Episode 51: How to Begin Estate Planning with David Edey

Acquania Escarne 0:03

You are listening to the Purpose of Money podcast, a podcast where we talk about ways to build wealth and create more freedom in your life today. I am your host Acquania Escarne.

Hey guys, welcome back to the Purpose of Money. I'm super excited today to have another special male guest, David Edey on the show, I've learned that nobody likes talking about death and inheritance before they absolutely have to. And having these conversations earlier rather than later will save you a lot of time and money. Despite the effects of the pandemic, the overall percentage of Americans with a will has not significantly changed, instead families have been traumatized and dealing with chaos at the same time after family members have passed away. And I did a little research and I found that roughly 70% of US afluent households, assets are controlled by baby boomers. So we have a huge portion of the American population, who at some point is going to die. It's estimated that by 2030, American women will be expected to control as much as 30 trillion in financial assets that baby boomers possessed. That is a huge wealth transfer. And it's time for women to get their finances in order and help their parents with financial planning and estate planning so that we can make sure when these assets transfer, we are truly building generational wealth.

This is a huge responsibility. And I know some of you might not even know where to start. So that's why I have David on the show today. David Edey is a certified executor advisor who has worked in the financial planning industry in Montreal, Canada, for more than 35 years. He is the author of Executor Help, and How to Settle an Estate. He also hosts a podcast by the same name.

Hi, David, welcome to the podcast. How you doing today?

David Edey 2:12

I'm doing fine Acquania Acquania. Thanks for having me on the show.

Acquania Escarne 2:15

Absolutely.

David Edey 2:17

And being the second male, this is groundbreaking.

Acquania Escarne 2:20

Yes, it's such an honor, I just pretty much decided if the information is going to be valuable to my audience, I want it to be shared. And that's why I invited you on the show today, because you have an amazing personal story. You're not just helping people do estate planning, you had your own chaotic experience, right.

David Edey 2:39

But seven years 10 court appearances and $50,000 in lawyers fees. And my parents had a will. And and how I came about to write the book is because every time I would talk to friends, I talk to clients and tell them about the frustrations of going to court and doing all those things. I'd hear about one more executor that was, you know, like, oh, you know what, I had to go through that or I hear about another family that wasn't talking to each other. And the more I heard the stories coming out all the time, I didn't want anybody else to have to go through what I did. And also my other sister went through. So I decided to write the book.

Acquania Escarne 3:15

So I think I heard this you said your parents had a will. Most people assume the problems come because a family member didn't create a will. But why did you have to go through so much if there was something written down to say what should happend

David Edey 3:29

Because there's three types of families. There's the families who avoid the issue. And then there's the families who are what we call acceptors, where they'll do the have the will, and they let the paperwork do the communication, but there was no communication. In our family situation. I knew my parents had a with some of the kids knew there was a will and others didn't. We always assumed but if was something was to happen, it would be just split equally. And when my parents did pass away, they never had to before they passed away, they never had the conversation with us. So what happened was the will dictate what was going on. And then we had the fights. So you need to have the conversations earlier, rather than later. You've it's intensive care is no place to find out that mom doesn't or mom or dad doesn't have a will. So you've got to have those startup those conversations. Yes, they're uncomfortable, but they're uncomfortable because people are uncomfortable talking about their own demise or they're talking talking about death, and I get that. But you don't want to leave your family disorganized and in chaos, because you didn't take the time to walk them through what your wishes are. And that's where the problem is, but it first starts with you need to have a will, which is probably the the foundation of having a good estate plan.

Acquania Escarne 4:46

That's a good segway into my first question about estate planning. For those on the podcast listening right now who are not familiar with these terms. Can you give us like a general definition of what is estate planning

David Edey 5:00

Well, estate planning is going to cover a whole variety of issues, it will start with the will. So in the will, it'll say what your wishes are going to be, then you might and everybody's differently is different. So what you want to have make sure that you have this conversation is with a experienced estate planning lawyer who can walk you through the steps. So in every situation is different. So you want to start with the will, you might want to have a power of attorney, you might want to have healthcare directives, it depends on your situation, but you want to and as I go in, I have written in the book, I've got a list of things that you want to prepare for yourself. So when you do have you go speak to the lawyer that they get the the most information from you so they know how to craft your estate plan.

But again, the bottom line of the goal of the estate plan is not to leave your family in disorganized, you don't want to leave a legacy I know you talked about and your brand is all about building wealth. While you know and you want to make a generational, why not make it easier for that wealth that you're you've built and pass it on to the next generation. And that's where a lot of problems and when it comes to estates and inheritance, the first it might lead from one generation to Baby Boomers, and or maybe from their parents to the baby boomers. But because there's no communication, it doesn't make it to the next generation. So what you want to do is make sure that you become what I call an adopter, whereby you have those conversations, and the next generation knows what's expected of them, and what will be coming to them. So it's not a surprise. So there won't be any family arguments. Because every family is going to fight. It's just human condition. Every family's got issues between you and I, we you probably we all have members of our family that we don't get along with for whatever reasons. But the matriarch or the head of the family, they keep us all together. But what happens when they're gone? If that's where you see the breakdown in the family unit.

Acquania Escarne 6:59

I'm so glad you said that I actually say this often. I've talked about estate planning medical directives and power of attorneys before but most people just still don't think about these things. They just assume a will is enough. And I said no. What if you are incapacitated and can't speak for yourself. It's the Medical Directive that tells doctors and your family members what you want to happen. And there are some people who want the life saving experimental technology because they want to be saved at all costs. And then there are other people who do not want intervention. And they want as much as can happen to be done. But then if they go on life support, they don't want to stay on life support. So the Medical Directive outlines those wishes. But you'd be surprised and you made a good point. People don't want to talk about death, right? So they just ignore it,

David Edey 7:55

It comes down to communication, when you're talking about the directives. If some people want to be kept alive, some people don't want to be kept alive. But who knows what we want. If there's nothing written how you can't have a meaningful conversation when somebody is on a respirator. So you need to figure out, Okay, I'm going to make it easier for my family. And these are my wishes. And it's going to be the guideline, a roadmap for what you want done because you can't start guessing.

Acquania Escarne 8:21

Thats exactly right. And I also tell my life insurance clients, because I am a life insurance producer. And one of the things I say once we get a policy is please keep a copy of this for yourself. And for your executor of your estate, making sure that they know this exists, so they can contact me when the worst happens. It's so hard for people to know how important it is to share the information as to what is coming their way. So they'll know how to handle it. I do not like the time that you die, and they're looking through the apartment or in your stuff for them to find out. She has a life insurance policy and not just a policy, but it's left to me. I actually have a story where recently and this really moved me a few months ago, I got a phone call from a number I didn't recognize, but I answered and was like, Hi, how can I help you? And on the other end was a young man who said I regret to inform you my brother passed away. And I was like, Oh, I'm so sorry to hear that. What was your brother's name? So he tells me his name. And I said, Oh, he's not one of my clients. And he said, What do you mean I'm going through his stuff? I see this life insurance information and it has your name and your number on it. And I said I regret to inform you that your brother did not apply. He decided not to get life insurance with me even though it was my recommendation. And so I don't have a policy that I can actually help you cash in. So this is where communication becomes detrimental. Right, because had, he talked to his family about even his desire to get life insurance. Maybe his reservation was financial, but maybe they would have helped him. But because he didn't take action, when he did pass away, and I don't believe it was known to him that he would, because at the time I talked to him, he didn't express being sick, or that he would have any health issues that result in death very soon, they weren't able to have that money to deal with his final affairs. So I continue to allow that experience to drive me to continue to talk about the importance of estate planning and life insurance, because I don't want another one of those phone calls,

David Edey 10:44

Apps Apps Absolutely. And I'll take it one step further. Because in the book, I talked about that, besides your the the life insurance policy that they have, I talked about all the important information that you need to have, and put it in a bright orange envelope or bright yellow envelope. So when you have that conversation and say, if something happens, I need you to go for that bright yellow envelope and in there, it's going to have all the information, it's going to have the life insurance policy, it's going to have information about the mortgage. But another thing that people don't think about today is they don't think about the digital assets. They don't think about their passwords, they don't think about things that they bought online, and they've got logins to their social media, all of that has to also be written down. So if something was to happen, they can, it'll be in that envelope. So digital assets has now become even more prevalent and part of an estate plan, you need to be certain about your digital life. And that's a problem with a lot of people, they think I don't have any assets, I don't need to be doing this. It's only it's only for older people, spoiler alert, we're all going to die. And we need to be prepared. And what you want to do is you don't want to leave your family disorganized and in chaos.

So you need to just get your act in order. Again, I know it's uncomfortable, nobody wants to talk about it. But once you've taken those steps, and then you also continuously update your estate plan because there could be children, there could be a divorce. Once those every two, if there's a life event that takes place, just update the plan, paperwork changes, maybe they get more coverage from a policy from you. This way you've updated it, and they know that's in there, and you're just making it easier for them for that with that file. People don't want to if there's a death, people are traumatized already, and you can't find paperwork, when you're traumatized, you're going through the grief of a loss of family member. And you you know, if just make it easier on them, this is probably the biggest gift, I'd like to say estate planning is the biggest gift that you can give to your family is to be organized and be thinking of them going forward.

Acquania Escarne 12:49

Absolutely. And so that leads me to the next question. And a lot of things we do on financial planning, we have an age in mind where we're supposed to have done this. But I feel like estate planning may not necessarily be something you do at a certain age, but maybe at a certain point in your life. What do you recommend? When do you start estate planning

David Edey 13:11

Like I said before, you've got assets, if you've got some bank accounts, if you've got some investments, even at the bare minimum, you've got a checking and savings account and just some money, you've got an estate, and then you add in the digital assets. And right away, you need to make it organize yourself so that some if something was to happen, people will be able to make sure that you're taking care of make sure that the estate is taken care of. So there isn't a right. Or excuse me, there isn't any age, because again, death or a disability could come at any time. So again, is a bare minimum, you got checking and savings and some investments, you need to have a will.

Acquania Escarne 13:54

I really like that. And I've always wondered, what's the plan when someone passes away? Can you just call Facebook and ask them to close an account? I've recently had difficulty trying to figure out one issue with Facebook. It's taken me weeks, and my only communication has been through a chat bot. So it's been very frustrating. And so I could only imagine if you're trying to prove to Facebook, someone's passed away, they might require a significant amount of information just to prove that and then they still may be hesitant to do it, because there's so much fraud that's prevalent out there. So it's I think what you're saying is really important, especially as young people who we are on social, we are building wealth at earlier ages. I have a lot of clients who are millennials and have really started to prepare for financial freedom or early retirement. And so they are accumulating 1000s of dollars in stock and cash and other investments in their 20s and 30s where some people may in the past have started to accumulate that in they're late 30s to 40s. So now, I think it's even more important, like you said, if you're someone who's 20 25, and you have investments, cash, bank accounts, digital assets, that is when you need to really write something down, and make sure it's communicated to your family,

David Edey 15:18

Well writing it down, you need to do it yourself is is probably not the best way to go. I'm a big proponent of making sure you go see a lawyer, they're going to charge by the hour, but you're good. You want to go there pre prepared, it's not, it's only going to cost you a couple $100. Unless you're, it's not going to cost you $1,000, because you're not Oprah, you're not Beyonce, you're not going to have a huge estate to be talking about. But it doesn't have to be expensive for your assets to make sure that your assets are prepared. It's the mindset, it's got to get done. And don't think it's for older people. Millennials, you've got a saying you're helping people build wealth, they have, wealth, they need an estate plan, they need a will, there's no two ways about it. And if anything, the the pandemic has made people maybe more aware, because there's a talk of people dying all the time, and it's around you and a little bit more that should make people think if something was to happen to me, and I got sick, but I have to go to the hospital, they haven't got time to go to the lawyer's office to open up start a will be prepared, just in case. That's all you're doing this for just in case. And again, make it easier on your family and the loved ones behind that they know exactly what you want to happen.

Acquania Escarne 16:32

Absolutely. And that leads me to my next experience that I want to get your take on. So I am very blessed to still have both of my parents, but one of my friends recently lost her father to cancer, and one that was very progressive and fast and not expected. But apparently, unbeknownst to them, runs in his family. So let's talk about when you are determined to be the executor of an estate. What does that mean? And what are your responsibilities.

David Edey 17:05

It is a one of my responsibilities trouble to expect trouble being executive there, there are so many responsibilities that people have probably haven't even thought about. So that's what's basically the book is about is to help people who are either an executor or someone who is planning their estate so that they understand what the job entails. It's a thankless job. On average, it takes probably about 100 hours of someone's time if they're an executor. And it can take anywhere between 12 to 18 months to settle an state. And now with a pandemic, it could probably even take longer. And in the book, I talk about the triangle of conflict. If you take in consideration, you're an executor, and you've got one of the elements of the triangle of conflict, meaning there's no will, or there's a second marriage, or if the siblings don't get along, that job just got a whole lot more difficult. As an executor, you need to put together a professional team, it's going to start with an accountant, you're going to maybe talk to your insurance professional, maybe a financial advisor to make sure the assets are going to be handled until they're going to be distributed, the accountant you're going to need because you want to make sure you pay the right amount of taxes. Because as an executor, if the you are now taken on the legal responsibility. If there's any sort of mismanagement of the of the estate, you could be held responsible. So that's why you want to make sure the taxes are are paying in advance, and you don't pay the beneficiaries, because beneficiaries, they only see his money coming to you. Whereas you've got as the executor, you've got the responsibility to make sure everything is settled first. And like I said, the taxes when you're you're settling in a state as an executive, you've got three goals is to pay the right amount of taxes, make sure that you pay the beneficiaries and then close the estate. And you're going to do that by going through the probate court and make sure you've got all the paperwork and involved to saying that this estate is closed, so they can't come back on you, the government can come back to you and say, You know what, we you owe some more money, because you can't try and collect from a beneficiary saying, You know what, I didn't pay enough taxes. So I need you to write a check. They're gonna say that's not my problem. So you want to make sure you've paid the right amount of taxes, and then pass on the residuals to the beneficiaries.

Acquania Escarne 19:17

That is so important, and I didn't even think about the legal responsibility of the executor. But I do tell people, don't forget about your final tax bill, even Uncle Sam wants the decease to have a final tax bill. And then we also have a state tax in the United States, which sometimes will impact how much the family actually inherits. So that's really good. And I'm glad that you brought that up in your response. So you mentioned this earlier, but I'm a little curious since you've gone through this. You've paid the $50,000 in legal fees and had to wait years to finally settle your parents estate. How do you keep money from destroying your family? What are some of your tips other than communication and making sure they are aware of what's coming?

David Edey 20:06

Well, it's even if you have the communication, if some people are just if some people are just difficult, they're just going to be difficult. So you who, who you're setting up the estate, you want to have you want to make the communication again, it's come back to communication, let people know this is what's going to happen. You may or may not like it, but it doesn't matter. When you have an estate, you are looking about, you're thinking about leaving a legacy, okay? And the beneficiaries are only looking at it as an inheritance. So it's it they're looking at, we're looking at through two different lenses. So they're looking through it as money coming to me, and I'm entitled to it, you're going to see, and there's, like I said, every family's got issues, you're going to see people change for as a beneficiary, depending on how who they are and how they've handled money in the past is probably going to come out, because they're going to say, You know what, I've been waiting long enough. How come what's what's going on. So you as an executor, you also got to keep the beneficiaries in the loop. Don't to do things and not let them know what's not going on to me. And maybe you have a zoom call, or every two weeks, you send them a an email or something, let them know, keep them in the loop. I'm telling you, if you don't keep people in the loop, and especially in a state, and I know there's money coming to me what's taking you so long ever is gonna start looking sideways. And now what's going to happen if you all get together at Thanksgiving, or at Christmas, how come has taken so long, you know, and what is this all about? This is all about money. And that can destroy the family.

And I'll take it one step further. It's not only money, there's could be stuff, it could be a TV, it could be a car. If again, if you don't name out in your will, what you want to happen to it, you as an executor, you now also make sure that the assets and things go to to the right beneficiaries, because it's not uncommon for beneficiaries. When someone passes away that they go into the house and start taking up stuff like jewelry and other stuff like that. It's It's a thankless job being an executor. And you've got to go in with your eyes wide open and expect Don't be surprised by how people are going to behave. Just don't.

Acquania Escarne 22:16

It's funny, you bring that up. Because before when I was younger, my grandmother passed away. And one of the things that I was given by my aunt was jewelry. But I didn't even really think about how she might have had to protect the household from people stopping by to do a little shopping before you finalize the estate. But that's actually now that I think about it, people do that. As insensitive as it may seem, or crazy people will do that. Because they may assume because they don't know what's going on, that they're not going to be included. Or that they may not be inheriting something. So they're going to take what they can before you can stop them.

David Edey 22:56

That's a sense of entitlement. You know what I had a conversation with a grandma, and she says, I'm supposed to get that string of pearls. You as the executor unless you're on that list there of benefits as well. Yeah. Nope, sorry, if all of a sudden people will come out, you know, I wanted this or I wanted to have this or this gives me that lamp, I remember as a child sitting under the grandma would read me a story without laminate, they for some reason, they assume that it should go to them. And they may not be on the list of beneficiaries. There are going to be some arguments. And don't be surprised with people's behavior. Just don't.

Acquania Escarne 23:30

Yeah, that makes a lot of sense. So some of my listeners are entrepreneurs just like me, and have multiple streams of income, businesses, and their families. So is a will enough if you have a business.

David Edey 23:47

No, it's not. You've taken care of the the you have the will, and you got the health care directives. But as a business owner, you've also got to think about because it's a separate entity, all those businesses, so you need to have a succession plan. If something was to happen, if you were to die, what would happen to the business, it's either going to be you'd want it to go to a family member, you're either going to sell it or you're going to shut it down. But if you've got no directive, what's going to happen to the business, then you've also left that job to the executor because you haven't left any directives.

Suppose you've been paid fees, and you haven't delivered the services and unfortunately, you pass away, I'm going to come back when I paid $10,000 Where's my money, I didn't get the services. So that's now the executor has to deal with it without without creditor, you've got business that you're involved with. And you've got you have completed it. In the book I talked about Tony Haish was the CEO of Zappos, he left an estate of $146 million and he didn't have a will. So what could possibly go wrong? So they the the his brother and father were named as executors and so they had to piece it together. They went into his house, and on the wall was 146 sticky notes of different business dealings that he was involved with. Okay, so now they're trying to piece together. And during that time, we've got people who've done business with him, or he owed money to his colleagues, different entities, and they, and now they're coming after the estate. So as a business owner, you need to also have a succession plan and take on top of that, you've got your personal digital assets, but above the digital assets for the business, you need to have another brightly colored envelope, or their software where you can leave all that information in the cloud. And make it easier on the executor. Make it easier on your family, especially if the business is the only source of income coming in to the to the household.

Acquania Escarne 25:43

All right, you guys, you heard it here. First, if you have a business, LLC, S corp, C Corp, and you are operating, please have a succession plan. So if something happens to you, your family knows what to do. Now, you've been listening to my podcast. So I know the drill. The name of the podcast is the Purpose of Money. And I asked all my guests this question, what is your purpose for money?

David Edey 26:07

That's a good question. I've heard your podcast and I knew it was coming. Im blindsided, but the purpose for me as being an advisor, and also seeing how money can change people for the good because it allows you the freedom to do whatever you want. In my case, I've been blessed and fortunate to have some health issues. And once you have your health, if the next step is to make sure that you're financially in good situations that you can do whatever you want. So money is going to, for me money is just gives me the the opportunity to do whatever I want, go whatever I want. But the accumulation and building wealth, that's also the fun part of being an entrepreneur, being an advisor. Money means different things to different people. To me, it just means a little bit more. It means independence, it means freedom. And if I have to help if I can help out family members or friends, then I'll do that as well. So it's not about a crying stuff and stuff after a while it doesn't mean anything. I'm five years ago, I had open heart and I know what health is the most important thing. But I know I once I got well and and I sit and prayed and said you know what, let me just get through this. And I will say my heart surgery was just a little tune up. Once I have had the heart surgery, and I came out, I looked at life differently and enjoy it more, enjoy my family, enjoy my friends. And with money you can you could it just gives you more freedom to do whatever you want.

Acquania Escarne 27:27

And thank God for your recovery and that you decided to do things differently. So many people have near death experiences, and they don't all turn their lives around or focus on their health as much. And that's really what it comes down to. And I've always said that your health is your wealth, if you are not healthy, there's really not much more you can do to create wealth or to even work. And that's why it has to be a priority. So thanks for sharing that story. And again, reminding us of the importance of family and how we can use money to live.

I want to end on a note that I hope that anyone who's listening today and doesn't have an estate plan that you get to work. And you get this done, because we've seen through so many celebrity families, how many people do not do this. And they have millions that they're trying to fight over and you had maybe I'm not sure if your parents were millionaires. But still the experience of 10 court appearances, seven years of drama and $50,000 in lawyer fees is not something everyone can survive financially or physically. And I know for some people, even having to pay the fees is impossible. So this is the best gift you can give your family by planning this all out before you're gone. And saving them the headaches and the chaos.

David, thank you so much for sharing your expertise. Before we depart, please let my guests know, where can they find and follow you.

David Edey 28:59

You can just go to my website, DavidEdey.com. And we were talking about social media on the website, in the resource section they've got I've got a list of all what you need to do with all the social media companies and there's checklists for when an executor has to do

Acquania Escarne 29:16

Yeah, thank you. And that's David Edey E D E Y guys, so check out his website. Make sure to follow the Purpose of Money on social media when you love this podcast episode, and I know you will make sure to share it with anyone else who needs some valuable information.

And until next time, keep building generational wealth. If you enjoy listening to the Purpose of Money podcast, please leave us a five star review on Apple podcasts or wherever you may be listening to this show.

Thank you for listening to the Purpose of Money podcast. For more resources and information check out my website, the PurposeofMoney.com and while you're there, please sign up for our newsletter so you have the latest information on new episodes and blog posts until next time keep creating freedom in your life today

Transcribed by https://otter.ai