Three topics for this show: How to select a great executor or power of attorney agent. Then Victor talks about how to plan for getting older if you’re single, with or without kids. Finally, Victor discusses the real cost of not working with a “best-interests” financial advisor.
Make It Last with Victor Medina is hosted by Victor J. Medina, an estate planning and elder law attorney and Certified Financial Planner™. Through his law firm and independent registered investment advisory company, Victor provides 360º Wealth Protection Strategies for individuals in or nearing retirement.
For more information, visit Medina Law Group or Private Client Capital Group.
Click below to read the full transcript…
Announcer: Welcome to “Make it Last.” Helping you keep your legal ducks in a row, and your nest eggs secure. With your host Victor Medina, an estate planning and elder law attorney, and certified financial planner.
Victor J. Medina: Everybody, welcome back to Make It Last. I’m your host, Victor Medina. I’m so glad that you could join us here. This is April 28th. It’s 7:30 in the morning.
I am pleased to be your host, and share with you some great information today. I’m going to talk about three different topics.
I’m going to cover, essentially, how to select the best executor and/or power of attorney agent. I’m going to cover what to do if you are single, with or without kids and getting older, how to plan for your care in those circumstances. Finally, I’m going to talk to you a little bit about the real cost of not having a best interest advisor working with you. We’re going to try to hit all of those today.
First, a couple of public service announcements. I have some speaking engagements coming up and I want to let you know about them in case you’d like to join me. These are absolutely free. I’ve got two things coming up that are professional in nature, and one of them, that’s a little bit fun and personal.
I’m going to be speaking at the Roosevelt Senior Center on, this is May the 1st, at 12 o’clock in the middle of the day at their Municipal Building, which is located at 33 North Rockdale Avenue, which is also known as Route 571 in Roosevelt, New Jersey.
If you are interested in attending the best thing you can do is, first of all, you can just show up. But if you want to make sure that you’ve got all the details straight, you call the Borough Hall at 609‑448‑0539. That’s 609‑448‑0539. It’s going to consist of some senior citizens. It’s part of the senior citizens club that they have out there.
I will be discussing things about all kinds of legal planning, legal state planning, like powers of attorney, advanced health care directives, health care proxies wills and estate planning, all that fun, fun stuff, including Medicaid planning. If you are interested in hearing a little bit about that, you can show up and attend that talk.
Then also coming up a little bit later, I’m going to be at the East Windsor Senior Center. It’s going to be on May 17th again in the morning about 10:30 in the morning. They are also located off 571 in East Windsor. If you’re interested in coming and see that I got a completely different topic there.
I’m going to talk about three reasons why you should never ever, ever buy an annuity and three life scenarios in which you might want to consider buying an annuity. If you’re interested in learning a little bit more about those financial planning topics go ahead and attend these Windsor Senior Center.
They do require pre‑registration, so you have to contact them about coming in and seeing me talk there, but those are two opportunities. I’m going to be speaking on professional topics.
Now, a little bit more of a personal topic next Saturday, May the 5th, I’m going to be performing. Some of you know this and some of you don’t. For fun, I am a member of a co‑ed adult acapella group, and they’re named Jersey Transit. I am one of the musical directors there. I’ve been a president in the past.
What we do is we get together once a year with other acapella groups from across the country. We sing our hearts out and try to perform for one another at a free concert for anyone else in the public. We are performing for each other, but members of the public are welcome to attend.
This year, Jersey Transit is hosting this conference that happens every May. It’s going to be at the Kingston Presbyterian Church. The concert goes from 9:30 to 4:00 in the afternoon. You can pop in at any time.
As I said, attendance is absolutely free, but if you’d like to see me perform, hold a little bit something over me in ransom, having seen me onstage. You can do so by arriving at 9:30 in the morning. We’ll be the first group to perform. We’ll have five songs in the set. You’ll probably get to see my kids in the audience cheering me on as well.
That is a great concert with great music, and if you’re interested at all in acapella music, it runs the gamut. You’ve got things that are performed early time jazz, four part choral things, but we also have more popular, contemporary songs.
If you’re interested in those at all, absolutely, come on down and listen to the concert. It’s called Spring Sing. There will be ten groups from across the country. Chicago. Detroit. Boulder, Colorado. Philadelphia. You name it, they’ll be there. In any event, going to be a great concert.
I will remind you next week, very early in the morning, but of course if you’re listening next week live on the radio at 7:30, you better get dressed and showered, because the concert does start at 9:30 in Kingston.
Those are a couple of things over there. Going to be just absolutely thrilled to discuss three topics for today, and they’re topics that come up from time to time.
If you are at all curious about how to name your executors and your power of attorney agents, I’m going to tell you little bit about what I talk to clients about when they’re asking those questions. People tend to default to certain types of people…like their firstborn, the people that live closest to them. I don’t know that I necessarily subscribe to that.
I look for two qualities when it comes to people that deal with money, and one quality when it comes to people who have to do your healthcare. In those scenarios, here’s the way that I help clients think about it.
Essentially, when you name somebody who’s going to serve as a power of attorney agent, or who’s going to serve as an executor…now, we write a lot of trusts, and if you’re thinking about the word “executor,” you should really be substituting ‑‑ in our world ‑‑ a “trustee,” because a trustee is very similar to an executor. Also, very similar to a power of attorney agent.
Probably goes way beyond what we can cover here today, in terms of discussing why a trust, in conjunction with a power of attorney. Let’s just assume for a second that we’re going to use those words. We’re going to use trustee, executor, and power of attorney agent. Here’s what I’m looking for when it comes to those situations.
I want somebody who is of impeccable character. What we’re looking for here is if somebody found a wallet outside of the store they would turn around, return the wallet back to the store ‑‑ now watch this ‑‑ with all of the money still in the wallet. In that scenario, we’re looking for somebody who is going to hold themselves to the highest standards.
Why are we looking for this level of character in there? They’re going to be responsible, these individuals, with dealing with money and dealing with areas of responsibility. They’re going to be, for lack of a better term, tempted and they’re going to have the opportunity to really have a lot of control over you, your money and what happens afterwards.
What we want is…while there are all kinds of mechanisms in order to help protect what you have, you can go and sue in court, you can dislodge the money. That’s trying to unring a bell. That is way too complicated.
It’s much better to avoid a problem by selecting a great person. You know your own lives. You know whether or not, that is, in fact, your firstborn or if it’s somebody completely independent.
I’ve said to the people, “Look, I don’t really care what the birth order is. There are some cultures that prefer the boys over the girls. That doesn’t matter to me. I’m not concerned with that at all. I want to make sure that we have great people serving in those roles because it’s one of the best ways to prevent problems later.”
The second characteristic that we’re looking for in those fiduciary roles of people dealing with money and making those decisions is we want somebody with enough financial savviness to get what is the difference between a good deal and a bad deal.
One of the ways that I illustrate this is, if somebody comes into your life and has to sell your home, you want somebody who’s savvy enough to understand. We’ve got to replace the roof in order to do that. I should take an offer that’s about 90 percent. Holding it onto the market for another six months may actually cost more money than increasing the offer by another five percent.
You want somebody who can think through problems like that because they’re going to be using their judgment. They’re going to be replacing their judgment in what to do. If you think of somebody who has a similar approach to finances, just good stewardship over money and making decisions like that, that’s the second quality.
Not once a little bit harder to come across. I have some tricks up my tree sleeve to figure out who are good people for that. I give you some examples. Anytime there’s somebody in your life that deals with accountancy, money, filling out forms for their business, these are good people. They’re going to think things through logically.
They’re not going to be swayed by emotion. When you’re in that situation, it’s important to have somebody who can think these things through because they’re going to be substituting their judgment for your judgment. Those are the two qualities in dealing with money.
We want somebody who’s having impeccable character, can think things through logically, a good financial prudence on what to do with money and making those decisions.
I said there was one quality for somebody’s making healthcare. By the way, that is something that we do separate out. We ask people to name somebody who can help deal with the money. We have some people help with healthcare. Sometimes they’re different people. They have different strengths in those areas.
When those scenarios come up in the healthcare, I typically recommend that you look for somebody who is strong enough to understand what your decisions are in healthcare, support those to the outside world. When you think about it like a healthcare directive or a living will, I explain to clients, “This is not a set of serial instructions. You’re not leaving behind do this, do that, the other…”
You can’t even think through all the permutations of what care might be necessary. What you want is somebody that understands what care you want. That document ends up being their trump card, their support that allows them to turn around to the other family members and say, “This is what so and so wanted.” They can support that decision.
As you’ve heard I have not at all talked about who’s born first, who’s oldest, who lives closest to you. I don’t care if they’re old or young, even related to you or not, as long as they meet those three qualities for the things that we’re thinking about.
Victor: I hope that helps you line that up. That’s a big item. When we meet people for estate planning, sometimes it can trip them up and make things a little more complicated for you. You should probably think about one or two people in those roles. We want some backups for them along the way.
Anyway, when we come back ‑‑ we’re in a little long on this segment ‑‑ we’re going to talk about how to plan for care if you are single, with or without kids. Then we’ll talk about the recourse of not having a best interest financial advisor working with you. Stick with us we’ll be right back on Make It Last.
Victor: Welcome back to Make It last. I have spent the first segment, if we’re running a little bit long on that, talking about how to create and select a great executor and you know what? It’s a pretty closely related topic to this next area which is how to plan for care as you’re getting older especially if you’re single.
We know you can become single all kinds of different ways, maybe you never married, maybe you divorced later in life, maybe you’ve become widowed. For people who are alone and without that kind of support structure many times people don’t have kids, it can be difficult to think about how to plan for care.
I’ve met a number of clients who in the past week have come in, new clients for planning, and their lives are really upside down.
I can think of one client that I’ve met that relocated from half across the country, moved to be closer to family, but she is widowed. She has no children and in thinking about how to set up her life, so that she can plan for care later, there are some obstacles to overcome because we’re not just thinking about estate planning and naming executors. That’s one layer of complexity in setting this up.
She’s also thinking about the practical logistics of what it takes to plan to get older. A couple of things come up. If you’re getting older, you may have mobility issues when you get older. You may start to encounter some mental decline. By the way, there’s tons of research on this, that your ability to make decisions, it becomes compromising.
Think of another client that we had to walk very slowly through the process of making decisions regard financial matters because that client had started to not feel as confident about the decisions they were making, again in large part because of health concerns and getting older.
This person’s all alone. This is not something that happens completely in isolation, it’s very common and a lot of research supports that.
By the way, other research supports [laughs] that your best decision making time is in the morning. You’re going to want to end up making your hardest decisions when you have the most ability to do so and then keep the easy decisions for the afternoon so there’s even time on that.
In fact, if you’re interested in it, there’s a fantastic new book by Daniel Pink and he wrote a book called “When.” He researched this area about how to be productive, but also the different powers you have or strengths you have in decision making. Gone away off track here, let’s go back to talking about somebody who is single.
Mental decline, physical decline and you’ve got to plan for those things. There’s different ways that you can do that and a lot of them are about controlling your environment.
As you get older, you may have spent most of your life living in a single family home that you mow the lawn and you were comfortable mowing the lawn, you were comfortable doing home maintenance and everything that that entails, but it could be that now as you get older you realize that that’s not going to be sustainable.
In fact, even if you’re doing it now, one of the things that I would urge you to think about is, get ahead of the potential problem. If you know that you might have a physical ailment that prevents you from upkeep in the house and whatnot, you need to move out of the house before the problem comes in.
Relocating your environment to a place that’s a little bit more conducive to that kind of living, where you don’t have to draw upon your own physicality and your own mental acuity in order to do that, that’s one of the biggest steps.
There are all these planned living communities. You don’t have to go to a 55 and older, although many of those homes are designed in a way for you to age into them, by either having space for a caregiver to come in or having all of the living on one level.
A lot of the more forward thinking, real estate development is on having these mixed aged group living, where you have some homes that are one level and some homes that are families because there is a lot that you can draw on energy from people who are younger than you and you’re living in an environment that’s still live and vibrant.
You don’t necessarily have to move to a 55 and older warehouse and the old folks in one section a time, you don’t have to do that. You can live in a young area. If you do a little bit more research, but you do want to think about these planned communities where, as you get older, and you lose the ability to drive, if you do, now you’ll have a support system in place. You can walk to the grocery store or wherever else you need to.
My first home in New Jersey was in one of these planned communities and of course I’m not really concerned about getting older, but I was concerned about having my kids being in an environment that was safe, sidewalks all over, we spent Saturday mornings. There’s an old grocery store called “Barazzos” before they closed in Robinsville.
They would offer 25 cent hot dogs and 50 cent hamburgers on Saturday morning and we would walk from our house over there, maybe stop and fish in the little stocked lake that they had, little sunnies where every once in a while where the trout had to fish for the one trout that was there, throw it back quick.
You had the opportunity to live in that environment and have everything that you need available that you need, the coffee shop, the bagel shop. It was all within walking distance which made it really great for somebody that had inability to drive or mobility concerns.
Even beyond that, you want to be in a structure which is environment where you can bring help in. That’s not only planning for someone who can live with you from time to time like a home healthcare, but you’re thinking about things like being on a bus route.
A lot if the home healthcare aids are restricted by what is available to them on public transit. If you do not own a bus route, it could be difficult to bring somebody in to healthcare for you or at least your options will be limited, the cost might be higher.
Think about that and that would also help support because you may not somebody to live with you all the time. You could have someone that basically comes and cares for you during the day or helps you out for that.
We’ve talked all about an environment that you’re in, but you also want to think about family and notifying them. You don’t necessarily have to live next to family, and relocate in that area. Maybe even the weather is not something that would help you on that, but knowing where the support structure is for outside family and how they can step in and help is important.
Giving them different communication opportunities with you.
You might need to make sure that your house is wired for the Internet, and that there are some structures in there so that somebody can come in with some software toys, where they can come in and communicate with you if something were to happen. You know how to communicate with them.
They can have a visual of use, using an iPad with FaceTime. Even things specific to that might actually help because you’ll essentially be able to live where you want, without lifting yourself up and moving entirely over to somebody that may not be very close with you, especially if you don’t have kids.
Who can you talk to about making sure of that? Definitely, one of these areas that you want to talk is an elder law attorney. An elder law attorney tends to touch on multiple areas on this. They’re going to touch on the legal planning, you’re going to touch on the healthcare related stuffs. They’re at least going to be aware of what the best providers are.
They’re going to see so many people come in and out over the course of the clients that they see, that they’ll be able to say, “OK, these are good areas to live. These are good care providers. This is a good area for this kind of care.”
You might want to plan for something else a little bit later. You can even back yourself into doing it. If you’re not single, even if you’re married, and worried about what happens when one’s spouse passes away.
You’re not currently widowed, but you might be with it sometime. For that reason, you’re going to want to think about that.
Victor: All right. Those are some ideas to think about in terms of becoming single and growing older, and have a plan for your care. I think the first step is reaching out to qualified elder law attorney. Certainly, we would step into that role, if you wanted to come and talk to us at Medina Law Group.
You can do your search for somebody who’s competent, if you don’t want to see us and you want to see somebody else. When we come back from the break, we’re going to talk a little bit about the real cost of not having a fiduciary level advisor.
We’re going to talk about what that means. We’ll take some real‑life examples. Stick with us when we come back on Make It Last.
Victor: Welcome back to Make It Last. We’ve been talking a little bit about a hodgepodge of topics today. Talking about how to select a great executor or power of attorney. Talked a little bit about how to plan for care if you’re single and you’re growing older.
Now I want us to talk about one of the things that’s near and dear to my heart, which is how to select a fiduciary advisor and what the real cost of that is. This has been a topic that has not only been covered here in this show multiple times, but it continues to be in the press as the issue comes to light.
For the longest time, the cost of financial advisement and those conflicts of interest, and the idea that somebody didn’t have to look out for your best interest, those have all been stuff that has really flown under the radar for years and years and years.
Now we’re at a time where people are starting to get whys to the idea that, first of all, the financial advisors that they’ve have been working with may not be looking out for the best interest, may not be legally able to look out for their best interest. They want that.
They want somebody who looks out for the best, and they should. We’ve seen that come out of different ways. We’ve seen that come out as the DOL, Department of Labor fiduciary rule, which was given light in June of last year, and struck out a real blow recently in a Fifth Circuit Court of Appeals, basically saying that it’s unconstitutional.
It looks unlikely that the current administration is going to do anything to take that to the Supreme Court or to the next level. Next things that are happening is that the SCC has now promulgated some rules to try to make that situation better.
They’ve got some rules in place, and they are proposed. They’re not in place yet. You shouldn’t rely on that. The idea here is that the advice that you’re going to be giving in matters regarding securities should be in the client’s best interest.
The recommended days on the product though still is on suitability, which if you’re thinking though this, means you don’t have much protection at all. When it comes down to the actual products, that’s when they can sell you something that is not in your best interest. That’s not great.
The other problem with the SCC rules, of course, is that not everything is a security. If you buy a mutual fund, a stock, a bond, these are all securities. If you buy a variable annuity, these are securities. If you buy a life insurance policy, if you buy a fixed or indexed annuity, these are not securities.
That means that the people are not bound by the SCC rules. These insurance agents that pose as holistic financial advisors, they are not people who have to adhere to a best interest standard, because they’re not governed by the SCC.
There’s a lot of law, on the fact that insurance products are not securities. They’re not investments. That just means that we’re still in the wild, Wild West. My job here is to let you know that, of course, you should be looking for someone who’s a fiduciary level advisor.
You should be making sure that everyone you talk to in that area meets that standard, that voluntarily elects to that standard. You can do that a couple of different ways. People who are registered investment advisory firms that are not duly registered.
I just lost half of you listening because you couldn’t understand what that means. You can have an independent RIA and it can be a couple of different ways. One of them can be just solely an investment advisor.
Another one can be a duly registered representative, which means that they’re a hybrid. They are doing some advisement work, and that’s under a fiduciary standard. They are recommending products, and that’s under suitability. That’s bad. That’s the negative part of where we want to go to.
Again, you can have it in either set up. It’s important to make sure that you’re in the right situation. The best way to do this, by the way, is to really request somebody who is a fiduciary to sign a fiduciary oath. You can do a search.
There’s a great professor named Ron Rhodes, who has got a JD and CFP, and a bunch of letters after their name. He has created a fiduciary oath. You can print out and ask you advisor to sign. Here’s what’s going to happen.
If the advisor is a registered representative, is somebody that is not capable of signing it, they won’t be able to do that. They may not be candid about the fact they’re going to do that. They might in fact say, “Well, you don’t need it. You don’t need me to sign it. I’m already taking care of it.”
Anything other than, “Yes, I’ll sign it right now,” is an indication that you’re not working with a fiduciary level advisor. The fiduciary oath is certainly one way to do that. Another way to do that, as self‑interested as this comment is, is to work with somebody that is both a lawyer and a financial advisor, the way that we are in our firm.
The reason for that, by the way, is because as a lawyer, the relationship that you enter between an attorney and the client, is a fiduciary level arrangement. I have to look out for my client’s best interest when they engage me for legal services.
Here’s the trick about it. It doesn’t end. If I help them with their financial matters, I’m going to be held to a fiduciary standard by default. There’s not a client in the world that thinks that I stopped being their lawyer just because I gave them financial advice. They expect me to be their lawyer.
They’re anticipating that I’m working with them like the lawyer would work with them. I’m happy that that’s the arrangement that we’re in, because in fact, that’s exactly the arrangement I want to be in with my clients. I took these clients on because I wanted to care for their best interest.
For that reason, anything that I give them advice on, I’m giving them advice on in their best interest. I would be happy to defend that to anyone that comes in and ask any questions. You do the same thing with somebody who’s only bound by suitability. All of a sudden, they’re going to go running for the hills.
One of the things you can do, by the way, and where I got the idea for this segment is, there’s an individual named Bob Veres, it’s V‑E‑R‑E‑S. He actually posted article called “The Real Cost of Suitability.”
The idea here is that he went through some real‑life examples about where a fiduciary level advisor was able to get over on a fiduciary level advisor, and the recommendations on the products. You’re going to read this and you’re going to be shocked.
You may even see yourself in some of the examples. If you do, here’s my legal advice for you. Don’t despair. You have an opportunity to make a change, to move over to the better part of advice. You just needed to know about that.
This is what gives you the opportunity to do that. If you’re listening to this, jump on to the Internet, take your phone. I know that you have your phone within your arm’s reach. Google The Real Cost of Suitability with Bob Veres, V‑E‑R‑E‑S. Read the long article that they’re highlighting different circumstances.
You may not understand all the terms that are in there, but you get a very clear idea about what the potential cost is to working with somebody that’s not a fiduciary, and why you should switch, and get to somebody that is a fiduciary. Listen, three opportunities to come and hear me speak.
You can be at the East Windsor Senior Center on May 17th, from 10:30 to 12:00, talking about why you should never ever buy annuity. Reasons for that in real‑life scenarios, in which you may want to think about that.
You may want to see me at the Senior Center in Roosevelt, New Jersey. You can do that on May 1st, after 12. Do that by contacting their bureau, at 609‑448‑0539. We’re going to start at 1:30 that day, talking about everything on legal planning, including Medicaid planning and how to protect assets.
If you’re so inclined, to come listen to some live acapella music with some great groups from across the country, go ahead and do that. That’s going to be May 5th, at the Kingston Presbyterian Church. We’re going to go from 9:30 to four o’clock.
Jersey Transit, the group that I am in, starts right at 9:30. Again, this is a perfect opportunity to have a little bit over on me, hold me hostage with some damning information that you know that I actually sing in an acapella group, and that you’ve seen me perform.
That’s been it for Make It Last.
Victor: Join us again next week where we’re going to cover another set of important topics on retirement planning, legal and financial. This has been Make It Last, where we help you keep your legal ducks in a row and your financial nest egg secure. Catch you next week. Bye.
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