Read The Transcript Below:

Steven (00:49):

Hello everyone, and welcome to the next episode of the Retirement Tax Services Podcast, Financial Professionals edition. I am your host, Steven Jarvis, CPA, and with me on the show today, I have Anne Rhodes, the Chief Legal Officer from wealth.com to talk all about the overlap of estate planning and taxes. So, Anne, welcome to the show.

Anne (01:09):

Thank you so much, Steven. It’s really a pleasure to be on the podcast and hopefully I’ll get to meet a lot of your audience when we go to the summit and yeah, so it’s just really great to be here.

Steven (01:22):

Yeah, super excited about the summit. We’ve been talking about that a lot on the podcast. Really glad that we were able to get you to agree to come out, not just agree, but you’re excited to be there to come and talk more in depth about some of the things that we’re gonna discuss here on the podcast today. But, we’re definitely really excited that we get to partner with wealth.com on the summit in general, because when I learned about wealth.com, and I’ll let you speak more to what it is that you all do, it really struck me as, Hey, this is what we’re trying to accomplish for advisors in taxes. But you guys are focused on estate planning, so I immediately was excited about what you’re doing. So maybe before we dive into this conversation, talk a little bit about your background and what it is you do at wealth.com, and then kind of the wealth.com vision in general for working with advisors.

Anne (02:06):

Sure, absolutely. So wealth.com is a platform that allows financial advisors to remain the quarterbacks of their client’s estate planning. There are various features in the platform, of course, you know, we talk about an ecosystem designed so that you can really keep sort of have full transparency over your client’s estate plan. But the crux of the product right now is document creation. And so if you have a client, you know, either new or an existing client who does not have an estate plan or has an estate plan that needs to be updated, wealth.com can allow you to do that. And of course, there are a lot of other features that are currently on the platform, but also up and coming ones to continue, you know, deepening and strengthening, empowering you to have more insights into the estate plan. But that’s what wealth.com does.

(02:56):

And so my background before I jumped into the sort of startup world, FinTech, whatever, I am an attorney and I worked at two of the largest law firms in the United States that have a trust in the estates practice. So the first one I was in New York City, Manhattan working at McDermott Will and Emery. It’s where I cut my teeth. I worked with luminaries like Carlin McCaffrey, Scott Bowman, they’re still my mentors today. You know, I owe ’em everything I know about this practice and worked in the ultra high net worth space. So you had to have a federally taxable estate to kind of come in through the door to make it worth your while. And so I worked with a lot of, you know high net worth, ultra high net worth families wealth transfer techniques and a lot of cross border issues as well.

(03:44):

So that’s where I started my career. Then I transitioned to Perkins COIE, which is a Seattle based law firm. By then my family had moved to San Francisco, so if I moved aside you could see the Transamerica building behind me. But that’s much more of sort of a typical West Coast client base. Folks who are, you know, building first generation wealth startup founders, people who are thinking about maybe liquidity events and things like that may not be quite there yet as well. And so my practice really spanned the gamut. And so, yeah, just excited to now be, you know, an attorney who can peel back the layers for financial advisors and other planners so that you can understand, you know, your client’s estate plan and also some of these more intricate sort of transfer wealth transfer techniques.

Steven (04:32):

Yeah, the more I learn about what wealth.com does, again, I see a lot of overlap in what we created Retirement Tax Services to do just in the estate planning world because there’s actually more and more CPAs who are trying to get into the financial planning space and that certainly could have been an option for me. I could, if I rewind a couple of years and look at how I could have expanded my career or changed the trajectory, trying to do taxes and financial planning certainly was an option. But I really like what you said about how wealth.com is looking at keeping the financial advisor as the quarterback in their client’s life specific to estate planning. But I think there’s so much power in that financial advisors are in this unique position where they see all aspects of a client’s financial life and taxes and estate planning just happen to be pieces of that puzzle.

(05:18):

And so the way I looked at it, and it sounds probably similar to the how wealth.com grew is rather than me abandoned my expertise and what I’m really good at and try to do all of these things, why didn’t I partner with the people who already have their arms around all of those things at a high level and provide them that really deep expertise in this one particular area? And so I get questions about estate planning all the time ’cause there is a lot of overlap between taxes and estate planning. And I am happy to tell people, Nope, that’s not what I do. And now I’m even more excited that I can point them to something like wealth.com to say, Hey, here’s who you need to go talk to so that you can stay the quarterback. You’re not just this over a big concrete wall and hoping for the best that there’s this transparent and collaborative relationship.

Anne (06:02):

Right, exactly. And you know, we can come back to some of that overlap that you mentioned between estate planning and taxes for sure. You know, people have heard of the alphabet soup of trust types, you know, your grats and your clutz and whatever else. You know, we can always talk about those things. But really fundamentally, I think you touched on something, you know, you hit the nail on the head, which is, as a financial advisor, you think of financial wellbeing very holistically, right? You’re thinking about short-term goals for that client. Or what is it that they can sort of invest in portfolios that they might be interested in? You’re thinking longer term too, right? So retirement, what happens if your client is, you know, has a disability and who are their dependents, right? You’re planning for some of those like kind of tougher moments that tend to happen later in life.

(06:56):

But you have to have those conversations. And kind of the natural progression too is thinking about their financial wellbeing in terms of what happens once they’re gone as well. And it’s not their financial wellbeing, but it’s how they define their legacy and who they’re taking care of. Who are their loved ones, what are the causes that matter to them. And so all of that, you know, kind of is a continuum, right? We think of planning on that continuum. And so estate planning is a part of your job, right? To even know if they have an estate plan is like, you know, the first step. But every client of yours should have an estate plan. The tricky bit about estate planning is that, you know, usually you send people to lawyers to put documents together. Probably you are used to having to develop a network of referrals to give to these people.

(07:47):

And if your clients, you know, even bother to pick up the phone and actually call them and then call three of them to interview them and then, you know, do the beauty contest, et cetera, sign an engagement letter, start getting billed. There’s kind of that friction filled experience there. And where wealth.com is hoping to step in is that is filling that space. So for those clients who are, you know, having some trouble getting started, but maybe they’re more digitally inclined to begin with, maybe they’re younger clients, wealth.com is an ideal platform to get really quality, high quality legal documents. The ones that I would put together, you know, in private practice where I kid you got $9,000 as the starting quote for a couple in California, get you those really nice high quality documents in the hands of those clients. And so we are that kind of alternative where your client has an end to end, you know, digital experience.

(08:43):

They take an onboarding quiz, they figure out if they need a will-based plan or a trust-based plan, and off they go all the way until, you know, they get printed documents that they can sign. So to us, you know, technology needs to step into the space on the one hand for your client to have less of a friction filled experience, but for you as a financial advisor to also then get visibility into what’s going on. Right? And one of the things that I love to say is, I mean, you guys wag your fingers, your clients to get the estate planning done. And that finger wag, you know, we give you the ability to have sort of greater visibility a way to communicate with your clients through the platform in order to make sure that they’re getting it done and once it’s done to keep it updated as well. So it’s all kind of this ecosystem that talks to each other and we think that’s makes sense for technology to step into the space and help you help your clients.

Steven (09:39):

That makes a complete sense to me, especially like how you keyed in on that transparency piece. ’cause I would imagine it’s very similar with estate documents, but what we run into all the time with taxes is that a client will think that they’re relaying the right information about their tax return. But unless it’s the advisor, you have the tax return in front of you. I would take with a very large grain of salt what your client is telling you about their taxes. ’cause there’s a big difference between what I think was on my tax return or what I think is in my will or what I think is in my trust document and what is actually there. For the advisors that we work with, where we’re doing hands-on tax preparation and tax planning, that’s one of the things they highlight to us all the time that they love about working with us, is that instant access to the real documents.

(10:23):

So, to your point that you’re taking the friction out of the process, that it’s not this game of telephone of the client trying to relay what the attorney or the CPA said back to the advisor and then trying to have them play middleman the whole time. So I definitely see the value there. One of the things I wanted to ask you about, because you talked about your background and working with ultra high net worth clients, and, but you also mentioned in there that hey, everyone should have an estate plan. And so on the tax side, nobody ever tries to tell me they shouldn’t pay taxes. They kind of need to, but I think it can be a little bit different as far as people recognizing at what point or at what net worth or what income level that wait. It makes sense to engage with an attorney or a platform like wealth.com through their advisor to say, I need something like that. So how do you look at that? Is there a threshold where you say, Nope, you don’t need a will or a trust?

Anne (11:13):

Well, so as somebody much smarter than me, and I think it was Ben Franklin as attributed this book, “nothing is certain in life except death and taxes”. So you’ve got the taxes covered and apparently people don’t fight you about that anymore, but the death component is there too. And you know, all of us are going to have to face our own mortality at some point. And truthfully, no, there is no net worth threshold. And so I can talk a little bit about where the net worth sort of piece comes in because as you’ve hinted taxes play a role in estate planning too. But the baseline is this, if you have beneficiaries who might fight over or need clarity over what happens to your assets, and this applies to your clients, of course it applies to you as a financial advisor, but you know, in your personal capacity.

(12:10):

But anybody who has beneficiaries who need that clarity, you should put in place an estate plan. Just take the guesswork out. You know, I think a lot of folks who think, oh, well, you know, I don’t have the type of net worth where it makes sense for me to have, you know, a revocable trust or this thing called the living trust or whatever it is, right? Or even a will that sounds like something for rich people. You’re missing the opportunity to tell society, but particularly your loved ones where things should go. And I always use this example, but I was in a cab in DC once and happened to mention to my cab driver that I wrote wills and trusts. And she said her mother left behind $2,000 in a fur coat and her sister-in-law went to her mom’s closet when mom had just passed away, took the fur coat and left with it.

(13:01):

And that fur coat had so many memories for the family, you know, and she and her sisters would have wanted a chance to decide among themselves who should have it. Of course, now sister-in-law’s probably not invited to any of the family gatherings, but I mean, you don’t have to have a lot of assets for somebody to like, have sentimental value over the things that you own to want to leave a, you know, a last gift for someone. And so that’s, you know, as a baseline, everyone should have an estate plan, but it’s more than that, right? And especially if you have, a client who has a blended family or who has let’s say real estate in estate other than the one that where they live, so think like vacation home rental, you know, units, whatever it may be, you know, those clients are leaving behind potentially, a source of stress for their loved ones.

(13:54):

So somebody is going to have to step in and open up probate in those states where the vacation home or the real estate is located in addition to the state where they live, right? So think double the cost of probate or, you know, in the blended family circumstance, like, do you want to make sure that at your spouse’s death or your client’s spouse’s death your client has another opportunity to decide where their assets go, right? To protect, you know, maybe children from his or her own relationship. And so those are the types of things that also motivate somebody to have to go get an estate plan. And then lastly is, you know, the net worth and the kind of tax planning component. Unfortunately, you know, if you pass away or your client passes away without an estate plan, nobody’s going to do tax planning for you.

(14:41):

You know, the law is not set up to be kind that way. And so your opportunity to kind of reduce and minimize taxes you’ve lost that without a will or trust that then builds into it further tax planning options. We can dig into those. One thing I’ll mention, because I know Steven, we have talked about this in the past, is it feels like, you need to have an ultra high net worth client to even worry about, you know, the Sub trusts to do tax planning. Be careful about that because states also have estate taxes and their tax exemption numbers are uncoupled sometimes from the federal one. So what I’m going to unpack that statement. At the federal level right now, it’s the historically the highest tax exemption level it’s ever been, it’s 12.92 million per US person. And if you’re a couple, you can actually combine and share between the two of you that tax exemption the two tax exemptions.

(15:40):

And so really you’re thinking, okay, you need to have $26 million as a married couple before this applies to you. But that’s not true at the state levels. So you have, you know, Oregon, for example and Massachusetts still that have $1 million tax exemption amount. So all of a sudden, you know, if you, our clients in the states, you’re thinking, oh, okay. Like they definitely, every single one of those clients should have an estate plan and do a little bit of planning. And then of course, there are various states that lie between the 1 million all the way to the 12.92, and I think it’s Connecticut that’s still tied to the federal level.

Commercial (16:15):

Prospects walk through your door for investment advice, but they become clients because of the tax advice you provide them. If you are a financial advisor who struggles with implementing key concepts of tax planning for your financial advisory clients, and on September 27th through the 29th, you will wanna be at the live in-person event hosted by Retirement Tax Services in Las Vegas, Nevada. Register now at retirementtaxservices.com.

Steven (16:43):

Yeah, so much good information in there. Like I love how you’re unpacking this as you said, to really illustrate that there’s more to this than is my net worth at a certain point. And even when we talk about it on the tax side, we’ve gotta tie it to goals that go beyond what’s on the piece of paper. And, I like how that you described it that way, that this isn’t about charging up hours as an attorney or giving something that somebody can frame and keep on their wall. Hopefully that’s not what you’re doing with your will. This is about what it means for your legacy, for your beneficiaries, for those who come after you. This is about accomplishing goals that go beyond the dollars and cents. So, I like that you described it that way.

(17:23):

Again, I’m not a financial advisor myself. I’m certainly not an attorney, although my parents had hoped that’s the route I would go, that’s a topic for another day. But one of the things I’ll hear from advisors, especially on the estate planning side, much more so than the tax planning side, because we thankfully have an annual deadline there other than the yet to be determined date that you pass away, there’s really no deadline for, I have to have my estate documents done. So advisors will endlessly struggle with getting their clients to take action. So what have you found, whether it’s what you’re doing right now with wealth.com or in your past experience, what have you found to be helpful to move that journey along to get the client to really lean in and say, yes, this is important, this is valuable. We need to organize the documents, we need to make these decisions. How do you keep that process moving so it doesn’t stall out and it just becomes this thing that we’re just trying to beat somebody over the head with every time we meet with them?

Anne (18:15):

Yeah. That’s the million dollar question, right? And I will say the number of plans that I did when I was in private practice that were driven by vacation timelines, the client’s vacation timeline is astounding. And so oftentimes, you know, if you know that your clients are going to go on vacation with their families, that’s actually a really good time to step in and be like, Hey, you know, you told me that next month you’re going to go on this big trip, well actually it’s a really good time to get these documents in. Right? And so people tend to think about protecting their families, and having those conversations with their families when families gather. The other time of the year when that happens is Thanksgiving, Christmas.

(19:03):

For an estate planner, I will tell you, those are busy seasons. So if your client was motivated by having a conversation around the roasted turkey with their families your estate planning solutions may be you know, seeing an uptick in traffic during those times. But overall I would say, you know, keep an eye out for, you have to learn how to motivate your client. That’s the thing, right? Some clients are going to be really motivated when they’ve experienced a probate that went horribly. And when we think about the great wealth transfer that’s happening, I mean now, right? The baby boomers silent generation as they pass away and all the wealth that they held, that’s now going to be trickling down to, you know, the Gen X and millennial generations. You are going to find a lot of your clients who had a horrible experience because somebody passed away with either no estate plan at all or an inadequate one.

(20:00):

And so that’s a good moment to be like and don’t do the same thing to your loved ones. The other are just, you know, life milestones as they’re encountering life milestones. It’s always a good idea to bring it up. And so I’m thinking, marital status changes, of course, if somebody is getting either married or divorced, there are actually a lot of other conversations that you have, not just estate planning, right? But it’s a huge motivator to get that right, because you might be talking about a prenup, for example, right? As part of getting married and making sure that all your ducks in a row. And so estate planning kind of needs to be coordinated with a prenup, but a divorce or separation, I mean, its whole slew of a beast to tackle. And there are many things that your client needs to do, but definitely updating or creating a new estate plan will be key to, to one of the to-dos and then, birth of children that that will trigger people to think about.

(20:59):

It particularly moves across state lines so that your estate plan is, you know, really optimal for the local laws. Estate planning really needs to address local laws. And so, you know, if you are in California where I am and you’re moving to Florida, as many of my clients did, that’s a completely different set of rules and regulations. And so you want your estate plan to talk to the local laws. So yeah, so those are the types of moments where I think you can especially, you know, bump up the estate planning as an important piece in that client’s financial wellbeing.

Steven (21:36):

I love that there’s so many great recommendations in there. We try to do that all the time on the tax side of trying to tie potential tax savings or tax strategies to some other bigger goal. But I mean, there’s a whole list in there that you just provided of, okay, here’s how we tie this to something more than the pieces of paper. ’cause I think that’s where people get lost is that it can feel like there’s the shuffle of paperwork to what end. And so to have it to not have it tie back to some kind of meaningful life event as far as why we’re doing it and then using maybe some what might feel like arbitrary deadlines, but something to tie it to so that it doesn’t become this endless process that takes 10 years to get done.

Anne (22:14):

I will also mention one more thing because, you know, Retirement Tax Services, it’s in the name, but also make sure that if you go over retirement accounts with this person and you’re doing some sort of review of where their IRAs or 401Ks are today, that you also mention the beneficiary designations. And that can be also a natural jumping point into, well, what about all the other assets, right? Life insurance policies, do you have designations on those? Because everything that doesn’t have a designation defaults to your estate, right? And so that can create a kind of a messy process. And importantly, once that person has an estate plan, you want to make sure that you understand where their assets are going that are, that normally, you know, they’ve put beneficiary designations on. So, I’m thinking for example, of rights of survivorship, the WROS that you see next to like fidelity accounts or whatever it may be. That means that actually upon the first person to pass away, like the first spouse to pass away, the other spouse automatically gets those assets just like operation of law. And so if that they have an estate plan, you might actually want to review with them, like, what does it mean really for this account to all of a sudden just jump straight into the other spouse’s assets, should it go through your estate plan so that way somebody can pay your funeral expenses, lost taxes, things like that. And so, you know, it’s helpful when you’re reviewing designations to think about estate planning as well.

Steven (23:44):

Yeah, that’s a great reminder. We just had an advisor reach out recently with a situation for a client where their health savings account didn’t have a beneficiary designated. And when the one spouse passed away and a check was written to the other spouse, and now they’re kind of left in this, oh wait, what should have happened and should we roll it over? And, so these are things that if somebody’s reviewing not just what’s in the estate plan, but how this relates to other accounts as well we can prevent a lot of headache and frustration for sure.

Anne (24:11):

Exactly. Absolutely.

Steven (24:13):

Yeah.

Anne (24:14):

They do say something like, there’s like $4 trillion of unclaimed retirement accounts, something like that. You know, people pass away and the administrator just like doesn’t know where the assets should be going, and it’s just don’t lose money.

Steven (24:29):

Yeah. I’ve seen that number thrown around the numbers nerded me really questions how they came up with the number, but I do think it is a real problem.

Anne (24:38):

Whatever that number is, it’s a problem.

Steven (24:40):

Whatever the number is, it’s not zero, that’s for sure. That is absolutely, for sure. So it, and really, I mean, I could keep nerding out on this with you for hours, but we won’t, that’s not what people come to the podcast for. So we’ve already talked about a couple of things that, we always like to turn what we’re discussing into action items. ’cause, as we’ve been talking about, estate planning only has value if you execute on it. Information only has value if you take action. And so, I mean, you outlined some great things in there as far as how we can help clients take action by tying this process to other events so that even if we’re creating the deadlines ourselves, that we’re giving ourselves a deadline to keep things moving.

(25:21):

Tying the estate planning process to other life milestones. I love that. I’ll also throw out there that we kinda mentioned at the top of the podcast, but you’re gonna be presenting at the RTS Tax Summit at the end of September. There are both in person and virtual seats still available. So go out to retirementtaxservices.com to get signed up. And if you’re already on the wealth.com platform, send us an email at advisors@rts.tax. ’cause we have a partner code for a discount on the summit if you’re already a user of wealth.com, but we would love to see there, you can come see Anne live and and in person. And it’s gonna be an incredible event. Estate planning’s gonna be one of the topics and we’ll cover a lot of other things related to tax planning as well.

Anne (26:00):

Well, thank you Steven. You know, I look forward to meeting all of you at the summit. And I also encourage you to check out the checklist that RTS and wealth.com will be making available to you. That sort of gives you, you know, I mean a checklist to implement, estate planning and incorporate it into your own book of business. And so I encourage you to check that out.

Steven (26:24):

Yes, absolutely. Some, we’ll most likely distribute in some form or another after the event, but every summit attendee will get a copy for sure. And before we wrap up, if people are listening to this and thinking, geez, I really need help now with estate planning wealth.com sounds like the answer for me. I mean, we’ve said wealth.com several times already. I’m sure people can intuit that they should go to wealth.com. How else can they learn more about what you all are doing?

Anne (26:49):

You should just reach out to us. And so, you know, I am going to make my email known to you. It is anne.rhodes@wealth.com. I like to make myself available because I just think, you know there’s so much that needs to be demystified about estate planning and wealth.com strives to do that for financial advisors, but I’ve garnered a lot of knowledge through, you know, years of trust in the state’s practice experience. And if I can help you, that is, you know, something that brings me joy. And so I encourage you to get in touch.

Steven (27:25):

Wow, that’s a very generous offer. I’m sure you’ll be getting plenty of questions. I know I get questions all the time that I have to defer to estate planning attorneys, so I appreciate you giving that out for out there. Again, Anne, thanks so much for being here. To everyone listening, thanks for joining in this week and until next time, good luck out there. And remember to tip your server, not the IRS.