Understanding Estate Planning: The Fundamentals with Nicole Cleland (Part 1)

Retirement Planning - Redefined

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22d ago 21:13

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In this special episode of Retirement Planning Redefined, John and Nick welcome their first-ever guest, Nicole Cleland of Legacy Protection Lawyers, to kick off a new estate planning series. Nicole shares key insights into what estate planning really involves, who needs it (hint: it's not just for the wealthy), and how proper planning can help avoid confusion and conflict later. They cover the differences between estate planning and elder law, the importance of incapacity planning, and how assets actually pass after death.

Learn more about Nicole and Legacy Protection Lawyers

Contact info: www.legacyprotectionlawyers.com
Phone 727-471-5868

Helpful Information:

PFG Website: https://www.pfgprivatewealth.com/

Contact: 813-286-7776

Email: [email protected]

Disclaimer: PFG Private Wealth Management, LLC is an SEC Registered Investment Advisor. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. The topics and information discussed during this podcast are not intended to provide tax or legal advice. Investments involve risk, and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial advisor and/or tax professional before implementing any strategy discussed on this podcast. Past performance is not indicative of future performance. Insurance products and services are offered and sold through individually licensed and appointed insurance agents.

Marc:

Once again for another edition of Retirement Planning Redefined with John and Nick from PFG Private Wealth, and we've got a special show this week. We're going to be talking about understanding estate planning. We've got a little series planned around this. We've got some special guests coming up also. So really looking forward to today's conversation. John's going to be joining me along with Nicole Cleland, who is our special guest from Legacy Protection Lawyers based outside of St. Petersburg, Florida. And we're going to have a great conversation around understanding those estate planning basics and some other details and information. So it's going to be an excellent episode, so stay tuned and we'll get right into it. John, my friend, how are you this week, buddy? What's going on?

John:

Hey, I'm doing all right. I'm excited to have Nicole as our first guest that we've ever had on our podcast here.

Marc:

Yeah, our very first guest here on this, so it's excellent to have Nicole here. Nicole, welcome in. How are you?

Nicole:

I'm doing great. Thank you both for having me. I'm really excited to be here today.

Marc:

Absolutely. So we'll jump in real quick. Just tell us a little bit about you and your firm, what you guys do.

Nicole:

Sure. So we are a boutique trust and estates firm, meaning this is all we practice is trust and estates. We do primarily planning, and secondary administrations of estate planning documents, and we also do a little bit of litigation and a little bit of tax planning as well. So we do have a trust and a estates only litigation lawyer and a tax lawyer with us too.

Marc:

Okay, excellent. And Bill McQueen is going to be joining us as well on probably the next episode, so we'll get into some conversation with him. But for now, let's just kick things off and get started. Although I do have to ask, I was looking at the website and I see that you are a super lawyer. What is a super lawyer?

Nicole:

Yeah, it means that we get a cape every year.

Marc:

Nice.

Nicole:

No, a super lawyer designation is a designation that you receive from other lawyers in the area and about 5% of practicing attorneys get this designation. So I'm very honored to have been a rising star super lawyer for seven years now, I think.

Marc:

Awesome.

Nicole:

And yeah, it's nice to know that the professionals that I work with enjoy working with us in our firm too.

Marc:

Yeah, that's great. John, you need something like that? You need super advisor or something.

John:

I don't know if there's a super advisor, but if there is one, I'm about to see how I can get that.

Marc:

There you go.

John:

I feel like got as much work as I do, I need a cape as well.

Marc:

There you go. Yeah, capes are good. Well let's get into our conversation here. So I wanted to kick things off with just a really simple question for you, Nicole, because a lot of people, I think it's probably changed through the years and you can maybe talk about that as well, but people, I think around estate planning, even financial advisors, tend to think that, well, this is for the ultra wealthy. Those kinds of things are for people that really have a lot of money, and I don't think that's the case. So explain, do you really need an estate plan and if so, why? Can you give us some kind of parameters and some breakdowns on that?

Nicole:

Yeah, that's a really great question. And I think a lot of people do think estate planning means you have to have a large estate, but that's really not all estate planning is, I kind of think of it as twofold, you've got planning on the incapacity side and then you've got planning on the after-death side. So you don't really have to have a lot of wealth, or really any wealth, to do estate planning, because if you're incapacitated, you might have very specific wishes on your care, whether that's through any sort of long-term incapacity, through any end-of-life care wishes, whether it's where you want to live, how you would like to be buried, things like that. So it's not necessarily always based around dollar amounts, and I'm sure you all see this and sometimes you have the most complex cases that really aren't the super ultra-high net worth people.

It could just be your run-of-the-mill, middle-class American that has very specific wishes in terms of they've got a blended family, or stepchildren, or maybe a child that has addiction issues. So it can really be more broad than, "Hey, I have all this money and I need a plan for taxes." It's really more complex than that.

Marc:

Gotcha. Okay. Is there a difference between estate planning attorneys and elder law? I think people get those confused as well.

Nicole:

Oh my gosh, yes, there is a difference. And that's a big one we get too. And for us, the estate planning is planning for... What I say is, you've got tax planning, you've got incapacity planning, asset protection planning, and kind of encompassing all of that, just your run-of-the-mill estate planning, meaning how you would want to plan for things after your passing. But elder law is a little bit more on the incapacity side and planning for one day potentially needing Medicaid, so thinking more of the disability planning. That's how I sort of equated in my mind is you've got an elder law lawyer that's a little bit more on the disability planning side, but a lot of elder law attorneys still do estate planning, but there is a slight distinction between the two and that is important to note.

Marc:

Great point. All right, good. What makes an effective estate plan?

Nicole:

Oh, that's a fun one too because I like to say the one that works is the one that we have no hiccups with after the testator, or the creator of the plan, has passed away. And that's sort of the hard part on estate planning is my best witness is no longer here to verify that this is what they wanted. So I would say that the best estate plan is one that you can keep family harmony at the end, as much as possible, at least preserve it or maintain that family harmony as much as possible, and administer and execute that settler or that testator's intent. Really kind of making sure that that is the theme throughout the whole administration.

John:

So Nicole, you mentioned incapacity, what type of planning goes into that because that comes up quite a bit with Nick and I's clients, where it's coming up where we'll talk about beneficiaries and the estate stuff, but I'll say the incapacity planning is not my strong suit. So I think from our listeners standpoint it'd be good to hear, what does that include?

Nicole:

Yeah, that's also a great question because a lot of people, when they think of themselves in the incapacitated context, they think of themselves more in, there was an emergency, I had a bad accident and now I'm on life support for a week and then I'm deceased and then I've passed. And the reality is that's not what happens to most people, especially as we're aging and living longer, more people are experiencing longer bouts of incapacity. And with that, a lot of family members don't really know what that person wanted, where they would've wanted to live, what kind of care they would've wanted to receive.

So when I'm talking to clients about incapacity planning, I try to tell them, don't think of yourself in the context of, "Oh, there was an emergency, I'm out for a week and then I'm gone. I want you to think of it as you've developed some sort of dementia, you've developed some sort of condition where we're going to have long-term incapacity.So when you're thinking about who should be making those types of decisions on your behalf, think about it in the context of you've just signed these people up for a part-time job, if not full-time job." When you're thinking of these individuals, a lot of people default to their children, which is usually best for most people, but it isn't for everyone. And I think it's important for people to sort of think of themselves, which is really hard to do in the situation that they've gotten, they will need long-term care, not the short-term one-week care, but really that long-term care piece, and it's really hard to think of yourself in that boat.

Marc:

That makes sense. And documentation has got to be crucial in all of this, right?

Nicole:

Absolutely. There's no statutory authority or person that can make any sort of financial or legal decision if you become incapacitated. There is a healthcare statutory order, but it's just spouse, then parents, then children, there's no one after that. So if you're an elder person with no children, not married, you don't have that default person, so it's really important that you do have documents in place. But for most people, whenever you're thinking of who to name in this role and what documents you should have in place, it's so important that you really have a robust plan and documents that really spell out all of the things that you want your named agent to do because there are certain types of statutory forms. So you can look on Florida Statute and just look online and find a statutory form for a living will, but if you present that form that was created by lawyers to a doctor, that doctor's not going to be able to honor that living will. It's not clear enough, it doesn't really express what someone's true intent might be.

So sometimes there is a disconnect between what the lawyers prepare and what the doctors are executing, or what the bank is executing under a durable power of attorney or something like that. And it's important you have a lawyer that's preparing your documents that knows both, that really can make the connection between the different areas of your life in any sort of end-of-life care incapacity situation.

John:

When you're meeting with clients, I'm assuming this comes up quite a bit, when someone's having an issue picking who their power of attorney or health care surrogate is, what kind of advice could you provide for that?

Nicole:

Yeah, great question too. I tell clients, think of two things when you're considering who you should name in these roles. And the first condition I say, is you want someone who's going to have the time because most people want to name their more intelligent child or, "This child is very smart, they're a doctor, they're a lawyer, they're going to know what to do. They're very smart." But those people typically don't have the time. They're too busy, they've got a family of their own, full-time career, other obligations outside of their job and family that even though they could probably do and be fine with it, they usually don't have the time that's needed to devote to something like this. So I always say, look for someone who's going to have the time. And then two, you're going to want someone who's going to know when to ask for help.

And I always tell clients too, is when we have people do things that are bad, it's not because they're a bad person. Most people aren't doing things to be evil or have any bad intent behind the action, but it's because they didn't know when, or they didn't want to ask for help. I think people still have that, "I want to save money, I don't ask the professional for help." Or, "I think I can do it. I don't need to ask all of these people for advice and things like that." And I think if you have someone who's going to know their limitations, then they're going to get advice, they're going to get opinions from people, and they're going to get a little bit more well-rounded approach on how to provide for mom or dad's care, or whatever it is, or whatever person that we've got here, making decisions on your behalf.

So I would say those two things is, someone who's going to have time, someone who's going to know when to ask for help, because again, it's not always our children, but usually it can be, but it's something where they really need to, if they're comfortable, have that conversation with that person. And that's sort of sometimes a hard conversation to have, especially if you have children that are, "I don't want to talk about it, we don't need to talk about this." But it's really important that you do talk about it because what you don't want is you don't want to name John Doe, and then when John Doe is being called to serve, he's completely taken off guard, he has no idea what to do, he's not prepared. So it's nice to kind of have these conversations with your prospective agents just so that they can start asking questions that they might need to know the answer to one day.

Marc:

Yeah, that makes a lot of sense. I mean, certainly you want to get people in the loop on these things and when you're setting up all your documentation and putting the basics together, I guess we should probably switch and talk a little bit about some of the assets then, because that's where people get confused and kind of wonder about the different rules that are in place. So how does property pass at your death? I guess we can start there.

Nicole:

Whenever someone dies, there's really three ways that property can be transferred. The first way is by operation of law, and a good example of that is if you own something jointly with rights of survivorship with someone. So for example, if I own my house joint with my husband, when I die, by operation of law, he will own the home. Nothing else has to occur. He doesn't have to record anything, that's his house.

The second way that property passes is through contract law, and a good example that would be a beneficiary designation. So if you've got a life insurance policy, you could have a contract with that company that says when you die, whatever the death benefit that life insurance policy would be, that would be paid to your named beneficiaries. Another example of a contract is A trust. A trust is a contract you have with typically yourself as trustee, and we could talk a little bit more about trusts later today too. But the third way that property passes is through probate, and probate is really just a fancy court-supervised process of transferring assets out of someone's individual name to your heirs. And if you have a will, then your will says who your beneficiaries are. But if you don't have a will, then the state of Florida tells you who your beneficiaries are.

So really rounding out, how does property transfer whenever someone dies? Those three things are in order of priority, so joint ownership usually supersedes beneficiary designations or other types of contracts, and then both of those items supersede your will. So a lot of people don't realize this, but your will only governs assets that go through probate, and your will would only kick in if you have probate assets. So that's why sometimes when we talk about estate planning, it may be where you really need to confirm with a professional what your estate plan is, because whether you have a will or not, you have an estate plan in place, you just may not know what it is.

Marc:

You have the state's plan, right?

Nicole:

Correct.

Marc:

Yeah, I was always taught, and tell me if this is accurate, that a will just means you will go through probate.

Nicole:

I love that. Actually, that's a great phrase there that I should probably start using.

Marc:

There you go. You're welcome.

Nicole:

Absolutely. Yeah. Your will only is going to govern those assets that have to go through probate, which if you've done other type of planning, you may not need probate, and so you may not need your will. There are, of course, other reasons to do one, but yeah, that phrase is right on point.

Marc:

You can jot that down.

John:

And Nicole, I think going to get onto some of this stuff deeper in the podcast or maybe next week, but something that always comes up, is how long does someone expect probate to last?

Nicole:

Yeah, really good question. I used to say most probates are anywhere from 6 to 12 months. Since COVID, it's been more 12 to 18 months, and I used to kind of say that the 6 to 12 month mark was really dependent on the court process and where the court's cue is and how backlogged they are. I am finding, I think the longer I practice, that your probate administration is probably 60% to 80% indicative of how efficient, and organized, and on top of it your executor or personal representative is. Because if you've got someone who's going to take charge, hop on things, get things done, it can be more on the 12-month mark. But if you have someone who's sort of dragging their feet, and it's, again, part of the grieving process for people. Some people need to dive into stuff, others need to take time to process before they can dive into stuff.

But I would say now probably more 12 to 18 months because I think people are busy, I think people sign up for a lot of things and maybe don't necessarily know they've been signed up for this, but it definitely can take I think more 12 to 18 months now.

Marc:

All right, well I want to ask, is a will part of that advanced directive as part of that incapacity conversation? Is that part of that documentation you want to have?

Nicole:

A will is what we call an ambulatory document, meaning it actually isn't a valid document until after the testator has passed away. So I sort of joked earlier that when you have an estate plan, your best witness is gone by the time we're effectuating that estate plan, and that's sort of the case with the will. So when it comes to most people's estate plan, when we think about what's included in all of those documents, those legal documents we would prepare, the will is the after-death document, the advanced directives are the pre-death documents. And most estate plans are going to have, at the very least, a durable power of attorney and a healthcare surrogate, with the durable power of attorney being the person that makes financial or legal decisions on your behalf, and your healthcare surrogate being the document where you name someone to be your healthcare proxy or who's making healthcare decisions on your behalf.

So part of a robust advanced directive packet, you should really have those two documents, and a few more if it is your wish to have the additional documents. One of the probably more common questions I get on the incapacity planning side is people generally don't want to be kept on life support, they want that pull the plug document, which we call your living will. That's a document where if you have no cognitive function that you do not want any life-prolonging procedures. You want all of those heroic measures withdrawn so that you can pass naturally, but a lot of clients get that confused with a DNR. A DNR is different, that is what I call heart function. So a DNR is also on yellow paper, it's signed by your doctor, and a lot of doctors typically don't like to sign those types of, Do Not Resuscitate or DNR documents, unless you have some sort of terminal condition.

So that's why, circling back to the beginning, really kind of making sure that your client, if they have a lot of these end of life or incapacity specific wishes, that they're talking to all of their professionals, not just a lawyer but their doctors and things like that.

Marc:

Well look, we're doing this multiple part series on estate planning, obviously a wealth of information here from Nicole. So if you've got some questions, you need some help, definitely make sure that you're reaching out and having conversations with qualified professionals and talking about the situations that you're in and what you might need. So if you'd like to get in touch with the team at Legacy Protection Lawyers, visit them online at legacyprotectionlawyers.com, or call them at (727) 471 5868. Again, (727) 471 5868. And don't forget to subscribe to the podcast, you can catch future episodes as they come out because we are doing a multi-part series on this so there'll be more information to come. And you can find all of that, of course, at John and Nick's website, pfgprivatewealth.com. And don't forget to subscribe to us on whatever podcasting app you like using, like Apple or Spotify and so on and so forth. Nicole, thank you so much for being here and sharing a lot of great information with us.

Nicole:

Thanks for having me. This has been fun.

Marc:

Been excellent. And John, of course, thank you for being here, my friend, and facilitating as well. Hope you have a great week.

John:

Thanks, appreciate it. Have a good one.

Marc:

We'll see you next time here on Retirement Planning Redefined with John and Nick.

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