Wills

 
Philip Fish, CFP® and Estate Planning Specialist with Sandy Spring Trust

Join Philip Fish, CFP® and Estate Planning Specialist with Sandy Spring Trust, as he shares his 30 plus years of experience on Estate and Financial Planning Issues with a focus on Wills. Wills are a vital estate planning document that can control certain assets when a a family member passes away. Phil will also discuss other estate planning documents such as Financial Powers of Attorney and Medical Advance Directives and how these documents form part of an estate plan. Phil will review the selection of Personal Representatives, the decision makers named in the Will, and how to prepare them for their future role and ease the burden on their shoulders.

 

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Transcript

  • Question

    Wills

    Answer

    - Good afternoon everyone. And thank you for joining our financial and estate planning discussion. My name is Phil Fish. And for the next 45 minutes to an hour, I will be your host as I do my best to share with you information on a number of different topics. You're joining us today in one of two ways, some of you are joining the live event. So, a happy Tuesday afternoon to you. I hope you're safe and secure wherever we happen to be. For those who are on live events, it looks as if you're the only person on the call. This is not a Zoom type program. We do that for privacy reasons. So, your video is blocked and your microphone is permanently muted. So, you don't have to worry about background noises, the FedEx truck arriving and the dogs barking or kids playing in the background or whatever background noise you might have. Don't be worried about that. Some of you have requested the recording of today's program or downloaded the recording. So, for you a good morning or good afternoon or good evening, depending on the time of day. My name is Phil Fish, for the past 20 years, I've been an estate planning specialist and a certified financial planner here at Sandy Springs Trust, which is part of our Private Client Group and our division assist clients with the financial estate planning issues. I'm a salaried office of the bank, been doing this for a little over 30 years and I've been here at the bank since August of 2000. So, for those of you who bank with Sandy Spring Bank, thank you. We've become the largest local community bank in the greater region. We're founded in 1868, right after the civil war and for 152 years, we have stood by the side of our clients, going through difficult times, rebuilding after the civil war, dealing with World War One and the pandemic that occurred around that time. World War Two and the great depression, the great depression and World War Two and a host of other challenges, including the ones that we've been facing this year. It's been a difficult past year and I don't have any wonderful solutions for what's going forward. Other than to let you know that Sandy Spring Bank, will be standing by your side. We'll try to do our best to help you navigate. And that's one of the reasons that we host these educational programs. You don't have to bank with us to view these educational events and we hope you might share the knowledge of it. And also the recordings with friends, family, neighbors, both locally and around the country. So, for the next 45 minutes to 60 minutes, I'm gonna do my best to relay over 30 years of experience to you. So, all I ask is that you relax and you grab a pad of paper and a pen or a pencil and that you take notes. The way we do this is it's starts out as a one-way conversation. I'm gonna be doing the talking today and I will extend an invitation for any of you listening to reach out to me if you have questions, because today my goal is to raise questions. I will probably raise more than I answer, just because of the breadth of the information we're gonna cover today. Talking about legal issues and tax and finance and healthcare and family, it's gonna be a fairly full agenda. We don't take questions from the attendees of the live event for a couple of reasons. One, I have a lot of information to cover today. And second of all, a question asked in this format is very hard for me to answer, because I don't know anything about the person asking the question. I don't know their background, their family structure, their type of assets, what estate planning documents they have in place currently. The goals and their objectives. So, if I did receive a question, I would have to give an answer that's so generic and so broad, it might not really be helpful. And the other issues first, the moment I answered the question their might be three or four follow-up questions. So, at the end of today, you'll see my contact information dotted around on the entry screen and the exit screen. If you would like for further reach out to me, I don't reach out to anyone other than to share information, but if you'd like to sit down and talk to me for an hour or so, through either a phone call or a video conference, you just let me know. Send me a phone call or an email and we'll set up a time to do that. There's no cost, no obligation to talk. Sandy Spring Trust does provide services. We manage assets under federal fiduciary standards and we are named in legal documents as a personal representative. As a trustee, we provide support to family members who are named. So, during today's discussion, I'll talk a little bit about what the bank does and how we help and if we can help you directly or even indirectly then we've done a good day's work, behind me is the boardroom of Sandy Spring Bank. I'm speaking to you today from our main offices in Olney and normally once a month behind me, the room is filled with members of our board of directors and Dan Schrider, our president, Philip Mantua, our chief financial officer and other members of our senior staff, as they talk about the bank's past and our present and our future. And currently those types of meetings are being held virtually, just like our meeting is today, but it is an honor and a privilege to work for this bank. And I hope you enjoy today's program. So, with that on the way, the kind of the details is one piece I need to cover, before we get into the details, which is just a a little bit of a disclaimer to make you realize that today is an educational program. So, if you give me a moment, I have a little piece of paper here. I'll read to you. The material provided today solely is for educational purposes by, it's provided by Sandy Spring Trust the division of Sandy Spring Bank and is not intended to constitute tax, legal or accounting advice or a recommendation for any investment decisions or transactions. You should always consult with your own legal tax accounting or financial advisors regarding your specific situation and needs. And our staff are always happy to work with your advisors on any situation that may come about. Sandy Spring Trust and the Sandy Spring Bank logo are registered trademarks of Sandy Spring Bank and all rights are reserved. So, we got that little legal issue out of the way and it is actually good information. Be very careful about taking information you hear, whether you're reading it online or you hear it through television or through a program like this and trying to just apply it to your situation, because financial estate planning is not cookie cutter. Everyone on this call today is different and unique even two individuals of similar ages with similar family structures, similar assets may have completely different financial and estate plans, because they are different people. They might have different goals, different objectives, different concerns. So, always make sure that you're working with somebody familiar with your situation with the knowledge and skillset to guide you and the professionals that Sandy Spring Trust, we're all salaried, on average, we have 20 plus years of experience and we're navigators, we're kind of positioned to hope guide clients through this difficult process. So, hopefully you're relaxed and you've got your favorite beverage next to you. And I hope you enjoy today's program. We're gonna break it down into three kind of segments. I shared with everyone, the outline, there are 10 items that we'll be covering. The first four, we'll kind of cover in a block, which we'll be talking about legal documents and decision-makers, who are named within the legal documents, preparing those decision-makers for the role and the titling of assets. And that's kind of the first page of the outline. You don't have the outline in front of you. Don't worry, you don't really need it. I'll kind of guide you through that. On the second page of the outline, we'll go to the final two sections. We'll talk about investments, stocks and bonds and mutual funds and exchange traded funds and fiduciary standards. And we'll talk about providing support to individuals who are named in your legal documents. And then our final section numbers 8, 9 and 10 is the tough session. We're gonna talk about incapacity, the declining health of a loved one. We're gonna talk settling in a state. We're gonna talk about the establishment of trusts after somebody passes away. I did receive a number of questions in advance from some of the attendees and a lot of them were focused around wills. So, I'm gonna do a pretty heavy emphasis today on the will. We'll still talk about estate and financial planning issues, but you'll see a kind of common theme in today's discussion. As I attempt to answer a number of the questions that were asked. If you have specific questions on revocable living trust, which is another way of handling your estate plan, let me know, send me an email or give me a call. And we actually have a recording of an event I did last month, similar to today's, but there were a lot of questions at that event on revocable living trust. So, that event is actually a little more leaning towards trust. If you actually watch both, you realize that there's a lot of commonalities, a lot of common themes, a lot of the same things we have to do in each to accomplish a strong plan. It's just a slightly different approach. Neither one's right or wrong. I commonly am asked, which is better Phil, should I do revocable trust or should I do a will? And the reality is it depends on a lot of different factors. Within our group of close to 50 professionals at Sandy Spring Trust and within our Private Client Group, we have a lot of estate planning attorneys. They many times serve as a trust officer or an administrative office or as kind of support, but they can never be our client's attorney. We are asked sometimes, can we Sandy Spring Bank draft your will, draft your trust? And the answer is a polite, but firm, no. Our lawyers cannot be your lawyer. They have to remain at arms length. We can certainly guide and advise and work with your attorney. But when it comes to drafting documents, we're gonna work with your estate planning attorney or we can give you names of some local ones that we know and then we will work with them. If you engage us to help your family, work through these difficult issues. So let's get to school, financial and estate planning. What does it boil down to? It boils down to control, whether it's an investment plan, a financial plan and estate plan. It's about you deciding how you want your affairs handled and then creating a plan to help execute that wish, whatever it might be. So, on the estate planning piece, my father and mother both passed on. I was the youngest of four, but if my father were alive and he wanted to kind of control his affairs, while he's alive and healthy he doesn't need an estate plan. Well, actually he does, but he won't actually be using the estate plan, because he, himself can make decisions. He can talk to his doctor, he can talk to his financial advisor, he can write cheques, he can pay bills. He can move money around, invest, transfer funds. He doesn't need to use an estate plan. The problem occurs is if my father faced a period of health decline, if he became sick, if he became incapable of making decisions, then it gets tricky. My father grabbed a piece of paper and just scribbled while he was healthy. I'd like Phil Fish my son to handle my financial and medical affairs if I get sick. Unfortunately that's really not gonna work. We live in a litigious world, a illegal world and financial and also medical facilities are not gonna be comfortable releasing private confidential information to somebody other than the client based on a handwritten note. There are legal documents, things like revocable living trust, things like financial powers of attorney, things like HIPAA releases on the medical side. So, part of a financial, part of an estate plan is the establishment of documents needed. So, a revocable living trust is one path we can go down and it's just a way to manage assets during health and upon illness and upon death and afterwards. And so, we're gonna set that off to one side since I covered that in last month's discussion and certainly feel free to request a copy of that, but let's focus on the will. If my father decided he wanted to use the will as his primary document. The will controls assets when he dies, but it doesn't control all of his assets. In a few moments, we're gonna talk about account titling and a revocable living trust, the way you title your accounts is critical, but also with a will, the way your title your accounts is critical, because the will controls assets in the client's individual name. Accounts that were in joint ownership in many cases are gonna flow directly upon my father's death to the joint owner. Accounts that have a beneficiary designation are gonna flow to the designated beneficiary on that bank account, investment account, insurance, retirement accounts. There's lots of accounts out there, whether are beneficiary designations, they are going to override the wishes laid out in the will. So, we have to be very careful when we work with clients to look at the different ways assets transfer, joint ownership, beneficiary designations, through the will which is for individual assets. Assets just in my father's name, George Roger Fish. He had a bank account and the only account titling was George Roger Fish, no beneficiary designation, no joint owners. When he dies his will, if he has one, controls those assets. He doesn't have a will in the United States of America, the state that he lives in will give him a will. It's called dying intestate. So, even if you don't have a will, you actually have one. The state that you live in is gonna create a cookie cutter solution and disperse your assets per state law. It just may not be the way that you want your assets to be dispersed. Again, we're coming back to control. A will is about laying out your wishes, who receives your assets, how do they receive them? At the end of today's discussion, we're gonna talk about trusts that are created after somebody dies. You can create those trusts through your will. Your will is called your last will and testament. The trusts created are called testamentary trusts. That's where the term comes. A trust created from a client's last will and testament. I know it gets complicated and we're only just starting for some of you on the call today, who have a stronger background, excuse me, in financial and estate planning. I apologize, need a drink. For some of you, who are knowledgeable about financial and estate planning, you're gonna find a lot of the information that I cover today to be very basic, very fundamental. You're gonna look through your screen at me and go, "Gee, Phil, everyone knows that." Well, actually, no. We're talking to a broad audience. And for some of you on the call today, who are just starting to learn about, estate and financial planning, it's gonna feel overwhelming. It's like you're trying to learn a foreign language in a year, in an hour. And so, you're trying to comprehend wills and powers of attorney and medical advance directives. Just hang in there and know that you're not alone. After today's program, if you have a lot of questions, I'm a salaried officer of the bank. This is what I do. I speak publicly. And I answer client's questions. That's my primary role for the bank. We have portfolio managers who manage assets. We have trust offices who administer estates and take care of our clients. We have financial planners. We have private bankers. So, we have individuals who have different roles. My role is to be a problem solver. And once I clear my throat and if I can speak clearly, then hopefully I can answer some questions for you. My apologies for that. So, the will is gonna control your assets when you pass away. But the will does not control assets if you become sick, many clients I meet with have a will and they say, "I've got my estate plan." I go, "Well, you've got your estate plan, "but what about your incapacity plan? "What if you become sick?" If I walk into Bank of America with my father's will and he's under the weather, he cannot take care of his affairs and I'm trying to pay his bills. And I show the will and it lists me as the personal representative, which is the name of the decision maker in the will. So I'm like, "I need to take care of my father's affairs." They will say your father's still alive. This document is when he passes away, you need a financial power of attorney. So, when you're using wills as your primary document for estate settlement, your financial power of attorney will be your primary document for handling financial affairs if you have a health issue. You'll also have a third document, a medical advance directive. That's a document to handle medical decisions. If you are no longer able to communicate to the doctor or the hospital, if they can communicate to you, the client, they will ask you what you want to have done. But if you're unable to communicate clearly your wishes, the medical advance directive is giving medical directions in advance. It's basically saying to the doctors, if I cannot speak to you clearly, it's okay to speak to my wife, my brother, my sister, my son, my daughter, my niece. These individuals that I've listed in this document, I give you permission to speak to them. I give you permission to release private medical information and to engage in conversations with them about my medical care. So, we have three documents for client choosing will's on the estate planning side. The will, the financial power of attorney to handle financial decisions during an illness and the medical advance directive to handle medical affairs during an illness. The medical advance directive will have a medical power of attorney to handle medical decisions. And it will have a living will, which is the end of life document that talks about how you wish to have your health handled at the end of your life. For any of you on the call, who are dealing with health issues right now or who have just lost a loved one or who have loved ones who are battling a health issue. I'm sorry about the topic. It's a difficult one to discuss. So, for individuals with wills, you need a will, a financial power of attorney, medical advanced directive, it should be drafted by a local estate planning attorney. Somebody familiar with the laws in the state that you live in and it's should be tailored to your specific wishes and your goals. So, it should not be cookie cutter. I prefer it be drafted by somebody with skills and knowledge to make sure that it's aligned with your wishes. Once we have the documents in place, then we have to select decision-makers. Within the will, we select a personal representative. The old term was executor male or executor females. We have agents named in all financial and medical powers of attorney. On the trust side, we'll have trustees, but we're not talking too much about trust today. We're focusing on wills and powers of attorney and medical advance directives. You can name your spouse, but as you get older, your spouse gets older and you have to realize if you've been, I've been married for 26 years to my wife, Lisa. If something happened to her, I would be lost. If something happened to me, she would be lost. One of the roles of Sandy Spring Trust is to provide support to decision makers, including the spouse to help them through a very difficult time. Their loved one has become sick or has passed away. Offering support and guidance. They might be named in the documents, but they might need help because it is such a hard thing to go through, but you can't just name a spouse or a partner or a significant other and you may not have a spouse or a partner or a significant other. Then you might look for brothers and sisters, but again as you get older, they get older. My oldest sister, Maggie is 15 years older than I am. So, she's gonna turn 70 this year. Well, if I'm 80, that means she's 95. So, naming her in my legal documents might not be a good fit any longer. When I was younger, possibly. Now as we both get older, might not be a good fit. Children, absolutely many times a son or a daughter are named as a decision maker. The question is you know, where do they live? How busy are they? How will they get along with other siblings? We talk a lot, when we speak one-on-one with our clients, about who you naming in your documents? Who's a good fit? Once you get beyond significant others, spouses, brothers, sisters, children, and you start looking further a field to nephews, nieces, cousins or friends, to be honest, this is a huge assignment, a huge burden, a huge responsibility. And I think it might be too much to ask a distant relative or a friend, but we can discuss that. Sandy Spring Bank can be named in certain roles. And we can certainly discuss the bank's role. In many times, we are asked to be a backup to a family member, a support mechanism to family members or be the primary decision maker for clients. Don't know if we're the right fit, but it certainly might be worth the conversation. Once you have your legal documents and you've selected your decision-makers. The next step is to talk about preparing them for the role. So, I'd like to introduce you to two people, Steve and Susie. Steve and Susie are just hypothetical decision makers. They might be your brother, sister, son, daughter, nephew, niece. They might be a trust officer at Sandy Spring Bank, but you never name individuals at the bank. You always named the bank. And then a bonded insured officer of the bank would represent the bank in our dealings with the family. So Steve and Susie, what do we need to do? Well, the first thing is you need to call them and you need to tell them. Do not hide this fact from them. This needs to be open disclosure. So, if you take nothing from today's program, please take the importance of the open dialogue communication with your decision makers. Steve and Susie need to know everything. Where are the documents kept is a good starting point. The originals, while they're in a safe deposit box, that stay at our main office in Olney, on Georgia Avenue, downstairs in box 348. Great, where's the key? Well, you take the key to the back of the picture in your living room. Wonderful. Do Steve and Susie know where the key to the safe deposit box is located? Do they have a key to get into your house to access the key? And most importantly, are they a signer on the safe deposit box contract in the branch. So, when they walk into the branch with the key and we pulled the contract, are they listed as an authorized person, who can access the box? Because just having the key isn't sufficient and you can't, the Steve and Susie can state or the documents in the box that say it's okay for me to get into the box, doesn't work that way. Then we have to go through a court process and it's complicated and time consuming. They need to know where, who your lawyer is, who your accountant is, where you do your banking, where your investments are held, what insurance policies do you carry, passwords to computers, secret hiding places in the house. You have diamonds in a little plastic baggie, that's wrapped inside a meatloaf and wrapped in foil stuffed in the back of the freezer. Make sure they were aware of that. So, they don't throw out the old stinky meatloaf, thinking it's old stinky meatloaf. Well, it is. But inside are $58,000 worth of family jewels. Communication with your decision-makers is critical. Number four. So, we've got the legal documents, the will, the financial power of attorney, the medical advance directive. Again, if you're going down the trust path, you would also have a revocable living trust. And certainly let me know if you would like to view that recording that focuses a little more on the trust side, but for us today will, financial power of attorney, medical advance directive. We've got our Steve and Susie's lined up. We've communicated with them. Now, we get to item four, which is the titling of accounts. This is probably the most common mistake we see in clients financial and estate plans is that the financial estate plans do not work together in harmony. They work in conflict. How you title your accounts is critical. We talked about it briefly. You've got assets in your individual name. There'll be controlled by the will. You've got assets in joint name. There are three types of joint accounts. There's joint with rights of survivorship, we should say between me and my brother. And if I die, the assets flow to my brother, there's joint tenants by the entirety, which is for married individuals, say myself and Lisa, again, same situation. I pass away assets flow to my spouse, Lisa and vice versa. We have beneficiary designations on retirement accounts, life insurance. Also, you can add a beneficiary designation to a bank account called a POD, payable on death. You can add a beneficiary designation to an investment account called a TOD, transfer on death. These beneficiary designations override the will. If my father had four children, if his will said, I leave my assets equally to my four children, but he started adding my brother David on accounts, when he dies those joint ownership accounts with my brother flow to David. Could my brother sold it out and kind of redistribute? Yes. Can it cause friction and problems and issues? Yes. The other danger with joint ownership with a non-spouse is if my brother got into a car accident or sued or divorced, the joint ownership opens the door to risk and people going after my brother, could also go after the assets that are jointly held with my father. So, you generally don't want to add non spouses on as a joint owner. Again, talk to your accountant or your estate planning attorney, when it comes to these types of issues, but the account titling is critical. So, we've covered kind of the first section. We're gonna flip the page and we're gonna talk about investments for a little bit. Finances, it's hard out there. There's no easy answer at the moment, because interest rates are at an all time low. Normally when we look at investing, you look at cash, savings, accounts, CDs, bonds, stocks, real estate and then you get into the old types of other different types of investments. But today we'll just kind of stick with the core cash, stocks, bonds. The challenge with cash and CDs and bonds is interest rates are at an all time low. If I give money to U.S. Government to help with their large credit card problem large debt issue. And I purchased a U.S. Government bond for 10 years. I'm only gonna receive less than 1% per year for 10 years. I think around 0.7. It's not a very good rate of return. And because of that low rate, everything is low, bank accounts, CDs, bonds, a 15 year old bond with a corporation. If I give money to Exxon to build a big refinery down around the Gulf Coast and I give them $50,000 and purchase a 15 year bond, I mean, your earn around 2% for 15 years, that's how bonds work. You lend money to somebody who needs money and in return you get paid interest. And that the end of the bonds term, be it a year, five years, 10, 20, you get your money back. Your principle is returned as long as the entity, who you gave the money to is still doing okay. So, companies and states and governments that issue bonds have credit ratings and there is risk in bonds. One risk obviously is the company cannot continue to do business and goes out of business. And then the bond holders become creditors of the bank and may not suddenly get all of their money back and they get a portion back, 10, 20 cents on the dollar maybe, but there are other risks. We talked about that 15 year bond and I give Exxon $50,000 for 15 years. I'm earning 2%. Well, what if interest rates rise? And now, Exxon's issuing new bonds paying 5%. My bonds pays two, but if I called up Exxon and said, "Hi, I gave you money in 2021 and it matures in 2036. "I'd like, it's now 2026. "And I wanna get my money back because rates are higher." They'll shake their head. They'll go, "No, the bond is set till 2036. "When that time comes around, we'll give you money back." If you want to cash in your bond, you're gonna have to go to the bond market. And I'm gonna have to go to other bond investors with my 2% bond, when they can all earn 5 or 6% and they kind of laugh at me and go, "Phil, why would I want a 2% bond? "Unless you're gonna sell it to me at a very large loss." So, bonds can carry risk. Stocks are investing in companies. You invest in stocks for two reasons. You wanna get dividends from the company. If the company's profitable, they pay a dividend to the stock holders. So, sharing of company's profits and it's done quarterly. It's not guaranteed like a bond, but strong companies, are generally gonna keep paying dividends, unless they fall into really hard times. You also buy a stock because you hope it may appreciate. It may grow in value. You might buy a stock for $10 and you hope it might grow the $50. And that's called an unrealized gain. It's an increase, but it's not taxable yet, because you haven't sold the stock. If you sell the stock for $50, you make a realized capital gain. Now, you have a profit. There are tens of thousands of choices out there. The analogy I use on investing, it's kind of like trying to figure out how to travel across an ocean. You're on the shore on one side of the ocean, you're trying to crossover and you have all these different boats to choose from, which boat do you choose to place your investments into? Do you go cash or stocks or bonds? And then what type of bonds, what type of stocks? Then we have things like mutual funds, which are a way to invest in cash, bonds and stocks. And you have thousands of choices in mutual funds. So, places like Vanguard and T Rowe Price and Fidelity, some are really good, some are average, some are really bad. You have ETFs, which are exchange traded funds. That is a non-managed bucket, where you might invest in the S and P 500, which is 500 roughly stocks and own all 500, but not equally. We'll talk about that in a few moments. How do you choose? At Sandy Springs Trust, we have a team of portfolio managers, not brokers, not commissioned. They are professional portfolio managers and clients hire us to help navigate them across the ocean. We don't control the storms or the weather or the tides, but we have the knowledge to help guide clients and to align their investments to their objectives and their goals. Everyone on this call is gonna have different goals and objectives. In regards to your financial plan, you'll have different retirement plans, different investments, different objectives, different risk tolerances and your investment plan should be tailored to your comfort. There's no right or wrong, except the wrong is if your investments are not aligned to your goals and objectives and risk tolerances, that's wrong. But we have clients who are very conservative. They don't like to invest in things that have volatility. And we have clients who are more comfortable taking on some risk and there's a trade off between risk and reward. And what we try to do is be honest with our clients, just to look them straight in the eye and say, "This is the market. "Here's your expectations, allow us to navigate you "to the best of our abilities." Can we control the interest rates? No. Can we control the stock market? No. Can we use our experience to help you navigate wisely? Absolutely. That's what we do for our clients. We're doing it for over 30 years. Our Trust Division, has been actively managing client's assets for well over 30 years now. And it's an honor to work with the professionals that we have. Again, all of them salaried, all of them very skilled. So, if you need help navigating, you can look to us. We're a fiduciary, which is the next thing, I wanna talk about. A fiduciary, there's two categories. There's the fiduciary on the estate planning side, individuals named in legal documents that are who are legally responsible for taking care of that individual. So, if I were my father's trustee or his agent or his postal representative in his legal documents, I am his fiduciary. I have a fiduciary duty to carry out his wishes as laid out in the legal documents. You also have fiduciaries on the investment side and we are a fiduciary under the federal standards. The strictest standards, all of our staff are salaried. There's no products, there's no commissions, there's no conflicts. We don't have our own investments. We don't have relationships with firms where we lean clients one way. It is transparent, it is the way money should be managed. And it's one of the main reasons that I've worked here for the past 20 years. And so as a fiduciary, we have to look at the client's risk tolerances, their tax situation, their goals or objectives and we tailor investment portfolios to meet the client's objectives. And we keep an eye on things and we keep updating and adjusting as we move forward, because your goals and objectives today may be very different than what they will be five years from now. The last piece of this section is talking about providing support to the Steve and Susie's. Remember Steve and Susie named and your legal documents? They're gonna need help. I would need help. I've been doing this for over 30 years. I'm considered an expert in my field but I'm not an attorney. So, if a family member asked me to serve as a decision maker in the legal documents, I would need legal help. I'm not an accountant. I would need help with tax issues. I'm not a portfolio manager, even though I've been a certified financial planner for 20 years, I do not manage assets for our clients. We have people much better trained than I and skilled to do that type of work. There are our portfolio managers, part of our team. I'm not a medical expert. I don't have a background in medicine, so I would need assistance on the healthcare side. The main thing I would need help with is time. I have a career. I have a wife, a life and I stay pretty busy. If a family member asked me to take care of their affairs, this is not something you knock out in a couple of hours on a weekend. It is a huge burden, a huge assignment. And it's one of the primary reasons, we are engaged by clients. They will come to us and say, "I want to name my son, but I want him to have help. "I need a backup behind my daughter. "I don't have any one I'm comfortable naming, "would Sandy Spring Bank be my fiduciary, "would they help me?" And the answer many times is yes, we can. So, whoever you're thinking of naming realize that they're going to need help. They're going to need support. Last section, as we move on is a difficult one. We're gonna talk about three areas. We're gonna talk about incapacity, the declining health of a loved one. We're gonna talk about settling an estate. We're going to talk about the establishment of a trust for the love of, for the protection of a loved one. This section is hard. And so, for those of you who have dealt with the loss of a loved one recently. Last year, actually it was a little over a year ago. It was a really hot time in our household. I lost a brother, unfortunately and my wife's mother passed away. And they both happened in a fairly short period of time, between one another. Losing loved ones, especially with my brother, he passed away before his time is such a hard thing for a family to go through. So, if any of you on the call have recently lost a loved one or dealing with the declining health of a loved one. I'm so sorry, it is so difficult. And there's no easy way through that. But as we work with our clients, one of our primary discussion points is how do we prepare the family for these changes? For these upcoming changes in, we call them transitions. Life stages. Incapacity is one of the hardest things we deal with. The declining health of a loved one. So, if my father's health declined, how do we balance between maintaining his dignity, but also protecting him from risk? Making sure others around him don't take advantage of his diminished capacity to make good, wise decisions. How do we make sure his bills are paid? That he gets the medical care he needs. First of all, we need to have a good plan in advance. We need to have the legal documents in good working order. The wills, the powers of attorney, the medical advance directives, the trust. If we're going down the trust path. We need to make sure assets are titled properly. We need to make sure that the Steve and Susie's of the world are prepared. They know that the documents are kept in the safe deposit box at Sandy Spring Bank's main office. They've actually been introduced to the staff. So, the staff knows Steve and Susie. They know the location of the key, they're are a signer on the safe deposit box contract. They know the client's attorney, their accountant, their financial advisor. They know that the client has long-term care insurance and where the policies are kept. They know the client has life insurance. They know whether policies are kept. Many times insurance does not get used properly, because the individuals making the decisions don't even know that there's a policy in place. Passwords to computers, so much is done online now. But if access to that information is blocked, how can Steve and Susie help? So, we have to communicate with the decision-makers and we have to prepare them. But even with all of the preparation, it's still a difficult journey to work through the declining health of a loved one, to honor their wishes, to try and maintain their dignity, to keep them safe, but also to just take care of their needs. When the client passes away, we go through an estate settlement process. If they are using a will, then the four ways, the three-way if you look at assets moving, are joint ownership, there is one type of joint ownership, where the will kicks in. It's called joint tenants in common. It's not used very commonly, which is kind of funny, but it is used sometimes in real estate. So, if my brother and I wanted to own a piece of real estate, we might title it joint tenants in common and each own 50% of the property. And then if I die, my half is handled by my will. If my brother dies, his half is handled by his will. It can get complicated, because if he's leaving his half to his two children, now his two children own half of the property and you can see how this can get muddy very quickly. So, we have to kind of think through things, you know, not just how assets are titled today, but how are they going to transfer? And what, how are they gonna be managed, after the client has passed on? We have beneficiary designations, dotted all over the place, life insurance, retirement accounts, are they up to date? I'm the youngest of four. Did my father and mother remember to add me onto the life insurance, to add me onto the retirement accounts? Or did it just go Maggie, David, James and then there's a blank where there should be filled, the youngest of four. These things get complicated. Life gets in the way, but a good financial estate plan has to be well coordinated, has to be thoughtful and has to be kept up to date. Things, get sloppy sometimes over time. Clients have lots of different accounts and for every different account, it is a challenge. The process of settling an estate, when people say how complicated is it to settle in a state. A starting point is how many accounts do we have? How many account numbers are we dealing with? Do you have eight IRA accounts or two? Do you have 12 mutual fund accounts at 12 mutual fund locations with 12 different account numbers? Or do we have one account that holds those 12 mutual funds, settling that estate would be significantly easier? So, part of a good estate plan is to get out the broom and kind of clean out those loose edges. Try and make things as consolidated as possible, as easy as possible for your decision-makers, because they're gonna have to step in and take care of things. If you're dealing with a will, you will go through a process called probate. It is the, it comes from the Latin word to prove it is the process of the assets flowing through the local courthouse in the state that you live in and in Maryland actually the process of probate is not too bad. It's considered much easier than many other jurisdictions. Your estate planning attorney can kind of guide you on, based on the type of assets you have. Do you have property in multiple states? You know, where do you live, might determine whether a will or a revocable living trust makes more sense for you, but your decision-maker, will most likely need help settling the estate, gathering the assets, dealing with furniture and clothing and paintings and coins and jewelry and golf clubs and cars. And it can be overwhelming. Once the estate is settled for some clients, it's a simple distribution of a client's net worth. I wish to disperse my assets to my four children equally. We have to look at assets that can't be split equally, easily like real estate. Do we leave the beach house to the four kids? You can, but how is that gonna be managed going forward? Who's gonna pay the bills. Who's gonna handle the insurance, the upkeep. Are the two kids who live on the West Coast, gonna feel comfortable about getting bills for the upkeep of the beach house on the East Coast, where two of us siblings go and play and have fun. But the two on the West Coast, don't really get to enjoy the beach houses as often. Things that can't be split easily. Dad's army jacket, gun collections, coins, baseball cards. We have to think about that. You can't cut a valuable baseball card into four pieces, kind of loses its value. Who gets the valuable baseball card. And don't ask me about, I'm not an expert in that area. I just know that some things like that can be very valuable and they might be emotionally valuable, that baseball card might only be worth $30, but it might have incredible emotional significance to the family. So, we have to be careful, about things not only a financial value, but emotional value as well, but for some clients. The estate plan doesn't end there and we get to the last point of today and it leads in, it connects back to the first point. When we started onto the conversation today, we told about legal documents and wills and trusts and signing up an estate plan. Well, sometimes that estate plan is designed to continue on after the client passes away. Sometimes we have a need to protect assets after the client has passed away. Maybe an individual who's the beneficiary is young, maybe they're 10 years old. So, you can't leave a ten-year-old a lump sum of money. Maybe they're a 20 year old, leaving a 20 year old a lump sum of money, might not be a good idea. There are some 30, 40 and 50 year olds, where it's not a good idea to leave money. They might not handle money well, they might have a physical, a mental illness. They might be qualified for receiving medical benefits, because they don't have assets. An inflow of an inheritance might disqualify them from receiving those benefits. They might have an addiction, bipolar disorder, depression, alcoholism, drug use. They might be easily influenced by others. They might be in a marriage, where the parents are concerned about divorce and they want to protect the assets. The marriage may be strong and the clients may still be concerned about protecting the assets because things change. And we have a 50% divorce rate, unfortunately in our country. So, sometimes it's about protecting assets and making sure it's for the children and the grandchildren. And it doesn't go sideways in a divorce settlement. This is where we work closely with the client. We work closely with the client's estate planning attorney and maybe a tax advisor. And we help put together a plan and Sandy Springs Trust can be named to either help individuals who are named to take care of these wishes or we might become a trustee later on to step in, either as a backup or a support to a family member or the primary decision maker. So, we covered a lot today. We talked about legal documents, decision-makers, we talked about preparing those decision-makers, titling assets properly. We talked about investments. It is a challenge right now. Interest rates are at an all-time low, it's a gut punch to investors as they try to find a way to get the returns they need, while managing the concerns over risk, we can help guide clients on those issues. We cannot control the interest rates. We cannot control the stock market, but we can give thoughtful conversations to clients, about their options and it will be transparent and it will be done under fiduciary standards, always looking out for the client's best interest. We talked them about providing support to the Steve and Susie of the world. Helping clients navigate through an illness, settling estates, setting up trusts for loved ones, who need assets to be protected for different reasons. On behalf of Sandy Spring Bank, thank you for joining us. And as I said at the beginning, if you bank with us, thank you. We are a strong local bank, because of clients choice to do business with us. And we value that. If we can help you in any way, reach out, I'll send out a recording of today's program or if you've already received the recording, my contact information is dotted around on the handouts and on the screens or you can just call Sandy Spring Bank and ask to be contacted with Mr. Fish, who works for the Trust Division. And they'll forward your call or your email to my attention. And we'll set up a time to talk for an hour or so. There's no cost or obligation to talk. I've probably raised a lot of questions today. I'd be happy to spend an hour or so talking to you to try and answer those. And either indirectly by giving you some ideas and pointing in a direction or maybe directly talking about the bank services and how we can help. And if I think we can help, we'll have other conversations and you can decide if you'd like to retain Sandy Spring Bank and our Trust Division to help you moving forward. We can help and we'd be honored to be your guide. I hope you're safe. I know these are difficult times with COVID and all of the issues that's all around this today. Take care of yourself. And for those of you who request a conversation, I look forward to speaking to you, directly over the next couple of weeks. On behalf of Sandy Spring Bank, take care and have a wonderful rest of your day.

  • Disclosure

    This material is provided solely for educational purposes by Sandy Spring Trust, a division of Sandy Spring Bank, and is not intended to constitute tax, legal or accounting advice, or a recommendation for any investment strategy or transaction. You should consult your own tax, legal, accounting or financial advisors regarding your specific situation and needs. Our staff will work closely with your advisors to coordinate your overall plan. 

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