Don’t Be Frightened By Estate Planning – Episode #360

When you hear “estate planning” what do you think? It’s only for the wealthy? Or, maybe it makes you consider your own mortality, which you don’t care to do. If you’re delaying yours, know this: each dentist needs an estate plan. On this episode of the Dentist Money™ Show, Ryan and Matt look at estate planning basics, plus some life complexities that may need estate attention.

 

 

 

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Podcast Transcript

Ryan Isaac:
Hello everybody, welcome back to another episode of The Dentist Money Show: Halloween Edition brought to you by Dentist Advisors, a no commission comprehensive fiduciary financial advisor just for dentists all over the country. Check us out at dentistadvisors.com.

Ryan Isaac:
Today on the show, Matt and I are in our Halloween costumes, we actually stream this episode live on Facebook just so we could showcase how absolutely ridiculous we look. But we tackled a very serious issue and subject of estate planning. We start with a very crazy story from the Salem Witch Trials, very Halloween of us. And we talk about what is a basic estate plan for the average dentist, how does it change when a dentist becomes a little bit more complex or higher net worth, where do you go to get all this stuff done? And a few other tips and tricks and common mistakes and things to think about when doing an estate plan, very important stuff here. Many thanks to Matt for dressing up literally like a squirrel and making me laugh the whole time, I could barely even do the intro to this thing, it was a fun time. Thank you for joining us, if you have any money questions whatsoever, we love helping people with their money questions. So just go to dentistadvisors.com. You can get someone on the phone, you can schedule a free consultation, you can interact with probably more than 1000 hours of free content on there.

Ryan Isaac:
Check it out at dentistadvisors.com to answer any of your money questions, we’d love to help. Thank you for being here and enjoy the show.

Announcer:
Consulting advisor conduct on due diligence when making financial decisions, general principles discussed during this program do not constitute personal advice. This program is furnished by Dentist Advisors a registered investment advisor. This is dentist money. Now, here’s your host Ryan Isaac.

Ryan Isaac:
Welcome to the dentist money show, where we help dentists make smart financial decisions. I am Ryan, and this is Matt, and this is a special Halloween edition, and I’m having a hard time keeping a straight face, Matt is dressed as a squirrel. I am dressed as a sunshine and rainbows in a blue dusky sky. Hello, Matt. Happy Halloween. Thanks for being here.

Matt Mulcock:
Hello Ryan. Let’s talk serious financial topics at this point.

Ryan Isaac:
We’re gonna get…

Matt Mulcock:
And I wanted… We could turn this into a drinking game to see how many times we end up laughing.

Ryan Isaac:
I can’t… This is…

Matt Mulcock:
As we stare at each other, and I’m not gonna lie to you my whiskers are literally in my face, I can’t move them.

Ryan Isaac:
Oh, there’s whiskers under there?

Matt Mulcock:
There’s whiskers literally, can you see them?

Ryan Isaac:
Oh that’s bad.

Matt Mulcock:
They’re like literally hanging down in my face.

Ryan Isaac:
Today on the show, on the Dentist Money Show, Halloween edition, we are going to be talking, of course, this totally fits in about estate planning.

Matt Mulcock:
Yeah, of course.

Ryan Isaac:
The questions being asked here today are, and hopefully answered in some shape, form or fashion, are what is a basic estate plan for a dentist? What does that even mean first of all? How does that change when a dentist situation is more complex or let’s say further along in life, wealthier, higher net worth? Where do you go, where does one turn to do an estate plan? We’re gonna be itching the whole time.

Matt Mulcock:
My ear is itching, I’m sorry.

[laughter]

Ryan Isaac:
I’m gonna be like over-heating.

Matt Mulcock:
We are good.

Ryan Isaac:
And then well, any tips or tricks, common mistakes, things that we… Feedback we’ve received just to… For anyone, maybe who’s new to this, to the show or our firm, Dentist Advisors, we are a fee-only Fiduciary Financial Advisor and investment advisor just for dentists. We aren’t consultants, who aren’t attorneys, we aren’t CPAs, we work, we kind of quarter back those relationships with our clients. We work hand-in-hand really well with all these people. But estate planning is something done by an attorney, we’ll get to this later, but we help our clients coordinate with this and it’s done by someone who’s like a licensed legal attorney to do this stuff. So we’re not attorneys.

Matt Mulcock:
Can I give another analogy really quick?

Ryan Isaac:
Yes.

Matt Mulcock:
You said quarter back.

Ryan Isaac:
Yes.

Matt Mulcock:
And I got called out a couple of times for using too many sports and analogies.

Ryan Isaac:
Yeah, good call.

Matt Mulcock:
So I flipped that, I changed it up and I started saying we were the general contractor of your wealth… Building your house of wealth.

Ryan Isaac:
Yeah, I like that.

Matt Mulcock:
Right?

Ryan Isaac:
Yeah.

Matt Mulcock:
I feel like people… ’cause I got called out for using the quarterback analogy too many times, so I switched to that.

Ryan Isaac:
Good call. Yeah, for all of us. I saw a shirt that says, for all of us who aren’t the biggest sports fan to say, I just want both teams to have fun. Anyway, we’re gonna do estate planning and mostly because I found a Halloween story that actually kind of ties into estate planning, I was like, “So this is our episode, this is the topic this week.”

Matt Mulcock:
Let’s do it.

Ryan Isaac:
This is how it goes.

Matt Mulcock:
We’ll dress up.

Ryan Isaac:
Matt…

Matt Mulcock:
We’ll just dress up as crocodile.

Ryan Isaac:
Let’s dress up. This is actually why we wanted to do this, just so we could dress up.

Matt Mulcock:
Yeah. It’s the only reason.

Ryan Isaac:
Casing point. Matt, what do you know about the Salem Witch Trials? No right or wrong answers, I’m just curious how familiar you are with the old Salem Witch Trials?

Matt Mulcock:
I watch Hocus Pocus every year. So, I’m a fan.

Ryan Isaac:
Did you watch the second one? The new one?

Matt Mulcock:
I have not yet. I have not yet.

Ryan Isaac:
They knocked it out of the park.

Matt Mulcock:
I’ve heard it’s pretty good.

Ryan Isaac:
Yeah, they totally… They did awesome. And for such a classic, I was kind of surprised about how well they did it. But man, they did a really good job. I have a story today about the Salem Witch Trials I wish I knew more. I actually have some friends who are really, really into this, and they travel during Halloween time back to Salem. And they go do all kinds of tours in the town of Salem and…

Matt Mulcock:
Oh, that’s cool.

Ryan Isaac:
Yeah, it’s super cool. The thing that always comes to my mind, and I can’t remember which Monty Python this was. But do you remember one of the Monty Python where the person is like, “I’m not a witch.” And they’re like, “See if she floats, like throw her in the water, see if she floats…

Matt Mulcock:
Oh yeah, yeah.

Ryan Isaac:
And then like burn her, and then it was basically like, “Well, if she dies, we burn her and she dies then she wasn’t a witch.”

Matt Mulcock:
It is like… But okay, cool.

Ryan Isaac:
So probably not the most… The best justice system. Here is a story during the Salem Witch Trials from a guy named Giles Corey, before we turn this guy into a total hero, he wasn’t a great dude, but in his 80s, during his third marriage, this guy along with his third wife was accused of witchcraft. Now the only thing I could find… And his wife was too, and also when his wife was accused of witchcraft, he was like, “Yeah, she’s a witch.” He totally…

[laughter]

Matt Mulcock:
Yeah, take her.

Ryan Isaac:
He totally did.

Matt Mulcock:
Yeah, take her.

Ryan Isaac:
During her trial and everything, he is like, “Yeah, totally she’s a witch.”

[laughter]

Matt Mulcock:
“Actually you’re right she is totally a witch. Yeah.”

Ryan Isaac:
And the only thing you can find about her practising witchcraft was she was reading mysterious books that were frowned upon in the community.

Matt Mulcock:
Got her.

Ryan Isaac:
So wild times to be an avid reader, but so there…

Matt Mulcock:
To be an avid reader of books that people don’t like.

Ryan Isaac:
So here’s the law. This is why we’re talking about estate planning today. The law at the time said that if you were accused of crime, went on trial and entered a plea, and then you went to trial, no matter what happened, if you entered a plea from going to trial after being accused, you could not… Your estate would pass on to the local government. So your heirs would not receive any of your stuff. And this person was, from what I can tell, fairly wealthy, a lot of land, a lot of farms, and had heirs. And it was like a significant amount of wealth that this person had, this guy had. So he couldn’t enter a plea. So when he was accused of being a witch, if he said not guilty, that’s entering a plea. And then his estate’s gone. So he knew either way he was kind of host. So this guy did some estate planning at the last second in his head, it was very painful estate planning. But hear what he did, there was this law that said you didn’t have to actually enter a plea. You could just not say anything. But what they did…

Matt Mulcock:
Plead the fifth.

Ryan Isaac:
It was kind of plead the fifth before the fifth.

Matt Mulcock:
I mean, this is plead the fifth, but yeah.

Ryan Isaac:
Yes.

Matt Mulcock:
Oh, yeah.

Ryan Isaac:
Plead the fifth. Yeah. So what they did for people who would not enter a plea either way, they did something called death by pressing. Now you might be thinking about your bench presses in the morning. You’re at the weight…

Matt Mulcock:
Which sometimes I feel like I want to die.

Ryan Isaac:
Yeah. At the weight you bench press, I would accurately say that’s death by pressing. But what they would do… Okay, this is terrible. They would tie the person down on the… They would strip them naked, tie them down on these boards. And then…

Matt Mulcock:
I’m so glad we’re doing this live ’cause I think a lot of this might get cut.

Ryan Isaac:
I know.

Matt Mulcock:
So, I agree with these people.

Ryan Isaac:
And then they would put boards on the person’s body, like big planks of wood.

Matt Mulcock:
Oh my, God.

Ryan Isaac:
And then they would just slowly put big rocks and boulders or have people stand.

Matt Mulcock:
Oh my word. And they would just pop like a grape.

Ryan Isaac:
Yeah. And they would slowly… They would just slowly add more and more weight and check this… I’m just reading this. This is crazy. They wouldn’t…

Matt Mulcock:
Oh, don’t show a picture.

Ryan Isaac:
No, they wouldn’t feed them anything except for, on the first day, three morsels of the worst bread, not good bread, not medium bread, the worst bread. The second day…

Matt Mulcock:
You’re getting the burnt ends.

Ryan Isaac:
Yeah. You got three drops of standing water. And then that should be alternating until he died or until he entered a plea. The whole point of this pressing theme was that you would eventually just be like, “Oh my gosh, I’m being squeezed to death and I’m gonna die and I’m gonna enter a plea.”

Matt Mulcock:
Well, unless the standing water got you first.

Ryan Isaac:
Dysentery…

Matt Mulcock:
‘Cause I’m gonna that… Yeah. That standing water probably killed some people first.

Ryan Isaac:
Yes. So most people died after a few days. He lasted multiple days and I’m trying to see how long it was. I’m not sure… Okay, here’s the craziest thing. His final recorded words, and multiple times this happened, they’d add more rocks and the only thing he would say, they’d be like, “What do you plea? What do you plea?” And he would say, “More rocks.” [chuckle]

Matt Mulcock:
No.

Ryan Isaac:
Yes, yes. Giles Corey would say…

Matt Mulcock:
Okay, so he’s not the best dude. He’s not a good guy. But he was a bad one.

Ryan Isaac:
Yeah, he was, he was a serious person about… He was serious about his estate planning. And that’s the tie in, that’s the point we’re trying to make today. And that’s where we’re gonna get to. He was so serious about… This is the reason why he chose to be pressed and just would call out more rocks or more weight, was because he knew that if he entered any kind of plea, he would lose his… His family’s, heirs would lose his estate. Now his wife was hanged three days later after him.

Matt Mulcock:
‘Cause he called her out?

Ryan Isaac:
Yeah.

Matt Mulcock:
So he calls her out, then got pressed to death, and then his kids got all this…

Ryan Isaac:
They got it. Yeah.

Matt Mulcock:
He liked his kids, didn’t love his life.

Ryan Isaac:
So what’s the takeaway from the story? The guy is probably not a great human being. He was tough as nails and he was a clever estate planning person.

Matt Mulcock:
Yeah. He knew what he was doing.

Ryan Isaac:
He went through the cost and the pain of doing estate planning, which by the way, in Salem, if you were accused of being a witch, estate planning was a very, very risky business because you had to be pressed to death, basically. The moral of the story is for dentists, it is still painful. And we know this because of how a few people actually do estate planning. It is still kind of painful.

Matt Mulcock:
Maybe if we started threatening…

Ryan Isaac:
Pressing?

Matt Mulcock:
Being pressed to death.

Ryan Isaac:
Yeah. Maybe you do it.

Matt Mulcock:
Then maybe they would do it.

Ryan Isaac:
Wasn’t it crazy? Wasn’t the story of the artist formerly known as Prince when he died, that he had no estate plan and it was a gigantic, gigantic mess. And that is really…

Matt Mulcock:
That would be a total mess.

Ryan Isaac:
And it’s really common. And the reason why it’s common is because it doesn’t feel urgent. And when you do engage with estate planning, you’re kind of… It’s kind of like when you buy life insurance, you kind of have to accept your…

Matt Mulcock:
Grapple with that.

Ryan Isaac:
Yeah. You gotta kind of like acknowledge your own mortality and limits at some level. And then start to think about like, “What happens when I’m gone?” Which is just a… It’s a weird, uncomfortable, non-urgent process that costs money and takes time and all those factors together. Like, well, no wonder people don’t do estate planning. So before we dive into our points, which again are, what is basic estate planning for a dentist? What does that mean? What does it mean when it’s more complex? How do you go about it? Do you have anything to say, Matt, about the story of Giles Corey and the Salem’s trials and pressing?

Matt Mulcock:
I think the first thing I thought of is I can just imagine you at the gym yelling more rocks.

Ryan Isaac:
I would to you.

Matt Mulcock:
As you’re squatting or doing something.

Ryan Isaac:
Not to me. No. I would be unlike…

Matt Mulcock:
Yeah. Or like me, if we were like lifting together, you’d be like, “More rocks.”

Ryan Isaac:
To you, yeah.

Matt Mulcock:
Yeah.

Ryan Isaac:
I’m hype guy. For sure.

Matt Mulcock:
There’s a really famous… We don’t need to go too far down this rabbit hole, but there’s a really famous power-lifter/body-builder named Ronnie Coleman. He’s like world famous and there’s videos of him out there yelling every time he goes to lift, he goes like, “Lightweight.”

Ryan Isaac:
“Lightweight, baby.”

Matt Mulcock:
People slap his back and slap his legs and stuff.

Ryan Isaac:
It does something up here.

Matt Mulcock:
Go check it out. Yeah, go check it out. But I imagine you and I in the gym together doing this, slapping each other yelling more rocks.

Ryan Isaac:
Yeah. I would do, yes.

Matt Mulcock:
In fact, I might have to fly out there.

Ryan Isaac:
Did we just make this happen?

Matt Mulcock:
So we can have a little session together and just yell more rocks.

Ryan Isaac:
The same thing would happen at like a hot wings eating contest. I wouldn’t do it, but I would totally hype someone else to keep going.

Matt Mulcock:
Totally.

Ryan Isaac:
Like put yourself in danger for my entertainment. I would totally…

Matt Mulcock:
You do it. I’m gonna be your hype man.

Ryan Isaac:
A hundred percent.

Matt Mulcock:
Totally.

Ryan Isaac:
Yeah. All right. I have a list here. Let’s jump into this here. I have a list of what the basics of an estate plan are for the average dentist. Now, Matt, do you want to paint? How about you paint a picture of what… I think you probably know what I’m saying when I say average dentist, what’s the picture we’re painting here for average an dentist…

Matt Mulcock:
Yeah, let’s paint that picture.

Ryan Isaac:
Picture Picasso.

Matt Mulcock:
Well, I’ll just give kind of our average client. So our average client that we work with, 42 years old. Over $500,000 of income. About a $2 million net worth. That’s the client of…

Ryan Isaac:
Practice owner.

Matt Mulcock:
The average… Yeah. Business and say, average client who owns a practice who’s been in it for probably let’s say 10 years or so. That’s about where they’re at. And again, that those are real numbers from like our average client base.

Ryan Isaac:
Yeah, and owns a home. I don’t remember the percentage. It’s like 60% of those maybe around there owns a building, some commercial real estate. Has a retirement plan. Married. Kids. Has after tax brokerage accounts, IRAs, Roths, insurance policies, cars, stuff. They have stuff, right?

Matt Mulcock:
Yep.

Ryan Isaac:
Yeah. That’s the average. So let’s talk about… Okay, so here’s, I guess, the myth that we want dispel and what we want to encourage from people is that engaging in this, in a basic way for most average dentists is not super complex. It’s basically, you’re just trying to take care of a handful of things that if something did happen to you and or your partner and spouse, that the flow of your stuff would just go to the people that you wanted to go to seamlessly, without the government having to get involved in a process called probate, which is where your stuff is going to go to your people, but it has to pass through local courts first, and then they… And it more than anything that just delays things. Yep.

Ryan Isaac:
And it’s not, at a time like that, it’s not something that people want to deal with. So here are, let’s see, we’ve got 1, 2, 3, 4, we’ve got four main parts of a basic estate plan. And I’ll just kind of start going through these. One of the first ones here is going to be a trust. And by the way, I’m gonna reiterate this. This is not like, “Go do this.” This is not advice to, “Go do this.” We’re just saying, “These are parts of a basic estate plan that could exist for you as a dentist when you go do this stuff.”

Matt Mulcock:
Well, what I would say is, “Go do something,” like, “Go figure out a plan around your estate planning.” It doesn’t mean that each and every one of the… It doesn’t mean you have to have a trust specifically.

Ryan Isaac:
Totally. Exactly.

Matt Mulcock:
But it’s, “Go do this,” in the sense of, “Take this serious from a guy in a squirrel suit and actually go engage in some type of estate planning.”

Ryan Isaac:
[chuckle] Trust me, trust me.

Matt Mulcock:
Just trust me.

Ryan Isaac:
Take advice from a guy, a squirrel suit.

Matt Mulcock:
Trust me. Like when I say, take this serious guys, like you need to take.

Ryan Isaac:
Take it seriously.

Matt Mulcock:
This super serious.

Ryan Isaac:
We’re being serious right now.

Matt Mulcock:
Yeah. We’re being dead serious. So we actually really are like…

Ryan Isaac:
This is serious stuff.

Matt Mulcock:
Okay. I’m taking the sarcasm away. We are saying, “Go do this,” as in engaging in estate plan.

Ryan Isaac:
Yeah. And we’ll get to the part about how to go engage and do this. So a trust is… And people hear about wills and trusts. And that’s really like kind of a big part of this here. A trust is the legal entity that owns your stuff. What a trust does is it creates an easy flow of ownership. That’s a really basic way to think about what a trust is. It’s just a legal entity that owns your stuff, that creates an easy flow of ownership and receivership if something happens to you. And a trust can own lots of your property. It can own a house, it can own buildings, real estate, it can own accounts, it can own life insurance.

Ryan Isaac:
And so having a trust as part of a basic estate plan as an average typical dentist is pretty common. And again, as you go through the process with a licensed attorney these things will be explained and you’ll be educated on the stuff. But that’s a basic part of it. Is having a trust as part of your estate plan. Anything you wanna say about trust and there’s revocable and irrevocable and there’s all kinds of… I’m not gonna dive into…

Matt Mulcock:
Yeah. There’s tons of different scrubs. Yeah. All that kind of stuff. You can get really specific in how you utilize trust. The basic premise of what you’re describing, I’d say I’m not… I don’t if I’d have to give a number to this, but I will. 90%, 95% of trust that are established… I’m totally making that up. A good portion of trust that people have are the standard revocable trust.

Ryan Isaac:
Yes.

Matt Mulcock:
Which just means that you can put assets into it, you can take it out, the government treats it just like you would put it into a brokerage account. There’s no tax benefits. The only reason you would have it is exactly what you’re describing to avoid probate, to pass the assets, to control the assets beyond the grave and who they get to and in what former fashion. So I don’t know if you are gonna go into detail of some of the control measures you have or if we want to do that.

Ryan Isaac:
Yeah, I think we’re gonna hit those…

Matt Mulcock:
With the trust?

Ryan Isaac:
Yeah. I think we’re gonna… I think we’re gonna hit those with… You mean with like powers of attorney?

Matt Mulcock:
Well, meaning just within a trust, so I will just give one quick…

Ryan Isaac:
Then keep going. Keep going, yeah.

Matt Mulcock:
One quick example. So like, if you have young kids, let’s say a trust can establish let’s say you’ve got, multiple six figures or seven figures of assets that are owned in that trust or that will what’s called like pour over into the trust upon your death. And you’ve got, let’s say again, young kids that are not gonna be 18 for many years. Well, you’d wanna establish, or the trust is the document in how you establish how they receive those assets and when. So you can literally put in there like, “I don’t want my kid at 18 to all of a sudden be getting millions of dollars. I want them to wait till they’re graduated from college, or they’re 30,” or whatever it is. So a trust allows you that control to like protect your kids from themselves of getting all this money if you were to die.

Ryan Isaac:
That’s a really good point. I’m glad you did say that because yeah, not only does a trust designate ownership and receivership, but it designates conditions of receivership. And that’s a huge part of it. And then we’ll get into this in a little bit about… Trust can be used in much more complex ways in terms of like high net worth individuals that are using trust for asset protection in like cases of, in case you got sued or there are tax strategies for higher net worth people that use different types of trust, irrevocable trust to grant money and…

Ryan Isaac:
That’s a whole different thing we’ll get to in a little bit, but yeah. So a trust is a pretty basic part of this, and that’s a pretty standard part of a basic estate plan, when you get one done. So that’s a pretty fair expectation. Another piece of it is a medical care directive, and this is kind of fairly self-explanatory, it’s like if something happens to you, who is in charge of making medical decisions on your behalf. If you’re incapacitated and you can’t make those decisions, that’s usually part of a pretty basic estate plan is this medical directive, and there’s a lot of cases and stories and reasons why this is important. So this is another basic piece of this.

Matt Mulcock:
Yeah.

Ryan Isaac:
Yeah, go ahead.

Matt Mulcock:
This is huge, Ryan, because I think a lot of times understandably so, people think of estate planning, they think of death, they think of like, “Okay, what happens when I die?” But another part of this is exactly what you’re describing, which is, well, what if you don’t die, but what if you become incapacitated and cannot make decisions for yourself. In some ways, that’s more likely, maybe you get in a car accident, you didn’t die, but again, you have to have someone else make decisions for you. So this is really, really critical to have as part of your estate plan. Again, not only of like, “Okay, I died… ” ‘Cause I’ve actually heard people say… I’ve literally had clients tell me like, “I don’t really care, like I’m dead,” you know what I mean? Like truly. But then I’m like, “Okay, well, what about if you don’t die, but you’re in a position where you can’t make decisions?” That is a huge part of this as well.

Ryan Isaac:
And an easy way to… I don’t know how if it’s easier. An easier way for me to think about this, than putting myself in that place is just thinking about clients I have, or people I know that are receiving inheritances from parents and grandparents at this point in life, kind of mid-life and parents and grandparents are passing things on. I’ve seen more than my fair share of cases where there wasn’t a lot of structure and organization, and it was really messy, and you think about adult siblings with their own lives and families spread all over the country or whatever, doing their own thing, trying to come together and figure out what to do with mom and dad’s or grandparent’s assets. It’s kind of, it can be a huge mess, it can be a really big pain. I’ve seen the other side of that too.

Ryan Isaac:
I’ve actually seen it in a practice scenario where… And partners of larger practices think about this, how unorganized and chaotic it could be in a business if there wasn’t a good succession plan with this kind of stuff, which is part of your estate plan, but does involve your business and partners. I’ve seen it in a really, really organized way, where the unfortunate, totally untimely death of a partner left the other partner in a position that was highly organized. It was very, very clear what to do as highly organized, everything was funded, and it was like the… Transaction as far as the financial side of it…

Matt Mulcock:
Smooth.

Ryan Isaac:
Yeah, the transaction was like… So they could spend their time grieving and going through that process, but the financials and the logistics of it were, they were smooth ’cause everything was on paper. And so… Yeah, it’s pretty far reaching if this stuff, if net worth are big and things are more complex, just having a document that says where things should go, can make a world of difference, totally.

Matt Mulcock:
No, it’s a great point. Really what this is, is it’s to what you’re describing is really an unselfish act for the people that you’re leaving behind, ’cause in those situations where you lose someone you care about so much. That, you can’t avoid that, you can’t avoid that pain, you can’t avoid that suffering that’s gonna happen and the grieving, but you can alleviate, I think some of what you’re describing, which is like that disorganization and the added pain or turmoil that can come from not having all the financial stuff in an order, and in that moment when you’re already dealing with so much emotional pain of losing someone so close to you that can be… That just compounds it. So it really is an unselfish act.

Ryan Isaac:
Totally is.

Matt Mulcock:
Of saying, “I’m gonna leave this… I don’t wanna leave this a mess for the people that I care about.”

Ryan Isaac:
There’s another piece to a pretty basic estate plan that goes pretty hand-in-hand with the medical directive, which is again, give someone authority to make medical decisions on your behalf. The other one is called a power of attorney, and you can have what’s called a durable power of attorney, or you can have what’s called a limited power of attorney. And this is basically like kind of what Matt was saying. This is the authority to make decisions on your behalf for like everything else, all of your financial decisions, that’s what a power of attorney would be. So you can have one that’s pretty broad in general, or you can have one that’s limited and it might be limited to, “This person can close on this house,” or “This person can direct the sale of my practice,” or “This person can… ” whatever, be in charge of these accounts or this property. So you can make very limited or really broad in general. And again, Matt was saying this earlier, the beauty of an estate plan is you get to write this, these aren’t like… There are standard documentation and standard language, but you get to write what happens, that’s why this stuff needs to get done, you spell this stuff out, who gets what and under what conditions, and who is in charge of what and under what conditions.

Ryan Isaac:
That’s kind of like the basics of a lot of the stuff. Anything you wanna say about power of attorney, Mr. Squirrel.

Matt Mulcock:
Yeah, I would just say, a lot of times this is two different people, it’s not uncommon to say like the medical power of attorney and the financial power attorney would be two different people. I see this all the time. So just keep that in mind that you could have someone that would say, “If I were to die, become incapacitated, they’re gonna handle my financial stuff, and then this person over here, my cousin or sister or brother, whatever is the doctor I want them to handle medical stuff,” a lot of times it can be two different people.

Ryan Isaac:
Yeah. Let’s talk about life insurance in an estate plan, so most people have and should have personal coverage life insurance that goes to their heirs, family, whatever, in case of death and that life insurance can be part of this estate plan, it can be owned by a trust, that’s a… Talk to an attorney about that, and your account and everything. But life insurance is a big part of this, but what I wanted to say too is in the case of business owners, ’cause that’s who we’re talking to when we say an average dentist. If you have a business that involves partners, then it’s really important and it’s very imperative to have some kind of agreement spelled out that’s legally binding, written out and funded with life insurance as part of your transition plan and your estate plan. So not only life insurance plays this role on the personal side of funding things, if something happens to you and go into your heirs, paying off debts, funding future goals or whatever, income. But it’s part of your business plan too, especially if you have partners. That might be a different situation if you’re a sole single owner or you’re an owner with just associates, but even with associates, you might have a plan in place for them to be able to buy you out.

Ryan Isaac:
That’s what’s a buy-sell agreement. And by the way, this whole insurance thing is like we can go hours on just implementation of this stuff with insurance, so that’s not really the scope of this. But insurance is a huge part of this and it needs to be discussed with your estate plan. So again, we don’t… General contractor, not quarterback. When you have a general contractor relationship with a financial advisor that can talk to you, your CPA, your insurance person and your attorney, you can get everyone on the same page because they shouldn’t be doing independent things. Like, your insurance person shouldn’t be selling you stuff that doesn’t meet your needs for your personal goals, but also doesn’t meet your needs for your estate planning. Those things should talk to each other. So your attorney, advisor, CPA and insurance person should be on the same page, which is why when you work with fiduciaries, then it makes it a little bit easier ’cause there’s not… Someone’s not trying to just make some money and sell stuff and not have it coordinate and talk.

Matt Mulcock:
Yeah. And hopefully that buy sell you’re describing in most cases that’s gonna be all wrapped up into the operating agreement, that hopefully the attorney on the front end of as you were putting that together is gonna be kind of putting that in place as you’re bringing a partner on. And then like you said, the insurance person would be transacting the actual policy that would then just be kind of placed within that plan.

Ryan Isaac:
Yep. Now, look… Okay. I think that kind of describes the basics of… That’s an average… And that might seem overwhelming, but that’s actually pretty run-of-the-mill stuff. Even if you go… And we’ll talk about how to implement this stuff, but even at the less expensive end of things, these are usually kind of basics that get done when you implement a pretty standard estate plan. When things can…

Matt Mulcock:
Can I add one more?

Ryan Isaac:
Oh yeah. Please, yeah, yeah.

Matt Mulcock:
It’s not often thought of as in the estate plan, but it is, which would be beneficiaries. So, just on your account types. So there’s really three ways… So as we were talking about earlier, an estate plan is just a plan to… Basically a game plan to put in place if something were to happen that you didn’t see coming, like early death or incapacitation. And when something happens, your assets pass in one of three ways, you already mentioned that probate or they pass through a legal document, like a trust or they pass through by contract, like, beneficiaries. So let’s say like an IRA, you have no beneficiaries on that. Well, then someone’s gotta figure out who that should be going to, that would go to probate. You avoid that, really simply, this is probably the simplest part of your estate plan, you just designate someone right on the custodians website, so you have an account at Fidelity or TD Ameritrade or Schwab, you just go on there. It’s gonna be very obvious, all of these custodians are gonna make it really easy, you designate beneficiaries. A lot of times you can’t even open an account somewhere…

Ryan Isaac:
Without doing it.

Matt Mulcock:
Until you’ve designate that beneficiary, but that’s part of the process of making sure you’re keeping those up to date. As things change in your life, you might wanna change beneficiaries. Maybe your son pisses you off and you wanna pull them out of the estate plan, but you gotta make sure you’re keeping up on that, the beneficiary is up-to-date as well, which is, again, the easiest part of all this.

Ryan Isaac:
I just finished Game of Thrones. So when you talk about your son pisses you off, and he’s disinherited, he gets sent to the Night’s Watch or something, and he’s no longer carrying your last name.

Matt Mulcock:
Yeah, who hits, press to death I don’t know.

Ryan Isaac:
It’s press to death.

Matt Mulcock:
We’re talking Game of Thrones. Yeah, there’s more gruesome things that have happened in…

Ryan Isaac:
Yeah, you die… Yeah, you die pretty quick. Game of Thrones is like if you’re walking down the street on a dirt road and you see another person, there’s gonna be a sword fight, someone’s dying, inevitably, no matter what. It’s like, we’re fighting to the death.

Matt Mulcock:
Every time.

Ryan Isaac:
Just because you saw another person in the open, you’re fighting to the death.

[chuckle]

Matt Mulcock:
And that’s a Wednesday.

Ryan Isaac:
And that’s a Wednesday.

Matt Mulcock:
That’s just a Wednesday.

Ryan Isaac:
Thanks for mentioning beneficiaries. That is probably one of the… Even without an estate planning, without an official estate plan, one of the easiest things somebody can do to make sure the flow of their assets goes to the right people, and it’s an easy need to check on to. Every year, a couple of years, you can just ask your financial person like, “Can we look at beneficiaries again and make sure these are all squared away and… ” Totally. Okay, so when things become more complex, and by that, I mean somebody has a net worth that starts getting over the thresholds of needing to pay estate taxes, which we don’t need to dive into a lot of the details, because if you listen to this five years from now, it might be different, the numbers. But if your net worth starts getting high enough where after you pass and then your partner or spouse passes, there will be estate taxes owed on the estate.

Ryan Isaac:
Sort of saying earlier about the role of insurance, a different type of insurance than what most people will carry for their own personal reasons, can be used to pay estate taxes. So as things get more complex, working with your attorney and an insurance person and a financial advisor to implement insurance to pay your estate taxes, that can be… That’s a pretty big… That can be a really big part of it. Another bigger piece of it too is when you start talking about asset protection, when things get fairly large scale… And I don’t know, maybe I can put some numbers to it, what would you say, Matt, starts to become a large scale net worth, is it a number or is it like the amount of things on the balance sheet? What would you say?

Matt Mulcock:
I think it’s a number first. If we’re gonna put… As of right now, again, like you said, five years from now or whatever, things can change obviously at any point. As of right now it’s… If you’re married, you and your partner, it’s 11… I think it’s 11 and a half million each, so it’s 22, $23 million in total assets, meaning once you go above that, you are above the estate tax threshold or exemption level. Basically, you can say, if you’re below that right now, if you’re some piker at 15 million net worth, [laughter] piker, I know, I had to fill that out.

Ryan Isaac:
Yeah, thank you.

Matt Mulcock:
But if you… No, if you’re below that, you could argue though, “Okay, we don’t need to do anything too extreme.” I actually would cut that number in half, meaning I’d actually say, starting about 10 million, especially if you are on the younger side, meaning in your 40s, even 50, if you’re about 10 million in assets or net worth, I’d actually say you’d wanna start taking this more serious of talking to an attorney, getting up maybe a more complicated plan in place. And the reason for that is two-fold. Number one, because you’re younger, chances of you going above that threshold at some point, nearing death is going to be much higher. ‘Cause hopefully, if you’re 50, you’re gonna have a long life ahead of you. Chances are, you’re gonna be above that. Number two, that estate plan tax exemption or exclusion amount, actually, the law sunsets in, I believe 2025, and actually gets cut in half. Unless the government decides to change this, which they very well could and make it permanent, in 2025 it sunsets and goes back to the original amount which is 5.65 million each. It’s like 11 or $12 million. With those two reasons, I’d say if you are nearing $10 million in net worth at any point, you’d probably wanna start taking this more serious beyond the basics.

Ryan Isaac:
Yeah. And perfect, and that would start to, like I was saying, incorporate the implementation of using insurance to pay eventual estate taxes, which is totally different than what you buy for your own self personal insurance along the way. And also when your net worth is that high, usually there are goals for gifting down the road to kids, heirs, grandkids, charities, institutions, whatever. And the role of gifting, it has a lot of consequences that if done right can be really helpful for taxes, the role of asset protection with a net worth that big, and especially if it becomes a fairly complex net worth. If it’s businesses, real estate, liquid assets, involves a lot of people, protecting those assets in case of a lawsuit can also become a big deal. And that’s when it’s more than just a basic trust in a will, in a medical directive, that’s when it’s multiple entities that own other things, and it’s… I’ve seen these flow charts from attorneys when they get to us. [laughter]

Matt Mulcock:
Oh, they get wild.

Ryan Isaac:
It can get a little nutty. Which… It is more complex but when your situation calls for it, that’s just… That’s what is needed.

Matt Mulcock:
Yeah. And the other thing I’d say too, to your point of complex business structure, I’d also say complex or more complex like families structures. So maybe something like you’ve been through… You have children from a first marriage, let’s say, and now you’ve been divorced and you’re on to a second marriage, or maybe you lost a spouse and now you’ve got a second spouse and you’ve got children with that first, there are scenarios like that, that you wanna be aware of as well, that just a family… So maybe you don’t have the $10 million net worth, but you have a more complex family situation that you’d wanna bring in, you’d go beyond the basics at that point just to make sure you’re accounting for that.

Ryan Isaac:
That’s a really good point. Yeah. And that’s probably a really nuanced line, like what’s complex, what’s not complex, but those are really good points. How do you implement this stuff? Where do you go? Matt, you’ve done a lot of work with… And unfortunately they kind of come and go because it’s a tricky thing, estate planning is very state-specific. Simply like the laws and the taxes, so it’s very, very state-specific. There has been a handful of nationwide companies that have been able to pull off some kind of a little bit do it yourself over the internet lower cost estate plan. And you’ve worked with a fair amount of those Matt, why don’t you talk about what the… If you go that route, you find an online company, less expensive, kind of do a little bit more of yourself. What’s that experience like when people go through it?

Matt Mulcock:
Yeah, yeah, so to your point there it is a lot… There’s a lot of stuff that gets state specific, if you go beyond the basics. I think if you’re going with the basics where 80, 90% of people, let’s say 80% of people…

Ryan Isaac:
You’re saying will, trust, medical directive power of attorney beneficiaries?

Matt Mulcock:
Exactly. Guardianship for your kids, beneficiaries, the basic estate plan. I have found there are actually a lot of… There are now at least a handful of quality companies out there, we work with one.

Ryan Isaac:
Do you wanna throw some names out? I think that’s helpful.

Matt Mulcock:
Yeah.

Ryan Isaac:
You might as well.

Matt Mulcock:
There’s no financial connection to this group… To these groups. So the one that we use right now…

Ryan Isaac:
Nor would they want a connection to people like… That look like us. They don’t want an official connection when we’re dressed like this. They’re like…

[overlapping conversation]

Matt Mulcock:
Nor would they wanna talk to us and have any connection. Yeah. No, we actually have a connection in the sense of meaning, when I say connection, it’s like, we’re not getting paid to say this, right? We’re not YouTubers like, like and subscribe where we’re getting affiliate, whatever. But I will say this group, the group is called Trust and Will, trustandwill.com, you can go, anyone can go to them right now. If you use… We have specific links through our company with, this is the only connection we have where we can actually get our clients 10% discounts on their services. So that’s nice. But you could go right now to trustandwill.com and start a basic estate plan. I’ve gone through that process for actually, for myself, for my young family.

Ryan Isaac:
Yeah, what’s it like? What did you do? Give us the two-minute… What was it like?

Matt Mulcock:
Yeah. Go on there, set up a profile, you go through the basics, fill out some information, you select the plan you wanna go through, off the top of my head, I believe they go through like you’ve got two basic options, which is will, just a will, or you go through the trust and will where you’re setting up all of the stuff we’re talking about today.

Matt Mulcock:
I don’t know off the top of my head, but I wanna say it’s somewhere around $600 if you do the full package. And so really cost-effective, the whole process itself, so once you select that, you pay. You go through the process of step-by-step, there’s like the five things we just hit on, and you literally go step by step and designate what you want, who you want, doing what the stipulations on your trust, all of that. Honestly, if you sat down and with your spouse or your partner and you went through it, and you dedicated some time to it, you’re talking like an hour, maybe hour and a half total.

Ryan Isaac:
That’s really not bad.

Matt Mulcock:
Not bad to go through it, assuming the hardest part of it is knowing… Like I just had a discussion with a client today, I was not in a squirrel suit.

[laughter]

Matt Mulcock:
I just had a discussion with a client today, and she said… She told me the hardest part… ‘Cause she’s going through the process with Trust and Will, and she said, “The hardest part right now is getting her and her husband on the same page with guardianship for their young kids, if something would happen.”

Ryan Isaac:
Oh, yeah.

Matt Mulcock:
There is some prep work that has to go into it in conversations with your spouse, that’s the hardest part, but once you’ve got all that figured out, it’s literally an hour.

Ryan Isaac:
Cool.

Matt Mulcock:
And then they send you what you need or you can… I think you can just… If I remember it correctly, I did this a year ago, but you just print it off and then you can take it and get it notarized, and then you’re good to go.

Ryan Isaac:
And you have a legal estate plan.

Matt Mulcock:
It’s really straight forward.

Ryan Isaac:
Yeah. Very cool. That’s trustandwill.com. And like you said, there’s a handful of companies out there, it’s tough for them to pull this off, ’cause they have to be licensed in every state, I think. And there are limitations on what they can do when it does get more complex. The other route then, is to find a local estate planning attorney in your area, which is usually done by just asking your network and people that you know. A local estate planning attorney will have done hundreds, if not thousands of these, and can walk you through things, especially when they get more complex. And here’s what I would say the difference is the difference I’ve noticed between those two things, and it’s very similar to the difference of downloading an app to do cheap investing on your iPhone and then hiring a financial advisor that cost more money. Is almost inevitably in every scenario that I’ve seen where people do this set up on their own, it’s very, very easy, it’s very cost-effective, but people are usually still left with questions that they need a human to answer.

Ryan Isaac:
And I’m not… This is not commentary on Trust and Will or any of these companies, because I’m sure they have excellent service and you can ask questions. But my point is, sometimes there just is a line where technology can’t give you everything that you’re gonna need, there’s just gonna be questions and some more complexities you’re gonna need a human to answer for you. And it reminds me a lot of our industry where people download apps to do their investing and it’s fine until it’s not fine, and then they gotta talk to someone. But again, humans are always more expensive for everything. So if you gotta hire a human, it’s gonna cost you more money, but that’s the other road to go down, is to hire someone local in your state that you can see and they can do that. And especially if it’s gonna be more complex then that’s the road you’re gonna take. Anyway, you won’t do it online, if it’s a more complex.

Matt Mulcock:
Yeah. And again, I think there’s some pretty easy…

Ryan Isaac:
See the squirrel’s choking on a couple of acorns there.

Matt Mulcock:
Squirrel’s got a little chestnut in here.

Ryan Isaac:
Acorns dust.

Matt Mulcock:
Acorn. Yeah.

Ryan Isaac:
Acorn dust it is.

Matt Mulcock:
Not a chestnut. I don’t think squirrels eat chestnut.

Ryan Isaac:
Squirrels eat chestnut? I bet if you handed a squirrel a chestnut, he would be like, “Thank you.”

Matt Mulcock:
Probably.

Ryan Isaac:
He’d take it and…

Matt Mulcock:
I’m gonna go outside after this to find out.

Ryan Isaac:
You go feed some.

Matt Mulcock:
I’m also like sweating in this.

[laughter]

Ryan Isaac:
It’s so hot.

Matt Mulcock:
It’s getting so hot.

Ryan Isaac:
In this it’s hot.

Matt Mulcock:
I could just feel it. I don’t even know where I was going with this, but yeah. So to your point, if just ask, just ask, you can ask us, you can give us if you have questions around like, “Hey, I think my situation might be a bit more complex,” and I think to give you some really easy parameters for this, if you have a above average net worth, so meaning, let’s say, or let’s give you a benchmark, if you’re close to the $10 million net worth range, that’s a pretty good indication that you wanna start thinking about using… I would say almost every time.

Ryan Isaac:
Someone in-person.

Matt Mulcock:
Use an attorney. Complex business situation, use an attorney. More complex family situation, probably use an attorney.

Ryan Isaac:
Yeah. And I would say even if you… I like trying to put numbers to this, although it might be a little arbitrary, but if you said a dentist with a $5 million net worth, that probably means the business is fairly valuable, and even if it’s average value, that would mean that there are other assets either real estate or stocks, bonds, mutual funds and retirement accounts are above average and quite a bit. And so even at that level, and you start getting someone who’s got a 5 or $6 million net worth, it usually indicates something is successful and bigger, business or accounts or something. Portfolios of some kind, and the bigger and more successful things are, that’s just usually more questions, you’ll have more complexities that’ll arise, you can try to do this stuff. So thanks for tuning into the podcast, we love helping you with questions. So whatever money question you have, whether it’s about estate planning or insurance, or your net worth or spending, or anything that you are trying to figure out and get on track, go to dentistadvisors.com, there’s a lot of ways to engage with us. You can get one of our advisors on the phone easily, painlessly in a very friendly way, and…

Matt Mulcock:
Like you won’t even feel like you’re getting pressed by rocks.

Ryan Isaac:
There’s no pain. There’s no pressing happening. You can get on their calendar and ask your money questions to one of our fiduciary CFP, dental specific financial advisors. There’s probably more than 1000 hours of free content on the website as well, and we have a cool new group called The Dentist Money Membership, where people can engage with some private content, get some one-on-one help and get access to some organizational systems for pretty cheap. So there’s a lot of ways, dentistadvisors.com, there’s a lot of ways to engage and get some help on your money questions and going on your money path. Matt, this was an absolute treat. Hey, speaking of that, when I put this costume on, guess what I found in the pockets? I found wrappers.

Matt Mulcock:
Candy.

Ryan Isaac:
Yeah, Candy wrappers empty but they… All three of them were York peppermint patties, because I tell my children, when we trick or treat, That’s my favorite, and you get a York, it goes in my pocket and I had three.”

Matt Mulcock:
You’re a York dad. That’s your dad tax.

Ryan Isaac:
That’s my dad tax, my Yorks.

Matt Mulcock:
That’s your dad tax. That dad tax is the best.

Ryan Isaac:
Love the Yorks.

Matt Mulcock:
The Yorks. Okay, what’s number two? Give me your top three real quick.

Ryan Isaac:
Yorks, I love Reese’s stuff, peanut butter and chocolate.

Matt Mulcock:
It’s so good.

Ryan Isaac:
I just like… I like chocolatey stuff actually. I’m a big like Mounds guy. That’s…

Matt Mulcock:
Number one.

Ryan Isaac:
Really, that’s your number one?

Matt Mulcock:
Almond Joy. Almond Joy.

Ryan Isaac:
Wait, Almond Joy is…

Matt Mulcock:
My number one.

Ryan Isaac:
With Mounds…

Matt Mulcock:
I get a lot of ridicule for that. I feel like I’m emotionally depressed.

Ryan Isaac:
Almond Joys and Mounds get…

Matt Mulcock:
When I bring up my Almond Joy love.

Ryan Isaac:
Yeah. I’m with it. I’m with the band. So thanks for joining us, thanks for being here, dentistadvisors.com, if you have any questions, we’ll catch you next time on another episode of The Dentist Money Show. Take care now. Bye-bye everybody. Peace out.

Estate Planning