Financial and Estate Planning

Philip Fish, CFP<sup>®</sup> and Estate Planning Specialist with Sandy Spring Trust

Phil Fish, CFP® and Estate Planning Specialist with Sandy Spring Trust shares his over thirty years of experience as he provides a broad overview of important issues to consider in your financial and estate plans. Topics will include Revocable Living Trusts, Wills, Financial and Medical Powers of Attorney, selection of decision makers, preparation of Fiduciaries for their future role, account titling, investments, stocks, bonds, mutual funds, exchange traded funds, incapacity planning, estate settlement and trusts established to protect family members.

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    Estate Planning


    - Good morning everyone. And thank you so much for taking time out of your day to join our Estate Planning and Financial Discussion. My name is Phil Fish, for the past 20 years I've been a Certified Financial Planner and an Estate Planning Specialist with Sandy Spring Trust. My role is to solve problems. So I speak throughout the community and before the pandemic and COVID I used to hold seminars with groups in-person and now we've moved to this online version. So you're joining us in one of two ways. Some of you have joined the live events or a happy Tuesday morning to you. And on your screen, it looks like you're the only participant in the discussion which is not the case, but we do that for privacy reasons. Your video and your microphone are muted so you can relax. No one could see into your home or office and no one can hear any background noises. So if the FedEx truck arrives and the dog start barking, you don't have to worry. My role in the next hour is to try and raise your awareness of some important issues on financial and estate planning issues. I've been in the industry over 30 years. I've worked for Sandy Spring Bank for the past 20 years. And I was a trust officer for many of those years. And as a trust officer, I help clients navigate through the different transitions in life, going from working to retirement, from retirement to the illness of a loved one, unfortunately from the illness to the death of a loved one settling estates. And also the establishment and the management of trusts established for the protection of family members. In the next hour we're gonna cover a lot of information. So what I ask of you is, first of all, just relax. The some of you with a stronger background in these areas of financial and estate planning some of the information will seem very fundamental. And I ask for your patience and understanding because we have a broad audience. And for some of you who are just trying to learn more about these issues at times, it will feel overwhelming. It will feel like you're trying to learn a foreign language in an hour. I'll be discussing various terms, wills, trusts, financial powers of attorney, ETFs, mutual funds, stocks, bonds, the Dow Jones, Nasdaq and your head will start to spin. Just hang in there. Hopefully you have a pad of paper and a pen we would have shared with you an outline if you don't have it with you, don't worry. I'll kind of guide you through today's program and just jot down questions as we go along. Unfortunately, we received quite a few questions in advance. So with the amount of information I have to share with you today, I'm not sure if we'll be able get to any questions sent during today's program but I will be made available am I can be reached after the event. And so for those of you on the live event later this week you'll receive a recording of today's program. So you can watch it again if you wish or share it with others. And you'll also receive some times when I'm available for up to a one hour discussion I'm a salaried officer of the bank. There was no cost, no obligation to speak to me. So as I raised questions today you are free to take those questions to your estate planning attorney, your accountant, your financial advisor, but you're also free to reach out to me if you'd like to speak to me and I will do my best to answer those questions to the best of my ability. I'm speaking to you today from the boardroom of Sandy Spring Bank, for the past 20 years I've been a salaried officer of our trust division which is located next door. And behind me in normal times this room is filled with board of directors and executives. Dan Schrider, our President Phil Mantua our Chief Financial Officer and other senior management, staff and board members as they talk about the bank's past, future, and also our present. Our bank was founded in 1868 shortly after the civil war. And I'm proud to state that we will, one of the few banks in the region at that time that would accept deposits from everyone and anyone. And we would make loans to everyone and anyone, there were no restrictions. If you read your history back in the 1860s, a lot of banks had restrictions on who they would do business with this bank did not start that way. And for 152 years, we stood by the side of our clients through difficult times, rebuilding after the Civil War, World War I of the pandemic that occurred during that time. The great depression of the late 20s and early 30s, World War II, the technology bust of 2000, which is when I joined the bank. The mortgage crisis of '07-'08 and the crisis we've dealt with this year. I know it's scary times and it's overwhelming. So I'm really grateful that you've taken an hour out of your day to sit, listen this'll be a one-way conversation today. I will be sharing my information with you and there'll be an open invitation, if you'd like to turn it into a two-way conversation you just need to let me know by responding to one of the emails or reaching out to me. My contact information is in various places and there was no cost or obligation. And we'll speak for an up to an hour either by telephone or through a two-way video conference. So thank you for joining us today grab your pad of paper and your pen or pencil. Hopefully you have a favorite beverage and you're comfortable and I hope you enjoyed the information that we have to share with you today. So I'm gonna break today into three segments, on the outline there are 10 items listed. We'll start out with kind of the fundamentals of estate planning. I'm not an attorney. I am a very knowledgeable about estate planning. I work with clients attorneys, and I know a lot of the estate planning attorneys in the region. Sandy Spring Trust has a number of attorneys who work in our department, but they can never become your attorney. It would be a conflict of interest because Sandy Spring Trust does three things. We professionally manage assets under federal fiduciary standards. And we'll talk about that, later today. We are named in documents as a trustee and as a personal representative, we're named as a backup behind family members or friends who might be named. And we offer support to family members and friends who are named in the challenging roles of serving within the legal documents that we'll talk about today. So let's start with item one, legal documents everyone on this call, no matter how old you are, how many assets you have, whether you're married or have children. Everyone should have the three basic fundamental documents a will, a financial power of attorney and a medical advanced directive. The will is gonna control assets when you die that are in your sole name. And we'll talk about titling later today but assets that are in my name, Phil Fish, if I die would be controlled by the will that I have in place and the will states, what do I want done with those assets that are controlled by the will. And that's a very important statement because certain assets will not be controlled by the will. And we'll talk about that in a few moments joint ownership, beneficiary designation, trust assets but the will is an important document that we should have but it does not deal with lifetime issues. So we have two documents deal with what happens if I become sick and I'm unable to handle my affairs or we have a financial power of attorney to handle my financial affairs. And we have a medical advanced directive that contains a medical power of attorney to handle my medical decision-making. The reason we have these documents is that there are restrictions on releasing information to somebody who's not the client or the patient. A bank is not just gonna start sharing information on your bank accounts that are in your individual name with somebody else, unless they have proper authorization. And the little scribble on a bar napkin or a pad of paper, isn't going to work. Same thing with doctors and hospitals they have restrictions on releasing medical information or talking to individuals other than the patient about medical issues. The medical advanced directive is a document that states your medical wishes in advance. You're basically laying the groundwork to state to the parties out there. "If I become sick, I want this person authorized to handle my financial affairs. If I become sick I want this person to handle my medical affairs." It could be the same person, could be somebody different. And when I die, this is what I want done with my assets. Estate planning, excuse me estate planning is about control, controlling your assets and controlling who has authority to act on your behalf. A revocable living trust is a fourth document. It's a little beyond the scope of today's one, our discussion. If we do talk further one-on-one we can certainly discuss trusts in more detail but a revocable living trust is just a way to gather assets and place them under the control of a governing document called a revocable living trust. So that would be the Phil Fish revocable living trust and that would be trustees. People authorized to act on the trust assets. I could be the trustee of my own trust, starting out. I could name my wife, Lisa, as a trustee later on or a family member, a son, a brother, a sister. And we'll talk about decision-makers later. And a revocable living trust can actually cover all stages while I'm alive and healthy, when I get sick, when I die and the trust can actually continue on after I've passed away to create a trust for the benefit of a loved one. And yes, we'll talk about that at the end of today's program as well. So three documents for everyone, four for some, a will, a financial power of attorney, and a medical advanced directive for every individual and then revocable living trust with complimentary will, financial power of attorney, medical advanced directive. For those who feel a revocable trust is suitable. And your estate planning attorney can help guide you. There's a lot of factors in whether a trust makes sense what state you live in, what type of assets you have, what you're trying to accomplish. So core documents, some of you on the call today or watching the recording, we're gonna make a recording of today's program and share that. So some of you did not attend the live event but some of you are listening to this on a Saturday afternoon or whatever day it happens to be. But for everyone on this call, it's very important that we have the right legal documents in place. The next step that we wanna focus on is who are our decision makers? Within the will they're called a personal representative, within the financial and medical powers of attorney they're called agents sometimes called attorneys. In fact, they don't have to be an attorney, with any trust they're called trustees. The broad term is a fiduciary. Somebody authorized to act on somebody else's affairs. Who'd you name? Well if you're married many individuals will name their spouse, or their partner, or their significant other. Some individuals will name brothers or sisters. Some individuals will name children, sons, daughters. When you get beyond the immediate family and you start stretching out to cousins, nephews, nieces, friends it is a huge ask to ask a distant relative or a friend to take on this responsibility. It is a huge amount of work. And so that's something we would talk about one-on-one is who have you named? Who are you thinking of naming? Some of you on the call may have no legal documents in place currently and are joining this call and maybe start that process. Hopefully I can motivate you to do the not fun work but the important work of getting your affairs sorted. Some of you may have old documents that you know, are kind of out of date. Some of you may have new documents that are confusing and you're not really sure. Some of you may have perfectly drafted documents but this will learn later, maybe the way your assets are titled is causing disruptions to your strong estate plan. So you have to select somebody. Sandy Spring Bank is a corporate trust division. And within our trust division, we are sometimes named as a decision maker, either as a primary for somebody who doesn't have anyone that comfortable naming, sometimes as a backup and sometimes as a support system to help an individual who is named Once we get our legal documents in place and we name our decision-makers, then we have to talk about preparing them for that future role. If you take anything from today's discussion, please take this. You need to communicate with the people named in your legal documents while you're healthy. This should not be a secret. It shouldn't be something that is not discussed. It's a difficult topic to discuss, but it needs to be. So I'd like to introduce you to two friends of mine, Steve and Susie they are hypothetical decision-makers. In your world they might be your spouse, your partner, your significant other, your brother, your sister, your son, your daughter, nephew, niece, cousin, friend, trust officer at Sandy Spring Bank. But Steve and Susie are the people named in your documents. Step one, tell them you should really maybe ask them if they wish to serve. And if they're smart, they will politely decline because it is a very thankless time-consuming stressful hard position to take on but sometimes they are willing to take on that assignment but you should at least communicate that they are named. What else do they need to know? Everything, let's start with the basics? Where are these important legal documents kept? Well, you've placed them in a safe deposit box at the bank because you feel that's a really safe place to keep these important documents, which is fine. The problem is it's not the bank you do banking with. Normally it's a couple of blocks down the street because back in 2004, that bank offered a free toaster oven for anyone who would open up a safe deposit box. And you jumped at that opportunity because how could you turn down a toaster oven? It toasts and it bakes in one piece, it's amazing. So you have your safe deposit box located at a different bank and that's the only relationship you have at that bank. The key is in a very safe place. It's taped behind a picture in the living room. So you know where it's located. The question is do Steve and Susie know where the key to your safe deposit box is located? Do they have a key to get into your house to access the key? Do they know where the box is located? And most importantly are they an authorized signer to access the box? When they walk into that bank? When the bank manager pulls the signature card for the safe deposit box for Mr. Smith does it reference Steve, his son as an authorized signer on the box, giving him authority to access the box without any headaches, the simple things, communication but there's nothing worse than a family facing the illness or loss of a loved one. And not knowing where things are, not knowing where the legal documents are kept, not knowing what insurance their mother or father may have carried, not knowing where they do their banking or investing, not knowing where the tax returns are located, not knowing who their lawyer is, their accountant, their financial advisor. A lot of accounts now are online. Do they have access to the passwords to give them access to these accounts? Because there are no statements coming in the mail everything's done through secure email. Can they step into your world and take care of you during a period of poor health? And can they take care of your affairs when you pass away? Do they know your wishes about end of life? Do you wish to be buried or cremated? What type of care do you want towards the end of your life? Yes, difficult issues. And if anyone on the call today has lost a loved one recently, are dealing with the declining health of a loved one. I'm so sorry. It is so hard to deal with this but it is significantly harder if the plan is not strong both the financial and the estate plan. And that's what drives me every day to do this public speaking, to speak to clients. This is my role. We have trust offices on staff. I'm no longer an active trust office. We have portfolio managers on staff who manage assets even though I'm a certified financial planner I'm not a manager of client's assets. I'm more problem solver. Somebody who has the discussions with clients try and point them in the right direction. We may not be able to help directly but if we speak over phone or through video and I think the bank can help, I'll let you know that. And if I don't think the bank can help directly I'll maybe try and point you in the right direction. That's my job. And I've been doing it for the past 20 years here and been doing it for over 30 years, my entire career pretty much. And I enjoy it because I get to help people. And I see the consequences of poor plans and I see the benefits of a strong financial and estate plan. So that's the first three items. We wanna make sure you've got your legal documents in good working order. We can talk about that when we speak one-on-one. We wanna make sure you have your decision-makers in set up and we need backups we can't just name one person, because what if that one person is unable to serve because they become sick or died or moved out of the area and just cannot handle the responsibility. So we need to have backup plans and we need to prepare the Steve and Susie's for that future role. Item four on our list is titling of assets. One of the common mistakes we see is clients need to realize that their estate plan and their financial plan have to be coordinated. What you do on one side affects what happens on the other and a common mistake we see is the improper titling of accounts. In a moment we're gonna talk about investing and we're gonna talk about stocks and bonds and mutual funds. And that's an important part of financial planning but a very important part of financial planning is how do we structure the accounts? Do we use a joint account? There were three different types of joint accounts, joint with rights of survivorship, joint tenants by the entirety, joint tenants in common, and they have different roles, different purposes. Do we have a beneficiary designation in place? How does that beneficiary designation work with the wills or the trusts because beneficiary designation overrides your legal documents. It takes precedent, many joint ownerships override legal documents. So I'm not saying you should never have a joint account and I'm not saying you should never have a beneficiary designation, but they have to be thoughtful and they have to coordinate with the overall financial and estate plan. That's what we do at Sandy Spring Trust. We kind of pull the pieces together working with you, and your decision-makers, and your attorney, and your accountant, and figuring out how your assets need to be managed and how they need to be titled. And when a life change occurs, whether it's retirement, illness or death, to be there either to serve in a role designated by you within your documents or to provide support to a family member or friend that you've named. So the titling of your assets is critical and we need to be very careful. Many times we'll see clients with a revocable living trust which is a wonderful document that controls assets during life and sickness and death and beyond but only controls assets that are titled in the name of the trust. And so many times we meet clients who have these wonderful legal documents but the assets are not titled in the name of the trust. And so it creates huge problems and it can really disrupt the plan. So the titling of the assets is incredibly important. So if you're following along with the outline we're now gonna flip page and head around the corner and we're gonna talk about investments for awhile. It is hard managing money, especially right now interest rates being so low. It is a gut punch to investors, it's wonderful for people borrowing money from others. Earlier this year, my wife and I were able to refinance our home. We moved there four years ago Sandy Spring mortgage helped us purchase the house. And with lowered interest rates, I reached out to my mortgage banker and we decided to do a refinance. So we basically low at the rate below 3%. What that means is for the next 15 years, that rate is set. It's locked in. If the mortgage company calls me up in 2027, when rates and now let's say five or 6%, I don't know if they will be at that level, who knows, but if they are and I'm locked in below three and the mortgage company calls me and says, "Hey, Phil, how you doing? Just wanna check in on you. You've got this 15 year loan with us. We're seven years in and the rates kind of low. And we were hoping we could maybe redo things and have you pay us a higher interest rate." I can stand up tall, shoulders back like my father taught me looking straight in the eye and go, "No, it's a 15 year fixed rate. You're stuck with this rate. I locked it in. It's not variable. It can't be adjusted. As long as I make my payments I'm gonna be paying you a 2.75% interest rate for the next 15 years." That's it. And they can't do anything about that. On the inverse side, the same works for investors. So if you're the client and you're investing and you wanna invest in say a bond which is a loan, a little bit like a mortgage and I give that money to a big corporation like an Exxon to build a big factory or refinery. I give them $10,000 in the form of a bond. And it's a 15 year bond. And Exxon promises to pay me 2% per year for 15 years 'cause that's kind of where rates are right now. You lend money to the federal government, a treasury bond. The 10 year treasury bond is earning less than 1% per year in interest. That's why CD rates are so low. That's why savings account rates are so low. If I lend the money to Exxon and promised to pay me 2% every year and in 15 years give me my $10,000 back. That's how bonds work. The problem occurs is if I call them up, if rates rise and now Exxon's issuing new bonds at five or 6% and I call up Exxon, I find the telephone number somehow. And I call up that bond desk. I go, "Hi, my name is Phil Fish, I gave you $10,000 back in 2020. You pay me 2%, but I'd like to get a higher rate. Can we redo the loan?" Just like the mortgage company, trying to redo my mortgage. They can stand up tall, shoulders back look me straight in the eye and go, "No, it's a 15 year bond. We promise to pay you 2% until 2035. And that's what we're gonna do." I gonna get rid of that bond that I have to go to the bond market and try to sell the bond. And I'm gonna take a real hit. I get asked, or we received a question in advance are bonds safe? And it's one of those questions that there are so many answers to that. In some ways, yes, they are safe, but they carry risks. And that's one of the risks. If you buy a long-term bond in a low interest rate environment and rates rise you're stuck with that bond. And if you try to sell it, you're gonna sell it at a loss because the promise is for the length of the bond and the issuer is gonna honor that promise. They're just gonna pay the 2% for 15 years. So you can take as much risk in bonds and be exposed to risk in bonds as you can in stocks. So let's do a quick run through and for some of you more familiar with investing, bear with me but there are a couple of different types of investments. We have cash, savings accounts, short-term CDs, checking. You put a hundred dollars in, you get a hundred dollars back with a tiny little bit of interest. We call that Safe Harbor money. The analogy I use with investing is investing is a bit like going out to the ocean and you have to figure out how far you're traveling and what type of investment vehicle, or ship, or boat you wanna use to get to where you're going. I wanna go two miles down the coastline on a nice sunny day. I don't need a big ocean liner but if I wanna cross over the Atlantic ocean that may take me 20, 30 years, say for retirement I don't need a little dinghy with a little outboard motor. It's just not gonna work well. Different investments have different characteristics. They work well in certain scenarios. Stocks are a longer term investment. Bonds can be short, medium or long-term, cash are shorter term. So we just wanna make sure that clients are using the right investments for what their goals are. And they have realistic expectations on what these investments can do and what these investments can not do. So we have cash. We have bonds that we've talked about, which is a loan. Stock is an ownership. If I were to invest $10,000 with a friend in a cupcake baking factory business, and we make money we might receive a portion of those profits in the form of a dividend, many individuals, own stocks, they receive dividends, which is a sharing of companies profits paid over time. Those dividends are not guaranteed, but if the company is strong and profitable, they're pretty steady. And we also hope that the stock may rise in value. And at some point we may decide to sell the stock and that creates a capital gain. There are unrealized capital gains. If I buy a stock for $10 and it grows to 50, but I don't sell it. I have a $40 per share capital gain, but it's unrealized. It's not taxable because it's not real. When I sell the stock, then I make that profit real. I receive the proceeds and that's when the state and the IRS kind of show up waving their hands going, "Hi, you just made money and there are capital gains taxes that need to be paid." It's a complicated world. Law, tax, finance, healthcare, legal documents. I learn every day, new things. I've been doing this for 30 years and I'm surrounded by people to be honest a lot smarter than me in a lot of different areas. This takes a coordinated effort. And what we try and let clients know is a good financial and estate plan has a lot of components to it. Legal documents decision-making, titling of accounts, investing of the assets, dealing with changing environments. It's difficult. Sandy Spring Trust is a fiduciary. What that means is all of our staff, are salaried. We have no commissions, no products. We don't have Sandy Spring Bank investment options. We can build portfolios using cash, stocks, bonds. They have team of portfolio managers who are salaried professional portfolio managers. They're not brokers, they're not commissioned they're professional money managers. And clients are assigned to a portfolio manager and they develop an investment objective for that individual. And they manage assets, retirement accounts old 401k plans, IRAs, individual accounts, trust accounts, any type of investment account, really. And we're hired to be a navigator. We're hired to help clients select from the tens of thousands of different investment options that are out there. And there are literally thousands of mutual funds which are just a gathering of money invested in a certain way. ETFs, exchange-traded fund, which is again a gathering of money invested in an unmanaged way. With an ETF you're buying kind of a block of investments with a managed mutual funds, that block of investments can be changed by the portfolio managers managing those funds. And there are really good managers of funds, and average ones, and really bad ones. The nice thing at Sandy Spring Trust is we don't have any affiliations with anyone. So our portfolio managers can go out to the vanguards the zero prices of fidelities and select top rated funds that are no-load, and we can also build individual portfolios for our clients as well. So as a fiduciary, our job is to manage assets but always keeping an eye on the estate planning side, always keeping an eye on the titling of the accounts, working with the client and their estate planning attorney, working with their tax advisor, working with the decision-makers, the Steve and the Susie's. Pulling those pieces together to prepare for change, retirement, illness, death. That's what we do at Sandy Spring Trust. It keeps us really busy. Couple of things, before we finish on the investment side we hear a lot about the S&P 500, the Dow, the Nasdaq. These are just indices they're groups of stocks that are trapped. So the S&P 500 is around 500 stocks. The important thing to realize, though with these indices is they are weighted which means that certain stocks carry a lot higher weighting than others. And actually over 20% of the returns in the S&P 500 are generated by only five of the 500 companies. So it's kind of tilted heavily towards those five companies. 70% of those of the returns I think are in the first 100 positions. So it's a very skewed index. It means that the lower end positions don't really carry much weight. And it means that if you invest in the S&P 500 funds you may not be as diversified as you initially thought. It's not an even mix where your $500, $1 goes into each of the 500 stock positions. It doesn't work that way. I know investing is complicated. I know it's confusing. It's not to me 'cause it's been my career. But if my car breaks down, I have no idea how to fix it. And if my air conditioning doesn't work I don't know how to fix that. We all have our skillsets. We all have the areas that we're more comfortable with. That we're more knowledgeable where we know the terminology. It's kind of just knowledge that we've built over the years. It's okay for you to feel overwhelmed and confused sometimes by law and tax and finance. But what we don't want is for you to not to get good advice and guidance. And that's one thing that we can do at Sandy Spring Trust. So we've talked about legal documents. We've talked about decision-makers, we've talked about preparing the decision-makers. We've talked about the titling of assets. We've talked about investing. We've talked about fiduciary standards. One thing I will stay is one thing we don't do at Sandy Spring Trust is we don't sell products. There are a lot of investment products out there that are sold. They are commissioned, the people offering them get paid big commissions when the client purchases them, all I will state is be cautious and be careful. They many times have hidden fees. Many times you're locking the money up for a long period of time. And they are complicated. The contracts that you're agreeing to they are contracts can be 300 pages long in very small font. If somebody's pressuring you to buy an investment vehicle just maybe take a step back ask them to give you the information in writing share it with somebody, you know, that you trust maybe an attorney, an accountant, a friend, or family member who's in the industry. But if you feel pressured to sign something don't something isn't right. And make sure you're comfortable and make sure you realize that if safe money is earning less than 1% a year over 10 years just be realistic about what's available out there. You can make good returns but there are risks and there are trade offs, and one of our roles is to make sure clients understand what they are. Last stage of our journey today, we've talked about legal documents. We talked about decision-makers, we've talked about titling of assets. We've talked about investments and mutual funds. The gathering of investment dollars. We talked about exchange traded funds, a gathering of investment dollars invested in a block of securities. We talked about fiduciary standards. So now I wanna move into section seven which is preparing and providing support to the Steve and Susie's of the world because that's one of the primary roles we serve in at Sandy Spring Trust. Once you have your legal documents in place and once you've selected your decision makers and hopefully you've communicated to them you need to realize how much work's involved. One of the pieces we shared with you in the handouts are the roles and responsibilities of a fiduciary during a period of illness and upon the death. And it's like two pages. It's a lot of information. This individual is gonna have to move into your world and manage your affairs, handle your real estate, handle any business interests, any rental properties, any beach houses, pay your bills, file your insurance claims. Do your taxes, pay your bills, take care of you, handle medical decisions. It is an incredibly challenging, difficult role. Some of the things that we can do to help the Steve and the Susie's, and that's one of the questions that was asked in advance is how can I ease the burden on the shoulders of people that I've named? Well, a couple of things, first of all we wanna make sure that you have good legal documents in place that are recently reviewed by an estate planning attorney who is licensed and knowledgeable in the state that you live in. Within different states, Maryland, DC, New York, California each state has slightly different nuances when it comes to estate planning. Certain laws apply in certain states that don't, certain documents are used in a certain way. So when we talk to clients, we want to make sure that the legal documents that they have their wills, trust financial powers of attorney have been prepared by an estate planning attorney who is licensed and knowledgeable in the state, where the client resides. You move to a new state that's a good time to have your documents reviewed. If your estate planning documents at 15 years old it's time to kind of dust them off and see if they're still suitable. They might be referencing tax laws that are no longer in effect. The estate tax laws have changed a lot. They used to be very restrictive and they've really expanded where a lot of people now, fortunately, don't have an estate tax problem who may have had one 10 years ago. And that's a positive thing. The problem is some of these old documents deal with those tax issues very aggressively and in today's world, could cause all kinds of problems and headaches. So we wanna make sure that documents are updated. So that's the first starting point. The second thing that helps Steven and Susie is communication with them. Talk to them, tell them where the documents are located. Make sure they can access the safe deposit box. If you've got diamonds stuffed in a old piece of meatloaf in wrapped in foil, in the freezer, make sure that they know that the foil that says meatloaf is actually holding some very valuable family jewels. My father used to keep cash inside of books. So when he passed away, we all gathered as the family and kind of shook out the books. He knew where the money was, but it was kind of a fun evening. We shook out books and found, you know gathered a little bit of money and then went out and had a drink and toasted my father. Sometimes dealing with the loss of a loved one can pull a family together. Unfortunately, sometimes it can rip a family apart if things are not thought through properly. Dealing with things like real estate and leaving a piece of real estate to multiple children and not having a clear idea of who's gonna be paying the bills? And who gets to live in the property? And what are we gonna do with it? Items that cannot be easily split very delicate. It might just be a kitchen table that is not much but it's a very emotional piece. A painting, a piece of jewelry, a piece of clothing, your grandfather's army jacket. We need to figure out what items in the house carry emotion either a financial point or an emotional point that could cause conflict. And we need to figure it out in advance. There was some tough decisions that sometimes need to be made because if you leave it to the kids it can cause rifts that can last a long time. Another thing that can be done is look at how many accounts you have. Every account number is a headache. And if you have $200 at a credit union, that's just sitting there. It takes the same amount of work to deal with that. When somebody gets sick or somebody dies as a $20,000 account or a $200,000 account so either add more money to it or close it down try to reduce the number of moving parts. Make sure your family, the decision-makers the Steven and Susie's know where your accounts are located, have a roadmap, so they know who to call, introduce them to your attorney, and your accountant, and your financial advisor, and your bank manager. So that they know and make sure that they're authorized to act. We talked earlier about the financial power of attorney as a document. It's an incredibly powerful document. It states if I sign one and I named my brother, David as my decision maker, David can do anything I can do. He becomes me financially. He can open accounts, close accounts. Wild transfer funds, sell assets, buy assets. He steps into my shoes. If I have a financial power of attorney and I have assets say at Merrill Lynch, well they need to know that my brother is the decision maker because if my brother calls him up out of the blue and just says, "Hi, Merrill Lynch, my brother, Phil is sick. I need to stop moving money around." He's gonna hit a brick wall. And so what we stress to clients is be proactive. Talk to your vanguards, TSP, TIAA-CREF, Bank of Americas. And once you have your estate plan whether you're using a revocable trust for lifetime issues or financial power of attorney make sure that your financial locations are aware of it. And try to reduce the number of locations that Steve assumes you're gonna have to travel to. Do you have 20 financial locations or four? If you have 20 mutual funds at 20 different mutual fund locations with 20 different mutual fund account numbers it's gonna be a tough job for Susie or Steve to contact each one of those locations and go through the legal process of dealing with those accounts during an illness or upon your death. I spent about a year or so ago a client, husband passed away. He handled everything and she was not properly informed on where things were. And it was a very difficult about a year and a half figuring things out trying to content financial locations. A lot of it was online. So a lot of it was very hard to access. The process was much harder than it could have been or should have been. And it made the grieving much harder. Sometimes this is not fun to do this proactive planning getting your affairs in order, but for your loved ones it can make the process less stressful and allow them to deal with the challenges of a declining health or the loss of a loved one easier. So I know it's not fun talking about this sickness, and death, and taxes, and finance, but we see the consequences of a strong plan. We see the consequences of a poor plan as well. So we prepare them decision-maker and we make sure that they kind of know, Steve and Susie we communicate with them. They know where the documents are located. They know who your lawyer is, your accountant, your financial advisor. We have documents on file. Everything's prepared. And even then they're going to need help. I would need help. I've been doing this for 30 years, but I'm not a lawyer. So we need legal help. I'm not an accountant. I would need tax help. I'm not a portfolio manager. I would need investment help. I'm not a doctor. I would need medical guidance and I would need help with time. I have a career, I have a wife, I have a life, I'm busy. And so any person named is gonna need some level of support. And that is something that we do provide through the bank's trust division. Incapacity is God, one of the hardest things we deal with, declining health of a loved one. First of all, bad people come out and are aggressive during those times, they will try to take advantage get access to checkbooks, get access to account numbers, to social security numbers, and people who are struggling with their mental clarity are much more at risk from these attacks. So one of the things we do at Sandy Spring Trust is our accounts are locked. We don't issue checkbooks tied to the larger investment accounts. We don't provide online moveability, clients can see the account but we're a little old school, the client has to contact a trust officer or portfolio manager who knows the family before we move funds and we have caught a lot of issues there and saved a lot of money for our clients. By just having that check and balance, obviously money can move very quickly and easily but we just don't want a missing checkbook or a passcode given to the wrong person to cause a lot of problems. So be careful about sharing information, be careful about protecting information, especially during a time when the loved one is struggling. Dealing with medical issues I do a lot of work with Montgomery Hospice and care manages, and I do discussion groups with lawyers and accountants and healthcare professionals, and we all try and figure out. And we all agreed that incapacity is the toughest time for a family. Even with all the preparations, it's hard but if we not prepared, it can be so difficult. And if the plan doesn't work then we deal with guardianship and court orders and it gets really traumatic. So if any of you are dealing with an illness or have a loved one or battling an illness yourself, I am so sorry. It is so hard, especially right now with COVID and the pandemic and all of the worries that seem to be swirling around us every day. Then somebody passes away and there are four ways assets can move, joint ownership. Remember I mentioned earlier, joint with rights of survivorship is a joint ownership say with myself and my brother, if I die the asset would flow to my brother. My brother dies the asset flows to me. We generally don't recommend joint ownership with someone other than a spouse because you expose it the asset to risk. So if I met with a client who says "I just wanna add my son to my Merrill Lynch investment account." I would probably guide them away from that because if their son got into legal trouble or was going through a divorce or got into a car accident that joint ownership opens the door to risk. And so if you want your son or daughter to have access to accounts we prefer that you use a financial power of attorney or a revocable living trust arrangement. It gives them a forum to act but it does not grant them ownership. And it provides a thicker protection against risk. So with joint ownership, we need to be very careful and make sure that our intent is when I die this asset flows to this joint owner because it's gonna override the will. Joint tenants by the entirety is a special kind of joint ownership for married individuals. If you have an investment account, not a bank account but an investment account in joint name with a spouse, it should be joint tenants by the entirety because it offers a higher level of asset protection. And you can talk to your estate planning attorney about that but it's just something we always guide clients to. Sometimes we see clients with a husband and wife with a joint account in an investment format and it's joint with rights of survivorship. And that's not the way it should be. It should be joint tenants by the entirety. They're both joint accounts. They both pass to the spouse, just one off as a higher of asset protection than the other. Joint tenants in common is an unusual joint ownership it's sometimes used in real estate. So if my brother and I jointly own the property, joint tenants in common we could allocate how much we each own say 50, 50 or 60 40. And then when I die, my will will control what happens to my share of that joint tenants in common property. And yes, this can get really complicated 'cause if I have to have four children and I leave my assets to my four children. Now my four children own half the house with their uncle. And yes, it can get really messy. So we need to be very careful about how assets transfer. We have joint ownership. We have beneficiary designations, transfer on death, TOD payable on death, POD IRA, beneficiary designations, life insurance beneficiary, designations, annuity beneficiary designations, and these beneficiary designations override any wills or trusts, so we just have to be careful. When I talk to clients we look at what assets they have and how that titled and how they're gonna move and what the client's intent is. And sometimes we discover that the client's intent is not gonna be honored because of the way the assets are titled or because the way the estate plan is structured. So we kind of start by backing things up saying what do you want to accomplish? Then we see if the client's plan is actually going to accomplish those issues. Trusts and wills, wills are gonna handle assets just in my individual name. Trusts, they're gonna handle assets that are in the name of the trust, the Phil Fish, revocable living trust. Assets that are titled that way will be managed by the trust document and just like the will, it will give instructions. Those instructions might be to directly give money to one individual or to split it among different individuals. Or we may have a trust created after I die. So if I had a son who had a disability I may want to establish a trust for that son and place assets into that trust because my son may not be able to handle those assets. We do a lot of trusts for individuals with special needs at Sandy Spring Trust. And I actually handled as a trust officer a very large number of those types of trusts. I became very involved in that type of work and it was very rewarding working with the parents and seeing how much they love their children and how worried they were about what happens when they're not here. And creating a plan to provide protection, financial also medical and social protection for the loved one. So the last thing we're gonna talk about today is trust. And it kind of goes all the way back to the beginning. When we work with the estate planning attorney on a client's documents there might be a reason where the client does not wish to release funds directly free and clear upon that death to an individual. Maybe the beneficiary is young, 10 years old maybe they're a 20 years old and still a little young to receive a lump sum. Maybe they have a disability a mental or physical incapacity. Maybe they're struggling with addiction. Maybe they have a mental health concern. Maybe they have a gambling problem or a problem with alcohol, or maybe that easily influenced by others. Maybe they just don't handle money well. People who inherit large sums of money who aren't used to handling money in a lot of times it just goes away in a number of years. They just don't know what to do on that easily influenced. And they get convinced to buy a big house or a big boat or something they really like, fancy car. Something that they just really don't need or can't afford. And before they know it, the money's kind of gone. So at Sandy Spring Trust, we work with clients who want to establish trusts for many different reasons. One reason, unfortunately is what we call linear protection. We have a 50% divorce rate in this country and that's just the reality. So many of our clients wanna establish a trust that provides lineal control. The money goes to their son or daughter and stays in that kind of downward motion to their grandchildren. And then not at risk of going sideways in case of a divorce. It's not a pleasant conversation but it's one that should be had. We focus with our clients about figuring out what their wishes are? What's important to them? How they wish to control their assets? How they wish to manage their assets? How they wish to handle things during an illness? Disburse assets upon their death, manage assets after they've passed on for the protection of loved ones. As you can see, it's multi-dimensional it's law, tax, finance, health, life, sickness, death, legacy all of them interconnect with one another. So that's kind of what I wanted to cover today. We did get some questions in advance. So I'm gonna go through some of those questions. Thank you for joining us for this past hour. I'll take a few more questions 'cause we've allocated an hour. For those of you on the live event I hope you have a wonderful rest of the day, this Tuesday. And for those of you watching a recording whatever day or time it is, I hope that you're safe. If any of you are dealing with illness whether it's related to COVID or not. I'm so sorry. I lost a brother last year. It wasn't related to COVID. It was related unfortunately, a mental health concern and losing somebody before their time is so hard for all of us who go through that. Losing somebody at any time is difficult. It's a part of life. What we try and do at Sandy Spring Trust is to help families navigate through these transitions, help them approach retirement. Help them through the retirement years, help them deal with the illness of a loved one, help them deal with the loss of a loved one, help protect assets at different stages of their lives, and help them manage assets, prudently, transparently. And it's why I've been here for 20 years and why I will retire a member of Sandy Spring Bank. We are the largest financial community-based financial institution in the greater Washington region. Our board of directors meets here. Our president works in this building and if you bank with us, thank you. Your choice to bank with us allows us to be strong and remain a strong local independent bank. And if you don't bank with Sandy Spring Bank I hope you might consider us for some needs. Reach out to us if you have any questions we'd love to help you in whatever way we can. So I'll take a couple of questions and then we'll wrap up. Later for those of you on the live event you'll receive an email from me and it will provide a link for you to view a recording of today's program. If you wanna watch it again we asked if you are comfortable share the link with others, family, friends, colleagues both locally and around the country. This is a community event. People don't have to bank with us to view this program. We hold this event every month. It's kind of the same information just maybe with a few different stories, a few different questions asked. And so if you know anyone who you think might benefit from watching this event, please share the information the schedule is listed You click on wealth, click on trust, click on seminars. There is a listing of the seminars that we host each month. And so thank you for joining us today. So let me take a couple of questions then we'll wrap up. One question is should we name multiple decision-makers? Should we name Steve and Susie to gather? My initial response is be careful doing that. And the reason is there's a couple of reasons. One, when we name to decision makers, whether it's in a trust or a financial power of attorney or will you're kind of forcing those individuals to make decisions together, depending on the document there are some documents where you can have an and designation where they have to agree on everything. And the question comes well, what if they cannot agree? What if Steve wants to sell the house now, but Susie wants to wait six months to sell. How do they resolve that issue? Some documents allow an or designation, Steve or Susie, and again, the question is then who's going to be in charge. I'm not never gonna say never, but one of the most common challenges we see in estate planning are multiple decision-makers who are struggling to come to an agreement and it can get pretty nasty and it can also create just a logistical issue. A lot of banks don't want an account that requires two signatures. They may not even allow it to be open. So if you're gonna do a two signature required arrangement, check with your local bank and financial location and ask them are they even going to allow this account to be established? Some banks may charge a very hefty fee for that relationship. Some may simply state, "We don't allow that it has to be an/or designation." And then the question is does the document allow either party to act independently? So if you're looking to name multiple decision-makers be careful. The other question I get asked frequently is should I name the same person for medical and for finance? You don't have to, but what you do have to make sure is that the two people named get along and can work in harmony. So if we named Steve for the healthcare position and Susie for the financial position, do they get along? Do they work well together? Because finance and medicine are gonna cross paths a lot. And if Steve wants the client that you know, to be moved to a nursing home, but Susie doesn't wanna pay the bills we're gonna have an issue. I know this is complicated. It's confusing. It's why I enjoy my work so much 'cause I get to help clients kind of navigate through this mess of law, tax, finance, and healthcare. So I'm gonna wrap up with a story about Sandy Spring Bank. Thank you for joining us. I hope to speak to you one-on-one, I do not reach out to anyone other than sharing the link and sharing openings will be my only communication. So if you'd like to talk to me then it is your decision to reach out back to me through an email or a phone call. Just say, Phil, I heard you speak could we spend an hour and just talk? There was no cost, no obligation. We'll talk. If I think the bank can help our describe our services and we can have both the meetings if it makes sense, if I don't think the bank can help or if you don't think that it's a good fit then I'll just try to answer your questions 'cause I'm sure I've raised a few today. So I mentioned my brother, Dave, he actually passed away last year and I was forced to go to England. And during that type of time it kind of reminded me that 20 years ago. Unfortunately I lost my other brother, James through a car accident. Yeah, it was 26 years ago and 20 years ago, my mother passed away. So of the six of us, I'm the youngest of four. Both of my parents have passed on and I've lost two of my siblings. It's just my sister and I, even though I work in the industry and even though I help families navigate through these difficult times it doesn't make it any easier. Losing a loved one is so hard. And when I had joined the bank in 2000 my mother became sick and I had to go to England three times in about a six month span. And the bank was so supportive and they were so gentle and caring and they actually sent flowers to my mother's funeral in England. And everyone was asking who Sandy Spring Bank is. They sent a beautiful bouquet of flowers to my mother's funeral. And I was proudly stating that they're my new employer, I've only been there a little over a year. That's kind of why Sandy Spring Bank, who it is. Dan Schrider, states that, "We are who we are because of the employees," the 1200 employees who work at Sandy Spring Bank kind of make Sandy Spring Bank who it is. And I agree with that, but I also feel that the reason I and many others work here at Sandy Spring Bank and stay here long term is because of who Sandy Spring Bank is as an institution. And because of the decisions that are made in this room every day, all day long. It is an honor and a privilege to represent Sandy Spring Bank. And I hope you enjoyed today's program and I hope you're safe. Take care. And for those of you who wish to have a two-way conversation please let me know and we'll schedule a time and we'll have a chat over a cup of tea or a cup of coffee, take care, have a wonderful day.

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