Your Life Simplified

Estate Planning: Protect Your Legacy & Avoid These Mistakes

February 29, 2024

No one likes planning their mortality, but this is not time made but time spent. The challenges and financial strain without proper planning can, unfortunately, leave a stain on someone’s legacy. On this episode of Your Life Simplified, Michael MacKelvie, wealth advisor, is joined by Michelle Cross, senior wealth advisor. They discuss ways to avoid estate planning challenges and give you a guide to help throughout the process.


Michael MacKelvie: No one likes planning their own mortality, but this is time made not time spent. The challenges in financial strain without proper planning can unfortunately leave a stain on somebody’s legacy, and that’s what we’re here to talk about today, how you can avoid this and help give you a guide in this challenging process.

We are here with Michelle Cross. She is a senior wealth advisor, certified financial planner with Mariner Wealth Advisors. Michelle is a wonderful guest for today because she specializes in estate planning, but also, she specializes in helping with the loss of a spouse or partner, something that obviously is incredibly challenging and not only requires a lot of thought, but also has some financial strain that it can place on a family.

So Michelle, I just first want to thank you for being here, but where do you even begin this conversation because there’s obvious barriers here, just even initiating it with anybody? Where do you begin this conversation with a family?

Michelle Cross: I think the best place to begin is really to maybe talk about my experience, my personal experience, and really why I became an advisor almost 15 years ago. My father had always done all of the finances. He was an entrepreneur, very successful, retired early. He loved working in the books and managing his own investments and was really good at it. And my mom, knowing that he enjoyed it so much, took the back seat and said, “I’ll just take care of the house, and you deal with the books,” and everyone was happy with that. But then he got sick, and he was not able to communicate for over two months. And what I saw happen was that the strain of having to take over the finances all of a sudden, in addition to not knowing whether he was going to make it or not, was just completely overwhelming. And it made me realize that it was not worth it, right? It’s not worth it to take to do it all on your own.

And so I actually switched careers at that point. I was in public accounting. I became an advisor because I wanted to be that proactive, trusted partner and help people plan for the future.

Michael: Wow. Yeah, that’s obviously a personal story and a powerful one at that, right? I think those tend to hit home a little bit when they’re in our inner circle. So I think beginning with that story is helpful, certainly for somebody to hear, “Hey, this has happened to me. I’ve maybe walked through this.” What are some of the initial steps that someone can take before this moment, ideally proactively, to really get this estate plan and this death planning, if you will, in motion?

Michelle: Yeah. I mean, nobody really wants to talk about their own mortality, of course. I probably am a bit numb to it because I do talk about it every day, but I think, first and foremost, if I could implore everybody who’s listening to this to have a relationship with a trusted wealth advisor, one who takes a comprehensive and holistic approach. We as wealth advisors, we’re looking at everything. We’re looking at how your estate is set up, account titling, who the beneficiaries are, what documents do you have in place, what have you done from an investment standpoint in taxes and cash flow management, all of that wrapped up together. It really helps to be able to understand your situation and give you guidance to know that there aren’t any holes and everything is buttoned up.

Michael: Yeah, okay. So maybe working with, in this case, an advisor and launching that conversation. I think at the same time, though, there’s that barrier. I don’t know if you’ve experienced this—I’ve experienced this as an advisor. It’s like, we can sit here and talk about this for the next 10 minutes, all the things you should do financially and organizationally to bring things together, but at the end of the day, there’s this barrier that exists of you still got to get somebody to the table.

And I can share what’s worked for me in that process. As much as I would like to say it’s, hey, eventually this is going to happen, we need to create something. If something happens to you for your family, you can have the legacy that you want to leave behind. What seems to motivate people significantly is the potential financial strain in the form of taxes or inefficiencies or time that a family would have to deal with that eventual loss, right?

Just, again, example purposes, state of Washington, state of Oregon have very low state estate tax thresholds, and it’s, “Hey, once you cross this, you might not be aware of this, but since none of this is maybe set up right now, or at least you think you have it set up, but it’s not really set up to where you need it because you didn’t tell the attorney exactly what you needed, 10% of your estate, several hundred thousand dollars is going to go to, in this case, the states.” And we’re not even getting to the feds yet, right?

Unfortunately, I will say that that tax strain tends to motivate, in my experience a lot of times, people in ways that I wish the personal strains that can be attached to just not organizing this would. I don’t know if you’ve experienced that. Maybe I’m just isolated. Maybe I’m framing the conversation incorrectly and I’m just not going about it right, but that’s been my experience. Again, I don’t know what your thoughts are on that.

Michelle: Well, I mean, I think you’re exactly right. The difficulty is getting both parties to the table, because a lot of times what we see is if there is an advisor relationship, that one who is more financially interested tends to come to the meetings and tends to be the point person, but then the other party who really needs to be there isn’t always coming. And so, I think trying to break down those barriers and making the conversation more easy to understand and being open and speaking to both, really encouraging that both parties come to the meeting, is important, and that you’re not talking over one of them and you’re involving both. I do think that in order to get moving, there is one of that fear factor, and you have to create doubt that there is a hole that needs to be patched or filled.

Michael: I think it’s just illuminating that doubt. It’s shining a light on it of there’s more to this. And again, not to speak over you, I want to hear what the rest of you’re going to say there, but my experience has been if you do not tell the attorney what you want in the estate plan, quite often the case is that individual will walk back with an incomplete estate plan. There’s this combination of parties involved in that estate planning process. I don’t know. Again, I don’t know if you’ve experienced that, but it’s almost like you’re illuminating like, “Hey, no, there’s more complexity to this.” Right?

Michelle: Well, it’s definitely a complex topic, and that’s why I think that one of the values that we bring to relationships with clients is that we do that brainstorming on what you want your estate plan to look like, how it’s set up now, how you want it to look. And we do that together for that one, all-wrapped-in investment management AUM fee, and you’re not having those brainstorming conversations at $600 an hour in front of your estate planning attorney.

Michael: Yeah. I think everybody would be thrilled about that. And what are some of the basics that you typically are telling people to get in place or to knock out this initial estate planning conversation and also in the initial estate plan?

Michelle: Well, there’s some very basic documents that everybody needs to have in place, so that’s going to be a will, a power of attorney, a health care directive. Now, each state may call them something slightly different, but those are the three basic documents you need. If you have significant assets, especially non-qualified or not in a retirement account, you might want to look at having a revocable trust agreement.

Michael: Yeah. Quite often, again, what I experienced there, not to keep hammering it, is people say they’ll have an estate plan. I don’t know if you’ve experienced this, but it’s like, “Oh, yeah, yeah, we have an estate plan.” I mean, how could anybody know the depths of all of these different professions and everything that’s required in life, right? Estate planning is just one example, but you maybe have the basic docs in place, and so you say, “Yeah, I have an estate plan.” Now you’ve got maybe a couple million to your estate, you’ve maybe progressed and you’ve grown your wealth, and suddenly you’ve stepped into a new level of estate planning.

And because that attorney isn’t somebody that you’re hanging out with and doing annual reviews like you would be with an advisor, there may be not going to be reaching out to you saying, “Hey, it’s time for that next level here of estate planning.” Maybe that is the trust planning, which again, I don’t know about you here, but I had assumed growing up that’s just for the ultra-wealthy. I didn’t realize that trust planning very much so is a part of a large part of anyone’s planning, right? I mean, I’m not sure the percentages on it, but at least the people that we serve, it seems like the vast majority of them are having to set up some type of trust at a certain point in time. So I don’t know if that’s been your experience there as well, but that’s been mine.

Michelle: Well, I think, frankly, there’s a lot of misunderstanding on the part of the clients that are coming in about really what they’ve done from an estate planning standpoint. So you’ve probably seen this, too, Mike, where clients will come in and say, “Oh, I have a trust, and it was set up years ago and everything’s all great.” And then, as part of our review, we’re looking at getting statements, account statements. And so, I’m looking through and I see a rollover IRA, and I see individual accounts, and I see maybe a Roth IRA. And I say, “Well, you had this trust. Where’s this trust?” “Oh, here,” and they give me a piece of paper, but nothing has been titled in the name of the trust.

Michael: It hasn’t been funded.

Michelle: It hasn’t been funded. So making sure that after you get your estate documents drafted and executed that the funding is actually occurring is really important and that the beneficiaries are correct. And now, if you don’t have a trust, there’s a way to add a beneficiary to an individual account. It’s called a TOD or transfer on death. That is bare minimum. So looking at account titling is super important to really understand and prepare for that next phase.

Michael: Yeah. And again, that’s that combination and collaboration with the advisor in addition to the attorney. And we don’t typically think of advisors as estate planners. We think of lawyers first. But the different parties certainly play their roles. What are maybe some of the pitfalls that you’ve seen that are worth people knowing so they can hopefully avoid?

Michelle: Well, the first one is really just not being aware of what you have and why you have it. So not having the right documents in place, not knowing all of your assets and your liabilities. One case that comes to mind is a probate issue. So we talk a lot with clients about how to avoid probate. I mean, not all probate is bad, but we’re generally trying to avoid those extra fees and the extra time, and that’s where the account titling comes in. That’s really important. So the case that I’m thinking of, this became involved after the husband had passed, and they had a lot of business entities that were just titled in his name, and that was a really big problem when he passed.

Michael: I bet. I bet. Yeah. Just those formalities that get lost in the busy-ness of our lives. Right?

Michelle: Yeah.

Michael: I certainly have seen some pitfalls and, unfortunately, some mistakes. I mean everything from just not changing the beneficiaries of investment accounts, reviewing those, you got past girlfriends on there. And you pass away and suddenly it’s not the people that you intended getting that money, right? Well, I have it in my will. Well, you might have it in your will, but what does it say as far as a beneficiary for each of these accounts? Where is that money being directed, right?

The older that we get, we get increasingly more complex. And because of that, we need to exert a little bit more intellectual fuel in the organization of our plan. So, really appreciate your insights here today. Again, I think if we were to summarize, it is not attempting this on one’s own, and you experienced that yourself. Now you’re on the other side, help out people with something that you had to experience and walk through on your own, which I think is just fantastic. So thanks again, Michelle.

To anyone who’s listening to this, make sure to subscribe if you’re listening on YouTube, Spotify, wherever you might be listening. Get more industry insights from industry professionals here at Mariner Wealth Advisors. Thanks again, Michelle. You guys take care.

Michelle: Thank you.

The views expressed in this podcast are for educational purposes only and do not take into account any individual personal, financial, legal or tax considerations. As such, the information contained herein is not intended to be personal, legal, investment or tax advice. Nothing herein should be relied upon as such, and there is no guarantee that any claims made will come to pass. The opinions are based on information and sources of information deemed to be reliable, but Mariner Wealth Advisors does not warrant the accuracy of the information.

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