Early Retirement - Financial Freedom (Investing, Tax Planning, Retirement Strategy, Personal Finance)

FAQs: Wills, Trusts, Power of Attorneys, and Other Estate Planning Tools (Part 2)

• Ari Taublieb, CFP®, MBA

Share episode

Estate planning isn’t fun to think about, but skipping it can cost loved ones time, stress, and money. In this week's episode, Ari breaks down the essentials so you can take action with confidence.

Learn the key differences between wills and trusts, which states make trusts especially valuable, and why even residents of “will-friendly” states might still need one. Explore the “dead box” strategy, an annual practice that keeps important info like passwords and funeral wishes accessible if something happens.

Get clarity on overlooked tools like POD (Payable on Death) and TOD (Transfer on Death) designations, plus the risks of outdated paperwork through real-life client examples.

The episode also covers power of attorney, healthcare directives, and how HEMS provisions can protect assets for beneficiaries with special needs or unique situations.

Estate planning is about more than documents—it’s about creating peace of mind. Start now to give your family clarity when it matters most.

Listen to Part 1: Here's When A Will Is Sufficient And Trust Isn't Necessary

Create Your Custom Early Retirement Strategy Here

Get access to the same software I use for my clients and join the Early Retirement Academy here

Ari Taublieb, CFP ®, MBA is the Chief Growth Officer of Root Financial Partners and a Fiduciary Financial Planner specializing in helping clients retire early with confidence.


Speaker 1:

In last week's podcast, I went over trust and wills. What are the differences? What states likely don't need a trust, what states do need trust? And even if you live in a state that likely does not need a trust, when are the situations where you might go? Yeah, I still think I should need it because I have a child with special needs or I have a divorce, or I wanna get these things set up Now. At the end of last week's episode, I mentioned that I do have a resource to help you if you want to get these things set up. You can check that out in the description of this episode.

Speaker 1:

Today is going to be more of a mailbag episode I don't know if that's the appropriate phrase, but when I was thinking about it it seemed like the best one and that means I'm going to just go over a bunch of different things real quick, short and sweet for you. So things like power of attorney or medical directives or trust or wills or beneficiary designations or PODs, or, if you're like I have no idea what you just said, I'm going to go over all of that, hopefully in 10 minutes. You're like okay, I think I've got a handle on this. Now, when it comes to estates. There's a lot to this, so of course you know I do recommend, if you actually are going to execute a charitable remainder trust or a donor advice fund or some fancy estate tool, you want to make sure you're working with an advisor, because you can save mega taxes and you want to make sure you're doing it properly. So, of course, consult with a CPA, financial, professional estate attorney you name it to make sure that everything's happening the way it should. Now real quick, because I get this question all the time will versus trust. I like to think I have good examples to simplify things for my clients, and the way I explain these, as always are.

Speaker 1:

Will is that's going to be essentially handled after death. Trust is during and after death. It's more complicated than that, but, to keep it simple, a will is basically just deciding how assets move after you pass away. A trust, on the other hand, is managed while you're alive, avoids probate. I call that avoiding hassle because sometimes probate can feel like the DMV. If you've been to the DMV many times, you know what I'm talking about, and you also, of course, use this to distribute assets after death. Certain states. You just don't need a trust. A will might be totally sufficient because you have a super simple estate plan. You live in a state where it's just likely not necessary. So, yes, you could still go get a trust, but it might just create unnecessary hassle. So I want to make sure. If you haven't checked out last week's episode, feel free to check that out.

Speaker 1:

After this let's start getting into it. So I'm going to go through a few different examples. I hope this resonates with you. If you don't know already, my name is Ari Taublieb. I'm a certified financial planner, host of this podcast, the Early Retirement Podcast, and I'm the chief growth officer at Root helping as many people as possible retire early with confidence. At root, helping as many people as possible retire early with confidence.

Speaker 1:

So one a reminder that there are state specific laws. Each state has its own laws regarding probate, regarding state estate or inheritance taxes. That was a mouthful Community property versus common law property rules for validating wills and trusts and tax implications. There's so much to this. Don't get so overwhelmed that you're like I'm just going to give up on estate planning. So here are a few pro tips and then I'm going to walk you through just some basic phrases that I want to make sure you're aware of, basically five big tips here.

Speaker 1:

Okay, here's the first thing I recommend. I mentioned this last week the dead box. I have a dead box. What that means is January 1st of every single year, I send an email to my spouse and members of my family not all of them, but members of them. They say I hope I never die. If I do die, here's where I want you to go and it's a link where I have emotional resources about things that I want them to know about my life videos specifically for them. I have all the passwords, I have everything organized for them and I also have fun stuff. Here's photos.

Speaker 1:

I'm trying to say if you were to host a funeral for me, here's what I would want shown. Here's what music I'd want played the Arsenal Champions League song. No, I'm just kidding, there's no Arsenal Champions League song. But I'm a big Arsenal fan. I'm a soccer player myself. I played in college. So when I joke with my clients, they know I'm a big soccer guy. So there's what's called the Champions League song, and Arsenal sometimes plays in the Champions League, and so I will joke that I'm going to walk out to my wedding, which is just in a little over a month now as of this recording to the Champions League song, but my fiance would not like that, so we will not be doing that.

Speaker 1:

But getting back to today's episode, here are five pro tips. Once again, you have my little dead box. You can do that if you would like, if you want more resources on that, I talk about it in my early retirement academy and exactly what I would do with that, which I got this idea from a different advisor who's awesome. Now here's five tips. Number one create or update your will. Why it's the easiest, it's the lowest level of hassle, no-transcript. So establish a trust if it's appropriate, if is the big word there, why it avoids probate and protects privacy. Ultimately, it's just going to save you hassle. There are certain states where, as I went over last week, it's not a big deal, but for many of you, like in California, you'll want one. Let me just tell you New York, you'll want one, massachusetts, you'll want one. These are states where we have Hawaii, you want one. Washington, you want one. I have clients that are in these states that go oh my gosh, if I did not have one, the level of hassle would have been crazy. It's also really helpful if you want to control distributions.

Speaker 1:

I'm just thinking right now of a story, and I like recording all these different episodes on topics because I let my brain go in different directions. So if that does not resonate with you, I apologize. I cannot change my style if I wanted to, but I have a client that has a child with special needs. And I have another client who has a child who is an awesome guy because I've spoken to him and if he's listening to this, he probably knows who he is because I've shared this story before. But this is someone who married someone who he thought was gonna to be an incredible match and it was not. And what happens is they were basically trying to get funds from their family. They did love each other, but then that faded and that's a whole thing.

Speaker 1:

The point here that I want you to know is that parent was like I trust my son, they're going to marry the right person, and so they did not go get a trust that specifically said what would happen in the event of a divorce and did not say I want specific what are called HEMS provisions, which stands for health, education, maintenance and support. That parent ended up passing away. Those assets were split evenly when they were divorced and that is not fair to that son, the client of mine, who shared wow, I wish I had set things up differently. Now there are situations where it can be very emotional I was thinking of the word there that I wanted to share, but trying to pick my words carefully here and it's always emotional and there's always oh my gosh, now we're going to love each other forever. I love my fiance, I want to make sure that we're in love forever, but we also still got a prenup. We also recognize that if we want to change our agreement, we can always go to get a postnup and reevaluate. Don't just like I say when you look at any idea. Don't marry an idea. Put all the best ideas on the table and pick that one as long as it remains the best idea.

Speaker 1:

All you're trying to do is protect any future changes, having a trust. For example, pretend I have a child one day and they just aren't, in my opinion, doing what I think is best for them or their family. I can create what are called HEMS provisions, which means if you want to use money after I pass away, it can only be used for health, education, maintenance or support, and I can put specific ages where that would be allowed. I could say at any time, if it's for those things, I could say at 25, they get X portion or whatever that may be. Now my parents don't plan on leaving me anything, which I'm happy for, because I want them to spend it on what they care about most. But I also am of the belief that I had to work really hard to get what I have and I think if I didn't have to work that hard I would like to think I would still have what I have, but maybe I wouldn't. And so I don't plan on leaving my future children millions and millions of dollars. I want to make sure that I can support them if I so choose or if there's a condition, but I believe in having that sweat equity. So because of that I still will have a trust, but it won't be. Hey, here's everything. So that's on the trust side of things Organizing and listing all assets and accounts.

Speaker 1:

This gets overlooked a lot. I'll say this is probably the simplest thing you can do. It probably will take you 20 minutes, hopefully less, but it is a big hassle saver. So I had a client. They sold their business. They were naturally very frugal people. They had about $8 million in a bank account for a very long time just getting a high yield savings rate. It was about four and a half percent at the time. Then they wanted to invest some in the stock market. They did some real estate other things. There's about $2 million left in that bank account and it did not have a POD at the time.

Speaker 1:

That stands for payable on death, meaning upon death. Where are those assets paid? And so it went to probate and it was a huge hassle. Now, eventually, the children that were supposed to inherit it did get it, but it took months and it was just not worth it. If they had one simple form it would have fixed all of that. So that stands for, once again, pod payable on death. That's for your bank. So if you don't have one right now, go to your bank, ask for your POD, get that set up. That's different than a TOD. Tod is transfer on death. Where do we transfer ownership of our brokerage or superhero account, which is different from your 401k and IRA, where you can list a beneficiary directly. So make sure that you have these things in order. That should save you a lot of hassle. Const beneficiary directly. So make sure that you have these things in order. That should save you a lot of hassle.

Speaker 1:

Constantly review and update beneficiaries that's simple but not easy. Or am I saying it the other way? It's easy but not simple. That's the one I was looking for. The reason I say that is it's really easy to go update beneficiaries and, at the same time, people don't do it all the time because it's like, yeah, what's going to sound more fun tonight watching Netflix or going to review beneficiaries. Like I work with humans, not robots. I get it Okay. So I think accountability is a big reason. People work with Root, so we make sure it actually happens. So check your retirement accounts, check your life insurance policies, check your POD accounts. I had a situation luckily we caught it where the POD accounts. I had a situation luckily we caught it where the POD, meaning the payable on death account via Bank of America. It was going to be paid out to their ex. You don't want to still have them listed if that is not your goal. So that's why, every year and any big change, I recommend shifting there.

Speaker 1:

Now, beneficiary designations will typically override what's in your will Very important to know. Finally, here, considering power of attorney and healthcare directives. So there are financial and medical power of attorney to allow trusted individuals to make decisions. If you become incapacitated, that up and then create a living will to document your healthcare wishes and relieve your family of making the difficult decision. For example, my grandma. We had this in place and she had mentioned if she was in a certain state she would not want to continue living and we were abiding by her wishes and so it did not put pressure on my mother to act in a certain way. That is something that I honestly could see in my mom, gave her peace in that weird moment, difficult moment as well. Now we also offer, if you do want to be able to go get all your estate things in order, we, if you're a member of the early retirement Academy, I give you the ability, for I believe it's a few hundred bucks, but I'll have to check the latest you can go get all of these things set up for yourself. Or, as always, I recommend you work with a financial professional like us here at Root, who helped do everything Estate trust, will, medical directives, power of attorneys, tax, insurance, planning, investments. We want to make it so you don't have a new job having to manage your entire finances in retirement. You still remain the CEO, but now you have a CFO to help execute all of this.

Speaker 1:

I know I said today's episode would be 10 minutes. I went a little long, but I hopefully not. Hopefully that was not English, but hopefully you do resonate with this. I leave all these little things I say in these podcasts because I want you guys to know this is real. I am not perfect by any means. I do my best, but I want to make sure I'm always being authentic with the content I produce, and that's it. See you guys next time.

Speaker 1:

Thank you all, as always, for listening to the Early Retirement Podcast. I love getting to host these shows and make different content for you guys every single week. I've not missed a single week in years and that is because I love getting to do this. Now, please be smart about this. Before you actually execute any strategy that you see me talk about or hear me talk about, should I say Please talk to your financial advisor, your tax preparer, your estate attorney. Please be smart about this.

Speaker 1:

None of this should be construed as financial advice. This is for fun, educational, informational purposes only. Once again, just a quick disclaimer here. Guys, please be smart about this. Appreciate you listening, as always, and you can, of course, submit a question on my website, earlyretirementpodcastcom. If you, of course, want me to address a specific case study or topic. I will not promise I can get to it, but I respond to every single person and if I find it will be helpful for a lot of people. I will not promise I can get to it, but I respond to every single person and if I find it will be helpful for a lot of people, I will absolutely make an episode on it, at the very least give you some insight. That's it. Thanks, guys.