Navigating Inheritance with Confidence and Clarity Featuring Josh Jerele

Settling an estate is a meticulous process fraught with emotional and financial challenges. We guide you through the typical timeline for estate settlement, stressing the importance of clearing all debts before distributing assets. With Josh's expert advice, we underscore the value of professional guidance from financial and legal advisors. Learn how to honor a loved one's legacy through charitable donations or thoughtful financial planning for future generations, balancing prudent management with family values. Tune in to gain practical insights that will help you navigate the delicate journey of inheritance and estate planning.

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Chapters

• 0:09 Estate Planning and Trusts Overview
• 10:59 Inheritance and Estate Planning Strategies
• 18:28 Legacy Planning and Financial Responsibility
• 22:44 Discussing Inheritance

Transcript

Jessica: 0:09

Welcome to the Reach our Summit podcast, where we help you navigate the path to a better, more secure future. I am your host, Jessica Magnuson. I am presented by Summit Wealth Group. We have here today one of our advisors out of our Lakewood office, which is a Denver metro area, Josh J. So welcome, Josh. Thanks so much for being with us.

Josh: 0:32

It's great to be here. Thanks for having me.

Jessica: 0:35

So for our listeners that don't know you, can you tell us a little bit about yourself and what you do here at Summit?

Josh: 0:42

Absolutely. I've been in Denver since 2015 and joined Summit in December of 2021 from the business side of things, and I've been married for over 13 years now and have three kids under the age of five, so we have a very busy life after work.

Jessica: 1:02

Well, thanks again for being here with us and talking about today. So we're going to dive into a little bit of estate planning For our listeners that haven't heard before. We have a kind of a deeper dive on estate planning a few episodes back that Stephanie did with our advisor, Dan Gilbertson. If you want a deeper, more in-depth look at estate planning and what you should be doing, definitely go back and listen to that episode. We're going to touch on it just a little bit here, very light on the estate planning at the top of this, then dive into also kind of the other side of that is, after someone has done their estate planning and they've selected their beneficiaries and done everything they need to do, what happens when you are those beneficiaries and you're the one getting assets inheriting them, and where do you start with that? We'll go ahead and dive in with what are the most basic estate documents that people need to get in order if they haven't done anything yet?

Josh: 2:07

A lot of the advanced estate planning work that we do is very specific to certain clientele, so there's a lot of nuances to this and definitely incorporates a professional attorney to help make sure we draft everything out properly.

Josh: 2:21

But I do find that some of just getting the basics in place because it can be overwhelming when you're going to an estate planning meeting you're going oh my gosh, I got to get all this stuff right.

Josh: 2:30

But honestly, the most important basic documents are your healthcare power of attorney, which you basically lay out who actually makes decisions for you if you are incapacitated, and usually it's primarily your spouse, but then you have to have a secondary person named in there in case both of you are incapacitated or something else changes. The other one is your financial power of attorney. So, just like the healthcare, it's someone that's going to help make decisions for you on the finances and work hand in hand with your advisor to make sure the bills are getting paid and all those different aspects while you're still alive but just not able to make those decisions. And then, really, your will lays out what happens to assets that don't have a beneficiary on it, so it avoids probate some of those other things, so your will catches anything else that wasn't actually having a beneficiary on there. Those are really the three basic things you really want to get in order, but definitely we can go for a whole hour on the other parts of it.

Josh: 3:27

But every client has a specific need. But those are the basic threes that are most important to lay it out.

Jessica: 3:34

So this is mainly a question that I have been wondering about, because I feel like I've heard it here and there from people of what is the deal with like putting something in a trust and leaving a trust to people instead of individual assets.

Josh: 3:52

Yeah, that's a great question as well. Really, the trust comes into place and every state is unique in how their laws are set up, so I always lean back on the estate planning attorney to see if it really does make sense to have a trust or not. But even within that, some attorneys have different preferences, so it really is specific on individuals. But the biggest reason you'd have a trust is if you have kids that are minors, just to make sure that that money is protected for them until a certain age, so that the trust will actually live on beyond you and your spouse's passing. It helps delegate where the money goes and how long it gets held back.

Josh: 4:26

So you obviously wouldn't want an 18-year-old kid inheriting millions of dollars in one day because all of us make poor decisions and we're 18, where that trust will help protect it to make sure it stays in place.

Josh: 4:37

The other thing is that the will is there to catch anything that does not have a beneficiary on there, so it can be decided on how the money goes after your passing, but you don't really want the state to make that decision. The trust will actually make sure that the money gets transferred exactly how you want it to be laid out, but really the biggest provisions there is. Trust will help protect money after you're passed away. I've had clients with kids with substance abuse or going through a nasty divorce in their thirties and the parents want to make sure they protect the assets for the family. So that's really where the trust will come into place. But there's definitely a lot more pieces to the trust that I would definitely recommend you know talking with an attorney about it and laying out those items. But those are kind of the basics of why you'd want to leave it in a trust.

Jessica: 5:25

Like you said, just protects everything, puts a little bit more cushion around things. So people aren't just getting anything willy nilly.

Josh: 5:38

Yeah, it is. I mean, it's not surprising anymore to me, but I think when a lot of people see how much hurt that can happen from not having a proper estate plan laid out and actually specifically naming certain assets to certain people or making sure things are laid out, it just if the trust or the will doesn't lay it out, it's a free for all and it causes families to separate and massive fights. So it is probably one of the best legacy gifts you can give is having a proper estate plan laid out so your kids don't have to fight over it or you know grandkids, whoever is going to be the beneficiaries of your estate. That is one of the best things you can give to them.

Jessica: 6:11

And you mentioned a couple of times an estate attorney. So how do you know when you're at a point where you need to have someone doing these things for you, versus I don't really have anything. I don't know, I'm just starting. Can I do it myself? Where's the line there?

Josh: 6:27

Yeah, and that's a great thing with technology.

Josh: 6:29

There's a lot of options out there where you can go online and find a basic estate planning software that you can put some drafts together, et cetera.

Josh: 6:39

So if cost is really a major consideration for you which it could be $2,000 at the lower end to $5,000 to get an estate properly drafted by an attorney if cost is a consideration, definitely going with one of those softwares could be at least a temporary fix to get the healthcare power of attorney and financial power of attorneys laid out, because those are really important, but just major life events that happen if you inherit some money and you got more assets there.

Josh: 7:04

Now you want to make sure a $2,000 or $4,000 expense is minor in that case of what could go wrong. But especially for I think, when you think about people, clients that have young kids that I don't want to really trust a online software with the guardianship of my kids and making sure the assets are taken care of. So that usually becomes a point where I just think it's worth having the professional draft things up and then, if you have any other complexity within, like dependency issues or you do think you need to trust, I would definitely lean on professionals. There I'm definitely more in the camp of people that want to use professionals more so than anything, because I've just seen things go wrong and not hold up in court, because it may be a generic great document for the state of Indiana but it may not work in Colorado or another state that you move to later on. So I think it's always good to lean on a professional in that regard.

Jessica: 7:59

Definitely a very important area that you want to make sure is getting done correctly and that you know. If you don't understand the legal complexities of it, obviously it's always better to lean on a professional for it.

Josh: 8:12

Yeah, definitely. And yeah, there's business assets, all those kinds of things that really play into this. It's really important to have that done properly. And then the other thing, too, is I just always say, from a standpoint of a person who's putting their trust in someone who's going to make sure this is all being done properly, you want it to be a legitimate firm that's going to be there for long-term. Where you know, I do see people that have some major shift happen after they built one online and they go well, now I have to go get this thing notarized and they're going in there and typing things in. I'm going. I think you probably voided the document at this point, so just call a pro and get it done right.

Josh: 8:46

And usually you know we say to at least review your estate plan every five years. Just take a look at you know Just take a look at the people you list as the trustees and all the different leadership roles that you're going to have within your passing. Just making sure that those are all in order. And if you have an estate planning attorney that drafted it, usually it's a lot less expensive to get it updated if something does change. So it's not like you're paying $2,000 to $5,000 every time you go meet with the attorney.

Jessica: 9:10

Yeah, that is a great point there. I guess now we'll switch over to the other side of things, where what are you doing if you're inheriting assets? If you're lucky enough to have someone pass something on to you, what's the first thing that someone should do when they are hearing that they're inheriting assets?

Josh: 9:30

It's always a tough time. I mean, we've unfortunately had many circumstances where you know, you get the email and someone says, hey, I, my mom, passed away or an uncle passed away and I think I'm going to be inheriting some money. And so it's always tough because you're you're grieving and my first question always just comes up is like, do they have an estate plan in place where things laid out Well, like who's the personal representative, who is actually going to make the decision, the trustee of the trust, just so I can understand, like which of the siblings is going to be taking the lead role, and understanding how that all works. But obviously there's so many different pieces to it. You got to make sure if you are the one who is the trustee or the one who's actually got to get everything executed. You got to get a death certificate and work on getting the accounts separated, communicating with your siblings, and you know there's so many different parts of it. So if you think about family dynamics and there's broken relationships with siblings, like right there you already see a red flag of saying this could be really difficult because I just named my son, who doesn't get along with my daughter, to go navigate this really complex estate plan and so you know. The other thing too with that is when you think about um, that piece to going back to like the estate planning side of it is having like a third party trustee can help with some of those family dynamics, cause then it's actually like a fiduciary who's going to be making those decisions and the siblings come together with them to make sure that everything gets coordinated well. But yeah, when you find out that you've inherited assets, definitely coordinating with your advisor to make sure that things get done properly.

Josh: 10:59

Because if you inherit an IRA, there's tons of tax ramifications if you just take the money out. We had a scare the other day where a client inherited. It wasn't a large sum of money, but it was still. It would have made a major difference at them if they would have just taken a distribution of that IRA from that account. It would have pushed them up two tax brackets this calendar year. And it was a miscommunication on an email where he said something like that I was going oh my gosh, I think that's a really bad decision we got to reverse this. But it's just important to coordinate early on so we can help make sure that the accounts get transferred over properly. The other thing I would say that's not really a direct answer to that question, because it really goes along the lines of things that you should not do is do not go buy a new car, do not go upgrade your home within a couple months.

Josh: 11:47

We do find that the best generational wealth transfer happens is that for people who don't change anything with their lifestyle. Generational wealth transfer happens is that for people who don't change anything with their lifestyle. I mean, obviously, inheriting a chunk of money at any age is a huge opportunity for you to grow and continue a legacy. Beyond that, we do find you know we have very direct conversations with people about the statistics and you know first generation usually builds a wealth. Second generation helps cultivate everything, grow the tree basically, and then statistically, the third generation chops down the tree, and so we want to make sure you avoid that by just not changing lifestyle or doing anything drastic in those early months.

Jessica: 12:24

And also sorry, and also don't tell everybody you inherited money, because that's never a good thing either.

Jessica: 12:31

Yeah, you always hear about people coming out of the woodwork when there's inheritance or something happening like that. So yeah, a really good point there to kind of take some time You're in the grieving process I've heard before like waiting at least six months before you make any large decisions with spending the money or putting it anywhere Just kind of letting everything calm down a little and try to make decisions with a clear head On the lines of inheriting. Obviously we know you can inherit cash or investment accounts or just actual money, but what other things do you see people inheriting that are assets?

Josh: 13:13

It's been interesting over a long career of all the different things that I've seen and from the really high net worth people having very expensive art collections and all the different specifics but just down to like simple, just family heirlooms and that's something that happened with someone very close to us is that the parents did not have much money at all and before the son of the person who inherited it got on the flight to fly down to Florida to go to her house, cousins and people from Georgia drove to the house and actually took family heirlooms and necklaces and jewelry and things like that from the house, because they just knew the house would be unlocked.

Josh: 13:51

So it is really important to just to step back on, like when you actually get an estate plan completed. A lot of times the attorney will give you a personal referendum where you fill out all the different things that you want to go like, I want my wedding band to go to my daughter so that she has that. If it's not written in the document, that is a very easy point for people to fight about. The daughter-in-law and the daughter get together and I want the ring, I want the ring. Who's going to decide now? The son has to decide. Of course he's going to side with his wife. Who knows how that could actually unfold. But yeah, you see things from personal collections, art, all sorts of different aspects. The best part is, I mean, for the stocks, real estate, cash bank, bank assets, all those kinds of things, it's really actually pretty simple. You name beneficiaries or you put it in the name of the trust, and those are usually the ones that are not very difficult at all, because your advisor will help you split everything up and get it done.

Josh: 14:42

A lot of times the things that cause the biggest strain, either with fights within the family, or just a headache of going through a house and looking at old baby clothes and like why did mom and dad keep this? You know those kinds of things that can cause tension within sibling relationships, just saying like, what do we do with all this stuff? So it is very interesting, but, yeah, making sure that that stuff is laid out very well. And I actually have some clients that are getting in their early eighties or late seventies and they don't wear their jewelry as much anymore. And I love the fact that they were giving it away to their daughters and daughters-in-laws because they said I don't wear this stuff and I don't want you guys fighting about it. I want you to know who's going to get it. And here it is and they handed it to them and I was so proud of them to make that shift so it doesn't cause more tension.

Josh: 15:23

So all sorts of different things that can come into play. One of the ones that has come up more recently there's many people out in Colorado that have like a mountain house or mountain property and it is a very sentimental thing and you say I want my kids to have this asset and share it for the rest of their life and there are seminars left and right about estate planning to make sure that that house gets left in the family. But on the same side it's really hard to make sure that that is something that the kids want. Because that's another tension piece where two people inherited a mountain home and one wants to rent it out and make money on it and the other one wants to use it for personal use and family. To you, you know, most of the time it actually makes sense just to sell the house and let people do with the money whatever they want to do at that point.

Jessica: 16:06

So so really anything that you feel like is valuable to you or to your family. You should try to put that into your estate planning or talk about it prior to your passing. Who's getting what? What's going on? What do I want everyone to have? Try to minimize any of this conflict. I'm hearing pretty much anything can be left as an asset to anyone that you want to.

Josh: 16:32

Jessica, I've seen animal trusts where people had a couple hundred thousand dollars to go into a trust to take care of the dogs and the dogs were like nine or 10 years old at the time and we had to navigate that they don't need this much money.

Josh: 16:44

So that client ended up buying a Mercedes Sprinter to take the dogs around on tour, and then she donated the Sprinter to be able to use for a nonprofit locally. And so it's. It's fascinating the stuff that you can do. But anything can be done, but again, just making sure your expectations are proper with it. Um, other clients have said I really think my son wants my car. And then I just said, well, have you ever talked to him about it? And he was like, oh, he's going to definitely want it.

Josh: 17:08

And I had a conversation at lunch one day and they're going, dad, I don't want that car at all. Like, just sell it. And I was like, why did you hold that thing for so long? Yeah, so it's, anything can be really passed, but it needs to be really laid out very well. A lot of people pay the money, get the estate planning done and then they put that binder in a safe and don't think about it. But you have to fill out that personal referendum and you also have to make sure you retitle assets and make sure everything gets executed, because I think only 20% of people, the stat might be still relevant today, have an estate plan and even of those 20%, only 20% actually execute it properly and get all the accounts updated. So I always remind clients to say get it done right, make sure you list everything that's very valuable to you and who it goes to.

Jessica: 17:54

So on that inheriting side, when you're getting assets, obviously it's just an emotional time. It can be a tense time. How can you make sure that all debts, liabilities, everything with like assets coming to you has been cleared and is legal and all good? Yeah, how do you do that?

Josh: 18:17

Usually people are usually surprised because they think that a state plan should be done really quickly or okay, they passed away, let's grieve, let's have the memorial, et cetera. And they just think, okay, let's just split the assets up and move. But it takes usually about nine months to get everything finally settled. So you're going to find out what kind of debts are there and make sure that everything is all paid for. And there's usually a notice that goes out of the death so that if creditors you owe them money or the state owes money.

Josh: 18:44

They actually have a system where they can go look and say, oh, that person died, we should go get some money from it. So you want to make sure everything gets settled down. So you know, I think one of the things I've seen in the past where maybe the kids inherited the bank account and they just split it up and just give it to their siblings right away, and then they find out there's a $10,000 bill that hits and so now the kids all have to go together and like have a conversation Okay, you got to send out this much money, et cetera. So it's usually good to just make sure, like that cash position stays there until the estate is fully closed.

Jessica: 19:14

I feel like that's something you don't really think about until you're in that situation. It's good to kind of have a heads up of how long these things actually take. Wanting to make sure that everything really is cleared before you start spending any money or investing anything Kind of like we were saying earlier, is just to just to wait, let everything settle before you make any decisions, which is a good tip emotionally and for tax reasons. So definitely.

Josh: 19:43

But yeah, you want to be on top of it, Cause I've had also estates that have taken four to five years to get settled, because person just doesn't take action at getting things done, and so like that's the other side of it too.

Josh: 19:54

You want to. You want to be proactive and get things done, but on the right time and don't rush too quickly to get everything all split up. But you want to be proficient with it and utilize the attorney who drafted the documents and your advisor to make sure that it all gets done properly.

Jessica: 20:08

Well, the last thing I want to talk about is kind of more on the legacy side or just like how do you honor somebody who is leaving you, then inheritance, how do you honor kind of their legacy, whether or not they had something laid out of what they want you to do with the money or just because you knew them as a person? Like, how would you advise people going about that?

Josh: 20:33

That's a great question because every client has their own value system and how they interpret things and et cetera. So, like you know, I've seen in estate plans people will say I want to give a gift to like my university because it gave me so much over the years. Or, you know, make a donation to the park or rec service cause I served there. So like those are really good to like, lay those out. But if it's not laid out in the estate plan and you're inheriting money and you say I want to honor my mom or dad by making a gift to something that they would have loved, those are really good ways of like just charitable giving to some of the causes I think they have.

Josh: 21:05

I do see a lot of times that even though the estate plan just listed out as saying, okay, all my assets go to my kids, a lot of the kids will get together and they'll say, well, let's give all the grandkids $10,000 just to have a little inheritance there. So like there's, there's definitely a lot of things you can do to help pass on like that family heritage so that they all you know can understand that hey, they were really good savers. Or I want to make sure I pass on investing to my kids at an earlier age. But really, I mean, I think to some degree it's hard for people to hear, especially if you're not good at managing money your whole life and all of a sudden you inherit a bunch of money. Honoring your parents and all the hard work that they put in there would just not be going and buying boats and cars and things like that, because if you didn't see them doing that with their lifestyle, it's not really honoring to go blow it, you know, and enjoy things, but you got to enjoy it.

Josh: 21:56

Like, money is a tool to be used during your lifetime. So, like I, totally get it. We have lots of conversations about that. There's a portion that you want to use for for some fun things or relieving debt, et cetera. But making a charitable gift, continuing that legacy of passing money on to next generations and even skipping the next generation of the grandkids is really an amazing way to do it. But not necessarily just giving them cash, but opening an investment account and say, okay, here you're gonna buy these mutual funds or ETFs and we're gonna hold these, and someday this can be worth a lot of money for you. It's a really great way to honor your parents or grandparents when you inherit money Well, great.

Jessica: 22:33

So obviously, like we said at the top, estate planning is a whole big topic and there's so many nuanced things to it, so this really just kind of scratches the surface. Obviously, we always recommend that you talk with a financial advisor, with an estate attorney, with these professionals to lay out your plan and what you do if you inherit assets. If you don't have somebody that you have to talk to, we would love to meet with you at Summit. We are at Summit Wealth Group on all the socials and our website is www. S wwwsummitWealthGroupcom. Thank you, Josh, for answering all those questions for us and giving us that insight on things you've experienced.

Jessica: 23:16

So, as always, we hope that you have found this informational and learned some new stuff, and if you have any questions, give us a shout. Thanks for listening. Thanks for listening to the Reach, your Summit podcast brought to you by Summit Wealth Group. If you enjoyed this episode and would like to help support the podcast, please share it with others and subscribe so you don't miss an episode. If you have any questions or topics that you'd like us to cover, please email us at info at summitwealthgroupcom.