared throughout the week. I’ve had some amazing interactions with listeners who are walking a similar path and planning alongside Carl. Keep those coming even after all this is over, I’m happy to answer your questions based on what I can without really knowing you in your journey.
Well, this week, I want to talk about organizing your estate plan. Let’s face it. If we’ve lived a long life – and I’m 48 now, I had a birthday last week so I feel like I’ve lived a long life – we create a mess for ourselves. You know, I look around the house and I’ve got to clean it up every week because I leave a mess. Imagine living thirty, forty, fifty years, the kind of mess we can leave in terms of where are our financial stuff, where are the items that we really care about.
This last step – Step Four – is about cleaning up and organizing that life, that mess that we might have made from our life in terms of all the stuff that we’ve accumulated and spread out over the world so our loved ones can handle closing out our financial life when we ultimately pass from this earth. That’s what we want to talk about today.
Sadly, most people don’t take this step.
A recent study said only about 61 percent of adults – excuse me, let me rephrase that – 61 percent of adults don’t have a will. Now, you don’t have to be rich and famous to have estate issues. Having a simple will to help close out your financial life is essential regardless of how little or as much as you have. Even for those that do have a simple will – which is a great first step, obviously, because most people don’t take that – the vast majority of people in my experience don’t have anything organized.
We live in a very virtual world, right? We live where accounts are all accessed online. A lot of times, we receive statements virtually via email. You know, in the old days, when someone passed, you would just have the mail forwarded and, over time, you would find out about all of their assets because you get a paper statement in the mail. Well, those types of things don’t happen anymore.
Now, it’s all complex passwords and email accounts and most people have multiple email accounts. This can create a very messy situation for your loved ones if you don’t have it organized. It’s not just about having the will and the directives and the powers of attorney and those types of things.
This is about organizing your financial affairs even beyond that. If you were to pass – God forbid – your loved one could walk in, find all the passwords, find the combination to the safe, get access to your email account so they could manage your virtual financial life and really start to figure out how to close this stuff out.
Sadly, I’ve seen very disorganized estates and I’ve had to help people walk through that path of closing those messy estates out and it’s sad because the loved ones, the people that you leave behind will be obviously grief-stricken when you pass. Having to manage the stress of all the complexities of “Where is that? How did he do this? What’s this bill coming from? Is this legit?” – all of those things can really compound the stress that your loved one feels after you pass. You can leave a beautiful gift by not just having your basic will and powers of attorney but having a love letter which we’re going to talk about with Carl – or he’s going to talk about – and an “in case of emergency” plan so someone can truly step in, unravel, and clean up your entire financial life. This isn’t just about passing money on or avoiding estate taxes. This is really more about organizing things to make things easier for the ones that you love.
Here’s my conversation with Carl about cleaning up the mess of his life when he passes.
ROGER: I want to switch gears. I’m going to ask you a blunt question. Do you have an estate plan?
CARL: A simple will is pretty much it. I haven’t done anything. I haven’t really even investigated trusts or anything like that. At this point, pretty much just a straightforward simple will.
ROGER: Okay. You have a will.
ROGER: When was it done?
CARL: We actually just re-upped it about two years ago.
CARL: And the other thing I should mentioned – and I would really encourage all your listeners to do this; I read this in an article and it really touched me – everybody should write a love letter to their wife. I talked to my wife about it. It’s not really an estate plan but it kind of is and then we can get more into the trusts and some of the other things you might be thinking about but it triggered this thought.
A love letter is simply a letter to your wife. I don’t know how most of the guys are that are listening – or the women, for that matter, if they run their financials – but, typically, one of the spouses does the majority of the investments and they’re into the details, and the other one kind of doesn’t really know the details. This love letter lists all the contacts, all the information on the accounts, all the account numbers, all the passwords, and we’ve agreed on that. We’ve printed it out. She’s got a copy of it. We’ve got one in the safe and she’s got the safe combinations – you know, all that kind of stuff that you just don’t think about and – heaven forbid – if something would happen to me, you know, how do you deal with all that? A love letter is not really an estate plan but it’s something else that we’ve done.
ROGER: You probably hit on the most important thing, Carl – the most important thing. That may be more important than the will in most people’s situation and some people may argue that but, from my position of having to work with people and walk through that journey of dealing with a loved one’s death, closing out their financial life or their estate, it can be a mess without that love letter because it is that way, right? Someone usually takes the lead on all the passwords and managing the bills and all the investments and where things are at. I’ll tell you, in my household, my wife has no clue for the most part. She doesn’t want to. So, if I were to pass, she would be, “Umm… What is the combination to the safe? What accounts do we actually have?” I try to work through those little conversations of showing her the net worth but it’s not something she’s particularly interested in. If you don’t have a love letter like you’ve done, it can be a god-awful mess for the one that you do love because what’s going to happen? Carl passes; his wife will be justifiably devastated because Carl’s a cool guy. On top of all that emotion, you know, all these bills need to be paid. How do I get into that account? How did he want to be buried? Who did he want to invite? Where is the will or where is the estate? Where is that life insurance policy? Who do I contact at the company for the pension?
ROGER: That stuff can just be a huge burden on top of the devastation of losing a spouse or a dad or whatever. I can’t stress this long enough. I call it an ICE plan. I don’t call it a love letter. A love letter sounds much nicer.
CARL: Did you say ice? Like, when they put your body on ice or what?
ROGER: In case of emergency plan.
CARL: Oh! Okay.
ROGER: But I like love letter better because that’s much more intimate. That is powerful and, from my seat of dealing with people that have gone through this and I’ve seen so much happen in families from car accidents to cancer to everything, it is a gift you give them.
CARL: Well, thank you. I’ll tell you, one other thing I did too and I just kind of customized it, there are some websites that have templates and stuff but I actually took it a little step further and I said, you know, “Heaven forbid but, in the case you’re reading this, obviously blah blah blah…” and then I kind of went through, you know, “To kind of help you through this process, here are the steps I would suggest you take.” Literally, “Step one: call your brother. Step two…” and I tried to think through what would be the logical process to work through this – you know, call the accountant, that kind of stuff. I gave her all those names. I literally took it down to a sequence – things that she could just pull it out and literally walk through the list and get through it.
ROGER: That’s awesome. You get a big gold star for that one, Carl.
CARL: All right! Thank you!
ROGER: And you have a simple will that’s been done within two years so you’ve looked at it in the last two years.
ROGER: Now, I’m assuming, in that will, you have health care directives?
CARL: Yeah. What do you call it? Whether you unplug me or whatever.
ROGER: Yeah, you have medical power of attorney, durable power of attorney. So, if you were incapacitated or she was, you could act on each other’s behalf. Now, my suggestion would be that you review that every two years. It doesn’t mean you have to go to the attorney but you want to pull them out – again, get caffeined up and read them because they’re not exciting things to read – and really key in, “Are these the people that I want to have making these decisions or be involved in my life?” because that can change over time as well, right?
If you’re married – you’ve been married a long time, I’ve been married 24 years – usually, “Oh, I know it’s my wife and I still love her so she’s the one!” but you want to make sure you have those secondary people correct because that’s really where seasons will change in relationships and connections that, if they’re not revisited every two years, it’s like, “Well, I do still like John but he’s moved to California and I haven’t talked to him for years so maybe he shouldn’t be the back-up executor” as an example. That’s really the reason to review it so you can make sure that you have those secondary people on the medical powers of attorney and durable powers of attorney correct. God forbid, you get in a car accident, more than likely, your wife will be in the car with you and, if you’re both incapacitated, you want that secondary person to be aware that they’re the secondary person and also have some knowledge of where those documents are so they can start to step in. You definitely want to review that every two years and have some communication – maybe a love letter light to those secondary people so they know where things are at.
Now, when was the last time that you reviewed the titling of your accounts and the beneficiary designations of all your IRA and 401(k) type assets?
CARL: Yeah. I mean, again, nothing really has changed in our life so, you know, I think a lot of them now, automatically, and this might just be through our work accounts but I know a lot of them kind of automatically send out review reminders or whatever so I do tend to keep an eye on that – you know, probably once a year or every two years. I mean, it may be not every single account but all the major ones. Again, nothing’s really changed so it’s basically my wife and then the secondary is my daughter. Until something changes, I know that that’s still the way they are and I don’t feel the need to review them that often but I’m aware of that and I’ve made sure that they all are correctly set-up.
CARL: But then it’s just kind of a quick maintenance, you know, I’ll look at them every now and again.
ROGER: Yeah, the key there is that you have your wife as the primary and it sounds like you’ve already done what a lot of people fail to do which is that secondary beneficiary. The secondary beneficiary is really important for the same reason. If you and your wife happen to go out together in a blaze of glory, not having that secondary beneficiary can cause some tax issues for them.
Now, do you have any gifting aspirations?
CARL: Yeah. I mean, we haven’t actually written that into the will but – this is funny – I’ve just had a really good discussion with my dad last week and we were talking about this and he’s done really well. He was a professor his whole life but he’s done extremely well with investments and he’s got a reasonable net worth. You know, he kind of keeps me posted and he just revised his will or something and he said, “You know, I’ve changed a little bit some of the charity designations.” For example, he’s really active in the Salvation Army in their hometown so he’s going to give a certain percent to that. I thought to myself, “I really probably should revise the will to specifically designate some charities for some of it,” because I do think that’s admirable. Yeah, you want to help out your wife and your children or whatever but, at the same time, it’s probably appropriate to include some specific charitable ideas in the will and we did not do that.
ROGER: Well, if I recall, you do a lot of things already while you’re living which is, if you’re going to give, it seems like it’s better to do it while you’re living. It’s much more appreciated and you can participate and give the spirit, not just the cash.
ROGER: Okay. We’ve had a good conversation here. We’re almost 40 minutes and we’ve covered as much as we can in this kind of forum – the protection in your life of all the risks out there in your life dealing with retirement and then covered some of the basics of the “give” portion of your life in terms of estate planning and covering it. Again, this forum doesn’t allow us to really get as in-depth as we would if it was a private engagement but, hopefully, this will give some color.
Now, the next thing, the next big exciting thing is going to be our live webinar which we’ll schedule the date where we – what am I looking for here, Carl? Unveil – there we go. We unveil and walk through, step by step, all of the assumptions that we’ve identified in Carl’s life to show what kind of retirement he could reasonably expect based on what he’s identified as his priorities in life so that’s going to be real exciting.
CARL: I am really excited about that. You know, I’d be very interested to see how many people participate because you do have to get to a computer you have to watch. But, personally, for me, I am really excited about it because this is the big question you always have, right? Well, okay, I’ve got my simple spreadsheets, but you do this for a living and you’ve got Monte Carlo and you’ve got all these cool things – I’m sure sliders you can move stuff around. I can’t wait to see it. I am really excited. To me, that’s the whole purpose of these discussions we’ve had up until now – to do some scenario planning and see what this thing looks like and I am really excited about the next session together.
ROGER: All right. Well, until then, you have a great day, Carl!
CARL: Okay. Thanks! You too, Roger!
ROGER: Well, there we are – the last step of the “Can Carl Retire?” Project.
Now, if you’ve signed up, you should receive an email with a number of resources of nine basic estate planning steps, how to create an “in case of emergency” plan, a little template I created for that and a template for a love letter that Carl shared with me that you can walk through with you and your loved ones to clean up the mess of your life so you can leave a beautiful gift for them.
I’m so excited that you’ve walked this journey with me. I hope that you’ve found a lot of value with it. Don’t miss out on the webinar this Friday, January 30th, where you’ll get to hear Carl and interact with him a little bit via entering messages on the webinar program, and see whether Carl can reach his ideal retirement.
If you haven’t registered yet, go to rogerwhitney.com/dream and sign up for the “Can Carl Retire?” results webinar.
As always, if you have any questions as you walk through the process or really about anything about dreaming up, planning, and living out your ideal retirement, shoot me an email. Ask me a question. I’m here to serve you and help you make that dream a reality.