Why Estate Planning is Such an Important Part of the Financial Plan
On this episode, sponsored by Thoughtful Wills, estate planning attorneys, Notesong Thomson and Nathan Kavlie, discuss estate planning and its importance in the financial plan.
About Today’s Guests
Notesong and Nathan, Co-Founders, Approachable Attorneys, Thoughtful Wills
Notesong and Nathan met in junior high in Jamestown, North Dakota – a friendship forged in orchestra concerts and speech meets – much laughter in hallways and early-90s nerdiness.
They both started law school in 2001, bonding over the exciting concepts they were learning, the intense 1L reading requirements, and Legally Blonde (released that summer).
Years later, Nathan asked Notesong to help create a law firm that would emulate the automation of LegalZoom but pair it with actual attorneys to create custom, lawyer-drafted Wills at an affordable price point. Thankfully, Notesong said yes!
This friendship is our firm’s foundation – and with each passing year, both grow stronger.
Notesong Srisopark Thompson, Co-Founder | Attorney, Thoughtful Wills
Caring for so many ill and injured children led Nurse Notesong to law school – she wanted to advocate for children from multiple avenues beyond the hospital bedside. After practicing as a pediatric emergency/trauma nurse for over 18 years, Notesong took a break from paid work to be a full time mom to her three sweet and spunky kids – one of her most challenging and rewarding roles. Along the way, she and her husband caved, and their family also welcomed two fluffy sheepdogs who are constantly at her side as she helps translate estate planning into terms and concepts that are understandable – echoing her signature nursing style when she explained painful procedures (such as IV starts) to her tearful and terrified patients as they clung to their parents.
Having dealt with the yuck of creating her own estate plan, Notesong ensures the Thoughtful Will experience respects and addresses the anxieties of parents and non-parents alike, helping make the process as pleasant as possible. She infuses TLC into every aspect of our brand of approachable lawyering. Attention to detail is crucial in both nursing and law – Notesong doesn’t miss a beat.
Nathan Jay Kavlie, Co-Founder | Attorney, Thoughtful Wills
In high school, Nathan knew his science fair presentation was ready when he could explain the enzyme pathways to his grandmother. That ability to translate concepts was rewarded when he won awards at the international science fair, three years in a row.
Many years later after repeated nagging by his Uncle David, Nathan turned his attention to wills and discovered this whole new area of law that desperately needed translation for normal people. He took a year to learn and study wills & trusts law – rewriting the standard “legalese” will into something elegant and understandable. The Thoughtful Will is one of his proudest accomplishments to date (it’s a three-way tie with his marriage and rehabilitating two rescued terriers).
Summary
This week, Tim Ulbrich taps into a topic not yet explored on the YFP Podcast, estate planning. Estate planning attorneys and co-founders of Thoughtful wills, Nathan Kavlie and Notesong Thompson, discuss what an estate plan is, who needs one, the value of a living trust, and why estate planning is an important part of the financial plan.
Thoughtful Wills solves the issue of unpleasant experiences with attorneys, delaying the start of estate planning. Nathan and Notesong have worked to make death planning and lawyering approachable for everyone.
Nathan explains that estate planning is not just about your estate, but everything you own, even non-physical items, when you die. Estate planning is death planning, using our system of laws to make decisions, spreading goodness even after your death. Anyone who has children, people who have pets, married couples, anyone with some assets, and people who have family members that they care about should consider estate planning as a set of directives in the event of your death. Notesong explains that because circumstances in life change, revisiting the estate plan annually is a good idea.
Nathan and Notesong give a general overview of the estate planning documents, including the will, the revocable living trust, other relevant documents of estate planning, and how they work together to protect your estate after your death. Nathan details what probate is and how it affects a person’s assets when they die without a will, versus with an estate plan. Notesong provides an overview of the healthcare directive and the durable power of attorney, which authorize someone to make decisions on your behalf if you are incapacitated.
Mentioned on the Show
- Create a Comprehensive Estate Plan with Thoughtful Wills
- Delivering Happiness: A Path to Profits, Passion, and Purpose by Tony Hsieh
- YFP 108: How to Effectively Talk with Mom & Dad About Their Finances
Episode Transcript
Tim Ulbrich: Notesong and Nathan, thank you so much for coming on the show.
Notesong Thompson: Thanks for having us, Tim.
Nathan Kavlie: Thank you.
Tim Ulbrich: So before we dive into all things estate planning, a topic that we surprisingly haven’t covered in detail on this show before, I’d love for you both to introduce yourselves and give us an overview of the work that you do with Thoughtful Wills. So Notesong, why don’t you kick us off? And then I’ll have Nathan follow.
Notesong Thompson: Sure. Well, it’s nice to meet everybody on the podcast. I am based in Madison, Wisconsin, and I am mom of three young kids — young, spunky kids. We have two sheepdogs who are very needy and wife of a really busy corporate attorney. But yeah, I’m a lawyer and I previously practiced as an emergency trauma nurse for 20 years, so I bring a lot of different perspectives to estate planning.
Tim Ulbrich: And we’re going to tap into some of your healthcare background a little bit later when we get into some of the healthcare directive pieces of the estate planning process. So very good. Nathan, go for it.
Nathan Kavlie: Yeah, so my name is Nathan Kavlie. I live in Minneapolis. Notesong and I, actually, we met in high school in Jamestown, North Dakota, back in the early ‘90s. But I am a lawyer. I was not a nurse, but I did work in a video store for several years, which, you know, oddly, I think was really I think formative, as much as probably anything else in how I sort of approach the world and my work, which is just sort of — we’re all customer service agents I think in the past. And if you aren’t, thinking that way I think you really are kind of missing the boat because I feel like especially in this new world where with masks and distancing, I think if you’re not spending time thinking about how to be friendly and approachable, you are not being friendly and approachable. I think you’re just missing a chance to sort of make people feel welcome and taken care of. But yeah, I live in Minneapolis with my husband, our two rescue dogs, yeah. Life is good.
Tim Ulbrich: Great comment, Nathan, about the importance of customer service and a priority. I actually — you made me think of the book by the founder of Zappos, “Delivering Happiness,” and great story about just that perspective and how important it is no matter what industry that one is in. So before we get into the weeds of estate planning — we’re going to try to make it as lively and fun to really highlight the importance of estate planning as a part of the broader financial plan — but before we get into that, tell us a little bit more about Thoughtful Wills. What is Thoughtful Wills? What’s the problem that you’re trying to solve? And what is the offering that you have, Nathan?
Nathan Kavlie: Yeah, so I think the problem we’re trying to solve is most lawyers are not very friendly or approachable. They kind of suck to work with. And people know that, right? There’s a reason why people — I’m sure you guys at YFP have heard of how often do you ever get clients that come in and they say, “Well, we’ve got all of our estate planning documents ready.”
Tim Ulbrich: Rarely.
Nathan Kavlie: Rarely, because they know that it’s like, you know, you have to take time off from work and go meet with this lawyer who’s probably going to make you feel like an idiot and charge a lot of money. And that’s the experience that I kept running into over and over again amongst my friends. And so you know, it was sort of an epiphany, like why does it have to be that way? And it doesn’t. We can just work online with people all over the country. We can — instead of sitting down and having this meeting, which is long and frankly then becomes expensive because we’re lawyers, right? We sell our time. We don’t do bookshelves, we don’t sell electric cars. We sell our time. And so you know, we can use technology efficiently to sort of save time, reduce expenses, and hopefully then if we’re being really sort of thoughtful about all of this process, we can sort of create kind of an experience for you that is sort of shockingly friendly and approachable. And that’s really what we’ve sort of done is sort of looked at every piece of our process to sort of ask ourselves, like is this understandable to normal people? Does it feel welcoming? Is somebody going to read this and feel supported? And if it doesn’t, then we work on it and frankly, we keep working on it over and over again just because when are you ever like perfect, right? So we’re sort of on a quest to really make lawyering approachable is I think really the crux of what we do.
Tim Ulbrich: So making lawyering approachable is really a big part of what you guys do. And folks can go to ThoughtfulWills.com/YFP and learn more. And we’ll reference that link again later in the show. I was telling my wife about this interview last night, and the way I was describing it, based on our experiences with a young family, going through the estate planning process, we really delayed ourselves in that process probably longer than we should because No. 1, it wasn’t exciting. It’s pretty boring, right? In my mind, it was going to be somewhat painful. And I felt like the industry wasn’t very transparent. As I look at what you guys have built, you really have addressed all three of those. And excited about what that means for not only pharmacists but also other professionals that want to do this part of the financial plan and do it well. Notesong, tell me about your background as an emergency — if I heard correctly, emergency care nurse. What about that experience led you to want to go back to law school and then specifically do the work that you’re doing now with Thoughtful Wills?
Notesong Thompson: Well, it’s funny you say that because Nathan and I reconnected after several years. And ironically, we were actually in law school at the same time. Started in 2001 and then we graduated in — did we graduate in 2004?
Nathan Kavlie: Uh huh.
Notesong Thompson: And I practiced law for a little bit in the juvenile defense world. I did some public defender work, guardian at litem, and pediatric nursing really drove me to the law because I saw so many things at the bedside that really, really troubled me. It just — it had me just wondering going home at night thinking, why is it like this? Why is this child with this abuser? Why is this informed consent issue an issue at all? So I will admit, nursing is my favorite love. And Nathan had to do a little bit of convincing to get me to practice law again, right, Nathan? And largely it was because of what Nathan talked about before is the traditional legal process is in many ways really miserable. And I practiced at a big law firm, and like I said, I did some more public defender work. But ugh. It was just yucky. And I went through the — I went through the estate planning process at my husband’s fancy law firm, and I just want to be clear that there is a place for attorneys and fancy law firms and for big estate planning too. And I’ve got to tell you, the only thing I remember going through that process myself was how much it was filled with yuck. And it was so anxiety-provoking, emotionally challenging, and we were doing this with a friend who took care of us. But it just was yucky, all of it. And so when Nathan finally convinced me to join in, it was after he heard me on a show called “Moms Every Day,” and he recognized that moms make a lot of decisions and keep the ball rolling forward with things that keep getting back-burnered. And as a mom of three young kids, you know, I — and having worked in healthcare in the nursing, I was faced with life-and-death issues every day. And even with that, at the bedside during a code, working with pharmacists who are handing me syringes of epinephrine and just on the ready — I love pharmacists, by the way. Can I just say? They’re the calm in the storm. And no matter what chaos is going on, the pharmacists were there, they just showed up in their cape and quietly handed us the meds we needed. It was like a miracle. But you know, that’s the thing. It’s the best part that I’ve found about being an estate planning lawyer now with the nursing background is that I still get to give TLC to our clients. And I think they are a little bit shocked when I say, “We’re going to take really good care of you and your family.” So yeah, that’s where I’m tying in nursing into estate planning. And it’s been really wonderful.
Tim Ulbrich: That’s great. And as I mentioned, estate planning isn’t a topic we’ve covered a lot in detail on this show before but certainly an important piece of life and one’s financial plan. And we’re not going to be able to get into all the nooks and crannies and aspects of estate planning, but I do think we’ll be able to lay a good foundation and hopefully get folks somewhat excited about learning more about this topic and some next steps that they can take in their own journey. So Nathan, as I was doing research on Thoughtful Wills and your background, one of your claims to fame that’s listed on the website is having a lifelong obsession with making the complex understandable. And so I want to tap into that a little bit here as we just start the conversation of what exactly is estate plan? What do we mean by an estate plan? Who might need one? Why is it important? And what are some of the various documents at a high level that make up the estate plan?
Nathan Kavlie: Yeah. Let’s emulate — I think let’s start with just the word, right? So we’re talking about estate plan, and estate — so this is the weird part. Estate planning is not just about your estate. Estate really just means like all of your stuff when you die. So when you die, all of your cars, your dirty laundry, your CDs, your art, it’s all — everything you own. And not just physical possessions but if you sort of owned patents or if you wrote some music, all of those pieces of property are your estate. And so we’re planning for that. But the problem is it’s like sanitation engineers, right? You know, like garbage truck people? And it’s like, they’re like, “Now we’re going to be sanitation engineers.” Really, what we do is death planning. But nobody likes to say that. And so they’re like, “Well, let’s call it estate planning.” But the thing is that it’s bigger and more important than just your stuff. Right? Because that’s the thing, it’s like, how many people as they’re lying in the hospital bed dying are thinking about like, ‘Wow, I wonder who’s going to get my couch?’ Right? ‘I wonder who’s going to take care of my silverware collection?’ No one cares about that. You care about your family. And your family is not part of your estate because you don’t own your children, right, as much as people might want to. So we’re planning for death. The problem — and this is why people don’t think about it and I think probably at some level why you haven’t done this as a podcast is because it’s morbid. We’re talking about when you die or we’re talking about when you’re in a coma and can’t communicate. Like these are not fun topics. But they’re important topics because you care about the people in your life. And this is the law’s mechanism for how to do that. Our system of laws, it’s kind of amazing. And I feel like — and that’s the thing I try to sort of impress upon people. It’s like, these documents are frankly like superhero documents because they allow you after you’re dead — I mean, you’re gone. But you are still making effect — you’re having effects in the world. You are actually still spreading goodness and care in the world because of these documents that you’ve created. And that’s kind of amazing I think. And you know, our legal system wouldn’t necessarily have to operate that way. There’s no reason why we would sort of say like, Jim died, and he left this fancy house. And we’re going to let Jim decide who gets the house, right? We could say, “Everybody gets a piece of the house,” right? We’ll sell it and put it into the tax coffers. Or Jim’s oldest son would get it. Right? But no, we give people a lot of control to affect these changes if they choose to. And that’s the thing, that’s what estate planning is. It’s you are making affirmative choices to sort of change the world in the ways that you can by using these documents. So the bad news is we’re talking about death, but the good news is we’re talking about this amazing set of documents that can really change the world for the better for the people that you love and your pets because I don’t have kids so I’m always thinking about my pets. So that’s what we’re talking about. We’re talking about death. And I think just put it out there. You know, we don’t introduce ourselves as death lawyers, but that is what we do. And it’s really important. And that’s the thing, it’s like why should people do this? Well, you know, I guess the thing is like you have people in your life that you love. Do you have young children that you care about? Do you? Right? If you have young children that you care about, probably you care about who would raise them if you and your partner were in an automobile accident or something and you both died unexpectedly, right? And I get why people don’t want to think about it. I mean, I think about one of — my oldest dog is almost 18, and the thought of her passing kind of makes me want to curl up in a ball. So I get why parents, it’s like, it’s a huge hurdle to actually say like, let’s affirmatively think through all of those gory scenarios. But the fact is, it’s like, if you want to really take care of your kids, you have to do this. Right? That’s just point blank. If you care about your kids, you should do this. So who should do this? Who should do an estate plan? People with kids, people with pets they care about, people who care about their family. You know, the thing is is that our system of laws also does have a set of default plans. Every state has a system of default plans. So if you don’t do your will, it’s not like all of your property just goes to the state. There’s sort of a mechanism in place for who should get things. And you know, for a lot of people, that system works great. If you both die in a car crash, it’s not like your children are just wandering the streets, begging for money. There is a system in place to sort of decide who should care for your children, right? So I mean, there are these default plans in place. So just to be clear, the “if you don’t do this,” it’s not catastrophic. But yet if you don’t decide who should take care of your kids, most often all of your relatives fight about it in the courts. You know? I don’t know. But there are default plans. The default plans are not the end of the world, but they are not your choices. And there’s chaos and trouble involved with it because there are lawyers and there are custody hearings and it’s all kinds of yuck. And the way that you opt out of the default plan is by creating these estate planning documents.
Tim Ulbrich: And I appreciate, Nathan, what you said about — and I’ve never heard this perspective before, and I like it a lot, which is that we have a system, which has given folks a lot of opportunity to make decisions that might otherwise be made for them. And so I think if we take that perspective and apply it to the estate plan, it’s not as morbid — still a morbid topic — but you know, now we’re in that conversation of, OK, I’ve got some decisions to make. I’ve got some autonomy. I’ve got some choice. And you know, you’re touching on that concept of probate, essentially that process where if folks don’t make these decisions, yeah, there is a net that’s in place but it might not be the desired state that one has, whether it be related to those that are loved ones and their family or even resources that they have. One follow-up question I have here, Nathan, because I think we probably have many folks listening that maybe this is very obvious that they need these documents or have to update them, maybe there’s young children or just children altogether involved, maybe there’s substantial or growing assets, and I think that tends to be fairly obvious. But often, I’ll get the question from folks that maybe someone who’s more of a recent graduate, perhaps doesn’t have a partner or significant other, there’s no kids involved. So is there a point when it’s a clear like, someone should have an estate plan in process? Or is there a period in time where some folks it might be not now, but we need to look at this in the future?
Nathan Kavlie: Yeah, I mean, if you’re single and don’t have any kids and you get along with your family, you’re probably good to go. I can’t be certain, right? I mean, to be absolutely certain, I’d need to do an analysis of your actual circumstances, but if you’re single and get along with your family, you’re probably fine. If you’re single and you don’t get along with your family, you should definitely create an estate plan. One of my best friends from law school is totally estranged from his mom and his sister, and it’s like, well, you need to do an estate plan then because otherwise they’ll get all of the stuff. And that’s not what he wants to have happen. So when you have children, you know, when you’re pregnant or when you’re thinking about kids — and actually, the thing is when you’re thinking about kids is when you should do this ideally. But anytime in that process is great. We get a lot of clients that sort of say like, our due date is x months away, should we do this now? Or should we wait until the baby is born? And the answer always is, do it now. Because when the baby gets here, you will not have any time. You won’t even have time to sleep. So do it now. Do it when you’re thinking about having kids. We can write the documents to basically sort of already account — a lot of what we do as estate planning is we sort of create documents that anticipate many different futures. Because we don’t know what the future will hold. But we know there are some things that might happen. You might have children. You might not have children. And so we can sort of draft the documents as an either-or situation. So when you’ve got kids, when you get married is a good time as well. Yeah. And if you have some assets, that’s always good. I mean, it’s one of those things, I think people think of it sort of like senior photos, right, where it’s like, it’s going to be expensive and you just do it once. And I think it’s a real disservice. I think it’s driven, of course, by awful lawyers that are really expensive and really unpleasant. But I think it’s sort of weird that we think that like you should only do this once because you will know exactly what your life is going to be like. And circumstances change.
Tim Ulbrich: Yeah, and that’s true, right, with the rest of the financial plan. You know, we always say when you’re looking at investing or retirement or insurance or whatever it may be, it’s an evolution. It’s a journey, right? And that was, Notesong, a question I have for you before we come back and talk with Nathan about the living trust and then some of the other documents. This concept of OK, it’s a lot of work to get it done but is it something I should be looking at annually or every five years or as life events change? And I’m looking at the site where you’ve got a two-step process, which is evaluating the plan and then wanting to avoid probate and you know, a couple different options where one is you’re creating your plan in that Phases 1 and 2 where you’re then updating that or having some ongoing support, so talk to us a little bit more about what you typically do or recommend with folks in terms of OK, yes, we do this upfront work, but then how often we should be evaluating this.
Notesong Thompson: Sure, absolutely. That’s actually a very common question that we get all the time. We’ve reorganized the way to think about this because the whole process is yucky and it’s overwhelming. So Nathan and I really strive to break it down into nuts and bolts. And so on the ThoughtfulWills.com/YFP page, we’ve created two boxes that talk about Phase 1 and Phase 2. Phase 1 is essentially creating your plan. This is where all of the drafting happens and we can customize it as much as our clients want. And then we also ensure that the document is signed correctly and questions can be asked without, you know, worry of the clock ticking because we also want to try to avoid that because that’s always a fear is how much am I going to get charged for this email exchange? Like we try to avoid that. And then Phase 2 is really equally important because if you get a revocable living trust, it’s important that you actually fund that trust. And there are certain mechanisms that have to — that are in place that need to happen in order to put stuff into that trust. And so that is all under the umbrella of Phase 2. And so as far as like reviewing your estate plan, for example, my husband and I drafted our estate plan — gosh, 14 years ago. And we haven’t had a lot of major life changes. A lot of our — we’re still close to the people we’ve named as legal guardians and backups, my sisters and my sister’s mom, and so luckily, if nobody’s developed a gambling habit where we need to change up who’s going to be the trustee or durable power of attorney. That being said, it’s always — we think it’s always a good idea to review your plan every year, just to make sure your wishes are still reflected. And then also, the revocable living trust, it takes a little bit more work, a little bit more follow-up with that every year. But making sure that you fund your trust, make sure that you are updating your non-probate assets too — and I’ll let Nathan go into that later — but you want to make sure that all of your beneficiaries are up-to-date. So it really drives me crazy when all these online will-making services have really now come onto the scene in light of the pandemic, and everybody facing life-and-death issues, they talk about like all these unlimited amendments and things like that. But what they are not talking about is all of the legal requirements that are required in order to make sure that they’re valid, they’re actually valid. So every time you change your plan or you do a formal amendment, if it’s required, you also have to make sure that it’s re-executed, meaning signed and notarized where necessary. And that’s all based on your state. Each state has really super specific nuances and that’s where we rely on our local counsel attorneys in each state to help us ensure that we’re following their state’s laws exactly to a T.
Tim Ulbrich: And Nathan, Notesong mentioned the revocable living trust, the importance that document can play and I heard you guys talk about this on another podcast as really a magical and powerful document that when utilized and funded correctly can sidestep the high cost and hassle of probate and how important that is for professionals, especially professionals who have a higher income potential. So talk to us more about what is the living trust and the importance and the value that that plays.
Nathan Kavlie: Yeah. So I want to sort of back up before I get to that if that’s OK.
Tim Ulbrich: Sure.
Nathan Kavlie: So I think we should first talk about the will, which is really sort of the foundational document to estate planning. I think most people know what a will is. It’s in TV, right? They all gather when somebody dies and reads the will and then people are all pissed off. But the will is the key, right? The will is sort of the foundational document where everybody sort of — where you create essentially your last testimony about what you want to have happen. And so that sort of superhero document that I talk about — I mean, the set of superhero documents. The will is the first one that people do. In like the 1960s, lawyers starting using what are called revocable living trusts. It was sort of a newer concept back then, but now it’s very subtle but it sort of was a little bit kind of cutting-edge back then, but now it is not cutting-edge because, you know, frankly, who wants to have — when you’re talking about your babies and protecting their assets, people don’t want to be experimental in the law. Right? You want settled law.
Tim Ulbrich: Not the place to be cutting-edge.
Nathan Kavlie: Yeah, exactly. So it was cutting-edge in the 1960s. It is not cutting-edge in the 2020s. Basically, so when you create a will or if you don’t have a will, basically, everything goes through probate. And I think it’s first important to say, what is probate? Because I think everybody sort of hears — if you listen to enough or really any sort of financial wellness sort of podcasts, everybody knows that probate is awful, but I don’t know that people necessarily know what probate is. And probate is our legal system’s sort of mechanism to wind up the affairs of people after they die. So it’s important to understand it’s a judicial process. And that’s why it’s expensive and a hassle because you have lawyers involved and you have a judge involved and then they have to send notice to the interested parties and there are hearings and it takes a long time. We probably all know somebody who is like, “Yeah, my grandfather’s estate took 15 years to probate.” That’s what it is. It’s — but it’s an important process because, you know, since we give the dead a lot of control over their assets, we need to make sure that we know what they really wanted. And if they didn’t make a will, then we need to make sure that the process, the sort of default plans, are followed correctly. And so that’s what probate does. So it’s an important thing, but it’s an expensive hassle. And especially — just somebody has to deal with it, right? You don’t just get to turn it over to the lawyers. Like somebody has to manage the process. And so there are ways that you can avoid probate. One of them is called non-probate assets. And I think people are becoming more and more familiar with these. These are things like life insurance and retirement accounts. Life insurance and retirement accounts, when you open them, you choose a beneficiary. So you say, you know, “When I die, this asset will go to my spouse or to my kids,” or something. And because the asset has a built-in beneficiary mechanism, it doesn’t go through the probate process because our system of laws honors life insurance’s own mechanism.
Tim Ulbrich: Makes sense.
Nathan Kavlie: Assets that are inside of a trust are non-probate. It’s like a $10 legal sentence, but it doesn’t really make sense without context. But the idea here is like your goal — because your house is not a non-probate asset. Your house is a probatable asset. So are your cars. Your cars are a probatable asset. So are your rights to music you wrote and your clothes and all of those things — some bank accounts — all of those things go through probate automatically. But if you move them into a trust, they can avoid probate. And so then the grand idea is well, let’s create a trust that will house these assets and then they can skip probate. Caveat: If you live in Connecticut, you don’t get to skip probate entirely. But this still is a very — it minimizes the hassle and the cost. So just a little caveat there. So the goal here, you create your own trust. Trusts are about as old as wills. They sort of hearken back to like the crusades in England. When the lord was taking up the holy cause and going out to the Middle East, you know, what happens to their assets? And so that’s where trusts came about. They were like, well, you can hold my assets, but you hold them for my benefit. You don’t own these lands. You’re just going to hold them for me because I’m going to be gone for like 12 years or something. So trusts — and trusts are used in many different contexts, not just in estate planning because like some charities are structured as trusts. But estate planning uses a lot of trusts. We can set up trusts for your children to protect their inheritance. We also use these living trusts. So it’s lots of different trusts, but this is the revocable living trust that we’re talking about here. And what it ends up doing is it becomes sort of a companion piece to a will so that together your will and your trust take care of all of your stuff together. But the will ends up becoming a much less important piece of this process. The will ends up acting like a backstop so that if you forget to move any of your assets into the trust, the will says, “Throw all these assets into your trust.” So if you forget to — or you know, if you sign all of your documents and you have like a Beetlejuice car accident on your way home and everybody dies, right, it’s like you won’t have had time to move your assets into the trust. So the will acts as a backstop. The will still is important because the will is still going to contain who should take care of your children, who should be the legal guardians, who should be the guardians of your pets. So the will is still an important document, but when we talk about like where your money should go, setting up trusts for your kids, or if you have somebody who has special needs, all of that goes into the revocable living trust. And we’ve described it as sort of a magic law box. Right? It’s like you create this account that you put your assets into, but it really only works if you put your assets in. Otherwise it’s just sort of really expensive paper. And so that’s when we talk about like Phase 1 versus Phase 2, Phase 1 is when we talk through how many kids do you have? Who should take care of your kids? Where should your stuff go? When we’re talking about Phase 1 and creating your plan, I don’t actually care about any of your assets, which is weird because a lot of people come and they’re like, “Well, I want to tell you all about my assets.” And it’s like, I don’t — it’s sort of jarring for them, their, essentially their death lawyer to be like, “We don’t actually care about your assets right now.” Right? And the reason I don’t care about them at this stage is because I don’t know what you’re going to own when you die.
Tim Ulbrich: Yep.
Nathan Kavlie: No one does, right? So right now, we’re creating a plan that really is just sort of broad strokes. And so we talk more in percentages, right? Like half goes to my spouse and half is divided amongst my kids.
Tim Ulbrich: Right.
Nathan Kavlie: And whatever you own, you know, that’s the key because we just don’t know, right? So yeah, during Phase 1, I don’t care about your assets at all. At all. That’s where Phase 2 comes in because once we create your plan and we talk about who should take care of your kids and who should get your stuff, then it’s time to actually talk through your assets. Do you have some retirement accounts? Do you have an LLC? You know, maybe you have an investment property as well as your primary residence. Maybe you have a cabin in a different state. Maybe you have some expensive cars. All of those assets, then we start talking about the actual assets because we need to move them inside of your magic law box.
Tim Ulbrich: I mean this honestly, Nathan, I think that is the best explanation I’ve heard of the will and the revocable living trust in about a five or so minute period. So thank you. You’ve lived up to —
Nathan Kavlie: Well thank you.
Tim Ulbrich: — the obsession of making the complex understandable. It was really, really good, and I hope folks will hit rewind and listen to that as well because I think it can feel overwhelming, and that was very digestible. So thank you for that.
Nathan Kavlie: Thank you. Well, I appreciate it.
Tim Ulbrich: Notesong, pressure’s on now. So we talked about the will and the living trust. But that’s not it. We can’t stop there. There are other estate planning documents that we need to be thinking about. So talk us through some of those other documents and what they mean and why they’re important.
Notesong Thompson: Yes. Well, I mean, it’s the world we’re living in right now. Tim, you and I were talking about this before, but everybody is facing life and death right now with the pandemic in our face and its ever-evolving whatever it is. And so the phrase “accidents and illness happen without warning; there are no guarantees in life,” it just has so much more meaning today. And the healthcare directive and durable power of attorney are equally two magical estate planning documents that operate while you’re still alive. And the magic about them is that they both authorize somebody to act on your behalf if you’re not able to, if you’re incapacitated, if you’re in a coma. And we used to previously refer to these initially as coma documents because we tried to talk to people about them as incapacity documents and nobody got it. And they’d be like, ‘Oh, I’m fine. I’m young. I run every day. I do this. I’m so healthy. I’ll come back to you after when I’m older.’ And you know, we never want to pressure people, but at the same time, in that kind of blunt, very candid way, we just say, “OK. Quick question, do you drive a car?” You know? And it is, these are miserable topics. But we have to also consider that these things happen without warning. So both documents authorize someone to act on your behalf if you’re not able to. They authorize someone to act as a power of attorney. And so with the durable power of attorney document, they act as your durable power of attorney as it relates to finances and property. In your healthcare directive, you’re also a power of attorney, but it’s all related to your healthcare. They can make decisions for you. And the healthcare directive actually has two parts to it. The first part is power of attorney for healthcare. The second part is what a lot of people know as the living will. And that’s where you can get really specific as it relates to whether or not you want a feeding tube or assisted breathing, CPR, if you want altered CPR. I really have taken on the healthcare directive as my baby because I was my dad’s backup backup backup healthcare agent when he took his last breath. And as awful as it was, the saving grace there was that — you know, and he was a physician and he knew the importance of identifying exactly what he didn’t want — as awful as it was to be at the bedside, I was able to also give the poor resident who had to show up at 3:30 in the morning with a crying daughter at the bedside, I was able to tell her, “No compressions, just morphine, oxygen.” You know? And honestly, I think one of the greatest gifts that you can give your loved ones is that healthcare directive because otherwise, as Nathan mentioned before, estate planning is just rife with chaos and emotion. And in that moment, you don’t want somebody fighting over what your loved one wanted at the end of their life. So you can get really, really specific about that and also like organ donation as well. And so I think it’s a really powerful document that way. The durable power of attorney, you know, equally too. It seems like a no-brainer to have this in place, but the thing is you mentioned Zappos and wow, I mean, I know that — is it Tony Hsieh?
Tim Ulbrich: Tony Hsieh, yep.
Notesong Thompson: I’m not sure if I’m pronouncing — Tony Hsieh. I mean, the last I read, sadly, tragically, is that he died without an estate plan and that his dad and brother are in court, fighting to be able to take control of his finances, which are in the billions. And so not only is that a hassle, but they have to go through so many court proceedings, it’s expensive, and they’re trying to grieve the loss of their son and brother. So having this simple durable power of attorney in place lets your person of choosing and their backup, and you’re going to choose to have them as co-agents in case you want to have like a checks and balances. That could be a whole show in and of itself is choosing a durable power of attorney. That is equally important because you want to make sure that you’re choosing somebody who’s going to manage your finances while you’re not able to — or equally like if you’re out of the country and you want to move on a property that’s come available and you’ve been looking at it for 20 years, that person can also step in and act on your behalf in that capacity too. And that’s the durable part of it.
Tim Ulbrich: That’s great. And we’ve scratched the surface on these documents but really important points. We’ve talked about the will, we’ve talked about the revocable living trust briefly, the healthcare directive, durable power of attorney, and as I mentioned at the beginning, the goal is not that folks hear this and say, “OK, I’ve got the textbook on estate planning,” but rather hopefully is stimulating some interest and a conversation among folks about where am I at in this process? What do I need? What do I not have? And what steps do I need to take? And I hope folks will check out ThoughtfulWills.com/YFP, where they can learn more about the work that you guys are doing as well as the services that you offer. I also suspect that we might have some folks listening that are saying, “You know what, I’ve done this or I’m going to do this, but perhaps Mom or Dad or Mom and Dad, it isn’t something they have done. And how do I initiate that conversation?” And it reminds me back to Episode 108 where I talked with Cameron Huddleston about how to effectively talk with Mom and Dad about their finances and this obviously being one of those very important conversations. So Nathan and Notesong, thank you so much for your time, for your expertise, for the collaboration. And looking forward to having you back on in the future so we can dig deeper on this topic.
Nathan Kavlie: Thanks. This was fun.
Notesong Thompson: Thank you, Tim.
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