Excerpt from Santa Clarita Local Leaders audio broadcast. Click here to download the complete MP3 audio.
Rebecca Robins: Well, that's wonderful. Thank you for sharing with us, Rob. Now I'd like to actually focus on probably what you were referring to earlier, was that estate planning. Can you explain to us what is meant by estate planning?
Robert Mansour: Of course. I think the first thing that we should do is talk about this word estate. That, I think, turns a lot of people off, and they figure, "Estate planning is not for me." Because the first thing they think of when they think of the word estate, is they think of somebody living in a big mansion, somebody who is very, very wealthy, who plays polo on the weekends, and speaks with a fake British accent. That is not, the word estate, I think, tends to mislead a lot of people.
The way I tell people is to think of the word estate as simply being equivalent to the term stuff. Everybody has stuff. You might have $50 to your name. You might have $50 million to your name. That is your stuff. It could include real estate. It could include checking accounts, savings accounts, any kinds of bank accounts, investment accounts of any sort, jewelry, clothing, all of the things that you own. Stocks, bonds, all of those things, are part of your "stuff."
That's all estate planning is. It is planning what to do with your stuff, and there's two components, essentially. Number one, planning who is going to be in charge of your stuff, if you will, if something happens to you. Nevermind the issue of death. Most people think of estate planning, and they think about dying. It's really about a lot more than that. It's about empowering people to act on your behalf in case something ever happens to you, whether it is a car accident, dementia, Alzheimer's disease, a coma, something happens where you're no longer able to handle your affairs, you want to make sure that you give people the legal tools that they need to be able to assist you.
Then, of course, the other component is after you pass away, you get to control where your stuff goes, and to whom it goes, and in what manner. By preparing these legal documents in advance, by creating this estate plan with your stuff, you get to control a lot more of what happens, rather than just leaving things to chance.
Let me just also address one more thing here, Rebecca. People always say, "Isn't this what wealthy people do? Don't wealthy people do estate planning? Why should I?" I say, look, yes, wealthy people do estate planning. Wealthy people know how to stay wealthy. That's one of the things that they do very well. We, as average folks, if there are any average folks listening to this, I consider myself average folks, we need to learn from the wealthy people. We need to do what they do. They are using the very same legal tools that are available to everyone. But most people don't think it's for them.
Then what happens in this country, I read an interesting article, most of the wealth in this country, especially in the middle class, is lost between one and two generations. It's gone. That is because the average people don't know how to transfer wealth from one generation to another. They don't know how to preserve it. They don't know how to ensure against problems and things of that nature. Wealthy people know how to do that, and we need to learn from them and do what they do, and preserve the wealth in our family and make sure that it gets to the right people.
Rebecca Robins: So Rob, what you're telling us is, no matter if our stuff is worth, in our mind $50 or $50 million, we should consider sitting down with someone and doing an estate plan. Is that correct?
Robert Mansour: That's exactly correct. One of the things that people tell me is they say, "Look, I don't have enough money to do estate planning. I don't have enough to protect." I tell them, the truth of the matter is, wealthy people like, let's say, the example that I often use is about Bill Gates. If Bill Gates lost a million dollars from his estate, he'd probably be okay. But if an average person loses a good portion of their estate to legal fees, or attorneys, or the court system, or hospital bills, or whatever the case may be, that will hurt that person, much more than it would hurt a very wealthy person. So you're absolutely right.