Estate Planning Matters for Everyone, Not Just the Rich - with Chris Wilbur

Hannah Mitrea 0:05
Get ready to get your questions answered by financial advisors. Learn how to put more money back in your pockets, regardless of where you’re starting your financial journey with your host, Hannah Mitrea. Alright everybody, welcome back to the Virtual US Financial Advisor Podcast. I’m super excited to have Chris Wilbur here. Chris is a financial advisor at Soteria Wealth Advisors. And I really appreciate you jumping back and forth with me to make sure we can get this scheduled. And I’m really excited to talk about estate planning. And welcome to the show.

Chris Wilbur 0:36
Thank you so much. I’m really excited to be here with you today. Yeah,

Hannah Mitrea 0:40
and before we jump into estate planning, maybe share with us a little bit about the Soteria Wealth Advisors and what you do.

Chris Wilbur 0:47
Yeah, so we are a fee only private wealth management firm backed by LPL Financial, the largest RIA in the country. So we work with individuals, families, business owners, to help them achieve their wealth accumulation goals, and preserve the wealth that they have accumulated, to make sure that they’re on track to achieve their life’s dreams and goals. That’s essentially the mission. And I’ve been doing this for 10 years now in the financial industry, and have worked with a lot of wonderful people to you know, make sure that they understand and know that they are on the right track.

Hannah Mitrea 1:29
Awesome, I love that love that you’re helping them kind of create that wealth that they can hold on to. And I feel like that’s hand in hand with estate planning. Because estate planning is about how do I make sure one when this House passes on to my children? Do they not pay all these taxes on it, and then losing money on it? So where did kind of like your, I don’t know if it’s passion? Or where did that estate planning side of it come into your life that you really like helping clients through that process?

Chris Wilbur 1:55
Yeah, so it’s been an evolution over the past 10 years, because I started at a hybrid insurance and investment brokerage firm, and really focused on protecting people from you know, the risks of life, you know, whether it’s disability or a premature death, to make sure that they have the right risk management plan in place. And as a part of a comprehensive plan on risk management, estate planning is a piece of that I also have parents, right, and they’re a little bit on the older side. So now, I have been focusing on this because it’s it’s becoming a real part of my life experience. And, you know, essentially, it’s just the process of designating who will receive your assets and handle your responsibilities after your death, or if you’re incapacitated. So, you know, it can be a heavy topic at times, but the philosophy is that you should have something in place, and you don’t have to be a millionaire. So one of the goals is to make sure your beneficiaries receive these things in the most cost effective way possible. And estate planning can help establish a platform that you can fine tune as your situation changes.

Hannah Mitrea 3:07
Yeah, I love that you mentioned like, you don’t have to be a millionaire. Because, you know, I hear estate planning. And I always think of Brewster’s millions. And I can only imagine, you know, that, like, this guy gets all those millions and has to spend them. And I think growing up with like, things like that we definitely think estate planning is for the people that are really wealthy, and just have a lot of money because we think like, what are we passing on? If we’re not, you know, super wealthy? So can you share with us like, how do you work with a client on that conversation of estate planning? How do you start getting through that of what they need to plan for?

Chris Wilbur 3:44
Yeah, so the first question is, what are your goals, right? So whether you’re, you know, younger and still accumulating, or you’re trying to retire, your goals are the most important thing when talking with someone. So if they want to pass on a legacy, or if they just want to make sure that they have enough money in retirement, we focus on that first. And then as part of that, we talk about, okay, well, we should have something in place for your estate, because you will have one. And the key question is to ask yourself, How do you want your assets distributed when you die, or if you become incapacitated, so that’s really the key thing. And if you have kids, then you want to make sure that they’re secure in their financial future, and then things of that nature

Hannah Mitrea 4:32
and just kind of talking through it here. Whenever we say estate, it’s not necessarily just your house, right?

Chris Wilbur 4:38
It’s It’s everything you own. It’s your house, your cars, any you know, retirement accounts, life insurance policies, all of the assets. I

Hannah Mitrea 4:47
feel like just because we hit real estate, I feel like real estates, super common knowledge and so we know houses are estates and but when we’re estate planning, we are planning every piece of our financial wealth And it’s future sampler, correct?

Chris Wilbur 5:01
Yeah. And you know, the whole process can seem quite overwhelming and complex. But to help keep it simple, you really just need to understand some basics. And, you know, there’s really only a few things that we’ll cover today.

Hannah Mitrea 5:15
Yeah. Do we want to kind of jump into like, what are those basics that we should be looking at covering?

Chris Wilbur 5:20
Sure, yeah. So the first thing is you need to be aware of probate. Probate is a process that each individual state administers for everybody’s estate. So that is state specific. And they basically execute on the estate, whether it has a will or not. And that’s kind of the starting point for everything.

Hannah Mitrea 5:42
Yeah, I think so I hear probate a ton is definitely something that I’m like, Oh, I know what probate is. But I’ll be honest, I have no idea of probate. Like it’s very confusing for people. So this working with like, someone like you kind of help go through that probate like, so if the family comes in? You’re the one dealing with it, or is that something like, you know, the family still has to deal with a probate? How does that work? And well, yeah,

Chris Wilbur 6:07
great question. So the executor of the estate is going to handle that process. But the court uses this to settle the estate and the settlement time and the expense, it varies by state in your situation. But that’s the first step. So that’s just the term used to describe the process the court uses and settling the estate, and the costs and the time that it takes.

Hannah Mitrea 6:28
Alright, so for just because, you know, I own a business, and so in my co founder is in Virginia, at the end of the day, we had to choose which state was a better place to have a business in Texas 1,000% was just a better place for business like legal side of it. When we look at estate planning and probate planning, because you mentioned kind of like states matter, do you have to do your probate in the state you live in? Or could you do a probate in the state that’s like better? I could be like, oh, boy, like, and it’s

Chris Wilbur 7:00
fine. Yeah. And that’s also a great question. So first, I just want to put out as a disclaimer, that I’m not a lawyer. So none of this is going to be legal advice. But speaking, just in general terms, wherever you own assets, whether it’s in Texas, or Virginia, those assets have to go through the probate process of that specific state. So let’s say you own your home in Texas, but you have another home in Virginia, that home, if it’s not in something called trust will have to go through the probate process of Virginia. So that’s called ancillary probate. So it gets complex, but essentially, your will is going to be the foundation of your plan. And that’s going to include all of your wishes, and how everything should be distributed to your beneficiaries, if the assets don’t have a beneficiary already designated and probate is the process that all estates go through. However, there is a way to avoid it, which is by setting up something called a trust, and there’s lots of different types of trusts. But essentially, when you take assets, and you transfer them into a trust, that takes them out of the probate process altogether. Okay,

Hannah Mitrea 8:14
because when you mentioned that there was the will and the trust, and so what’s the difference between a will and a trust, or are they just really synonyms for each other.

Chris Wilbur 8:22
So a trust is going to be an entity, it’s a legal documents, that is set up to proceed, or that’s going to proceed all the instructions in a will. So A will is going to be more inclusive in terms of it’s going to have like, I would like to be buried here or cremated. And this and that. And the trust is going to be where you put all the assets and include instructions for the beneficiaries on how those assets are to be used. And if there are any stipulations there. So they’re different, but kind of the same, the will is just going to be like a user guide for how your estate is to be executed. But the trust is to take any of those assets and take them out of the probate process and those instructions and that document is going to make sure that you don’t have to go through the probate process, which like I said, can take a lot of time. And it can be expensive. And if you have assets in different states, you’re going to want to avoid going through multiple probate processes. It’s very timely, time consuming, and it’s it’s expensive sometimes. So having a will is great. And if that’s the only thing that you do, then I fully support that. But having a trust is going to take it one step further and be an added benefit to your heirs, your beneficiaries, the people in the causes that you care about the most. So you don’t have to go through that whole rigmarole of working with the state government. Yeah,

Hannah Mitrea 9:53
like I’m like there’s so many movies going on in my head right now. Go through these processes. And it’s just so interesting, but When we’re talking about like, so, who that beneficiary is, can it be multiple people? Or is it one person? And how does that kind of look like?

Chris Wilbur 10:09
Yeah, you have full control over that. And it can be multiple people or institutions, you know, charities and whatnot. So let’s take something specific as an example, like life insurance, if you’ve got a family, and then they depend on you, you should have life insurance, or if you have a business partner, you should have contingencies in place for untimely death. So life insurance, I fully believe in the value and the benefit of having that. So when you get a life insurance policy, you have to designate a beneficiary at a minimum. So that’s called the primary. And then you can also set up a contingent beneficiary, you can also have multiple, so you can split it, like I don’t have kids. So my life insurance goes to my brother, his wife, my sister, and her husband, 25% each, so everybody is going to get a percentage of that life insurance. And if that primary beneficiary or beneficiaries is unable to receive that money, then it will go to the contingent beneficiary, which could be people causes a trust, you can use the trust to pass on that money.

Hannah Mitrea 11:22
Now, I just hope your in laws are listening and know the deep love you have for them that they’re getting plenty Piper’s Yeah. So with life insurance, and we’re just in that world of it, and you’re designating a primary, do something like that still have to go through a probate process? If it’s not interest? Or does life insurance have things that kind of Trump what has to happen in probate since you’ve already designated those people?

Chris Wilbur 11:47
Yeah, so a beneficiary designation, is going to supersede any instructions of a will. And if you place that money in a trust, it will go to the trust. So the beneficiary designation is, you know, the first designation. Okay, got

Hannah Mitrea 12:08
it? What are some other kind of like basics that we should know about estate planning?

Chris Wilbur 12:12
Yeah, so there are we’ve been talking about trust. So it’s something that everybody should definitely consider. And when it comes to trust, there are many different types, but they really fall into two categories. One is called revocable, the other is called irrevocable. So revocable trusts, you can change, right? They’re revocable, so you can make adjustments and you can change it, you know, at any time until you pass. And then that trust goes to the beneficiary. irrevocable trusts, it’s nearly impossible to change that trust document once it is officially established. And so there’s lots of like tax implications and things of that nature that differ between revocable and irrevocable, it does get very complicated, especially if you’re talking to somebody who has a significant net worth, because there’s limitations as to how much is exempt from estate taxes. And this is something that the legislation has been discussing and changing over the course of time, but essentially an irrevocable trust, you can’t change it. So you need to be fully confident in the decision that you make when you set that up. The other thing is that there are other documents you should probably have in place that are called powers of attorney. And there’s multiple different types, but those are directives for other people to make decisions on your behalf.

Hannah Mitrea 13:54
And the irrevocable trust and versus revocable real quick Why would anybody want an irrevocable trust? I think that’s why I’m just thinking like, you know, it’s human beings as humans are, we’re the most wishy washy species in the world, like we all so what would be a reason to have an irrevocable versus just, you know, having one that like, you know, oh, we’re getting a divorce, okay, now, you’re taking your off the will kind of thing and I do work with, like, divorce attorneys. So in my mind, those kinds of things happening all the time. So it’s just kind of like why would I not set up a revocable trust? So but is that reasoning that you would want to irrevocable? Yeah,

Chris Wilbur 14:36
it essentially comes down to taxes. There may be some other considerations as well, but essentially, there are more favorable tax laws surrounding the revocable trusts that allow that money to go to those beneficiaries but like I said, it gets complicated and I’m not a lawyer. So I just like to keep it you know, high level I

Hannah Mitrea 14:58
am no worries actually curious them too. Like make that revoke. Talk about attorneys and what that looks like.

Chris Wilbur 15:05
Okay, so yeah, powers of attorney, there are a couple of different types that I’ll touch on. One is called durable power of attorney. And the other is called a healthcare power of attorney. So, you know, durable power of attorney is something that it gives your agents, the person that you decide to make decisions for you the power to transact on real estate or enter into financial transactions and make other legal decisions. On your behalf. It is revocable, so you can change that. But it should be anyone you trust. So that’s durable power of attorney, healthcare power of attorney is just what it sounds like. Typically, it’s your spouse, your partner, or a family member. And it’s again, someone you trust, who shares your views on issues such as DNR, do not resuscitate, and can be there to support you in that instance. So it’s a backup agent should also be identified in case that person’s not able to provide that assistance.

Hannah Mitrea 16:10
And how does that kind of fall into the wealth planning side of it? I guess, just because since they’re on the healthcare, does it impact your will or your trust? Can they make decisions that change a revocable trust? If they’re they’re your healthcare power of attorney?

Chris Wilbur 16:25
That is a great question. And not something that I would speak on because of the legal complications that might be involved. So especially when you’re talking about if a beneficiary of a trust is designated as your healthcare power of attorney that creates a conflict of interest. So you’re going to want to be very careful, right about talking about these specifics, when you’re not an attorney. Yeah. And in general, it’s going to be like a family member or spouse, partner, etc, somebody who’s going to be there for you. So it’s the exclusive responsibilities are to make healthcare decisions.

Hannah Mitrea 17:01
And I think I think of it because we’ve seen so many movies, essentially, where in the final hour of their life, they’re making changes on their will. And then it becomes is it actually valid?

Chris Wilbur 17:14
Yeah, and that’s a consideration that the doctors will have to speak on. Because if you are incapacitated, or if you have diminished mental capacity, and you’re making changes on your deathbed, you know, then that brings up some questions. And the short answer is like, if you’re able to, if you’re able to make changes, and you want to do that, then yes, you can. But if you have a diminished mental capacity, or if you’re on life support and you can’t speak, then that’s another issue.

Hannah Mitrea 17:45
And I totally get some of these are legal things that no legal advice is happening. If you’re a healthcare power of attorney, go talk to an attorney for sure. about those things. I’m just curious being so I’m sorry. All right, awesome. So, you know, if they have the power of attorneys in place, what if they don’t end up meeting them? So what are those next steps look like?

Chris Wilbur 18:10
Well, then you’re happy, healthy and living your life. So it’s just contingency plan, just in case, you know, so if a if a husband or a wife or somebody gets in a horrific car accident, and they’re in the hospital, and they’re in a coma, then the healthcare power of attorney is going to be there to make a decision or, you know, multiple decisions. So that is just one specific estate planning documents have a whole array of documents that together form an estate plan. So you know, everybody thinks that an estate plan is just for the wealthy, and it’s only to avoid taxes. That’s not necessarily the case. So you’ve got these power of attorneys, but if you have kids, you should also have something in a place called guardianship designations. And this isn’t, you know, calling up your buddy and saying, Hey, I’d like you to be the Godfather, which I am a godfather, so I can speak to this. I am not the designated guardianship person for my friend’s daughter, Vivian. Right. So they are going to have to set up guardianship designations for her and for James, their son in case something were to happen. They would have those people the guardianship, the Guardians would have the legal responsibility and duty to care for those children until they’re of age.

Hannah Mitrea 19:30
Yeah, it’s not as easy as just saying you’re the Godfather, you’re the godmother. There are legal implications. And so that’s all kind of built into that trust that you have to create, even if you don’t have millions to do. Yeah,

Chris Wilbur 19:43
yeah, exactly. The guardianship designations are again, a legal issue, being a godfather as a religious issue.

Hannah Mitrea 19:50
Yeah, and I really like kind of understanding those different ways that you might need an estate plan, because I think we don’t know all those ways. We need it. state plans. Like, as we go back to the beginning, we talked about like, I have to be a millionaire. But in our mind, we think we do to meet these kinds of documents.

Chris Wilbur 20:08
Yeah, and I would say, just in general, if you’re young and trying to accumulate wealth, you know, you don’t have to have much or anything really to have at least just a will. Right. So putting a will in place is step one, and then talking to an attorney about benefits of revocable trust. And then if you have kids, then you get into the guardianship stuff, if you’re married, you know, having powers of attorney. And then once you do accumulate wealth, then you can revisit all of these topics and make it a little bit more specific and more geared towards other considerations, such as taxes, or charitable giving those types of things. And again, like I said, it gets very complicated, where if you have a business, and let’s say, it’s going to be worth $50 million, but you and your business partners and or your partner, wife, spouse, if you guys own that, and you’re getting ready to sell that business, and you’re going to create a very big tax events, there are ways to structure additional trusts to provide you with other tax benefits while you’re still alive. So you can avoid a lot of taxes by setting something up like that, I mean, essentially, you want to do it sooner rather than later. And it’s a good idea to once you have established this baseline plan, have conversation with your family. So this might be one of the most important aspects of having an estate plan, because it’s going to have implications and effects on other people. So obviously, death is really tough topic, but everybody does. And if you’re younger, that may seem like something that can be dealt with much later. But no one ever knows just when and will something happens. So you know, discussing your wishes, your relatives wishes, also, like your aging parents, is something that I would encourage people to do. So you know, making sure that your parents are protected, right? Whether that’s from any potential long term care needs, that’s a very expensive thing to have. So there’s so many different ways that things can unfold that if you have these plans in place, it will alleviate some of that pain. And it will make it much easier much quicker, because the last thing you want to do is sit in a courtroom for six months, and try to figure out what the probate court is going to do with your family’s assets. So again, another reason to have a trust so that those assets automatically essentially get directed to who it’s intended for.

Hannah Mitrea 22:54
Yeah. So I love that you mentioned, like, have that conversation with their family and just start making those plans. So for anyone listening, what’s the first step after they’ve had those conversations with the plan? Like who do they reach out to? Is it you or is an attorney, where is those next steps go and from there,

Chris Wilbur 23:11
either or, or both? Right, so I’m not an attorney, but I know lots of great ones, who will actually be the ones to execute these documents, they will draft them for you, I can review them with you, and make sure that it is properly written to be there for you and to accomplish those goals that you’ve set out for yourself. So this is just one aspect of the overarching theme of financial planning, which everybody knows is related to money and what your goals are, and what sort of, you know, maybe some investments that you should have, but also the insurance aspects. So it all comes full circle. So that’s why I work on a fee only basis to help my clients on every aspect of their entire financial life. And then when you are ready to set up an estate plan, you do have to go meet with an attorney. And they will help that for you.

Hannah Mitrea 24:07
Yeah, definitely. So if somebody’s here looking, I have a wealth manager, financial advisor, how can they find you, Chris?

Chris Wilbur 24:15
Yeah, so if you’re thinking about these things, then you can reach out to me on LinkedIn at soteriawealthadvisors.com. And we can help you with a comprehensive strategy, as well as refer you to good attorneys who focus on and are board certified in estate planning. So we’ve got the resources to facilitate that introduction and implement it into your overall financial plan.

Hannah Mitrea 24:39
Alright, awesome. So reach out to Chris if you’re ready for your state planning. And remember, you don’t need to be a millionaire to have an estate plan. And also you want to have an estate plan early on for things that aren’t even money side of it. So if you have kids, things like that, so definitely reach out to Chris and all this information will be below. Thank you so much for kind of sharing this estate planning side of it. with us, and you know, listening to my ridiculous questions, helping through those different things. So, I’ve loved having you on.

Chris Wilbur 25:06
Now they were great questions. Thank you for having me as well.

Hannah Mitrea 25:09
Thank you for joining us. This week on the Virtual US Financial Advisor Podcast. Subscribe to the show on Apple podcasts, Spotify, Stitcher, or via RSS. We’ll never miss an episode. We’d love rating on iTunes. Or better yet, tell a friend about the show, which will help us grow as well. If you want to learn from any of our financial advisers, head over to our website virtualusfinancialadvisor.com To learn more about each financial advisor and connect with them. Be sure to tune in next week to get more advice from the expert financial advisors. See you in the next episode.

Transcribed by https://otter.ai