AAR31 - Part 1: What is a Will?

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3:26Evan Raidt:When I was in the bank, I had a woman come in to talk to me because her husband had passed away a few weeks ago, a few weeks prior. And she was not a signer on his accounts. And he did not leave a will behind. And they had been married for, I don't know, 30 or 40 years. She had no access to anything. His name was on the house. His name was in all the cars. He was the only signer on the bank accounts. And so she had no income. Legally, she had nowhere to live. and she had no way.

4:13Dave Ahern:Good evening, everyone, and welcome back to At Any Rate. My name is Evan Rate, and we are here to help you make sustainable financial changes without breaking a sweat. Please welcome to stage the one, the only, investing Yoda and lover of new age banks, Dave Ahern. How are you doing tonight?

4:29Evan Raidt:night i'm doing great evan thanks uh thanks for having me back uh it's always fun to chat with

4:33Dave Ahern:you heck yeah i do think that that is probably the first time that that has ever been used in an intro for anybody in any podcast or video in history i would probably agree with that yes and that should feel good that should feel good every unique intro yes agree um so to be transparent about today's episode we're going to be covering wills which i know sounds very, very dull, but trust me, everything around finances can be dull, but it's about the importance behind it and not all of it. It may be a dull topic in and of itself, but it's not dull because it's going to take a massive amount of work to take on or implement into your finances or anything like that.

5:15Dave Ahern:But it's about understanding the importance behind it and the kind of effects it can have on your life. But to be transparent here, Will is something that I've never had before. This is going to be more of a learning opportunity for both me and the listeners where, of course, I've done plenty of research into it, but this is something that I've never taken on myself. And this was actually the topic that was put to me by a friend of mine to cover in today's episode. So, Dave, do you have a will or how much do you know about wills?

5:45Evan Raidt:I do have a will and I set up a will about four years ago, not too long after I had a heart attack. And that usually is the spurring or the inspiration for most people to get a will is when some sort of health scare pops up and you realize that, hey, we are mortal and we're not prepared. We are prepared and we haven't set anything up for our loved ones to be prepared. So yeah, I do have a will.

6:16Dave Ahern:Okay, yeah. That's definitely a very scary life event. I can only imagine that that would 100 % push me to start changing things in some ways for sure. So to just quickly cover what a will is, I think a will is something that I would feel pretty confident saying 90-95 % of people listening have heard of before. or most of us have heard the word will, the term will, and have a vague idea of what it is. But what kind of specific effects it has, I think far fewer of us actually understand. So just a 10 ,000-foot view of a will is it's a legal document, and it details, it's just a written document detailing how to distribute property and any other assets that you have a hold of to whomever you want at the time of your death.

6:59Dave Ahern:It also can appoint guardians for children, and the main reason behind it is your assets, your property, all that sort of stuff is going to be divvied up in one way or another at the end of the day. But a will allows you to avoid something like the state coming in and deciding what to do with your assets. So if you were to pass away today without a will, the state would come in and follow their standard rules and guidelines and appoint whoever they decide to and distribute things however they see fit. And that is not ideal for most people. Instead, you would rather write down and decide ahead of time, where do you want your home to go?

7:33Dave Ahern:the valuables inside that home, things like furniture, jewelry, anything like that, the property itself that the home is on, any vehicles you drive. A big deal for a lot of people, especially if you are a business owner, a part business owner, is any business ownership that you might have. Where do those business assets go? Who would be in charge of the business if you passed? As well as any bank accounts, investment accounts, that sort of stuff, anywhere that you have money left. This doesn't tend to touch accounts where you have some sort of predetermined distribution set up. It's a pretty limited number of accounts, but something like a life insurance account, you're already setting up exactly who that money would be left to at the time of your death.

8:15Dave Ahern:Something like retirement accounts, joint accounts, those have more obvious channels where things would go. But if you just own a home by yourself, or maybe you own it with your spouse and both you and your spouse passed away, there would be no direct guaranteed path for that property to go. There are some general channels that they would follow, but it's not guaranteed by any means. Dave, why would you say a will is important for somebody?

8:40Evan Raidt:It's incredibly important, and here's why. There's a few reasons, but the main reason is it eliminates any doubt how you want your property and your money and anything that you own. It eliminates the indecision or understanding of where it's going to go. If you want your money all to go to your children or your child, you can dictate so and how it will be distributed and whatnot. And I guess it acts as a clarifying document so that everybody that's involved in your estate, whether it's a smaller estate or whether you are very, very wealthy, it dictates through the will how those things, you know, so-and-so gets this, so-and-so gets that, so-and-so gets this, you know, that kind of thing.

9:33Evan Raidt:So it, you know, we've all seen the TV shows or God forbid in your family, the fights that can go on between siblings after maybe a parent passes away and maybe they had a substantial estate and nothing was indicated or dictated how that money was supposed to be divvied up or who gets the house, you know, who gets the, you know, vacation home, who gets the cars, you know, any of those kinds of things, you can dictate all of that stuff in a will so that when, when the time comes that we all, you know, go to the next stage, uh, there is, you know, we don't want to say the D word cause that's, you know, the bummer man.

10:13Evan Raidt:but you know when those things happen it gives you a lot of peace of mind as you're going through your end of the life that you have set everything up for your family and your loved ones to be taken care of the way that you wish them to be and it also keeps the state out of the decision making process and one of the things that people don't really maybe know about how this all works is i'll give you an example when i was in the bank i had a woman uh come in to talk to me because her husband had passed away a few weeks ago a few weeks prior and she was not a signer on his accounts and she had he did not leave a will behind and they had been married for around 30 or 40 years uh she had no access to anything his name was on the house his name was in all the cars.

11:11Evan Raidt:He was the only signer on the bank accounts. And so she had no income. Legally, she had nowhere to live and she had nowhere to get around. And she was moderately freaking out, which I probably would too. And basically her husband left her kind of high and dry. He didn't He didn't set anything up for her so that this would be an easier process for her. It's already tough that she had lost her husband of 30 or 40 years, and now she's got to deal with all this money stuff. There was no question that, you know, in the bank's mind, we saw the marriage certificate. We could see pictures of them in the wedding photos.

11:54Evan Raidt:It was very obvious that they had been married for a long time, but because her name was not on any of the legal documents, there was literally nothing they could do. And so then I had to go to the state. And in the state of Minnesota, where I worked at the time, I think the backlog on probate cases was 68 months. And so it was a pretty traumatic experience for her. So the reason why I'm kind of relaying all this is I hope that somebody out there listening will think, I don't want to do that to my spouse or my loved ones. And so this is where a will can definitely set everything up the way you want it to be so that your family doesn't have to deal with the grief of you being gone, but then also dealing with all the stress of the money as well.

12:43Evan Raidt:So it's incredibly important to set up why you're young, why you're healthy, so that you can set it up the way you want.

12:51Dave Ahern:yeah it's it's definitely like you said young and healthy but it's it's so easy to assume that you're going to have tomorrow or next week or next year or whatever but i the the number of freak random things that happen all the time again not not to be depressing or assume that something will happen but like you were saying it's about protecting the people that you care about it's really not going to help you in any way it's not something that's going to benefit you at all but it is something that's going to benefit all the people that that you care about and that you want to benefit instead. And I find it kind of ironic that, you know, the whole focus of this podcast, frankly, and then also plenty of other content out there in the focus of much of our lives is to gain money, protect money, secure money, you know, because it is so important for life.

13:34Dave Ahern:There's nothing wrong with that, but that is a big focus of ours. But then what happens after we're gone is not that big of a focus. You know, you could garner a ton, a ton of wealth, but if you passed away suddenly and things were not properly set up in your will, who knows where things could end up? All that money that you thought you were building up to protect your spouse, protect your children, if you pass and something like this isn't properly set up and the state decides something that you wouldn't want them to decide, then all of that time and effort that you put in to build that wealth to protect people might not protect them in the way that you want it to.

14:09Dave Ahern:And not to mention the example you gave was a woman. I think it's very important, especially for the history behind, you know, kind of how gender roles worked and everything, that women weren't signed on a lot of stuff, didn't have ownership of a lot of stuff. And, you know, if you're in a healthy relationship and both of you are alive, then okay, that might work out totally fine. But if the relationship itself goes downhill or if the husband passes away or something, then the woman can very easily be left in a huge lurch without being signed on any of that sort of stuff. And so, you know, for example, in our relationship, it's very important for both of us that my wife is signed on everything, is an owner of everything.

14:49Dave Ahern:You know, on all of my investment brokerage accounts, she is set up as the person that everything would be left to. Now, of course, I don't yet have a will. That's something that we're working on here. But everything else, it's been very important to have it set up so that if something did happen to me it's not just oh well you know he paid more for x and so that was his now he passed away and we're gonna go you know do this with it or whatever um and kind of a funny story for me is that uh actually when my when my grandfather passed away one of my grandfathers passed away he left the vast vast majority of of what he had saved up to the aspca and not even to a family member or anything and i love animals so i'm definitely for that decision but i know that there were some family members to not be named that were very very frustrated about about that decision um which i which i on one hand i definitely understand but on the other hand i find i find pretty dang funny but he left the vast majority of what he had just to you know help protect animals and so that's also an option for you to distribute your wealth if you don't want to distribute part of your wealth or something to an individual, you can distribute it to a nonprofit or to an organization or something and help make your mark on the world that way.

16:06Dave Ahern:That's definitely another option.

16:08Evan Raidt:Yeah, for sure. I mean, Warren Buffett has decided that when he passes away, the vast majority of his wealth, I think 90, 95 % of it, I don't know the exact number, is going to go to charities. He's already designated who the charities are. And so he is, he has indicated in his will that when he passes, his family members are supposed to sell off parts of his ownership of Berkshire Hathaway over a period of years and to distribute the funds to the charities. And so his, his family will get a small, small amount, but yeah, the vast majority of what he's made is going to go to charity. So yeah, you can definitely, you can definitely dictate where it, ago.

16:49Dave Ahern:Yeah, that's really awesome. That's really beautiful. So say somebody wants to get a will, you know, instead of me detailing this, you somebody who has actually gotten a will, where can somebody get a will? How do they go about it?

17:01Evan Raidt:Well, it depends on the state. Some states you can actually write it yourself. When I lived in Minnesota, no, actually I was in Chicago and Illinois. In Illinois, I could write the will myself. I just had to get it notarized. I actually, I wrote it myself. And And then I had a friend who was an attorney that was willing to look through it to make sure that everything was on the up and up. And then I went to a bank and had it notarized, and that was it. And then I distributed it to my family and my wife so that everybody knows what it is. You can pay an attorney to do it. I probably would suggest you do that if you have complicated assets, lots of homes, cars, bank accounts, different investments, maybe a business you own.

17:47Evan Raidt:or several businesses, any of those kinds of things that is a little more complicated than what my situation is, for example. So I would definitely encourage you to look at an attorney. WeagleZoom is the website out there that you can download for a fee. You can download different documents that you can use. Most states, you can use something like WeagleZoom, fill it out, and then take it to a notary and get it notarized, and then it's good to go. We all know how important it is to make smart decisions in our business,

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20:42Dave Ahern:It's available for our value spotlight members. If you want to see the thesis, we're doing a 60 % discount for now, but I'm pulling the deal once the stock hits$45. Check it out at einvestingforbeginners.com slash 60. Yeah, but the LegalZoom option was the one that I was currently leaning towards only because it's online and quick and cheap. and I don't currently know an attorney who could help me work through stuff maybe for a cheaper rate or something, and so the cost is more of a question mark. But the legal zoom price that I saw was around$100. And then it's definitely very important to update it over time after major life events.

21:18Dave Ahern:Thankfully, it's not something that you have to keep up with every single year or anything like that. But when something major happens, you purchase a new home, sell a previous home, buy a bunch of cars, get married, divorced, whatever, some major life event like that, they'll change things. It's definitely important to update it. And that fee doesn't seem to be very high. I also doubt an attorney would charge nearly as high of a fee because they're not having to rewrite or look through the whole thing. They're just tweaking a few things. So that's a pretty low cost upkeep. But again, I know$100 is$100 and putting the time into it is putting the time into it.

21:54Dave Ahern:But when we talk about saving your loved ones months or years of turmoil, possibly if they're having to pay attorneys to fight things back, then maybe thousands or tens of thousands of dollars to fight for something that they feel like should have been theirs in the first place. It's easily effort that's worth putting in.

22:12Evan Raidt:Yeah, for sure. For sure. And the other thing that I would probably recommend that people do would be to, as you're going through this process, we've mentioned several times like accounts and things of that nature. and Evan mentioned brokerage accounts, at the very least, have your bank accounts assigned a beneficiary, whether it's your spouse, whether it's a loved one, brother, sister, maybe a daughter, kid, whatever. At least have them added as a beneficiary because then when the time for the will gets to be used, an easy way, if you don't have a will, even if let's say you don't want to do a will, which we all think you should.

22:56Evan Raidt:And Evan and I both agree that this is something you definitely should do. If you don't want to do that, this is just way too much work. At the very least, have a beneficiary assigned for all of your accounts, whether it's your brokerage accounts, whether it's your bank accounts, anything that has to do with your money, have a beneficiary added because when the time comes, then all the loved one has to do is show up with a death certificate and their ID and everything's done. They can take control of the money. They can decide what they want to do from that point. And it just makes it a lot easier.