Speaker 1 (00:00.568)
You know, trust is kind of like pay me now, probate is kind of like pay me later, right? Because there's a cost to the trust and there's a kind of a time in slash energy cost to actually funding that trust.
Welcome to the Physician Family Financial Advisors podcast, where physician moms and dads like you can turn today's worries about taxes and investing to all the money you need for retirement and college. Hello, physician moms and dads. I am Nate Renneke, Certified Financial Planner and Primary Advisor here.
an investor.
it.
Speaker 1 (00:35.926)
And I'm Ben Utley, certified financial planner and the service team leader here at Physician Family.
Okay, Ben. So I went camping last weekend and you got a call when I was supposedly off work and my magical question to you was what book should I read? Right. So the listeners may not know this, but you are a big, reader and I'm curious. It got me thinking because you always have one in the bank for me, which is hugely beneficial because you have had to read a lot of stinkers.
Nice.
Speaker 2 (01:11.436)
in order to give me all the best ones. So I was wondering, what is the number one book you find yourself recommending?
to doctors well unfortunately it's not a fiction it's a non-fiction it's how to improve your marriage without talking about it yeah
So good. So, why?
Well, the funny thing about it is I find that men and women are poorly understood by the opposite gender, and the two authors, one male, one female, both PhDs, kind of sort out what women's basic needs are and men's basic needs are. When I say basic, I mean like core to their psychology, core to what makes them tick, their motivations. And the neat thing about it is I learned a lot in this book.
not just about marriage, but really about how people work. And that served me in my work as a financial advisor. It served me in my time as a father, particularly raising daughters. It's served me hugely in my marriage, which is to say I don't do stupid things anymore. my marriage is happier. So that's probably the number one book that I've recommended.
Speaker 2 (02:25.014)
Yeah, obviously everyone here on the team has read that and it's the same story for me. And it is true. You don't have to talk about it. So you could read this and if you hate it, you just don't have to do anything with it. But if you love it, you still don't have to.
Yeah, actually, I read it and then I talked to my wife about it. That was a bad mistake. mean, really, really read it and then don't talk to your spouse about it. You because it really, you embrace the concept that you can't change other people, you can only change yourself. And that's what I found to be true. that's not really, they don't say that in the book, but that's the gist of how to put the book to work. And I don't think anybody who reads this will be terribly surprised, but I'm pretty sure that they will.
be happy with the reframing of things and how it... you if you actually do some of the stuff that's in the book, then your marriage will actually improve. You know, it's funny because you're going off on vacation, you read a lot of non-fiction, and I read from just random places, know, stuff off the New York Times Book Review, things that I find randomly in my downloads, new books, all kinds of stuff, right? And the book I actually recommended to you is about a bank heist gone wrong.
that involves muscle cars and driving at high speeds across the country. So I would have recommended a Western, but the ones I like have gender balance and oddly they're out of print. yeah, so.
Oh, yeah, it was a great book, but I specifically asked you for fiction because I'm, you know, I for me, it seems like every book I read needs to be implemented into my life in some way for it to kind of be worth reading. And I just thought, you know, I've read about 10 of these. I'm trying to implement them all at once. I should probably take a break from this self-improvement for a while. But yeah, it was very fun to read.
Speaker 2 (04:17.87)
Yeah. Okay. Let's get some questions. have. wait.
It's time for the questions!
Yes, it is and we got some some good ones Less common ones, so I'm excited Okay. So first question GI dog, Pennsylvania
I understand I need to set up a will or a trust. Which is better? So, you know, it's helpful, I think, to kind of compare the two. to understand which is better, you kind of have to know what each is. But I was thinking I could kind of compare them and you could fill in.
This is what I have a a GI doc angle on this. That's like someone asked, OK, which is better upper endoscopy or lower endoscopy? And the right answer is the spinner you need. want both.
Speaker 2 (05:17.902)
You want both okay, all right, let's do it so There is a Timing of effect with wills and trusts. Yeah, it's just high level so fill in where you need to but Will takes place or it takes effect when you die Okay, and the trust is effective as soon as it's created and funded
Yeah.
Speaker 1 (05:44.174)
Okay, native you can dip again with AI lately because that sounds suspicious. Are you real? Could we do pass the Turing test right now? I am real.
This is this is straight from the book so yeah, I mean this is I Don't know how to make a state planning sexy Ben It just doesn't it just not well, it's just necessary. So this is straight from the book answer All right Then there's a probate process Assets distributed through a will typically go through probate. What's probate?
I've heard I've heard probate described as a lawsuit by you against you that you pay for. But really probate is, you know, when you die, it's not like your assets just automatically go someplace like maybe your maybe your priceless Ming Vos just goes someplace, right? But your accounts have to be legally retitled and things like homes have to be legal retitled. And probate is the process of essentially
transferring those from one person to the next person in a legal sense and it It can be a court proceeding. It can be expensive. It can be timely time intensive and more importantly, it's a public proceeding so Everything you have everything that you own that goes to the probate process is a will become a matter of public record and All of your creditors and some people you never even thought of as creditors have a shot at your stuff before your inheritors get it
Yeah, that covered a couple more things. it's like privacy.
Speaker 1 (07:26.254)
Trust is a private document, it's a private proceeding, and it's a legal document that says, you know, when I die, I want my stuff to pass to this beneficiary and here's how I want it to pass.
Mm-hmm. Yeah, so more control less cost a little more work up front but
I'm not sure about the less cost part. It kind of depends on how complex the trust is but you know with a probate there You know, you're have attorneys. You're probably gonna have a courts involved And that that that doesn't have to be terrible, right? But the more complex the estate is the more expensive their probate process can be so I would say that You know trust is kind of like pay me now probate is kind of like pay me later, right? because there's a cost to the trust and there's a there's a
kind of a time and slash energy cost to actually funding that trust. But can I tell you the number one thing that I see, mistake that I see physicians make with estate planning?
Yeah, so they go to the attorney, they get a will and a trust. And if you want me to talk about why you'd need both, I'll tell you about that in a minute. They get a will and a trust. They show up. They have a signing ceremony where some folks come in from the back office and they witness you and your spouse, you know, putting your John Hancock on the paper and you walk away with a smile on your face. You got some documents in your hand. You're like, woohoo, we're done. Wrong answer. That's where it begins. That's beginning of the process. So with a will, you might be done.
Speaker 1 (09:01.742)
But with a trust, all you've done is form a trust, which is kind of like building a cardboard box. If you ship an empty cardboard box, the recipients on the other end are going to get nada. And if you build a trust and you don't put assets in the trust by changing the title of accounts, the ownership records of a home, the shareholder of a business from you to your trust, then you're building an empty trust. And when you die and it comes time to crack open that trust, ain't going to be nothing in there.
Right. So there's all kinds of machinations that go with putting things in the trust. And then also you need to review your beneficiary designations on things like life insurance and health savings accounts, 529s, IRAs, Roth IRAs, 401ks, 43Bs, 457s, all that good stuff. All that needs to be reviewed and updated. And there's a good chance it hasn't been reviewed since you opened the account. So
Really, you build a list of assets and you go all the way down the list and you ask yourself, is this one done? Is this one done? Is this one done? And you know, it's not uncommon for physicians to have 20 or 30 items on their balance sheet if they're in the middle of their career.
Yeah
Yeah, and if you screw it up, you'll never know until you're dead. You'll still never know, but your survivors will know and your attorney will know because they're going to smile when they send that bill.
Speaker 2 (10:26.446)
Yeah. Okay. Well, that that covers most of it. There's one more thing that the book said, Ben. This is asset management during capacity. So that's basically pointing to the trust, the trust can provide that while you're incapacitated. So why
Okay, so here's the thing. Sometimes things don't get in the trust, right? Things that should be in the trust don't get in the trust. Maybe you bought it and you forgot to put it in the trust or you bought it, you intentionally didn't put it in the trust. So a will tells where stuff goes that is not in the trust and doesn't go, stuff that doesn't go by will substitute, which is another topic I can ask, you know, answer a whole five-minute question about. But basically, a great thing to have if you have a trust is known as a pour-over will.
And a pour-over will, what it does is it basically says, everything that's not in the trust, let's stick it in the trust on death, okay? That does not avoid probate. Anything that goes via your will, anything that is a bequest or anything that goes through the will must go through probate, but the good news is that at the end of the day it goes into the trust, so it's subject to the terms of the trust. In terms it might be like, oh, when my kids reach 35 they get a third of my stuff, and when they reach 40 they get
Half of what remains only reach 45 to get the rest of it, right? So things like that or, you know, putting things into the trust via the poor will allows a trustee to manage those things and take care of them. So again, I won't want to avoid probate. It's ideal to have everything in the trust that belongs in the trust, but sometimes people forget and it's good to have a poor over will.
Is there anything else we missed? This is one of those topics that people just don't get. They know they need it, but they're not really in touch with why. So anything we missed that you were hoping to
Speaker 1 (12:25.23)
There's another document called a durable power of attorney and like let's say that you and your wife have a durable power of attorney between you and you you become incapacitated a durable power of attorney allows her to step into your shoes and conduct business on your behalf so let's say maybe you have a an IRA you know an individual account if the if the brokerage honors that durable power of attorney it would allow her to take action on your behalf in case you become I don't know comatose or
mysteriously lost or stolen, you know. So, and usually when you get a will and a trust, you get a durable power of attorney. Often that comes with an advance, advanced directive or healthcare power of attorney depending on what state you're in. Usually it's each state has their own rules on this. So it's kind of good to have all these in place. But remember, when you, when you signed on the dotted line, the journey has only begun.
Yeah, last thing I'll say is we do have a great solution for relatively inexpensive trust. So even if you're not a client, if you're you can reach out about that. I think you need a referral.
Yes, this is part of our membership package. Yeah.
Yeah, yeah, so I guess clients but yeah, this doesn't have to be all that expensive, but you do have to be willing to do some work Okay, next question from a family medicine doc in oregon I was on a podcast a guest podcast last week And she got oregon, right? She didn't say oregon and she made it known to her audience. It's not
Speaker 1 (14:00.526)
I was serving a client in Moscow, Idaho yesterday and I said Moscow about three times. He's like, look, that's kind of a faux pas. You wouldn't want to say that around here. So it's one of the secret code words to let people know you're not from here. Right. So, all you Idahoans, Moscow, I get it.
Okay, they they asked they said I'm afraid to freeze my credit what might happen Should I tell him yeah, yes So so after the after this question you and I were talking about it and you said have you frozen your credit yet and I said Right said you wouldn't be able to sleep at night if you're
So that's a good.
Speaker 1 (14:38.51)
And then, what did I say to that?
Speaker 1 (14:47.064)
also said not freezing your credit is like going to the bathroom and not wiping. It's terrible bit of financial hygiene that you really should do.
Yeah, I know. the last time I thought of I can't remember what it was, but the last time I thought I was trying to my credit was getting checked or something. And it's just one of those financial hygiene things you should do. And my credit card got stolen over the weekend. So I was like, here we go. So you know what? I did it. And it took probably all told 10 minutes to freeze it. So I'll tell you kind of you're very well read on
Identity protection all security minded here in the finance world their privacy. So I'll tell you what my experience was and then you can kind of the big why but There's three credit bureaus Experian TransUnion and Equifax and you basically type into Google You know Experian credit freeze and then you go in there create an account. It took I think you tell
privacy.
Speaker 1 (15:55.392)
less than five minutes from beginning to end.
Yeah. Yeah. And then you essentially just click this button that says freeze. You can thaw it. We found that out, which is like if you're going to get a loan, you can put a thaw on the account where the freeze goes away for a certain amount of time and then goes back on without having to log back in. But you go into each credit bureau's website and do the free one because they're going to try to upsell you to something else. You don't need that. Just go in there.
go to the free membership and then freeze your credit so that people can't apply for loans in your name. And then my experience too, the kind of pushed me like, my gosh, let's do this right now, was I was in my computer, my personal computer and there was some passwords that it was telling me had been stolen. And there's just, we've all had data leaks at this point.
Our stuff is out there. There's just two ways about it.
It's just yeah, you have to go about it a different way now. So tell me more about also.
Speaker 1 (17:02.858)
I would say that the reason to freeze your credit is because your stuff is out there. To put this in perspective, on the black market, to buy someone's data birth, social security number, and name and address is 99 cents. That's the black market price for these things. So your stuff is out there. And also to stretch the perspective, if you want to buy an active email account off the black market, it's about five bucks.
It's not like they're paying thousands of dollars. It's not like there's cloak and dagger for them to get your stuff. Your stuff is out there. And as a physician, it's probably more out there than anybody else's because you're in every database in the universe and you've got a big fat target paint on your back. So what do do when your stuff is out there? You just make it so that the thieves can't steal your stuff. And the numero uno way they steal your stuff is to get credit in your name that you don't know about, drain that credit, go buy their meth and walk away. Right? So...
In order to keep them from opening credit your name, you freeze your credit. And basically what happens is whether you or a bad guy go in there to apply for credit, it's going to be locked up and frozen, which is to say that the credit granting agency, the bank or the lender, can't figure out if you're a good risk or not. So in order for them to find out if you're a good risk, you have to unlock or thaw your credit. You can tell...
You can tell these companies which date you want it to thaw and when you want it to go back in place. And typically it takes a credit granting agency like a bank. It just takes them a couple of days to check your stuff. And it doesn't have to be at all three agencies. Like I went through a rental application for my kiddo and I asked them, which agency do you use? said Experian. So I just thought Experian. It was open for a couple of days and then it shut back down again. If you don't do this and your stuff is exposed 24 seven to everyone on the planet.
And having had my credit hacked three times, I can tell you that the credit freeze is the thing that allows me to sleep at night. I could tell you some horror stories about people who've had their credit tapped and broken into that didn't have a freeze. But really, only defense is to freeze your credit.
Speaker 1 (19:21.922)
Now, the downside is the 15 minutes worth of inconvenience to freeze it and the 10 minutes worth of inconvenience to thaw it if you have to. That pales in comparison to the hours and days that you will spend restoring your identity and restoring your credit.
Mm-hmm. Yep Okay next question infectious disease doctor in New York Should I contribute to my new 457 plan at work? So high level view of 457 plans Non qualified retirement savings plan and really whether or not you should contribute to them is It's a question that people
Well, I'll get into that a second. But basically there's two different types of 457 plans. There's governmental and non-governmental. And non-governmental 457 plans have a substantial risk of forfeiture, meaning that if the company goes belly up, so does your 457 money. Right. Ben, what happens, you've seen this in action, what happens if you just leave 457?
your job. gosh.
And you just leave. mean, the company doesn't have to go belly up for you to leave.
Speaker 1 (20:39.36)
It depends on which form of 457 you have. So first off, if you are working a for-profit organization, you have a 401k, you're not likely to have a 457. I'll just go out and say you won't have one. 457 is a not-for-profit thing. so governments are not-for-profit. And so, you know, let's say that this doc works for some health authority in New York that is a division of the New York State government. That would be a governmental 457.
Let's say they work for a not-for-profit hospital chain, that would be a non-governmental 457. So the desirable one is governmental. And you can just look at that as like another 401k for all intents and purposes. The cool thing about that is you can put money in, you get a tax break, and you can roll it over when the time comes. And you're not going to forfeit that money, right? So being able to roll it over into an IRA's key with a non-governmental 457 plan,
That money is at risk. seen as you line up with the other creditors when the organization goes bankrupt. You cannot roll over a non-governmental 457 plan. So what I've seen is a physician will defer at the 24, the 35 % tax bracket, and they defer and they defer and they defer. And then somebody in corporate makes up their mind to change things and they say, oh, we're going to wind this up and we're going to distribute everything.
and now it all gets distributed. So all those deferrals that you have come out in one chunk, which for most physicians puts them in the 37 % tax bracket immediately. So not only did you not save taxes permanently, it actually cost you taxes because it took you out of a kind of a high tax bracket into the highest tax bracket. And in my career, and I've been doing this for 30 years, and in my career with doctors, which is 25 years, I have not one time.
seeing a non-governmental 457 workout. Not a single time.
Speaker 2 (22:39.566)
Yeah, this is hard for people to hear because they see that big juicy tax break this year. They're not looking long term. I have also never seen it work. There's only been one instance where I thought maybe it would and is because they were changing jobs, non-governmental 457, they were going to basically they got bought out and they had a chance to fund it for one year and they're going to retire the next year. Like, OK, and so it saved them a few bucks.
But what we're really talking about is this doctor, 35 years old, 25 years left, I just don't see, I don't see one, just staying at the same job, and two, it somehow...
good chance that's not gonna work out because I mean physicians change shots right so yeah
Often. Yeah. So governmental, yes. Non-governmental. No. Yeah. OK. Double doctor family on the East Coast. Do we need a new insurance agent for a DI coverage? It's a story here. There's a backstory. So they essentially they are leaving their financial advisor and.
Yeah.
Speaker 2 (23:55.662)
This is a prospective client and they're leaving their old financial advisor, don't know if it's to us or what, but they kind of that question. And when you dig in, it's, well, why would you leave your disability insurance agent if you're leaving your financial advisor? Well, they were referred to their disability agent by their financial advisor. So they're just wondering kind of how are they attached? So the thing is when you're,
You don't have to leave them. In this instance, they weren't attached. So what you want to do is look at the coverage and see if it's good coverage. So own occupation.
Yeah, all that. and when we looked at this, and one more thing, the elimination period. So this is it. have a guide about disability insurance coverage and it covers this. So we can give more details if anybody wants it. But if you have a well-stocked emergency fund, you can extend the elimination period. So if you're really short elimination period, it could be more expensive. You can extend out the elimination period if you have a well-stocked emergency fund.
in this case, they checked all the boxes. So they had good coverage. And while their financial advisor may have been charging them a lot, it didn't look like their disability insurance agent was. So the question is, if you still want to leave them, maybe you just don't like them. Maybe, you know, you just don't want to be associated with.
They bought your disability insurance from them and now they keep wanting to sell you variable universal live. Yeah.
Speaker 2 (25:38.594)
There you go. And you just, you just want to get them out of your hair. you can do something called an agent of record change. So you keep your coverage. You don't have to go get new coverage. You don't have to go to the doctor again. and just move it to a different agent. They can review it. They can also confirm it's good or bad. They can make adjustments. They can sell you.
cost to change the agent of record.
zero correct yeah yeah so in this case they just needed to find a insurance agent they like to talk
Correct.
Speaker 1 (26:13.806)
Yeah, because these agents, you know, they work for the company, so they're not fiduciaries. And they have two purposes, sales and service. And the biggest part of what they do is sales. Service, very seldom are you going to need much service on these things. And quite frankly, you can go directly to the company for your service. You don't have to go through an agent for that. you know, once you bought your stuff, you don't have to keep them.
I also want to let people know that there are a number of outlets right now that are selling disability insurance. There are a lot of bloggers and podcasters that are selling disability insurance. Looking at the inside scoop on this thing, there's a thing called guaranteed standard issue. And this is available to very young attendings and folks that are in training. So guaranteed standard issue means that you could be
You could be on the precipice of disability. You could have something that would keep you from getting disability otherwise, and you're still going to have it because the issue is guaranteed, guaranteed standard issue. If you go buy your disability insurance from just a random location, maybe you're your random friendly blogger, your random friendly podcaster, there's a good chance that they'll sell you a policy without looking at the guaranteed standard insurance. And you could get rated, you could pay more, you could get a worse deal.
So it's important to shop around, find out which agent actually has the GSI because the guaranteed standard issue goes with the agent for the organization that you work with. And so, for example, if you work at a specified hospital and they have GSI, there's gonna be one agent that's assigned to that GSI contract. You need to find that person and go to them to see about getting your coverage. I would be careful about just going to any disability insurance agent or any website to get it.
Okay last question cardiologist in Colorado said I have a great income and A job I love but no balance in life. What should I do?
Speaker 2 (28:22.338)
Ben, when it comes to spending time with your family, it is not the thought that counts. Right? I hear this a lot, like, wish I could. Well, you could. You just could. mean, so I, I can think of many ways to kind of buy back your time, but I want to know.
Well, I find funny is that, or sick funny actually, is that cardiologists as a group are higher than standard rates. They're more likely to have a heart attack than their standard cohort. And I think it's because the job is so dang stressful, right? And so, one of the antidotes to stress is to de-stress, to take some time away from work. To a person, all the cardiologists that I know are hard chargers.
I think they would have difficulty stepping back from work. So, you know, I hear that word balance and I see a teeter-totter in my mind with the fulcrum in the middle, and I don't think that that's a fair representation of balance. For some people, that teeter-totter is going to be all the way to one end. The fulcrum is going be all the way to one end. And so balance looks different for everybody. It doesn't mean, you know, taking half your time to go throw pottery and half your time to do cardiology. I think it means being able to be flexible with your time.
which means having control of your finances. Those are kind of one and the same, you know, one leads to the other. So, and I also think that there is, there has to be a mental shift in this because if you are a hard-charging cardiologist and that's part of your identity and perhaps you work in a group where that's the value there, in order to be able to shift, you're going to have to shift a little bit of who you are and you might have to change the organization that you're in to be in a culture that embraces different values.
In fact, I do work with one cardiologist, we work with one cardiologist who has done this, has shifted jobs a couple of times and finally landed in a group where I think they work three days a week collectively, and the other two days is family time, that's one of the days that they have. I know that this is rare, but it is out there. yeah, mean, buy back some of your time or, you get yourself a plan and figure out whether or not you really need to make as much money as you think you do so that you can...
Speaker 1 (30:39.118)
relax a little bit and de-stress and maybe live longer.
Yeah, no kidding. When I was talking to this family, the words actually came out of my mouth. I don't know what you're going to do with all this money. I mean, that's how much money this guy makes and he loves his job. And so that's the hard part. It's not like he's not killing himself over a job that he doesn't like, you know. It's just and I think it's hard just as humans, know, doctors are humans, too.
It's hard to see an opportunity to make a million dollars a year and to not grab it But that is why these these plans are so important to me I mean, of course they tell they tell you what you need to know where to put your money how to invest your money all that they also tell you they can explain how to balance your resources between now and the future and someone you know in this particular situation
They are not balancing their resources appropriately. If you have a goal of, I guess, unless you have a goal of dying with entirely too much money. So I love your answer. There's the typical answers like buy back your time, get someone to clean the house and do your lawn, do your shopping, all that stuff. And that's great. I mean, that's a great way, but that's kind of, that's a child's play. I I think.
most people make in a million.
Speaker 1 (32:14.668)
I can encapsulate the thinking around this. So what is the opposite of more? What's your knee-jerk reaction about? The opposite of more is less, right? The opposite of more isn't less, it's enough. It's enough. And so I think through the planning process, you can find out how much is enough for you, our clients can find out how much is enough for them. And once you know how much is enough in terms of work and money,
then it opens avenues to be open to other things in your life, to experience abundance in other areas.
Great. Okay. Well, that's it for today.
So we are physician family financial advisors. are fiduciaries. We are registered investment advisor. We are open for business. We're looking for clients. I talked to somewhere between five and 10 prospective physicians a month. If you'd like to chat with me to see about maybe becoming a client to get a plan or become a member, all you have to do is visit physicianfamily.com and click on get started to schedule an interview. Specifically, we're looking for physicians. That's MDs and DOs.
that are parents, that means you could be single, you could be married, you could be divorced, but you have at least one child. We're typically looking for folks who earn enough money to be able to pay our fees and still have money left to save. And we're looking for nice folks. You know, if you're looking to have a good, solid relationship with people that will treat you like a human and really take care of you, then we're the choice for you. If you're not ready for that and you'd like to ask us a question, you can call our answer line at 503-308-8733.
Speaker 1 (33:54.718)
or you can lob a question to us at podcast at physicianfamily.com. until next time, remember, you're not just making a living, you're making a life. Thank you for listening.
listening to the Physician Family Financial Advisors podcast. Are you getting all the tax breaks you really deserve? To find out, get your copy of the Overtax Doctors Retirement Investing Checklist, available at PhysicianFamily.com forward slash go.
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