Estate Planning for the Brady Bunch

This is Rodney from the Masculine Journey Podcast, where we explored manhood within Jesus Christ. Your chosen Truth Network Podcast is starting in just a few seconds.

Sit back, enjoy it, share it. But most of all, thank you for listening and choosing the Truth Podcast Network. This is the Truth Network. Welcome to Finishing Well, brought to you by CardinalGuide.com, with certified financial planner, Hans Scheil, best-selling author and financial planner, helping families finish well for over 40 years. On Finishing Well, we'll examine both biblical and practical knowledge to assist families in finishing well, including discussions on managing social security, Medicare, IRAs, long-term care, life insurance, investments, and taxes.

Now let's get started with Finishing Well. Welcome to Finishing Well today with our certified financial planner, Hans Scheil. In today's show, we have a special guest with us.

Actually, my personal agent at Cardinal is Tom Griffith to add his insight, which is really helpful for me, because for anybody who's ever dealt with Cardinal, if you've had a chance to work with Tom, I mean, what a kind, caring, patient man he is and very, very helpful. So we got him to help us with the show, because today's show, I'm so excited about the title, it is Estate Planning Brady Bunch Style. So if you think about the Brady Bunch and all those kids and all those stepkids, you know, I was thinking of what would made a great Brady Bunch episode would have been, you know, the story of Jacob and Joseph and Ephraim and Manasseh would be a great Brady Bunch episode.

Because you talk about shenanigans and all this, all the, you know, brother, sister, the stuff that was going on there. So Alan Wright, a pastor here that, you know, does obviously programming on the Truth Network, many of you know him, he wrote an amazing book, it's called The Power to Bless, and it has everything to do with estate planning. And when you think about what he wrote in that book, was when Jacob adopted Ephraim and Manasseh, which he actually adopted Manasseh and Ephraim, because Manasseh was older, there was a very unique blessing that he did, which is where he switched his right hand over to Ephraim to give him the bigger blessing. And in doing that, what he was doing, and by the fact that Joseph tried to switch his hands on him, he goes, No, I know what I'm doing, what he was doing was he was responding to something God was telling him, he was looking at the larger story, not necessarily that the kids might get upset about what's fixing to happen right here. But more importantly than what the kids think is what does God think?

Right? And we do have the power to bless with our lives, and certainly with our state, but like Jacob did, what a neat thing that he listened to God. And as a result, it was brilliant discernment, because what he did was he painted a picture of what Jesus himself would do with his life. He was the older brother, and he deserved the blessing. But when he went to the cross, God took his right hand off of Jesus, and he put it on me and you. And as a result, we got the blessing of the older son, as Alan Wright described that to me, and I have never forgotten it when you think about that story in Genesis.

So here in today's show, you know, sometimes we have to consider what does God think about these things, as far as widows and orphans and all these, over necessarily what the kids may get upset about, because at the end of the day, we get to bless the way that God wants us to bless. And so along those lines, you had an experience, didn't you, Hans? Well, I did, and Tom and I had that together. I was going to add a bit about Tom just real quick. Tom is also a certified financial planner, as I am, and he accomplished that at age 25, and which is perhaps one of the youngest people of all the 75,000 CFPs to achieve that.

You've got a three-year experience requirement that he got here at Cardinals, so I just wanted to add that in, is that Tom has the same certifications that I do. And yes, we had a client that really just got me focused on, this is what estate planning and life insurance, which is our topic today. This client just typifies all the issues that we need to deal with in helping people, blessing people. And what you had just shared earlier, which just really struck me, is we have the power as estate planners to bless people. And we do that through sitting down with them and finding out what they want to accomplish in their estate, in their life, in their retirement planning.

We want to get their goals together, and then we give them feedback about the possibility and the probability of actually achieving those goals, and we give them a strategy to get there. And with these particular people, they're in a second marriage, and so you've got stepchildren. And this second marriage happened 15 years ago, and they're in their 60s now, late 60s, mid 60s, late 60s. And they are coming into us, and their primary focus of coming into us is, she's still working, she's a little older, but she's planning her retirement.

He's retired. He's younger than her. He has a daughter.

She has two sons who are now married and have children. And they were very concerned about if one of them, right after this marriage 15 years ago, were to die, and specifically her, because I think she had the most money at the time, that her two sons would get the lion's share of the money that they would have been getting anyhow had she not married him. And it was just a big focus on that. And then there was also a focus on his daughter, if he were to die, that she doesn't get his money, that the daughter would get the money.

And that was clearly where the focus was. And then they had a trust done. I don't know if it was in advance of the marriage or in the marriage, I mean it didn't, but right around the time they got married, to make sure this is what happens with all the money. And it really had a huge emphasis on her two sons getting their sizable share that was brought into the marriage. And it lacked focus of taking care of the surviving spouse. So the trust did. So it was fine 15 years ago, because the situation they were trying to avoid is she dies fairly quickly after the marriage gets started, he gets all the money, the kids get nothing.

Or he dies, she gets all his money, the new wife, and his daughter gets excluded. So they were really focused on that. And it was real apparent to me. And then what they wanted me to look at it, see how they did, and I'm looking at the whole thing and I'm just saying to myself, well, I don't really care too much about 15 years ago, what I'm thinking about is right now. And what you're really hiring us to do is to plan after your death and your estate planning, 10, 15, 20, 25, 30 years from now.

So you're hiring us to do that. You're also, I think your priorities have changed, or I didn't really tell them this, but your priorities need to change to where you're more concerned about your surviving spouse than you are the stepchildren and the children inheriting at the first death. So there's a mouthful of kind of the situation. And Tom, I mean, what's on your heart right now?

Yeah, I mean, they came in and one of the things we do is we look through all the documents and I pulled it out and read it. And it was very clear that when they had written the trust that it was focused on the children and not each other, which maybe would have been appropriate 10 years or 15 years ago when they first got married. They're coming into a second marriage. There's some kind of question, the first one didn't work out.

Is this one going to work out? I mean, and I think that's easy to see where they might be in that mindset. Fortunately, it's worked out. They're very happy right now, but their priorities have changed. I mean, and we even got that out of them is that their focus really, when you ask them when you ask them is on each other, but then the document does not reflect really what their wishes are right now to the point where it really could have caused a lot of issues if one of them had passed or if they didn't change it.

And in the future, one of them passes. So, I mean, it's a good thing they came in because I think it's something that we can help them address and get it to where they really, it reflects what their wishes are currently. But I mean, I think it's illustrative of, you know, what might've been good. And I think there's some question whether it was even that good back then, but you know, what was good then might not be good now.

And it's important to review them just kind of ongoing. The other thing that was troubling in this is a lot of their money is in IRA and 401k, both of them. And they had named the trust as the beneficiary, assumed taking the kids out of the kid's name, putting it in the trust. And then they had made the kids the beneficiaries of the trust. And when they do that, all that money is going to get taxed when it's distributed because the trust is not a person. So that's a whole nother show.

That was kind of messed up. So I want to just speak real quick because what we're talking about today are people in their 60s typically that are doing retirement planning and trying to plan out their next 20 to 30, 40 years of living either as a couple or as one surviving. And that's where our focus is. But I'm sure there's many of our listeners right now that are either planning to get married for the second time in the next month or two or three or on the horizon, or you just got married a while ago or somebody close to you is. And what I'm going to tell you is this type of planning is fairly calming because when you have a second marriage going on and you've got all these families and people involved and children, everybody's trying to make everybody happy and make them love their new mate. They're going to do this in the estate planning and they're going to talk about it.

And it's appropriate to do that if there's something that's going to pass. You don't want this, my new stepmother is going to inherit all the money that I would have inherited if dad would have stayed single. What I'm going to just tell you is life insurance is wonderful. Go ahead and distribute everything at death to the kids when you're just right there getting into the second marriage. And then buy life insurance in equal amounts, a large amount. It can be term insurance if you're in your 40s and 50s. It's not that expensive.

It could just go 10 or 20 years because things are going to look a lot different 10 years or 20 years from now. It's inexpensive. And just name your spouse as the beneficiary of that. And then your spouse is going to get this big payment tax-free. If you were both were to die together suddenly, then the kids are going to get it anyhow and they're going to get both payments tax-free. Just a note for people is life insurance serves a wonderful purpose on that. And if you want to go ahead and buy permanent insurance, if you can afford it, then you can put long-term care in there. You can fund your estate. I mean, so there's all kinds of reasons to buy different types of insurance.

I'm going to recommend for people getting into a second marriage that you do this. Well, I was going to say before we run out of time in this segment, the other thing that I saw in my own life was, you know, people make assumptions as they go into that planning thing. Like my dad assumed he would be the first to go since he was 25 years older than my stepmother. You know, he had all this, oh my goodness, he had trust, all sorts of layers and layers and layers of what needed to happen based on that assumption. The challenge was that she died, you know, four or five years ahead of him from brain cancer.

And like everything was backwards and he was so distraught by that that he never went and figured out how to redo his estate. So, you know, as the executor of his estate as it turned out to be, you know, we had our hands full. So it's a wonderful thing to have somebody like Tom, somebody like Hans to work with you, to give you some of the things that they've seen.

Because if you go into these with some assumptions like we're talking about, you know, it can be quite something to unravel. But I appreciate you all listening. We got so much more coming up on this Brady Bunch special of estate planning. And don't forget, this is brought to you by Cardinal Guide.

You can go to cardinalguide.com and get Hans' book, The Complete Cardinal Guide to Planning for and Living in Retirement. We got so much more coming up. Stay tuned. – Hans and I would love to take our show on the road to your church, Sunday School, Christian, or civic group. Here's a chance for you to advance the kingdom through financial resources by leveraging Hans' expertise in qualified charitable contributions, veterans aid and attendance, IRAs, Social Security, Medicare, and long-term care. Just go to cardinalguide.com and contact Hans to schedule a live recording of Finishing Well at your church, Sunday School, Christian, or civic group. Contact Hans at cardinalguide.com.

That's cardinalguide.com. Welcome back to Finishing Well with certified financial planner Hans Scheil. And today's show is a Brady Bunch estate planning. You know, what do you do when you've got step kids and all sorts of other things, or just basic estate planning and how you're going to bless.

And so Hans, there were some really neat solutions you guys came up with for all this. Yeah, so let's talk just a little bit about priorities. What we did with these people is we got the priority right where it needs to be, and they're there now, which is the surviving spouse. And you know, I do that because it's pretty easy with a husband and a wife because neither one of them know which one is going to be the surviving spouse.

So they get to play both roles. You know, you're going to be the deceased spouse, you, and then you are going to be the survivor, and then vice versa. So for starters, that needs to be the priority because when the first one dies, the second one is going to have a hard time making it, even though with the money you've got.

Because a lot of things happen, and we're going to need to really kind of look at how that person is going to live out their life, which could be a number of years. So get the priority there. And then we need to go back to the priority of how much do you want to leave to your kids. And you know, one simple solution is nothing at the first death because we got to keep it all focused on the surviving spouse, which is a lot of people. And then we need to make sure that it gets properly distributed, what's left of it, after the second one dies.

Okay, and some people are just fine with that. They say, look, our money is there to take care of us. We just want to leave what's left to the kids.

Other people are like very specific. They want to leave money to their kids at the first death. And it really is in play with this stepchildren business. And people don't really think about that.

Some people do, but it's a big deal. So that's, in any case, they're the second priority in the work we do. And we have to do some reprioritization. And then we also do some ways, possibly using a trust, which we were looking at with these people, to just make sure that that principle in the estate, after the second death, gets distributed the way these people want it, the way they jointly want it. Now, one way to take care of the children at the first death is with life insurance.

So, and that's what we're recommending for these folks. So we went and ran a $300,000 policy. It's whole life, but it's whole life with almost no cash value, or little or no cash value in the later years. But it's going to cover them for the rest of their life, 300 grand on each of them.

And I got them to agree to leave the same amount to all three kids. Stepchildren, biological children, doesn't matter, you know, $100,000 each after each death through life insurance. So the kids are going to be the beneficiaries of life insurance. These people really don't need it because they got enough money to be just fine under all circumstances, other than long-term care.

I mean, they maybe don't have enough money and live a good life. But nonetheless, the kids are going to be the beneficiaries of life insurance, not the people. And it's going to pay $100,000 tax-free to each of the children. So when they come and gather the family, each of them is going to get a check for 100 grand. And that's significantly less than her sons were going to get if they just died tomorrow or something through this thing, and significantly more than she's going to get of the estate or he's going to get as the survivor. So that's going to be a win and very easy to sell. The other thing we added onto that $300,000 of life insurance is we turned it into a long-term care policy. And we got a product through Nationwide as a company that we do a lot of this.

We've got some other choices. And Nationwide, it's a $300,000 policy will pay them $6,000 a month for 50 months, where it'll essentially use up all the life insurance if they have long-term care and if they need long-term care, either at home or in a facility. And they're going to get that $300,000 worth. Now, the downside of that is they're spending the kids' inheritance money on their long-term care, but it's being paid for by the insurance company. And I doubt the children are going to be too upset about that after mom or dad has just spent three years or four years in a facility or at home getting home health care and then passes away. And it's going to be protecting the estate because if they didn't have the insurance, they'd be paying for long-term care out of their principal, which the kids are going to get that money anyhow.

So it's a really beautiful thing. And we're able to do that for these people, mid-60s, between $500 and $600 a month each. So that's a pretty significant premium. It's $1,000 a month that they're going to just pay, or $12,000 a year. Actually, it's a little more than that, like $13,000 or $14,000. But with that thing, it's going to pay $300,000 to somebody each or $600,000 to somebody, either for long-term care or life insurance.

It just makes sense. These folks can afford it. And it's pretty cool when we can set up something like that, and then the kids are going to get it from the beneficiary on the life insurance. And then the spouses are going to be able to be the beneficiaries of the 401Ks. And really where that is very helpful is the fear of theirs and a lot of people is that the family starts fighting over money after the death of one of the spouses. And when you have a second marriage that's even amplified because you have she dies, her sons don't really have any connection to her husband other than it's their stepdad, which she married him after they were adults or late teenagers. There's a situation where it can really get very messy from a family standpoint and having just money show up when their parent dies to kind of ease the situation just makes it go a lot more smoothly. We deal a lot of times on the back end of stuff where families are coming in and it hasn't been something we've helped set up. We're trying to manage the drama, if you will, of the family dynamics in that after the death.

And it's much easier to do that before they're dead than afterwards. Yeah, and the other thing for me, it reminded me as we were talking about this subject that I have an older stepson. He's I guess in his late 40s at this point in time and I just thought about in my own estate plan I don't have him with anything. And I thought, wow, that would really leave him out and what an unique opportunity really to just buy a smaller life insurance policy that's directly for him and, you know, I've got the power to bless him to say, oh yeah, I was my dad's son, you know? Well, you know, if you think about it, Robbie, we can have several beneficiaries on the life insurance policy, okay? And so you have three children and one stepson. So you have four children and you could pick an amount like $5,000 that you would like to leave to each of them. Your natural children and then your step child, that's $20,000. And then you could buy a $50,000 policy and leave 30 to your wife and 5,000 to each of them. And that money is going to be settled out before the estate is even filed at the courthouse.

You follow what I'm saying? Yeah, exactly. I mean, I live that. You didn't want to buy that much insurance, you could make that 2,000, you know? And now it'd be 8,000 and you could buy a $25,000 policy and leave, you know, 17,000 to your wife. And it's still, there's a whole lot of difference between 2,000 and nothing after a person passes away.

Yeah, I mean, that's, and clearly, you know, as life goes on, things continue to change. We talk about it all the time on the show that, you know, who is your beneficiary on your IRA? Who is the beneficiary on your life insurance policy? And wow, are we accounting for everybody that we really, you know, because I just don't think about my own death all the time, you know?

Well, sure. And just think about, you know, this is another place that we serve people is we have a lot of our clients, and again, people in their 60s, 50s, late 50s, early 70s, their parents are dying, okay, or have died. And then they've got to collect on these life insurance policies. A lot of them don't even know that you do that directly with the insurance. They think you take this thing to the lawyer and the lawyer sorts it all out through the will.

It doesn't work that way. So we help people all the time. And I helped you a bit when you were dealing with the beneficiaries of the life insurance for your father. And so, it just— Yeah, and it went, by the way, to a trust that had never been opened. And oh my goodness, it was a nightmare. And again, because my father was so distraught over, he thought that for sure she would go before him, and he never thought, wow, I need to redo all this stuff. And again, it's not—I mean, I'm so grateful for everything he did.

Don't get me wrong in this. But wow, I mean, it was—had I not had you and some other really nice people to tell me what to do with a lot of this stuff, it was complicated. How about when we talked to the stockbroker? Wasn't she sweet? Yeah, and again, thank goodness.

We had talked to my dad about figuring out the beneficiaries on those IRAs and all that stuff coming up, because it really would have been a nightmare. Yeah, wasn't she a sweetheart? Oh, yeah, just delightful. Praise the Lord.

I'm just all I'm going to say. But when you run into those sweethearts that don't appear like they're helping you, we're here. We do this stuff all the time. We'll dig behind that. You ought to watch me talking to an insurance company or an investment house that's trying to keep money from the people I'm helping, where the beneficiaries—I mean, that's when I really go to work, and Tom really goes to work. I mean, Tom's actually better at it than me, because he doesn't go away.

I mean, it's easy to distract me. Tom doesn't go away. Now, that is one of the advantages of having a team, really, because I have Tom to work with all the time, but then I have Hans, too. So it's the beauty of how God puts us in communities, because everybody has different gifts, and they use them, again, for the kingdom. Sure.

Well, I hate we're out of time already for this wonderful episode of the Brady Bunch estate planning, which I feel like I've experienced firsthand. So thank you, guys. What a wonderful time. Terrific. Thank you. Thank you.

God bless you. And by all means, go to cardinalguide.com. Pick up Hans' book, The Complete Cardinal Guide to Planning for and Living in Retirement.

We will get you next week. Thanks. We hope you enjoyed Finishing Well, brought to you by cardinalguide.com. Visit cardinalguide.com for free downloads of this show or previous shows on topics such as Social Security, Medicare, IRAs, long-term care, life insurance, investments, and taxes, as well as Hans' bestselling book, The Complete Cardinal Guide to Planning for and Living in Retirement, and the workbook. Once again, for dozens of free resources, past shows, or to get Hans' book, go to cardinalguide.com. If you have a question, comment, or suggestion for future shows, click on the Finishing Well radio show on the website and send us a word. Once again, that's cardinalguide.com. Cardinalguide.com.

This is the Truth Network. You can't buy his pillows at Kohl's anymore. You can't get them on Amazon or you can't get them at Costco.

They're attempting to close his business because he stood up for kingdom values. What a chance to respond, especially if you need a pillow. Oh, I've had mine now for years and years and years and still fluffs up as wonderful as ever. Queen size pillows are just $29.98. Be sure and use the promo code TRUTH or call 1-800-944-5396. That's 1-800-944-5396. Use the promo code TRUTH for values on any MyPillow product to support truth.