Your Money Your Legacy Transcript

Elfrena Foord: Hello. Welcome to Your Money, Your Legacy. I’m Elfrena Foord.

If you’re a woman over 60, chances are you have questions and concerns about money – how to manage it, how to ensure your family will be taken care of once you’re gone. It’s why we’re here today – to start a conversation about building your financial legacy: simple planning and making important decisions when it comes to your money. Estate planning can be intimidating and often confusing. To help ease some of that, we have our panel of experts with real experience of helping women just like you.

ELFRENA FOORD: Meet Kay Brooks, an estate planning attorney.

KAY BROOKS: Hello, Elfrena.

ELFRENA FOORD: And Gene Gonzales, a Certified Public Accountant.

GENE GONZALES: Nice to be here.

ELFRENA FOORD: Together we’ll help you answer your questions and offer some sound financial advice. To help begin our conversation we’ll meet three women with real questions just like yours.

ELFRENA FOORD: Let’s get started.

WOMAN #1: My husband recently passed away. He used to do our financial planning. What should I do now?

ELFRENA FOORD: It’s really hard being in that situation – having to do it when you’re not used to. So often women are lost and confused when it comes to money. Gene as a CPA, do you see that in your practice?

GENE GONZALES: Oh, most definitely. You know, I very frequently see women who are very overwhelmed with the responsibilities of handling the management of their money right off the bat.

KAY BROOKS: I actually worked with a woman who was in the same situation but had an added challenge. She herself was in poor health. I met her in her hospital room, and she said to me they tell me I have a million dollars but I don’t know and if I do I don’t what to do with it because I’m dying and my husband just died and we didn’t have children. But, we were able to complete an estate plan for her in a matter of weeks, the time she had remaining, and it fit her.  She left some money to care for her animals and then she created a fund in her and her husband’s name to help school children, she’d been a teacher her whole life.  So even in that very difficult situation you can get this done.

ELFRENA FOORD: Well that’s so wonderful that she had your help in that situation but when you can see it happens, it’s very exciting.   I think too often women worry about do they have enough money to live on and they forget there’s going to be something left over after their gone.

KAY BROOKS: And you should create a plan to fit your family whatever that family looks like. You may have children or grandchildren.  You may have a spouse or a partner.  Maybe a big extended family and those are the people you care about, maybe long time friends or maybe a cause you really care about or a charity you’d like to support and that’s what your estate plan should reflect the things that matter to you.

ELFRENA FOORD: Well, a lot of times there’s not too many perfect families.  Parents, women especially, have concerns that their kids are going to plow through the money. It’s nice to know that you can tell them there’s options to give your children a lifetime income so it isn’t just a pile of money.

GENE GONZALES: Most definitely. I think that another thing about a plan is it’s a good way to get a handle on what your property and possessions are. Frequently many women don’t even know what their property is.  So when you get a plan together it gives you time to put down in writing a list of all your assets.

KAY BROOKS: And the personal property too.   I have seen problems come up for that where that’s actually a big, you know just even deciding about those assets is an important thing.

ELFRENA FOORD: One of the things I love is this necklace is my mother’s, and this watch is my aunt’s. It’s going to be such a wonderful thing to have those things go from one generation to the next, but sometimes people fight.

GENE GONZALES: Most definitely and that’s a good point you are bringing up. It’s not only the major assets, major pieces of property.  Many times it’s the small personal items that have a lot of sentimental value that are much more valuable to family members than maybe perhaps the parents think.

ELFRENA FOORD: Well, wonder if someone doesn’t do a plan, what happens?

KAY BROOKS: Well, actually the state has a plan for you. The problem is, just as we were talking about how so many families are different, the chance of  that state default plan suiting what you would really want is really pretty small and when people look at it they usually realize they want to do something different. This is an opportunity for women to be in charge of their own plan and be proactive and have the plan reflect what their interests are.

ELFRENA FOORD: I like to think of looking down from heaven and you look down and you say wow my money really helped my family they’re all happy. They’re getting along. But people really need help, getting there. Gene where do you think people should start?

GENE GONZALES: You know that’s a good question because frequently they have a relationship with at least one professional that can help them. Many people have a tax preparer or an accountant they have worked with for years and will seek their advice first as to some help.  But, you know most of those professionals have a network of other professionals, such as attorneys, investment advisors, financial planners, insurance agents perhaps, or even a good trusted friend can give you a good referral.

ELFRENA FOORD: I know as a certified financial planner we’re used to talking about money and goals and what they want to have happen during their lifetime, so it’s a natural conversation just look at the estate planning.

KAY BROOKS: And as an attorney it’s great for me when the client has already thought about this with someone who’s known them a long time, someone they trust. You do need the attorney to document your wishes though.  We also are trained to help make decisions if you do need that help. But, then getting it in writing is very important and not just in writing but getting it signed and finished. People sometimes think “Oh, I know what I want!” But if you have not put it in writing then it’s not going to be effective for you.

ELFRENA FOORD: So, if you don’t have an advisor and you can always ask friends because they have advisors and usually, they say birds of a feather flock together, so it might suit them to work with someone they get from a friend.  But our local public television stations, they have lists of people, so if really people are needing help there is help to be had.

ELFRENA FOORD: So the big problem though I think is cost. It’s a roadblock that people use to say “Gee, it’s going to cost me too much I think I should stop and not do it.”

KAY BROOKS: Well, and I think it’s important.  Many people may not have worked with a lawyer before and you should ask right up front what the cost is going to be.  Lawyers usually have an hourly rate and you should ask how many hours they expect to spend. Sometimes, this work is done at a fixed rate or a flat fee, and find that out.  But remember you’re the client and you’re telling this person what you want so you are really in control of the situation. Get your information up front. It may seem expensive, but there is a lot of value to this work.

GENE GONZALES: And there’s no question professional fees are typically very expensive but what you’ve got to look at it is what are you getting for that expense and you’re getting a lot. You’re getting first of all privacy.  An estate plan will allow you to avoid probate which is a public event, so having a little bit of planning done gets you some privacy. You get peace of mind, which is a huge one because you will be able to organize your affairs and your finances in a manner that is easily accessible and readable by your family members.

KAY BROOKS: Having it laid out and defined, then there’s no question later because your wishes are known and that’s just huge to have that.

ELFRENA FOORD: And you avoid the negative consequences, I think that’s the biggest thing. You avoid family members fighting and disagreeing and not talking to each other for the rest of their lives.

GENE GONZALES: And that’s one of the things that I see the most.  Because the fighting that can occur between family members is really, really sad. And I think that if mom and dad had put a little bit of thought into what was going to happen after the fact, they would have certainly been more receptive to the value that they get from this planning.

ELFRENA FOORD: Again, looking down from heaven and your family is all getting along and it’s all working out … it’s kind of priceless, isn’t it? Well some people have already done a plan and they’ll say “Gee, it’s all done!” Let’s take a look at our next question…

WOMAN #2: I have an estate plan from years ago. Should I be doing something to review it?

ELFRENA FOORD: You know, I’ve met people like our question person here, who they can’t even tell me what they have, and they just did it six months ago. So she did hers a long time ago. Kay, what would you tell a lady like this?

KAY BROOKS: It’s really important to review your estate plan. It comes up for a lot of people, so many times once you do review it, things have changed a lot. You may have people named that are no longer even your friends.  Your children may be totally different than they used to be.  And the law may have changed. For example, if you have a health care document from before 1992, it’s actually expired by now. So, one other thing is you may have had a very simple plan, a very basic plan and it would be time to add more to it. You can go back and look at it.

ELFRENA FOORD: Your life’s changed. It’s gotten more complicated. Well, I think one of the big decisions we have to make is who is going to manage their affairs after they’re gone. What do you see there?

GENE GONZALES: Well I actually see a lot of different options there. You know very often they’ll have their trusted advisor, whether it’s their accountant or their attorneys help them with it. Other times, they’ll be other advisors available like professional trustees or banks that will help them with the management.

ELFRENA FOORD: That you can hire to do the job.

GENE GONZALES: You can hire them. That’s what they do and the benefit of hiring some professionals is that they’re not emotionally involved in the dynamics of the family. And sometimes it’s much easier for those people to make some of the more difficult decisions that need to be made with less repercussion to the other siblings in the family.

KAY BROOKS: You may have family members who are able to handle it, though, if it’s straight for ward maybe sometimes a sibling, adult children, nieces or nephews are good possibilities. But you do need to look at what the task will involve and sometimes there’s situations where it would really put them on the spot to be in charge of it. I do recommend that if you have an individual, that you have one serve at a time and have an alternate to them but when you try to put several people together that’s really going to bog down the process.

ELFRENA FOORD: I just had a family, the other day who had three children living in three different states who didn’t particularly get along together and they were supposed to do this job. So after we talked it out, they’re going to hire a professional because it will be faster, easier, and family harmony, being something they really find important.

GENE GONZALES: It’s important to remember that not every sibling or heir has the business skills necessary to run this, or the time, because it is time consuming to manage this estate, so that’s where the professionals help out.

ELFRENA FOORD: Like you said Gene, take the emotion out of it and just let someone who does this all the time do it and it has a cost but it’s quicker, easier, and more efficient.

KAY BROOKS: Elfrena, I’d like to go back to one point in terms of should she review her documents. There’s a good chance that she doesn’t have a living trust. Many people just have a will and believe that their estate plan is complete. Well, that may be what’s right for them but so often today, adding the revocable living trust is a real important addition for people and that’s something that they may not be familiar with and they should come hear about.

ELFRENA FOORD: Gene, you were saying that’s one of the most frequent questions you get asked.

GENE GONZALES: I do get asked that question very often. What’s the different between a will and a trust?

ELFRENA FOORD: And should I have one?

GENE GONZALES: And should I have one. And one of the key words that you just threw out there, which is kind of a technical term, revocable.  Revocable means you can revoke it.  It can be changed during your life time so…

ELFRENA FOORD: You’re not stuck.

GENE GONZALES: You’re not stuck so it’s really a nice feature that you can make this plan and still make revisions to it during your lifetime.

KAY BROOKS:  I usually suggest that people review their plan at least every five years and more often if they have a major life event.  If they have a marriage, divorce, a big change in income, a loss of a dear loved one that would be a time, but certainly every five years.

ELFRENA FOORD: Well good, now we’re going to go to a situation where a family wants to broaden their scope in their estate plan. Let’s listen…

Woman #3: It’s very important for my mother to be able to leave gifts to charity when she passes away. How can she do that and still leave a meaningful legacy for our family?

ELFRENA FOORD: This is such a great question, and one I hope more people ask. Kay do see ladies coming in asking you that?

KAY BROOKS: Very often. Many women like to leave a part of their estate to a cause they believe in. There are so many wonderful non-profits and charities to consider, and there’s different ways to do it. The first that most people think of is a specific amount. I want to give this many dollars to my favorite charity. I suggest they take that and translate it to a percentage because of the way estates change in size. And one of my favorite ideas is to create like a pie chart and think about how much should go to your loved ones. And then is their some left over because probably there is to give to your favorite cause or maybe you start with your favorite cause and then you fill in with your loved ones depending on your situation. You could also include the non-profit or the charity as an alternate. That’s another way to do it.

ELFRENA FOORD: An alternate, meaning if your heirs weren’t there, the charity would get the money.

KAY BROOKS: Right.

ELFRENA FOORD: Well, I think that one of the things you say in your estate plan, if you leave money to charities, it’s an important value in our family to share some of what we have and I think that is a nice message to send to heirs: we’re blessed and we’re sharing with whomever.

GENE GONZALES: I agree. I think that’s a great family value to instill with your loved ones and children. It’s that philanthropic sharing value that will pass down and I think that many studies have proven that it does indeed stick.

ELFRENA FOORD: I’ve seen that the best families are ones that share philanthropy together. One family that I know, they, at Thanksgiving, have started a tradition today, not waiting till death, where they take $2,000.  They come together, they discuss what we should give it to this year.  And the parents are surprised at what the kids say.  The kids are surprised at what mom and dad say and that sharing is very special.

KAY BROOKS: That’s a great idea.

GENE GONZALES:  I agree, definitely.

KAY BROOKS: Do you see people asking you how to decide how much? You as the accountant, like how much should I give each place?

GENE GONZALES:  Yeah, and that’s a typical question we get because it’s something you don’t really have a good handle on until you sit down and figure out. Okay, what do we have and how much can we afford to give here and here and here? I think that most parents are aware that they don’t want to leave too much to their kids that they do nothing but they do want to leave something for them so I think once you sit down and start to look at the dollar amounts it makes it easier to quantify.

ELFRENA FOORD: I think looking at specific dollars gives clarity because I know a couple that has no children.  They have nieces and nephews.  And once I said ok, $100,000 will go to each niece and nephew and then you have your retirement plan and they said well that’s enough for them, let’s save the taxes and give that to our church and to our favorite food bank. One hundred percent will go to the charity.

GENE GONZALES: And to just reiterate a point you just made, which is a really good point, is that today’s values aren’t necessarily tomorrow’s values.  Percentages work really well here because a hundred thousand dollars today may be quite less than what you want 20, 30 years from now.

ELFRENA FOORD: It’s hard to imagine I’m this old and I’m going to live 30 more years because things can change a lot.

KAY BROOKS: Now, she’s asking in the question, and it’s interesting the son was asking in the question, which is a great thing.  He was on board with this whole thing

ELFRENA FOORD: And they were communicating.

KAY BROOKS: They were talking together about it ….was how to do this. One idea I’ve seen that families do is to create a family fund.  And again this concept of starting during life, they could set up a fund now, do that coming together like the family you know and make decisions about where the assets go and then at her death she can add some more to that and they can name it after their family. There’s a lot of great ways to do that. That’s a good idea.

ELFRENA FOORD: Well, it actually happened that way in my family, my grandfather and his two brothers had a grocery store. They left most of their money to a charitable fund and it actually has been in our local community for 35 years. And the family is so proud of all the great things it’s done here. Then my Mom left, she really valued good television, and so she left a bequest to public television and she‘s also passed on that value to me, to not waste my time watching useless television but to make an investment and to have an education watching TV, and so that’s been very meaningful.

GENE GONZALES: And of course from a tax perspective any time is a good time to make a charity donation because tax savings can be significant and reduce the amount of your overall estate tax. Another thing to think about is retirement accounts, because retirement accounts tend to be very problematic when they pass to the next generation, because there is tax on the income that was never taxed during the lifetime. If you use an IRA, for example, to fund a charitable donation, that tax is eliminated and can reduce the actual gift that you are giving.

ELFRENA FOORD: Great idea. Any other tax saving ideas, Gene?

GENE GONZALES: Well, I think just, again, any time is a good time for donations.  I mean let’s face it.

ELFRENA FOORD: There are so many good charities to donate to, how do we figure out which are the best?

KAY BROOKS: Well, that comes up a lot with my clients and there is information online where you can find out for each non-profit or charity how much of their money goes to these overhead expenses or admin., and you can sort that out for the cause you’re interested in and find the right one. I’m sure the local public television station would have that information and help direct you to it as well, and I want to go back and hit one point. For those people who don’t have children or heirs, who are expecting this money, again a non-profit or charity is a perfect place to leave it because you know it’s just you’re giving back in a different way and that whole idea of when you’re talking about you’re looking down from heaven and you see the good that you’ve done, that’s a great thing.

ELFRENA FOORD: Well, I think it’s saying, “Okay, what is my passion? What is my special interest?” Whether it’s the arts, environment, education, health services and then finding an organization that matches up to your interests. You’re making everyone better off and doing something meaningful .

ELFRENA FOORD: Well, we’ve had a great opportunity to talk about a lot of things today and I think it’s not hard. You can take the first step. And there’s a lot of ways to benefit with your funds. Just do it.

GENE GONZALEZ:  Just do it.

KAY BROOKS: Just do it. And make sure you sign your documents, don’t just think about it but get it in writing and finish it up. Exactly.

ELFRENA FOORD: So, we would like to thank Kay Brooks and Gene Gonzales for being here today and remember that this is meant to be just the beginning of the conversation that will help you leave a meaningful legacy and a lasting legacy to your family and your community. Information without action equals no results so you’ve made an investment in your time in viewing this program, so please move forward. Don’t procrastinate. If you need help, call your friends and advisors. You can also call your local public television station. There are many people out there to help you take action to do something that means a lot. Thanks for joining us.


Kevin Smith-Fagan: Thanks for watching this special presentation by KVIE Public Television. I’m Kevin Smith-Fagan, and I hope the program has inspired you to take action. I’m happy to serve as a resource to help you get more information on planning your legacy. So please, don’t hesitate to contact me. And, as you do plan, I hope you’ll consider including KVIE in your estate plans. Your bequest will help ensure that children and families in our region can benefit from the intelligent and inspiring programs that they find right here on KVIE. And in honor of KVIE’s 50th anniversary in 2009, we’ll even help cover your documents fees when you plan an estate that includes KVIE. So, no matter what you decide, take action and thanks for watching Your Money, Your Legacy.