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Anne-Lyse Wealth: This is the Dreamers Podcast, episode 10. Today is March 29th, 2021. This episode is brought to you by Dream of Legacy. Check out dreamoflegacy.com for resources to assist you on your journey to financial independence.
Welcome to the Dreamers Podcast. I am Stephanie, also known as Anne-Lyse Wealth. I'm a financial coach, and an author. I self-published my first book, Dream of Legacy, a guide to help Dreamers reach financial independence and build generational wealth. In this podcast, I'll have conversations with experts and thought leaders who dared to follow their dreams. You'll hear about their journey and their money story.
I hope it inspires you Dreamers out there to live life on your own terms. Come on Dreamers, let's change the world.
Welcome back to the Dreamers podcast. I'm your host Anne-Lyse Wealth. I'm so happy you're here with me today. I've had some major changes in my life over the past ten days. That's why I've decided to postpone my interview with the amazing Beth Schiavo.
I thought it was the perfect time to talk about something that most people don't like to talk about, which is estate planning. There's a common misconception that estate planning is only for wealthy people.
In today's episode, I would like to dive into what estate planning is, why it's something that everyone who has dependents, or who has assets should look into, and how that can benefit your loved ones.
So what is estate planning? Estate planning is essentially organizing your affairs to prepare for an eventual death or incapacitation. Even though organizing your assets is a very important part of estate planning. That's not the only thing.
In today's episode, I wanted to go over the most common documents and things that you should consider when it comes to planning your estate.
Before we get into it, I want to share more about what inspired me to record this episode. Last year, I released my first book Dream of Legacy, Raising Strong and Financially Secure Black Kids.
I don't know if I've shared this before, but that book was inspired by my parents.
And less than two weeks ago, my father passed away unexpectedly. He was the ultimate dreamer. I'll tell you a little bit about why I am passionate about financial literacy not only for adults, but also for children. Let me tell you a little bit more about my father.
My father was born in Cameroon, which is in Central Africa. Early in his life, his father was a successful businessman. But over time, things started going downhill. My father started school, around seven or eight years old. My grandparents did not graduate high school, but my father did. And he managed to get a scholarship to go to college in France. And at that time, this scholarship provided hope for him to not only change his life, but also change his family's life. So, in the late 50s, he traveled to France, in search of a better life with nothing but a few Francs, which was the currency at the time. So, he had a few francs in his pockets, and a head full of dreams.
My father decided to become a pharmacist, he worked in France for a little bit. And while he was there, he married my mother and the two of them were able to provide the same chance for most of their siblings. They created an opportunity for them to go to school and have a place to stay.
After a few years, my dad relocated to Tunisia for a little bit. That's in Northern Africa. Being black in Tunisia came with its own set of challenges. But my father saw it as an opportunity for him to make enough money to save to open his own pharmacy in Cameroon. So, it was the beginning of a great adventure.
My parents moved back to Cameroon, my dad was able to purchase his pharmacy and he rose to the top of his profession and beyond. My father worked so hard his entire life, and he was always focused on his legacy.
At 80 years old, while most people are retired, he decided to develop a seven-story building. But most importantly, what I remember for my dad is that he took care of his loved ones. He took care of his people until his last day. My father passed away and unexpectedly.
It's so interesting because I always talk about planning for the unexpected, and the expected because we all here on a temporary basis. Before leaving, my dad left very clear directions down to the organization of his funeral, which allowed us to spend less energy thinking about what we should do, and actually focus on executing his wishes. Without going into the details of his estate plan, I want to talk about what everyone should consider.
One thing that I hear about a lot is, I don't need to worry about estate planning because I don't have money.
There are many reasons why you should worry about estate planning, especially if you're a parent, if you have dependents, of it you have assets.
Let's talk about something that most people know about which is having a will.
So, what exactly is a will? A will is essentially the directives that you give to your family, your loved ones about how you want your affairs to be handled. If you have children, that includes who you want to be the guardian for your kids, or will can include really anything that you want to share with your loved ones, down to your account information; whether it's bank account, retirement account, investment account, password, login, a list of all of the institutions where you have accounts, the detail for your funeral arrangements, whether you want to be cremated, or buried, really anything that you want to share with your loved ones. However, something that's very important to know when it comes to having a will is that you have to follow the rules in your state or in your country. In some parts of the world, a manuscript will that you live in your home will be valid. But in a lot of places, there are some more stringent requirements that you have to follow in order to have a valid will in the event that you were to pass. So, it's very important that you take into consideration where you live to make sure that you follow the rules. Because if you don't have a will, then you leave it up to the state the country to determine what's best for your affairs, authorities might decide that your kids should live with someone that you wouldn't have bit. So it's very important to put pen to paper so that everything is clear, and to ensure that you are following the legal requirements.
That's why it's never a bad idea to consult with a lawyer when it comes to these types of affairs. And depending on where you work, you might actually be able to do this at no additional charge because some companies will offer legal benefits at a very low cost or even at zero cost. So, it's important to look into the options that you have and to make sure that you are covered. Now in addition to having a will, it's a good idea to consider a revocable trust. A revocable trust because that means that you can change your mind at any point in time as long as you're alive and well. You can change your mind. Not everybody needs to have a trust. But it's definitely something to consider if you have minor children, because in the event that you were to have things like life insurance or assets, then listing your minor children as beneficiaries would in most cases make it very hard for them to access their inheritance, Minor children in most places can't inherit yet. So again, you're leaving room for the state or the country to interfere. And that comes with fees, lawyer fees, court fees.
For instance, I live in the state of Georgia in the state of Georgia, if you just have a will, and you have minor children, then the executor of your estate, which you will designate in a will, will have to go to probate court. And that comes at a high cost. And sometimes depending on the size of your estate, you can spend 1,000s, hundreds of 1,000s, sometimes even millions of dollars.
So, it's definitely a good idea to consider having an irrevocable trust. And it's very important to take the time to designate beneficiaries for all of your assets.
And another thing to consider, especially when you have people who are depending on you, depending on your income, or even if you're a stay-at-home parent who's taking care of kids at home. You are essentially working inside the home, which results in childcare expense saving. And if something were to happen, then your spouse would have to possibly incur additional expenses. So, for anyone who has dependents for anyone who has someone that's relying on their income, and if your assets are not enough to cover expenses, then it's definitely a good idea to consider life insurance.
Term Life Insurance, because it's much more affordable. A lot of times whole life insurance is presented as an investment, which is why the premiums are higher, but you would be better off getting a term life insurance, whether it's a 20,25, or30 year term, depending on how old you are to cover you until your dependents are old enough, and invest the difference in premiums.
A couple of things to consider when it comes to life insurance. A lot of times people think, well, I automatically get life insurance coverage through my job, and it's free. And yes, most companies or a lot of companies provide life insurance. But if you pay close attention, you realize that it might be maybe once or twice your salary, which in most cases won't be enough, when thinking about life insurance, you want to look at 10 to 15 times your annual income to lower the stress on your loved ones. If you were to purchase additional life insurance, also, just considering the fact that if you purchase it through your job, then once you leave that job, you will likely lose that policy or have to pay a higher premium to maintain it. So, it's a good idea to consider purchasing your life insurance outside of your place of work. Because if you switch jobs, then you’ll probably be older, and the older you are, the higher the premiums are going to be. As a point of reference in the US for a 30 year old making, let's say $50,000 a year interested in getting a policy of half a million dollars. If you're healthy, 30-year-old, you can probably get it somewhere around $20 a month. If you were to wait until your 40th birthday, you would probably be looking at least an additional $10 or so every month, for the same policy for 20 year term. If you waited until you were 50, you could probably expect that amount to double. And so, it's best to get life insurance when you are young. If you don't have life insurance yet, well, it's best to get it today, then to wait until next year, because every year that you wait will increase your premium.
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Another thing to consider is having a power of attorney for health care. This does not apply everywhere. But if you live in a place where power of attorney for healthcare are valid. That's definitely something to consider. don't necessarily think about this. But in the event that both you and your spouse were to be incapacitated who will make the decisions regarding your healthcare, you can assume that it's going to be a child. But what if you trust one child more than the other to make these kinds of decisions. Those are things that you want to think about.
We tend to believe that if something like that happened to us, then our spouse would make the decision. And we don't think about or plan for the worst-case scenario. But it's always good to be prepared in case something like that were to happen.
Another thing to consider is having a durable power of attorney. If you were to become incapacitated, and you had an active power of attorney in the US, it would automatically become invalid, that's when a durable power of attorney comes in, it would hold if you were to become incapacitated. It's always a good idea to work with an estate lawyer because they can help ensure that the forms that you're using are enforceable. And a durable power of attorney can cover finances health care, so it has to be someone that you trust to make those decisions. Another thing to think about is to leave medical directives. If there are specific things that you don't want to be done, or specific things that you want to be done to you, then it's always a good idea to write it on paper. And there are forms that you can find online. But again, it's a very good idea to consult with a lawyer.
Another thing to consider is long-term disability Insurance, we are more likely to have a disability of one year or more at some point during our career, then we are to die. But this ability insurance is something that's often overlooked. A lot of times we think, well I'm my employer covers that. But if you pay close attention, you will probably realize that the coverage is very minimal. And it ties you to a specific employer. So having complimentary disability insurance, or actually getting your own, so you're not tied to the company that you work for specifically, is definitely something to think about.
There are many other things that you can include in your estate planning down to specific directions for the generation to come. and beyond.
This is a startup list to consider for anyone serious about planning their estate. This is not something that you do when you're 50 60, or 70. It has nothing to do with age. So, I encourage you to look into it. And to actually revisit on a regular basis. Once a year actually sounds like a good idea. It might sound overwhelming, or you don't necessarily want to think about death, because that's not something very fun to think about. But it's necessary to protect your loved ones.
Losing a loved one is hard in itself. So, if you can make it less complicated, then you definitely should. Losing a family member, whether it's a parent, a sibling, is tough. So, if there's anything that you can do to help with the transition to alleviate the stress, then you should do it. That's why estate planning is so important. Think of it as the last gift you give to your loved ones before leaving.
If you don't have an estate plan yet, I encourage you to change that today, especially if you have younger children or people depending on you. We don't know when our number will be called. So, it's important to be organized. And also, while we’re here to make the best of it. So Dreamers, I'm ending today's episode by leaving you with this.
What would you do if you found out that you had one year left to live? What can you do in your life today to help you experience what you would want to experience if you knew you had just a little bit of time left?
Alright Dreamers, I hope you enjoyed today's episode In April on the podcast, I'll have one of Atlanta's most influential women currently leading the largest puppetry-based center in the country, Beth Schiavo. Beth is one of the first career mentors I had in my 20s and I so look forward to you guys hearing our conversation. Also coming in April, I have digital marketing expert Kathlyn Celmins, the branding powerhouse behind some of your favorite brands, Latoya Bond, and award winning podcaster writer and speaker Andy Hill.