FLYING WEST: PREPARING YOUR ESTATE AS A PILOT

[00:00:00]In today’s episode, we are going to talk about something that is uncomfortable, something that you probably do not want to discuss, but it is important and you need to hear it, right? This is an important conversation. It needs to be discussed. So is your family prepared if something unexpected happened to you, and you flew less? That’s it, that’s the question.
[00:01:02]Well welcome to this episode of Pilot’s Portfolio. In today’s episode we’re going to be talking about something that is uncomfortable, something that you probably do not want to discuss. But it is an important conversation and it needs to be discussed. So stick around for the entire episode, my name is Timothy P. Pope. I’m a certified financial planner specializing in the planning needs for the professional pilot. Today, I want to discuss a sobering topic. It’s probably one of the least favorite and least comfortable topics in financial planning. You asked me, well, Tim, how do you know? [00:01:39]Because almost without fail. It’s one that takes most clients the longest to complete. You know, there’s a lot of things to consider with this and it’s not as fun as talking about your investments and their growth or tax planning and how you are planning to save money on taxes or the fact that you have finally reached financial independence and you are feeling good about that and, you’re in a good mental space to maybe start spending some of those dollars that you’ve deferred for so long. So today we’re talking about flying West. We’re still learning a lot of new information about the D. C. A. Crash between P. S. A. Airlines and the Army Black Hawk helicopter. I saw a post online from a GA pilot and it resonated with me a lot. He said every time he gets into his own plane, he thinks about all the risks. He thinks about everything that could go wrong. And, you know, he thinks about what if the worst happened. But, when he gets on an airliner, those thoughts don’t even cross his mind. When I saw that post, I’m like, wow, you know what? [00:02:47]I can say the same exact thing. Like, when I jump into the Cirrus, You know, I think about the risk a lot most of the time, right before I start to taxi to the runway or if I’m holding short and I haven’t done it before, you know, I grab my phone, I send my wife a quick text, you know, and it’s usually just, hey, about to depart. That’s it. And, then whenever I get to where I’m going, as soon as I can, I send her another text and it’s always the same. Down and safe in whatever the airport identifier is. Okay. And so we think about the risks when we fly ourselves. Now, I don’t think many folks would disagree if we said that the PSA flight and the army training flight were both pretty routine and standard.
[00:03:30And, I think that’s what makes this entire event so tragic. And, that’s what shakes you up about it. You know, whenever I think about the crash, I think about the families. Wow, that’s 67 families that have this huge gaping hole in them right now. That’s 67 families that are grieving right now who are going to have to figure out how to pick up the pieces and keep going. That hurts. now I’m not here to discuss what might have happened or the probable cause or who has responsibility laying at their feet for this like I have no idea about those things. I’ll let the NTSB do their work and they’ll present it to us in time and I’m confident that as an aviation community, we’re all going to get smarter about what happened and what we can do in the future. [00:04:15]But I do think that there’s a lesson here for every single person listening to this show, and that’s what we’re going to talk about. Is your family prepared for you to fly west? That’s it. That’s the question.So look, I know that all of you guys who fly 121 out there. I know aviation is safe. It’s as safe as it’s ever been. In fact when this happened in January they were one month away from, making 16 years since the last major commercial airline crash and mass casualty event here in the US. Right? So this just does not happen very often. And we’re extremely thankful for that. But what about when you fly GA on the weekends? Or what about you business aviation pilots out there who may not have, as robust protocols as the airlines? Or for goodness sakes, guys, we all drive to work, right? [00:05:10And, we share the highways with others who may not be as safety conscious as we are. So things happen. So is your family prepared? If something unexpected happened to you and you flew West, let’s talk about a few things that you could do to help them get prepared. So one thing is, are your finances organized? Can you go to one spot? Open a file, whether physically or electronically, and know, okay, here’s all of our family’s assets. You know, here’s all of our liabilities. Here’s the income that we have coming in that we expect, Can you do that? Or do you feel, you know, man, I feel like my financial life is a little bit all over the place.
[00:05:53]Well, if you’re feeling like it’s a little bit all over the place, then it might be. Now, your ability go to that file open that up and to see everything in one spot. That’s great but, what about your spouse? Can they do that or if the shoe is on the other foot if your spouse usually takes care of these things that bring us back to that first question. Do you know where those documents are in the event that something happened to your spouse? One of the first documents that a surviving spouse is going to want to get their hands on and need to get their hands on is the life insurance policy. Okay? Who is the policy with? How much is it? How does it pay out?
[00:06:32]And this represents time. That life insurance policy represents time for surviving family members. It provides time for them to figure out what they’re going to do next. It’s already an extremely emotional and stressful time for the survivors. And, the last thing that they’re going to want to deal with is having to make immediate and big financial decisions because they just lost you and maybe you are a significant source of income for the family. Sometimes you’re the only source of income for the family. And, so that life insurance policy certainly represents time for them to figure out what’s going to happen next. You know, an important part of the preparation is also having conversations, right? So whenever I have estate planning meetings with clients and life insurance meetings with clients one of the things that we’ll go through is Mr. Client, if something were to happen to you how would you want your spouse and your family to manage once you’re gone? And then, you know, Mrs. Client, if something were to happen to you, how would you want your spouse and your family to manage when you were gone? And, these conversations work best when both spouses are at the table and, they’re listening to each other’s responses and they’re hearing things and they’re thinking about things, another question is hey if something were to happen to you, what activities would your spouse need to stop immediately? Or, how long could they carry on their current lifestyle until they needed to make a change?
[00:08:06]Again, these conversations and these questions work best when both spouses have a seat at the table and they’re thinking about it and you guys have already done the budget and the cash flow and you know where the funds are going and you know what activities you’re supporting for the family, these conversations are an important part of that preparation because in the event that something happens, the survivor knows, hey, either, you know, do need to make immediate and major changes and here’s what they are and, I know that because I sat at the table and we talked about it and, that’s what our financial plan said and I’m okay with it or and I tend to think this one is better I do not have to make immediate major changes while I figure out what’s next.
[00:08:49]Another thing I want you to think about is are your beneficiaries up to date? You know, is the person who you want to receive assets actually the person who would receive them? People forget and they leave ex spouses on policies or retirement accounts or Sometimes folks have had their parents as a beneficiary before they were married. They forgot to change them. Have you created a trust? That you expect your assets to flow to, but the beneficiaries on life insurance or certain accounts are still going to the natural person, right? So if the beneficiaries are going to the natural person, that money is not going to go flow through the trust like you expect it to.
[00:09:28]Sometimes the back office of your investment firm may make a clerical error. Okay, I was doing a beneficiary review with somebody a few years ago and we’re looking over some things and we’re both like, Hey, who’s this guy? I’ve never heard of this person. And it turned out , it was probably a clerical error at their custodian that they were using, somebody that we’d never heard of was on the account. So, you certainly want to look at that and you know, I’ll tell you, Hey, If you just got married or just went through a divorce, or if a spouse has passed away or if you’ve just had a baby, those are great times to make sure, just do a cross check, make sure the beneficiaries are up to date.
[00:10:06]Sometimes you might have an adult child that’s not demonstrating the responsible behavior that you would expect of them, and maybe some changes need to be made. It’s a good time to review those beneficiaries.
[00:11:24]Another question I’ve got for you is, do both spouses have a working knowledge of what just routine and regular bills the family has, when they get paid, who you pay them to, and things like that. As a financial planner I’ve been working with families for over a decade. The norm that I see is that usually one spouse takes a pretty big lead on the financial aspects. I think it’s super awesome and I love it when I see it when both spouses attend all the meetings, they’re both engaged, they’re both interested, but I think the reality is usually there’s one that really likes to handle it and then there may be one that is less engaged, and that’s okay.
[00:12:02]For my wife and I, we’ve been married 10 years this month, and in the beginning, I’d come to her and I’d say, hey, like, here’s what’s happening with our money. And I’d love for you to learn this and, be engaged and blah, blah, blah. And one day she’s like, hey, isn’t that what you do for a living? I’m like, Oh yeah, it is. She’s like, okay, well I don’t want to learn your job. Not that she isn’t capable. You know, she’s really smart, in fact, I mean, she’s smarter than I am. She just wants to spend her time differently. So we’ve adopted a different strategy. We have frequent conversations about the tactical financial decisions that we’re making as a family.
[00:12:32]These are like, week to week decisions, month to month decisions. And then we have less frequent but regular conversations about our long term planning and our long term vision, as a family and, all of that works for us because it rests on a foundation of, hey, look, if something happens to me, here’s all of our things in one place and you go and you call this financial advisor and they’re going to help you. Okay? So if both spouses are not super engaged in the financial planning that can work as long as there’s clear communication between
them and if one spouse were to, something were to happen to them then the other spouse is not, you know, just completely left blind and in the dark.
[00:13:20]So, I mention all that to say that depending on how your family does things and how you guys divide and conquer the task and the finances, you know, it may be necessary to organize things down to the monthly and the quarterly, the annual bills and how they get paid and who you’re paying and so forth. You’ve heard me talk about having an estate plan and, it’s true. You should certainly have one. You should have a last will and testament. You should have a living will, which is if you can’t make medical decisions for yourself, there’s guidance the medical professionals have guidance on how you would want those things carried out.
[00:13:56]If you have minor children, you and your spouse should most certainly appoint a guardian for them and, you know, if you’re a single parent and have minor children you certainly want to appoint a guardian. You don’t want the state government trying to figure that out for you. You certainly want to choose an executor for your estate and you want to put some thought into who that person should be.The executor assumes a fiduciary responsibility to the estate and ultimately to the heirs. I love my wife like crazy, but guess what? She’s not my executor. We have five minor children, which means she’s already super busy. But, if something were to happen to me, she’d be extraordinarily busy and she’d also be stressed during a highly emotional time.
[00:14:35]I hope, I hope she’d miss me, right? So here’s the thing, if you’re not used to navigating the courts and the financial systems then all of that at such an emotional time would be extremely daunting, and sometimes emotions can get you in trouble when you’re closing an estate just like they can get you in trouble when you’re investing in the stock market. I’ve seen it. Okay? So the person that you choose to be, your executor should be well positioned for the task. You know, if you own property, you want to make provisions for the disposition of that property. You want to understand how that property would flow. If you own property in multiple states. It becomes even more important to understand and plan for the disposition of that property, understand how that property is titled.
[00:15:28]You know, a lot of spouses will have joint bank accounts and then individual bank accounts. Okay? So if you have an individual bank account that you want to go to your spouse or vice versa, or if you want that individual account to go to your children, then make sure that there’s a beneficiary designation on those bank accounts. A lot of times they’re called transfer on death or payable on death designations. Okay? The same is true for, any individually owned investment accounts are going to be held outside of a trust.
Make sure that they’re, you know, if there’s a some kind of provision for these things to, to flow you, you really want to avoid probate where you can, okay?
[00:16:10]It gets more expensive than it has to be and it’s way slower than if there were beneficiary designations or transfer on death designations on, on these accounts. So as you think about this, this goes a lot deeper than simply having your estate plan complete, you know, having some life insurance in place and beneficiaries up to date. Now I don’t know if you guys have ever helped a family member or a family, maybe a friend or something when someone has passed, but there’s a lot of moving parts and when things are done well, all things considered, it can go pretty smoothly. When things are not done well, at minimum, it’s a pain. Right?
[00:16:46]And it’s a frustration and it’s a thorn in somebody’s side, but at maximum, the surviving family could experience a second tragedy right after the first, you know maybe there’s a huge disparity in income and spouse with the primary income passes away or maybe you were the only income and there wasn’t sufficient life insurance or things were not titled well, maybe there’s a lot of debt on the balance sheet.You could just imagine that wow the surviving family members just get hit with back to back tragedies, right? So, the good news is, at the majors, all you guys have legal benefits, okay? A lot of times it’s through MetLife, and the way that works is you sign up during open enrollment and there’s a network of attorneys that you can go through and, and find someone practicing in your state.
[00:17:31]And if your estate planning needs are pretty straightforward, this could easily be accomplished by using that benefit. And, last time I looked, I think for most of you guys, it’s less than $10 a pay period. Okay. So there’s not even a financial burden that you need to overcome. And, particularly like you’ve heard me walk through a lot of things, like not everybody’s estate plan is going to have all of these moving parts.Sometimes yours might be super simple and if it is, boom, you can knock it out. But if it’s more complicated, you certainly are going to want to sit down with an estate planning attorney. Or you might even need somebody who specializes in certain issues that you want to make sure that are addressed very well, you know, some things that come to mind special needs children, if you’re planning for leaving something behind for a special needs child, their care their finances and so on second marriages with children from previous marriages, okay, that could be something that we need to plan around illiquid investments, large estates, business ownership, and you know, some of those things, you know, might require a specialist who deals with that on a day in and day out basis. Also want to let you guys know there’s a book that you can buy from Barnes and Noble or Amazon. I think there’s many like it but this one
called “I’m Dead, Now What?” And, it helps you organize all the information that I just talked about and more, okay?
[00:18:50]You can pick it up for less than $15 and I tell you with having an estate plan, the proper life insurance. if you need it, way to easily organize your family’s financial affairs and having conversations with your family. If you go through all of those things, then I would say that your family is prepared. At minimum, they’re prepared if something were to happen to you and you fly west. Okay, I’d hope that they were never ready for that to happen, but at least they’re prepared. I’d like to give a shout out, one of my clients, and I know he listens to the show as well, 777FO you know who you are. He wrote in and said, Hey, Due DCA crash. I’m taking another look at my estate plan, right? And I’m glad he sent me an email because I’ve been thinking about this event certainly been on my mind as I’m sure it’s been on your mind as well you know, I wanted to talk about it in a Thoughtful and respectful way and the fact that he sent that question in like, you know what?
[00:19:52]I’m sure there are so many other people thinking about that for themselves for their own family. So thank you, Brad, for your email guys. This is going to do it for this time and I will see you on the next episode.