What Do You Really Need in an Estate Plan?

Mark Riepe: I'm Mark Riepe. I head up the Schwab Center for Financial Research, and this is Financial Decoder, an original podcast from Charles Schwab. It's a show about financial decision-making and the cognitive and emotional biases that can cloud our judgment.

In this episode, the topic is estate planning. It's an important topic, but for some, it's unpleasant because it involves thinking about your demise. It's emotional, and that can be difficult to navigate. It also can be complicated, and it takes time. You also may need an estate-planning specialist to help. Add all those factors together, and it's not surprising that, according to one study, more than half of U.S. adults have no estate planning documents at all. And it's not just regular folks.

There are plenty of celebrities who have famously mishandled their estates. Prince had a $300 million estate and no will. Aretha Franklin's family didn't think she left a will. Then they found multiple handwritten wills, one of them under a couch cushion. A jury decided the couch will, a holographic (or handwritten) will in a spiral-bound notebook, was her true will. Heath Ledger had a will, but he didn't update it after his daughter was born. This led to a slew of issues around his estate, which was worth $20 million.

The list goes on. Michael Jackson, Whitney Houston, Robin Williams. The message is clear. Even if you're not a famous multimillionaire, get your affairs in order and update them regularly. And we're going to get into how to plan so you can reduce the odds of ending up like any of those cautionary tales.

Today we have Austin Jarvis as our guest. He's our trust, estate planning, and tax expert here at the Schwab Center for Financial Research. Austin analyzes and provides insights on complex estates, trust planning, advanced charitable strategies, business succession, and executive compensation.

Austin, thanks for joining us today.

Austin Jarvis: Thanks for having me, Mark.

Mark Riepe: Austin, when I hear about estate planning, people may immediately think of wills or maybe some things that are happening after they pass away. I think that's part of it, but I was hoping to start with you just describing a little bit more fully what does an estate plan actually need to accomplish?

Austin Jarvis: Sure. So a good estate plan is one that effectuates what you'd want to have happen in situations where you can't speak for yourself. So a lot of people think about death. Obviously, you can't speak for yourself. But more and more people need to start thinking about periods of incapacity. That's the one that a lot of people forget about because we're living a lot longer thanks to advances in medical science. So it's becoming more important than ever that a good estate plan be put together with the idea that you're probably going to have a period where you're not going to be able to make your own choices.

So in short, a good estate plan should give you this sense of clarity, choice, and control, knowing that if anything were to happen to you, whether that's your death or whether you're in a coma, that what you want to have happen, whether that's getting your bills paid, whether that's making medical decisions, or whether that's who's getting what from your estate after death, that all of those things are carried out according to your wishes.

Mark Riepe: Austin, let's imagine that we've got somebody starting from scratch. What are some of the foundational documents you think that pretty much everyone needs to have in place?

Austin Jarvis: So here at Schwab, we believe that everybody should have four or five foundational estate-planning documents. And that fifth one is just depending on your individual circumstances. The first, of course, is a will. You need to have a will. No matter your level of wealth, your health, your age, anything. Everyone, if you're an adult in the United States, you need to have a will. Secondly, is a financial power of attorney. Third is advance directives, which could include things like a living will, healthcare proxy, or a DNR.

And then a letter of instruction. A letter of instruction is not a legal document, but it's very valuable in the estate-planning process because it can help your executor, trustee, family members, beneficiaries locate important documents, tell you who your attorney was, your CPA, where your financial accounts are located, online passwords, all those types of things. And it can also serve to memorialize family history you want passed down or explain why certain assets or property were left to certain beneficiaries to try to help alleviate some family conflict that sometimes arises during these moments of transition.

And then that fifth document, which is not for everyone, is a revocable trust. And we'll get into that a little bit more, but depending on your circumstances, where you live, how much assets and your goals, a revocable trust might be something to consider as potentially a will substitute.

Mark Riepe: That's a great list, Austin. Let's start with the will. What decisions does a will allow you to make and what can happen if you die without one?

Austin Jarvis: So a will allows you to determine who gets what and sometimes even when. If you just say, "Hey, I'm going to leave things to my beneficiaries," normally it just transfers directly to them and they get immediate access. But you can create a trust in your will. So if you say, "Hey, I don't want to give them direct access to it. I want it managed and controlled," you can put a trust that manages some of those assets for some of your beneficiaries. So if you think that some of your beneficiaries can't handle a large inheritance or they have other problems, that's also something that you can work with an attorney to put in place.

Really importantly, a will allows you to name an executor who manages your estate through the probate process. They're involved in wrangling all of your assets at death, going by the terms of your will, who gets what, paying your final taxes, drafting an estate tax return if necessary. So it's a very important position.

And for the parents out there, the will is the document that allows you to name a guardian for your minor children in the event of your death. This can be important because without a will and a provision naming your preferred guardian, a court's going to have to come in and decide who's best suited to take care of your children. And sometimes that person who the court would name is not going to be the same person that you would name. So it's very important that if you have minor children and you know, "Hey, this is the person I would want to take care of them," then you need to have a will because that's the document where you can put in.

So back to the final part of your question. You said, "What happens if you don't have a will?" That's called dying intestate.

And in that situation, the state law determines who gets what when you pass away. And I will say the vast majority of times, 90-plus percent of the time, what the state law says is going to happen to your assets is not exactly what you would want to have happen. So when someone says, "Why should I do this?" it's like, well, you already have an estate plan, whether you know it or not. If you don't have a personalized will, then the state law is going to control. And do you want to let your state legislatures and state law determine where your assets go, or do you want to have the document that allows you to expressly say, "Here's what I want to have happen and who gets what when I die"?

Mark Riepe: Austin, I want to talk about the second and third document that you mentioned, the financial power of attorney and the advance directive. So how do those protect you if you become unable to make decisions for yourself?

Austin Jarvis: So this one really hits home for me, because those have become recently important to my family. In March, my 93-year-old grandmother recently fell and broke her hip, requiring a full hip replacement. Luckily, my grandmother had both a financial power of attorney and healthcare proxy where she named my mother to handle all of her financial and healthcare decisions. This was important because it allowed my mother to instantly step into my grandmother's shoes and take care of her finances and to make healthcare decisions when my grandmother was unable to do so.

And I couldn't even imagine what would have happened without them, because my mother would have had to have gone through the frustration of going to court with all the time and expense that entails to be approved by the court in order to act.

Now, I get it. Some of the listeners might be listening and say, "Well, it makes sense for someone that old to have these documents, but I'm young and healthy. Do I really need them?" And I just implore you that you need to have them because life throws unexpected things your way all the time. Car accidents occur every day. Otherwise healthy people have heart attacks just because they don't know what's going on internally. And you can be in a coma or placed in one or being unable to actually take care of your finances, your own healthcare decisions for weeks or months at a time. So these documents are really important for every adult in all stages of life and all stages of health. 

And the final thing I'd say to our listeners, even if you do not want to get these documents for yourself, do it for your family and your loved ones. Take the stress off of them at a time when they need to be focusing on you and what's going on with you. They do not need to have the added stress of going to court, hiring an attorney, getting all the approvals they need. With the documents in place, you can immediately step into the shoes and make these decisions and not have that added stress.

Mark Riepe: Yeah, I think that letter of instruction really fits into that description really well, because those decisions are going to have to be made. And if you make them and take that burden off of everyone else, it probably alleviates a lot of potential misunderstandings.

Austin Jarvis: Exactly.

Mark Riepe: You had mentioned—you listed five documents—the last one, the revocable trust, not necessarily right for everybody. But describe that a little bit more. When might someone need that rather than just being able to rely on the first four?

Austin Jarvis: So a revocable trust is saying, "Hey, wills do have some downsides." Now everyone needs one, but wills do have some things that you need to be aware of. First is privacy. So when you have your will probated, that becomes part of the public record. So if you say, "I don't want people to know what I transferred and to whom and have that part of the public record for anybody to look out," a revocable trust may be a good will substitute for you because anything that you transfer through a revocable trust is private.

It's happening inside the terms of the trust. So that's one element. The trust may also be appropriate if you live in a state with high probate costs or where probate takes a significant amount of time, because once death occurs, the successor trustee of the revocable trust, whom you appoint, can then start the process to follow the terms of the document and either distribute the assets according to its terms or to continue the trust for the benefit of the beneficiaries that you've named. So a revocable trust most often has a little bit more flexibility in terms of it can move faster than the typical probate process.

So one other thing to keep in mind, and I want to point this out now, is that only the assets that a revocable trust owns at death are subject to it. And one of the biggest things that we see with clients who come into us and have an estate plan review is we look at the trust, and it's a very well-drafted trust, everything that we could want in it, but then we go through and say, "Well, what does the trust own?"

And sometimes we find that the trust either owns nothing because the client has not transferred the account titles to it or transferred the property, done the things necessary to have the trust own it. So for anyone out there, if you want to have a revocable trust as a will substitute, I implore you, just getting the trust drafted and signed is not the last step in the process. You have to change the account titles for the accounts you want the trust to open. You have to change the title for property you want. So anything that you want to have the trust own, you need to finish that part of it. Otherwise the trust doesn't actually control, and it's still part of your estate subject to your will.

Mark Riepe: Yeah, crucially important. Crucially important. Glad you pointed that out.

Austin Jarvis: Finally, I want to point out having a revocable trust does not mean you do not need a will. Quite to the contrary, if you have a revocable trust, you will also have a will, typically called a pour-over will. That just means that some or all of your probate assets, once the probate process is done, is going to get poured over into your revocable trust in order to have it control those assets. And it's also the place where you name a guardian again if you have minor children.

So for anyone out there listening thinking, "A revocable trust sounds good, because I want to avoid probate and the privacy and don't have to wait as long," just keep in mind that you will also have a will that catches anything that's not owned by the trust and pours it over at the end. But that's also the place that if you have minor children that you can put in your guardianship provisions. So if you have a revocable trust, you are also going to have a pour-over will as a part of it.

Mark Riepe: Austin, you just mentioned guardianship and the involvement of guardians, particularly with minor children. It kind of reminds me that it's probably pretty important that everyone who is affected or involved with the estate plan should be aware of what their involvement is. Talk a little bit about that and what kind of solutions do you recommend to make sure people know the role they need to play?

Austin Jarvis: So first and foremost, talk with anyone that you name as trustee, executor, healthcare proxy, power of attorney, or guardian to ensure that they want to take on that kind of responsibility. Many of these positions come with legal liability if they make mistakes or breach their fiduciary duty to the beneficiaries or to the person they're supposed to be overseeing. So the people you name should hear directly from you what you want to have happen when the time comes.

This also means that what you tell them should match your documents. So this means having a very in-depth conversation with the drafting attorney to make sure that what you want to have happen is basically in your documents so that when you're talking with the people that you're naming, you're providing them with good information of, "Here's what I want." Because you don't want to tell them one thing and the documents to say another. Because if they're named and they accept, they have to follow the terms of the document, even if they've heard something different from you. If the document says, "Do A," and you have told them in the past to do B, the document is what controls. So that's the importance of making sure that your documents and what you want are fully aligned.

Now, for the beneficiaries of some of these documents, the people that you want to leave your assets to, you can either talk to them about what you anticipate leaving them or you can say nothing. It's really up to you. However, some of the ugliest probate litigation typically involves family members who thought they were due an inheritance when the document said otherwise. So with that in mind, deciding whether you should tell your beneficiaries your intent on their inheritance is really up to you, but doing so may save family acrimony in the future.

Finally, if you have these conversations with your beneficiaries, make sure you follow up with them anytime you make changes to your will or your revocable trust when it affects them, because you can change these documents at any time. It's not uncommon to see that the same litigation I mentioned earlier occurs because they were told they were getting an inheritance only to find out after a death has occurred that they were written out of the will without being told because of an argument or dispute.

So that type of thing, family dynamics are very heated sometimes. And so making sure that you're talking with all of your beneficiaries, letting them know what to expect can really save heartbreak and also litigation expense in the future if everybody actually knows what they are entitled to. And I've said this to some clients, if you're writing them out of the will, you should probably let them know because they're going to be the ones who say, "That's not fair. I was promised this. No one told me," because if they're expecting to receive a large inheritance and they were later written out of the will, they might try to fight it. Now they may lose, but it's still an expense that the estate's going to have to incur in order to defend itself against that litigation.

Mark Riepe: Well, they may have also even planned on it and made various financial planning decisions with the assumption of receiving that. And then when it's not there, that really kind of upsets the apple cart, so to speak. 

Austin Jarvis: Absolutely.

Mark Riepe: It also reminds me, Austin, that … I think that was a great example, because it occurs to me that we sometimes might think that the estate plan and the associated documents are really operating in kind of a "set it and forget it" mode. But that's not the case. Life continues to move. Things happen. Many of those things are going to have an influence on our estate-planning decisions. So what are some of the big life circumstances that generally speaking will have an impact on the estate plan?

Austin Jarvis: Sure thing. So what I'm about to say is not fully comprehensive. There are going to be other events that probably trigger either creating an estate plan, updating, but the ones that come to mind are becoming an adult. The moment you turn 18, you should put together an estate plan. Do your parents have access? Do they get to make the decisions? No. You're a legal adult. You need to have the documents that name someone to make decisions if you're unable to do so, or how to handle your estate, even if it's small, even if you're 18 and all you have is a checking and a savings account or maybe a car. Those things need to be put into a document so that people know where that's to go when you pass away. So that's another place where maybe a financial power of attorney and a healthcare proxy are going to become important. 

Some other things that are fairly obvious: marriage, birth or adoption of a child, the death of a friend or family member should maybe prompt you to look at your estate plan or to create one. Seeing a friend or family become incapacitated, especially if something goes wrong. Becoming disabled is a big one. If you all of a sudden get a medical diagnosis, you need to make sure that all of your documents are in place and fully valid, especially for things like dementia and Alzheimer's where your mental capacity might be in question in the future. Having these documents in place while you're a full and sound mind is very important.

And then this is also something that we see where people say, "I need to create an estate plan or update it," is when you've been named to handle the estate of a family member who didn't have a plan. Have lots of clients who've come to estate-planning attorney saying, "I never want my family members to go through what I just went through." And that's when they create an estate plan.

So estate planning can be difficult for many people because it forces you to contemplate your own mortality. Consider that there may be a time in your life where you're unable to make your own decisions. But I will tell you, for the people who do it, the sense and peace that can come from it is well worth it.

Now, as for an estate plan being "set it and forget it," here at Schwab, we recommend that every estate plan be reviewed anytime that there's a major life event or change in law that would affect your estate plan. This is especially true for people with significant assets as changes in tax laws are becoming more and more frequent. But even if you don't have any major life events and the law hasn't changed in a while, we still recommend that you review your estate plan at least every three years. A lot can change in three years.

I just look back in time three years right now and say, "Wow, my life really has changed a lot in three years." So it's important that any of those changes that you notice in those three years, they're reflected in your estate plan. Because what your life looked like three years ago and what your life looks like now, your documents should still control what your life looks like now. So make those changes, review it, pull it out. I have seen some times where clients will bring us estate plans to review that were typed with a typewriter and the copies are on carbon paper that they're that old. I remember one time being handed one and there was literally dust where I could wipe my finger across the first title page and there was dust on it. Don't be that person. Make sure you're updating it on a regular basis.

Mark Riepe: All right. Let's go into some of the more common, the more frequent events that you just laid out. Let's start with marriage. What parts of the estate plan need to be revisited if you're getting married?

Austin Jarvis: So first is beneficiary designations and account titles. When you get married, make sure you look at your accounts to see if you can add beneficiaries to your financial accounts or retirement accounts like IRAs and 401(k)s. You can also retitle some of your accounts and real estate as joint owners. Or if those have transfer-on-death or pay-on-death provisions, make sure that you're doing that. Just because it's important. Account titling and beneficiary designations, those transfer by operation of law.

So even if there's something contrary in your will or trust that says, "Hey, this is what's going to happen," the beneficiary designation and the account title is what controls. So make sure that you review that. You should review the terms of your wills and trust to make sure that your spouse is named as you want and that they are named as your power of attorney or healthcare proxy because getting married does not automatically override an existing power of attorney or healthcare proxy. And that's something that newly married couples need to realize is that if you have an old estate plan and say you named your mom or your parents as your power of attorney and healthcare proxy, getting married does not override that. You actually need to redo those documents to name your spouse to be able to control. So that's another important thing that you need to consider if you're getting married is to make sure that your estate plan, your will names your spouse appropriately, that your power of attorney and your healthcare proxy also names them so that you can cancel out.

Now you can add your parents if you want them to serve, say, as the successor power of attorney or successor healthcare proxy, so that if something happens to you and your new spouse, say you're in a car accident together, that you've got a backup, that is fully fine. But I think you'd want when you get married to make sure that the first person who gets to make decisions for you is your spouse. And then if they're unable to do so, then name someone else—friend, family member like your parents or something like that.

Mark Riepe: Well, that's a perfect lead-in to the next event here, and that is the birth or adoption of a child. So how might becoming a parent change the decisions that you've built into the estate plan?

Austin Jarvis: Yeah, so the birth or adoption of a child can mean considering who to name guardian of that child in the event both parents have passed away. Now I hate that it's called in the estate-planning world a common disaster, where both parents pass away at the same time or close together. So we want to make sure that if that occurs, that the parents have said, "Here's who we want to take care of our children."

Also, many parents start thinking about how they can take care of a surviving spouse and child if they were to pass prematurely, which sometimes opens the door to exploring life insurance becoming part of the estate plan. A lot of times if there's a breadwinner that says, "I make the most money," we want to make sure that they have life insurance to say that if they were to pass away, that the surviving spouse still has the capital, the liquidity that they need for many years and fund maybe college educations, that type of thing. And that would also mean making sure that the beneficiary of the insurance policy is properly named to the surviving spouse, or maybe to a trust that can manage the death benefit for the benefit of the surviving spouse and child or children. So there's a lot of things that happen with the birth of or adoption of a child, but making sure that the unforeseen has a plan should be something that you do and a good financial advisor, estate-planning attorney can help you answer all of those questions.

Mark Riepe: Yeah, I don't know about you, but at least a lot of friend or family members, they also seem to be increasingly thinking about their grandchildren as well. So I suspect that many of those items you just listed apply to a grandchild as well in their estate plan. 

Austin Jarvis: Absolutely.

Mark Riepe: Birth of a child, typically a good thing, marriages typically a good thing, but things don't always work out. So sometimes we have divorces pop up which are going to be having, I assume, a pretty big influence on many of these documents. So if you're going through a divorce, what are some of the highlights that you would point them to from an estate-planning perspective?

Austin Jarvis: Generally a divorce cancels all bequests, meaning that if you said, "I'm leaving something to my spouse," in your will or trust, it normally cancels those. It cancels fiduciary appointments like being an executor or trustee, and appointments to serve as a power of attorney or healthcare proxy. So generally that's good for you. If you forget to do something, you forget to make a change to your will, your ex-spouse is not going to be your executor, trustee, they're not going to be your power of attorney or healthcare proxy. Most states' laws generally say, "OK, once a divorce is finalized, all of those things are canceled automatically." However, big however, divorce does not generally cancel beneficiary designations on some retirement accounts like 401(k)s, life insurance designations, or on accounts with transfer- or pay-on-death designations. So you really need to make sure that once the divorce is final, that you've made all of those changes to the beneficiary designations on those accounts.

Otherwise, it does happen where someone passes away, they have an old 401(k) that names an ex-spouse. Guess what? The ex-spouse is getting that account at your death. And so make sure you review your will as well and make sure that you have a replacement for your ex-spouse on any bequest that you made to them. And you have a replacement for them because if they don't, then those assets could be then flowing down to what's known as the residuary of your estate. Basically, anything that's not named just kind of flows down. So anything you have left over distributes. That might not be what you actually want to have happen. You might want to have a backup. Say that you had a specific piece of property or specific asset that you were going to leave to your ex-spouse, but now you'd say, "I'd want to leave it to my brother, sister, cousin, uncle, grandchild," whatever it might be, you need to make sure that whatever was left to the ex-spouse, you have a backup for that. And normally multiple backups, just in case.

Mark Riepe: I think a lot of those that you're just laying out, a lot of those factors also apply to any time a person, whether it's a spouse or another important person who's reflected in your plan, if they leave your life or pass away for whatever reason, you're going to have to at some point probably revisit your overall estate plan. So is there anything unique about if it's a non-spouse that they should be thinking about? And I guess a follow-up question to that is: When's a good time to be doing this? I always think it's never a good idea to make a big decision when you're grieving. So how do you find the right time to start to be making these decisions?

Austin Jarvis: So we'd never recommend that someone makes these types of decisions while grieving or in the midst of anger. You need to be clearheaded. You need to make sure that it aligns with your overall plan. So working with an attorney who can help calm you down, say, "That might sound good in the middle of a divorce, what you're doing, but it could frustrate things in the future," they can help temper that quite a bit.

I would say that typically spouses are the primary beneficiaries of each other's accounts, wills, and trusts. Without your spouse, it's likely that the contingent beneficiaries, if any, are now next in line to inherit from you in the event of your death. But if you don't have any contingent beneficiaries listed, those assets could end up being part of your residuary estate, as I mentioned before, and be distributed among those who are entitled to get what's left over. And that might not be exactly what you want.

So here our recommendation would be to review all account titles, beneficiary designations, bequests, and wills or trusts to make sure that one, they still work together, that it's harmonious. Two, that the accounts or assets will transfer to who you intend. And three, that you have additional contingent beneficiaries should any of them die while you're still alive, because that happens all the time. You've named someone as a beneficiary on an account or in your will or your trust, and they predecease you. That's why most of the time you get recommendations that say, "Hey, you need to have a primary, secondary, and even tertiary backup for everything that you do," just because you might live to a very long age. Living to 100 used to be a rare event that used to get the Smuckers treatment on The Today Show. Now lots of people turn 100 every single day, and you might be one of them.

Also, the vast majority of spouses name each other as their executor, trustee, power of attorney, and healthcare proxy. Make sure you review these designations to ensure that the person who name to replace your spouse or ex-spouse is, one, willing to do so, that you've had that conversation, and two, is still alive. You'd be surprised how many times we come in and we'd do just the cursory review and say, "Who is the executor, trustee, power of attorney, etc.?" And we'd go through and we'd have to scratch someone off and go, "OK, well now we need another contingent beneficiary because this person's already died, but they're still named in the document."

So that's again another reason why you should do regular reviews of your estate plan because it's not just about changes in your assets or your life. It's also about what's changed with someone else. Is the person you named have the capacity to do so? Do they still want to do it? This is the reason why estate-planning reviews are essential. Not just because of what's going on in your life, but what's happened to the people that you've named to take care of you when you're unable to do so.

Mark Riepe: Yeah, I think the "every three years at a minimum" rule. I think that, for all those reasons you just named, is a great way of looking at this because almost certainly something has changed or is worth at least reexamining for most people every three years. We kind of covered a lot of different situations and changes in circumstance. Anything we missed here that is worth calling out?

Austin Jarvis: For a lot of our listeners, I would say that look at what you own and make sure that you're doing things that take some of the burden off of the people who are going to be left behind dealing with this. And I'd say that one of the things that I see a lot is having real estate in more than your home state. Because normally what that means is that you have to have multiple probate proceedings known as ancillary probate. So this is another instance where having a revocable trust could be of great benefit because you could actually put that real estate inside that revocable trust in order to avoid having that ancillary probate proceeding. 

Because say you live in California but you have a Florida beach house. Well, if that's in your name, then you're going to have to have probate proceedings in California and Florida. But if it's a part of your revocable trust, titled appropriately, then the revocable trust controls there and you don't have to go through the probate proceeding in Florida.

The things that I would want you to look at, reviewing your estate plan, a sudden change in your wealth, like receiving a large inheritance. For the people who are lucky enough to win the lotto, obviously you need to change your estate plan. A life-altering medical diagnosis, again, should warrant revisiting your estate plan, especially because in order for any of the changes to be valid or to create a new estate plan, you have to have the requisite mental capacity to sign these documents. And that's where a lot of probate litigation comes in is someone says they were diagnosed with a condition that made them mentally incompetent or they had a surgery too soon to this and they were mentally incompetent to this. That's where a lot of probate litigation comes in. So if you have been diagnosed with early dementia or Alzheimer's, make sure that you talk with a doctor and an attorney who can make sure that they've lined everything up to make sure that you have documented mental capacity before you do these types of things. And it'll save you and your loved ones quite a bit of headache in the future, try to avoid some of that litigation.

Mark Riepe: I think of a lot of the different events and different financial situations that we talk about on the show, this is probably the one that is most prone to procrastination. Right? So in your experience, what works best to motivate either individuals or families to sit down and actually start to work on this?

Austin Jarvis: Normally the things that get people to immediately take a first step is seeing what's gone wrong in someone else's plan. Whether that's they were a part of a litigation in someone else's estate that got ugly when they saw that they had to take time and expense to go to court because there was no power of attorney or healthcare proxy, seeing someone else's mistakes go and thinking, "That could be me. I don't want this to happen to my friends and family" gets them motivated.

But for most people, I will say just take the first step. Even if it's a baby step, make the appointment with the attorney. Hold yourself accountable to that. Go online and purchase the estate package from a reputable online planning service. Whatever that first step is, is typically the hardest. Just getting that first step. But once you do, you're much more likely to continue with the process if you've taken that first step.

And that could also be something as simple as setting reminders on your phone for when you want to have it completed and hold yourself accountable to it. I know a lot of people, they say they live or die by whatever pops up on their phone. And if you have trouble with that, if you say, "Well, I'm just going to procrastinate and I'm just going to flick off that notification on my phone," tell someone else in your life that you respect to hold you accountable and tell them that you think it's important that you do this and not to accept excuses from you. A lot of that can push someone to completing that.

I remember one client told me that he put a stack of papers he had to deal with for a family member who didn't have a plan in his office desk and would not put them away until he had his plan complete. He said that putting that stack of papers away once his plan was complete made him feel reassured that his loved ones would never have to experience what he went through. He told me that those stack of papers sat on his desk for about six months, and he said that every time he would walk in and see that it was just motivation to say, "I need to get this done."

He finally got it done. He had a large estate that required multiple trusts, wills, all of the documents, and it took him a little longer. But for the average person, it's not going to take you six months to get to the finish line in the estate-planning process. It's probably going to be much shorter.

And it should not matter your level of wealth to this, you can go to a very sophisticated estate planner. If you need that kind of sophistication, you can go to a local estate-planning attorney and get an estate-planning package that is moderate cost, or if cost really is a concern, there are lots of highly reputable online estate-planning document generators that are good, that are decent, and having a plan is much better than having no plan at all.

Mark Riepe: Yeah, I think that's well said. Last question for you, Austin, then we'll let you go. What are some of the key points you want listeners to hold on to after they've listened to this episode?

Austin Jarvis: So some of this is going to be reiteration of some of the things we talked about. But first, not everyone needs a trust as a part of their estate plan. But if you do, remember that drafting and signing the documents is not the last step. You must fund the trust with the assets you want it to own for it to become effective. Otherwise, you're simply wasting the time and money that you spent on that trust. So "fund the trust" is the final step in that process.

Second, reviewing your estate plan at least every three years is an important part of the estate-planning process. Again, this is not a "set it and forget it." You'd be surprised how many clients will literally come in and they haven't seen their estate plan in 10 years and they've had grandchildren born. They've retired. They've had a medical diagnosis. They've moved states. And that can be a dramatic change to how your will if it's even valid or not. You've moved from Wyoming to Colorado. They're neighboring states, but they have very different laws in terms of that. So any major life change, make sure that you're reviewing it.

And then finally, I will just say estate planning is not just for the rich. It's for everyone, no matter your age, your level of wealth, or where you are health wise. Without an estate plan, state law is going to control where your assets go at your death. And it may take time for your loved ones to be able to act on your behalf if they have to go to court and get permission to handle your financial affairs or healthcare decisions should you become incapacitated.

So again, I implore you if you're listening, whether you go online and use one of the cost-effective drafting services, go to a local attorney or go to a boutique law firm because you've got significant assets, do yourself and your family a favor and get an estate plan or review and update your estate plan as soon as possible. Because I guarantee you, should something happen to you or should you pass away, your loved ones will thank you for what you did in planning for not only what happens to you, but what they have to go through during a time of grief.

Mark Riepe: Austin Jarvis is our estate-planning guru here at the Schwab Center for Financial Research. Austin, thanks for your time today.

Austin Jarvis: Thanks, Mark.

Mark Riepe: I hope you enjoyed my conversation with Austin. He always has valuable advice. I also hope that you have a better handle on your estate planning. The most important thing, of course, is to get started, and I hope this episode will help you do that. If you've already done the heavy lifting, great. Now keep up with it as your situation changes. And if you have questions, there are lots of articles on Schwab.com to help you. There's "Estate Planning: Don't Let the State Decide" by Decoder guest Cindy Scott. That gives an overview of the steps you need to take.

There's another called "What Is Estate Planning" by Austin and Matt McColl. We'll link to both of these in the show notes.

That's it for today. Thanks for listening. If you'd like to hear more from me, you can follow me on my LinkedIn page or at X @MarkRiepe, that's M-A-R-K, R-I-E-P-E. As always, we'd appreciate it if you give us a rating or review on Apple Podcasts, or comment on the show if you listen to it on Spotify. We always like new listeners, so if you have a friend or two who might like the show, please tell them about us and how they can follow us for free in their favorite podcasting app.

For important disclosures, see the show notes and schwab.com/FinancialDecoder.