Business Innovators Radio - Interview with Steven Michael England,President of Capstone Retirement, Discussing Estate Planning for Retirement

Episode Date: November 15, 2024

Financial advisor and Retirement Planner since 1982, Best Selling Author of “The Wealth Lifestyle”, honored with numerous industry awards and honors of achievement. I value close business relationships with clients and treat them the way I would want to be treated.Learn more: http://www.thewealthlifestyle.com/This podcast is for informational purposes only and should not be considered legal, health, investment, tax, profession advice. We are not responsible for any losses, damages, or liabilities that may arise from the use of this podcast. This podcast is not intended to replace professional investment, tax, or legal advice. The views expressed in this podcast may not be the views of the host or the management.Influential Entrepreneurs with Mike Saundershttps://businessinnovatorsradio.com/influential-entrepreneurs-with-mike-saunders/Source: https://businessinnovatorsradio.com/interview-with-steven-michael-englandpresident-of-capstone-retirement-discussing-estate-planning-for-retirement

Welcome to influential entrepreneurs, bringing you interviews with elite business leaders and experts, sharing tips and strategies for elevating your business to the next level. Here's your host, Mike Saunders. Hello and welcome to this episode of influential entrepreneurs. This is Mike Saunders, the authority positioning coach. Today we have back with this Stephen Michael England, who's the president of Capstone Estate Planning and will be talking about estate planning for retirement. Stephen, welcome back to the program. Thank you, Mike. You know, I think that a lot of times people get so focused on, I need enough money to get to retirement. When do I retire? What's the right age? When do I take so security? I'm going to live to X age.

I need enough money to last to retirement, you know, the end of retirement age so that I don't run out of that. But now what we're talking about is let's kind of look a little bit further down the road and look toward legacy planning, estate planning. and making sure that all these other things are put into place so that everything is set up the right way. So first of all, maybe let's define what actually is estate planning as it relates to retirement. Well, really, estate planning would be the distribution of your estate. So you spend your whole life accumulating things. But what happens if something happens to you? Either you can't make your decisions or you die or, I mean, what happens to all these?

these things. And you know, you need legal documents. So what do you need? Do you need a will or trust, a combination? And so it gets complicated. And the biggest thing is you don't want the ones you love, your spouse, children, grandchildren, you know, to be in a mess. So there's many, we won't go into it, Mike, but there's so many people in famous estates, you can look them up. And where there are states have been an absolute mess and not only been in the courts, but what they call a state shrinkage where so much of the money has been lost of what they were worth before it was distributed properly. And it's still ongoing decades after they've passed, I'm sure.

It's, I mean, Michael Jackson and Elvis Presley, there's so many people that it goes on forever and the amount of loss on their state is incredible. So it's just one of those things you, you know, you have to do ahead of time and you want your ducks in a row, so to speak. But most experts, and I'm the motivator for this, of course, I don't do it. I'm not an attorney. You need one. We can refer you one.

But I can ask people these questions and make sure they get these things, you know, it's, things they need to have an order. But basically, everyone needs a will. You know, if you don't have a will, state will write one for you, but you need a will, and you need your beneficiaries on your accounts properly written out, your primary beneficiary is contingent.

And you can even have tertiary beneficiaries in the third, from the third sense, but generally primary and contingent. You need a health care proxy on, I guess, the easiest way, you know, do I want to be plugged in or not or those types of things, living will and the durable power of attorney. So think about if you were, Lord forbid, incapacitated and couldn't make any financial decisions, who would do that? And these types of questions. And these are not things that necessarily that people like to talk. about, but I think the simplest thing is, you know, do you need a will or a trust? And it, I get it,

it's interesting how some of these trust companies tell everyone that they all need a trust. You know, people that just have, you know, a very basic life and have very few accounts and they need a trust. Well, they may need a trust, but the trust is primarily a probate avoidance. device, but not everyone needs a trust, and they can be quite complicated and can be expensive. So many, but you definitely need a will and you may need a trust, but you need to have these documents work in sync with your other advisors and with your other investments. So do you, you know, how do you, do you set up your beneficiaries or do you have you, if you set up a trust, do you have your certain accounts where they go through the trust?

I mean, it can be rather complicated, but the biggest thing is that you need to think things through and it needs to be set up in a way that you want it to work. So you have to know how it would work, what the outcome would be, and you have to set it up accordingly. But I find too many people, even when you ask them about their legal documents, the basic ones, they'll tell you, well, you know, I moved to a different state or I remarried or, no, they haven't been updated in 20 years or even your living will and your health care powers have changed in recent years because of legislation. So if you have older documents, they don't work. And in some states, you can actually, like your living will, in the state that I live,

live in, you can file your living will with the Secretary of State and there's a charge $10 or $15 and they send you back like a credit card and you can put that in your wallet and it's like a registry. So it's filed there rather than carrying that around with you, something ever happened to you. Oh, yeah. There's things, there's little things that you can do. But the biggest thing is you need your legal documents up to date in order and working.

with in sync with what you have for you know you mentioned that some i think that a lot of times people hear the trust you need a trust you need a trust you need a trust and it's almost like you know if all you have is a hammer then everything looks like a nail so you know the the companies that are focused on trust that's what they sell but you said that not everyone needs a trust what would be a scenario with a client that might not you know and again we're not giving legal advice and you're you work with the team and you do what's right for clients. But what would an example be of someone that may not need to set up a trust? Well, a trust was generally, you know, back along it was used when estate taxes were at the,

remember when they were, at least I do, they were, you know, if your estate was over $600,000 and I went to $675,000. So the limits were really low. And now for a couple, it's what, 5.4 or something, I'm not sure, but it's very high. It's over $5 million. So the limits are much higher, but that's what the trust were for back along. And so there's a lot of people now, and I have one attorney friend that said most people do not need a trust. I mean, a will with all the other documents that I just mentioned, the health care proxy, the living will, the durable power of attorney is enough.

And you can, through many accounts, through your beneficiaries, they avoid probate. Like if you have a bank account and it says payable on death to your child, then they're not on your bank account. Just payable on death to them. There's no probate. if you have a retirement account and you have a beneficiary where it's your wife first and then your children, if you have a beneficiary designation, there's no probate. So one attorney told me that a living trust is primarily a probate avoidance device. It overcomes the costs and the delays of probate.

Well, if you have your real estate structurally properly structured does not go through probate, your investments, your retirement accounts, your life insurance. So you may not have all that much that's probated, and so the cost may not be that much. So these people that say everyone needs a trust, I don't feel that it's true, but you need a trust or whether you need a trust or whether you need a trust. legal documents. It depends on what you're looking to do and how you want everything set up. So there's no, there's no, it's interesting. You'll have some people say that everyone needs a trust. Other people will say unless you're quite wealthy, like over the $5 million mark. You don't need a trust. So you hear differences of opinion. But I would say, this is just for myself. years and years ago, I used to have a trust when limits were low for state planning.

And now I just have the will and all the other documents associated with it. I don't need a trust. So it's much simpler. And when you have a trust and you have to have all your assets titled to the trust, it's complicated. It's not easy to make. It takes extra work. It is a lot of work.

Yeah, I remember when my dad passed away, they had a living trust and the house was titled properly, but the car wasn't. So it's like, you know, you miss certain things and then you got to fund the trust with this or that. So I think that like we've said so many times in our conversations before, there's never a cookie cutter answer for every single person. And, you know, annuities are always right for everyone. No. Trust are always right for everyone. No. But what if it is? So you need to look into it. And I like how you kind of go counterintuitive. You might hear that trust are essential for everyone, but maybe not always. ways. Right. And I would say that that decision, whether you have a will and all your other documents,

I mean, even with a trust, you have a pour over a will. So if something didn't get put into trust, it pours over through your will. But I think those decisions on what package you buy, and that's really all it is. It's the will and the other documents package, or it's the trust. And, you know, you still get all those documents. But I think that decision, you know, is between the, and their attorney. And so whether it's their attorney or attorney that we might refer to them, that's a decision they make. And because nothing is perfect and it's not one size fits all and they have to make that

decision. But I think the biggest thing for me, like just asking a client because I do retirement planning, but estate planning as well. And one of the things that I have seen, because I've been in the business so long since 1982 is that I've had a lot of clients pass away. I've had a lot of clients end up, you know, with a serious illness or nursing home or home health care. And I've had clients this year, every year. They pass on. So I see what happens with their accounts, taxes, and how they pass to the spouse, to the children, grandchildren. So it's really eye-opening. I think many

advisors, if they're younger, they never, they don't see that side of the business. Not early on they don't. So they don't really know what to do. But the thing that I ask clients, are your legal documents date? Are they up to date? The latest language, and, you know, if you want them filed and you get the credit card with some of those, or if you have specific things that you are really concerned about and things have changed, that you need your legal documents. up to date and you need to think about how all this will work out if something happens. And the thing is, Mike, you have to do it. It's called planning because you have to do it ahead of time.

You can't wait. You have to do it before something happens to you. So it's not that you're doing it and you want to talk about this because something's going to happen. But, you know, none of us live forever. So you're doing it ahead of time. And it's designed to really just make your, everything work out as smoothly as possible and not be a big mess where it's very expensive and costs and people fighting over everything.

And I've had a lot of people say, well, they will, there won't be any problems. And I have seen you would not believe. Until they are. Right. And many times it isn't, but you would not believe what happens in some families. when it comes to money, people get really strange afterwards. So it's best to have things work out. So all that is avoided, and it's a peaceful transition,

and people can focus on the important things. And the biggest thing is, if it's your money, and it's what you work, you and your wife, or what you work for your entire life, have it go and work out the way that you wanted to, not be lost to either legal fees or taxes or people fighting one another, that type of thing. So it's important that you do it. And it's unfortunately things, it's one of those things today.

It's rather complicated. It's not that you can't get through it, but there are decisions that have to be made. And I think once you get it set up and things are up to date, and you know you have everything in order, then it gives you some peace of mind knowing that you've done a good job getting it set up, but you definitely need help. And I find that this is an area of weakness with most people, because it's not the most fun thing to talk about.

It's really not. Yeah. And you're talking about some of these extra documents like medical directives and power of attorney and, you know, do not resuscitate all those things, you know, that tie into what if there is a hospital stay or prolonged illness. So how do you factor that in planning for maybe serious illness or prolonged long-term care needs to protect maybe the retirement assets from being depleted so that you have an estate to continue planning for to pass on to your ears? Right. You have, I have this fit test that basically it's seven holistic

planning questions and one of them. And so it's designed to, is your current planning, overall retirement and estate planning, are you set up the way that you want? And one of the questions is, do you have a plan for major health concerns, catastrophic illness or home health? And we find that that is probably your biggest potential expense. if someone has a health issue, and I guess everyone will at some point, but if you have a serious health issue, serious illness, you need care, home health care, full-time care, how do you pay for that and what, you know, where will you get the money? How will you pay for it? How will that work? Because we all know it's so expensive. It could wipe anyone out if you get sick.

And so what one person told me, Mike, was his worst things than dying. That is, I guess if you had a serious illness and it's costing you, you know, $10,000 a month or more for care. And that's just taking, you know, taking your money away very rapidly. And it also added worry and stress to how is this going to affect my, you know, money, do I have enough? and B, is it going to pour over and roll into my family and this going to, I wanted to leave them X number of dollars so that they're taking care of it. Now, maybe I'm not. So if you have those kinds of things, and there's a variety of solutions to make sure you're taking care of like that. It's not just the first one you see, especially don't just go Google it and go, oh, I need this. Talk with someone that can go, okay, here's some options. Here's some things to consider. Here's some pros and cons. But preserving that estate is the utmost focus there. Right. So one of the questions we ask is, you know, do people have long-term care insurance? And if they do, how much would that provide them? Does the policy increase with inflation or does it go up each year? Because we know costs are going up very rapidly on care. And if they don't, if they do not have that or even if they do, maybe they look at something that where they put in a certain. amount of money and if needed, it gives them so much a month for, they call it a single premium. You put an amount of money in one time and it gives you so much for care, home health care,

or for nursing care. And then if it's never used, if you're fortunate, it's never used, then there'd be a certain amount that goes tax-free to your family. So that could possibly be an option. there's other accounts where maybe even on your retirement money that you have a feature that if you cannot perform two activities of daily living, then it's like a pension feature, but instead of getting regular income, you get double the income guaranteed for either so many years or for life.

And that can be beneficial also at providing you know, extra money for care if something happens to you. But so nothing's perfect. There's no silver bullet. But the fact is, is you have to plan and something is better than nothing. But it's something that's a pretty big danger in your overall estate as far as just because the cost is, it's so expensive. And then you think about what could be the worst thing that might happen would be, if someone who had most of their money in the stock market and then they lose their health too

and they need to take money out and the markets are way down that's kind of a double whammy so it's it really is but you need to protect yourself you need to have enough income and you need to figure out how you would pay for care if you needed if you had a serious illness so once you've put some things into place and gotten the right documentation and you've that your estate plan laid out well. And now you're thinking, okay, I should have X number of dollars to pass along to my heirs, my family. What are some ways that you can minimize those inheritance tax or estate taxes so that your

heirs take the money and have the most use of it as possible? Well, you can set up a gifting program. You can do, we talked previous. about Roth conversion where you have tax-free options or that, excuse me, that option that where you, if you don't use it for care, it goes tax-free to your family. You can set up insurance where if you're healthy enough to get it, where you're leveraging. You're basically looking to leverage money where you're taking maybe three times the money, three or four times the money and you're getting that tax-free to your family.

And so you're putting some of your money, not all, but some of that. I think of your estate as like a pie and you take one of the slices of pie and you're using that for a tax strategy that will either offset taxes or give your heirs tax-free money. Because the tax planning, when you get to a certain point in life where you've accumulated most of what you're going to accumulate, let's say you're not working, or you're winding down, then really protecting what you have built up and not being taxed, not only you, your spouse, your children, grandchildren, where you don't lose at all to taxes and protecting it from serious illness and those types of things is a big part of the planning.

And I know most people when they're working, all they're thinking about is growing their money and all that. And it's fun. But if you do not think about some of these planning items, like the tax pitfalls, like the estate planning documents and some of the tax-free options, you're really missing the boat. And I think that you can think you've done everything right when you haven't. Maybe you did on the investment side, but you've done nothing on the estate planning. So that's what will really bite you in your retirement and in your estate planning for your loved ones. And I think estate planning, a lot of it is not only peace of mind, but you're saying that this is what I want and this is how I want it to work out. And really, you should have that because this is what you've worked your entire life to accumulate.

so why shouldn't it be, why shouldn't it work out and be what you and your spouse want? It should. And so you're just trying to set things up so that other things won't interfere and kind of, whether it's taxes or family or legal documents, other things, kind of mess up that plan. And it's really your estate, your life's, you know, work of here's what I've saved over my lifetime. and it's a gift that you're passing on to your family. So you're protecting that gift with putting these things into place. And it's also a gift that you have put things into place with the proper thought in mind like the tax mitigation.

So you're not only gifting and giving that gift to your family, but you're giving it to them in the best possible way. So with that thought of mind of gifting, how do you incorporate charitable giving into an estate plan? well i think it's a it's an excellent uh sometimes you can incorporate that type of giving mike and really you're not taking anything away because what would normally be lost in taxes with tax planning are able to do some good with the money so there are many people that i've worked with that would leave money to their church or charity or do insurance for that purpose um there is one client that I had, her and her husband passed first, and they always wanted to leave a legacy for educational purposes and scholarships, that type of thing. And they were able to do that

by using insurance. So she took a certain amount of money each year that came from their required minimums or their investments. And she purchased insurance so that that a very large tax-free amount went to, for that legacy that they wanted to provide for educational purposes. So it was really just a dream, and it was what was on their heart, and that's what they wanted to do with some of their money, not all of their money, but some of their money. And it can really work out. There are tax benefits for, you know, charitable planning and charitable giving. and so from a tax standpoint, it many times makes sense if it's what the client has on their heart,

and that's what they really want done. And so it's really good to think about if you've accumulated money or what you've worked for, what is important to you. And with your planning, can you make a difference, a difference in the lives of your family, but in the lives of others, and, you know, leave something behind. So I love to see that. And I think just many times it just works on the numbers and it works in the planning where if they hadn't done that, they would have paid more here or there. So the reality of it is maybe it costs them, but maybe it did just with the

overall planning, there's benefits, certainly tax benefits with that type of planning. Exactly. So once you've put all this into place and dotted the eyes and crossed the T's and made sure your documents are in order and all of these things, you don't just set it and forget it because life circumstances may change or new laws may change. So you need to have that estate plan reviewed. Same way with your retirement plan. So I think that that's something that people need to keep in mind. So if someone is interested in maybe having you look at their estate plan to create it or to review it, what's the best way that they can reach out and connect with you, Stephen? Well, they can email me at Steve at capstonestateplanning.com.

Excellent. Well, thank you so much for coming back on today. It's been a real pleasure talking with you. Thanks for your time, Mike. You've been listening to influential entrepreneurs with Mike Saunders to learn more. about the resources mentioned on today's show or listen to past episodes visit www. www. influential entrepreneurs radio.com.