The Importance of Estate Planning for First Responders with Keith McManus & Dave Chaves – Ep 034

Keith Ellis Jr: Welcome back to another edition of The Retirement Roadmap Podcast brought to you by SHP Financial. I’m your host, Keith Ellis. And today, we’re lucky enough to be joined by Attorney Keith McManus and Attorney Dave Chaves from McManus Estate Planning. And we’ve known Keith now for probably about close to ten years.

Keith McManus: Yeah, yeah. Solid ten.

Keith Ellis Jr: And Keith does a great job at his firm about walking people through the need for trusts, the need for health care proxies in different types of planning. But I think what he really does well, two things I’ll say from feedback from clients, the focus on taxation and then the focus on the way, in my opinion, the way you speak to clients. You speak in layman’s terms so people understand it. But that’s not why we’re here today. Today, we’re here to talk about really two things that I’ve noticed recently in your firm, and that is two specializations. I want to spend our time today going into. One of them is the specialization in helping first responders plan for their estate, which I think is extremely important. And I’m going to let Dave actually speak to this in a moment and give us kind of a little bit about himself, the background, because he seems to be the one that’s focusing on this.

And then the other one is the need for estate planning when it comes to adult children. You know, my kids are 12, 10, and 5. So, I’m not quite there yet but approaching quickly because time goes fast. So, we’re hearing more and more folks approaching that and that they need that. So, again, I just want to thank you two for taking a few minutes and joining us here today.

Keith McManus: Thanks so much for inviting both of us, Keith. And it’s always a pleasure to be here to talk about the practice. It is expanding in so many ways and I’m so excited to have Attorney Chaves here to speak to that particular issue of first responders. You have so much more experience and I have none, except for meeting with them. But obviously, I’d love to have you tell everyone a little more about your background and what you bring to the table. And it’s just so vital that people hear this.

Dave Chaves: Well, thank you. I’m here between two Keiths. Just in terms of background, I was 33 years in law enforcement, 13 as a police officer, a detective sergeant with the Raynham Police, and 20 years with the FBI in New York City. I was also an EMT during that time, so I had a lot of exposure to my brothers and sisters, the fraternity in law enforcement and firefighters. So, I have seen up close and personal some of the things that we’re not very good at and one of them being estate planning, which is one of the reasons why I was prompted to come and talk to Keith about looking more towards firefighters and police and how we can help them. But the problem is this chasm, this like black hole of working constantly this gruesome schedule. You’ve got your shift, you’ve got overtime, you’ve got details, court, all these things that take away from looking at the importance of doing something like estate planning. And we live in the moment. We’re not thinking that we’re going to get hurt or something’s going to happen to us. We’re kind of like, that’s not a place where our thinking wants to be.

So, we put it on the shelf until we’re attending a first responder funeral. Those bagpipes are playing. We’re hearing this music in the background. The reality that our own mortality is in question starts to come to us and you’ll hear people at the church, at the cemetery talking about, “I got to get a will, I got to get a will.” And it’s prompted by those bagpipes and the loss of somebody and seeing family suffer that I’m prepared for that death. It’s difficult enough to get through the death, not that you ever get through it, but now preparing financially and to try and maintain a lifestyle is a very, very hard thing to do.

Keith Ellis Jr: And as you start to look at this and I don’t mean to jump right into it, but it is so important for them to plan. I must relate to myself in my twenties. You have an S on your chest, you think you’re Superman, nothing’s going to happen. Then all of a sudden something does happen or something happens to someone close to you around that age and you’re like, “Whoa!” You know what I mean? It’s like, that’s where reality kind of sets in, and then you realize, “Hey, look, I have a responsibility beyond myself. I have a responsibility to my family, my loved ones, my kids to make sure that everything is in good order, that they are taken care of, that I’m not leaving them.” Sadly, we see this from time to time, a little bit of a mess.

Dave Chaves: Yeah.

Keith McManus: The nature of planning and estate planning and what first responders, how that intersects is that estate planning is getting ahead of the problem, not being reactive and reacting.

Keith Ellis Jr: That’s it. Proactive.

Keith McManus: Yeah. So, the ideal kind of psychology of someone to approach this is to say, “I’m going to get ahead of this problem while I’m healthy and well.” And first responders who are actively serving are generally healthy and well and young and extremely insurable for things such as life insurance and tend to have younger families and certainly need to get that plan in advance with things like trusts and the appropriate suite of documents to support that.

Keith Ellis Jr: Well, that was what I was going to ask because I know Dave just mentioned, “Hey a lot of times they’re talking about wills and things like that.” And I know wills are appropriate in some cases but what are some of the tools or is a will the best path? I mean, maybe you can expand a little bit on that so then the folks listening, whether they’re a first responder or not, maybe they’re thinking of their situation, putting this into light.

Keith McManus: So, ultimately a will is appropriate to perhaps, for the simplest of estates, and also to name guardians for minor children. So, often first responders will have young ones in the family. And it’s so important to make sure that it’s clear as to who their guardians will be. That’s found in a will. Aside from that, as far as passing assets and wealth from person to person, trusts are always going to be better than wills, in my opinion, except for the most modest of estate. There are so many different varieties of trusts that we’d want to meet with those first responders. And I know that a good, encapsulated version of the discussion is also something that Dave was kind enough to put together in the form of an e-book for first responders. But essentially, we want to talk about using trusts as the tools of the trade in my profession to help first responders plan appropriately.

Keith Ellis Jr: Yeah. We definitely want to make that e-book available to anyone that is listening to this podcast. So, what we’ll do is we’ll add it into the show notes so then folks can download it and read it at their convenience. Are there any specific tools that are really just specific to first responders or is it kind of, “Hey, look, come on in, let’s see the situation,” and like you said, look at what type of trust or will could be appropriate? Is there any specific tools?

Keith McManus: So, the trust is going to be the tool of the trade and it’s going to be customized for that person’s family and their circumstances. The tool is designed to not only help the first responder, the trust I should say, while they’re acting in act of service, but also after they retire and when they move on into other careers or other parts of their life. It’s designed to take them all the way through their life. And the trust is designed to be tuned up every three to four years. We want to have an estate review, and it’s not supposed to be something that you just do once and put in a desk drawer. You want to create that set of documents, that trust that’s going to speak to them. For first responders, it’s going to have two different portions of it. One is going to be while they’re alive and if they become unwell. So, if there’s an incapacity, sometimes first responders encounter a situation where they haven’t passed away but they’ve suffered a trauma or an injury and they can’t work anymore. Having the disability documents in place for them, that’s going to be found in the trust in the support documents.

And then part two is going to be in the event that first responder or someone in their family has died and to make that passage of assets easy. And then the third part is to incorporate services that SHP offers to clients, such as looking over their financials. First responders need good financial advice. They need to have that advice, be good and workable for them for the entire life through the various phases, and have that tuned up and also analyze, for instance, their insurance profile. First responders, you know, young, healthy people that are eminently insurable and tend to be underinsured by a large margin from where they may want to be.

Keith Ellis Jr: Yeah, because you don’t want to leave behind like when you’re talking about insurance, you’re not talking about health. You’re talking about really life insurance. A lot of times there could be debt that is owed like a mortgage or, God forbid, credit cards or car payment, whatever it is. And if something, God forbid, were to happen, you don’t want, like you said, to be underinsured and leave your spouse kind of stuck holding the bag. And if anything, you would think you would want to over-insure to make sure that they’re going to be okay long term? Because if you’re younger especially, that’s a long runway ahead.

Dave Chaves: I think those are great points because so often first responders have the ability to make a lot of money. You look at the municipalities and the published earnings of policemen and firemen, they’re at the top of the list. And plus, firemen have schedules that will allow them to perhaps do contracting work on the side or landscaping. So, the money is there. It’s just how we manage that money. And that’s why it’s so important for Keith’s group to be able to utilize someone like that to get that feedback and how to better manage money because at least for me, I wasn’t very good at it when I was in law enforcement. And it’s clear I had recently lost one of my best friends in the FBI due to suicide and to see what the family had to go through just to pay for burial costs. And then there are things like GoFundMe pages and things like that. Those are the things we don’t want to be doing. We want to be in a trust-based plan where we’re covering this through life insurance products and other things that are going to take care of all these things and give you a great peace of mind.

I have to say 33 years in law enforcement, it was glamorous, it was exciting, and everything else but now I find myself as an estate planning attorney, and it might not have all the sheen and the glamor of law enforcement, but there’s an incredible satisfaction when you shake hands with someone at the end of the meeting and they’re just thrilled and happy and relieved. So, as an attorney, you get to make money, but making money in a way that you’re really enjoying the process and you’re seeing the benefit to others is just why it’s so important for me to be here and a part of it.

Keith McManus: And it’s just a quick side take too, the estate planning process is so straightforward. There’s really usually not only to me…

Keith Ellis Jr: Yeah. I think a lot of people think it’s intimidating.

Keith McManus: Yeah, right.

Keith Ellis Jr: It’s really not. It’s just you got to take that first step. And then once you take that first step, you gain the knowledge, you gain the insight. And like I said earlier at the beginning is what I love about the two of you guys is that you speak to people in a way that is very easy to understand. A lot of times people are intimidated by attorneys because they speak up here and where maybe down here and it’s the truth. I’ve heard it in the past. And I think, like I said, what you guys do a really good job is explaining, in layman’s terms, in an easy way to understand. So, it makes a process that’s thought of as intimidating not intimidating. It makes it approachable.

Keith McManus: Yeah. Step one is just a free initial meeting. It’s usually about an hour to an hour and a half, and then we get all the information. About a month later, we’re putting in place the estate plan and we’re good because the first responders they’re putting in so much time and effort in what they do and they can become so hyper-focused on that. And that’s a necessary part of being functional. And it’s sometimes hard to take a quick segue but it’s really just a couple of meetings and it’s done.

Dave Chaves: I got to tell you, Keith, how I met Keith. My soon-to-be 105-year-old grandmother up until she was 101 was shoveling snow. She was gardening. She was very active. And then her health went downhill and it wasn’t a matter of being able to take care of her at home. She had to go into a facility for professional nursing care. And at 105 and doing well, she was born in 1918 in Portugal during the Spanish flu, lost her mother and some of her siblings, came to this country with her dad, my grandfather, survived the Spanish flu, had COVID 100 years later, survived that, but she didn’t survive the long financial arm and reach of the nursing home. Everything she ever accumulated was gone at 10,000, 12,000, 15,000 a month. It goes pretty quickly. And I’m saying to myself and people looking at me in the family like, “You’re a lawyer, don’t you know what to do? How can you stop this?” And I did not know what to do.

I looked up Keith. I looked for the best Google reviews I could, and it was Keith. And I said, “Keith, do you mind if I come in and maybe sit in on a few of your meetings?” And he says, “Please come in.” And that’s what started this whole relationship. And I’ll never forget the first seminar I went to that you held. And he talked about how doctors, board-certified, whether they’re a neurologist or whatever it may maybe, and attorneys don’t have that. You’re hanging your shingle and it’s like all are welcome. Estate planning is so nuanced in particular that you have to know exactly what you’re doing because, and you mentioned this at the seminar, unless the title says estate planning, like McManus Estate Planning, you might be getting a generalist. And those generalists have a program that they can put some information to and regurgitate some form of a will or perhaps even a trust. But the things that come in and you told me I’d see this, it’s almost borderline malpractice, some of the work we see come in where people are coming in. I believe this is corrected now. So, it really makes a difference going to…

Keith McManus: Going into a specialist for it as well.

Keith Ellis Jr: You don’t want someone wearing an estate planning hat then running over to the next room wearing that next hat. You want someone that focuses specifically on this and understands, like you said, all the different nuances. In the e-book, what I really like about that is you lay out I think very nicely specific tips that people can take away from estate planning for first responders. And I know there’s nine of them. Do you mind sharing maybe one or two?

Dave Chaves: No, of course not. And of course, the trust-based plan is like the salient point that we want to drive home. It all starts there. But making sure that you have beneficiaries designated on your accounts.

Keith Ellis Jr: How often do I see?

Dave Chaves: Oh, my gosh.

Keith Ellis Jr: I was dealing with someone yesterday, actually, they were in and they didn’t have a contingent beneficiary on the account. So, something happens to both of them at one time, what happens then?

Keith McManus: The meeting right before this podcast was recorded, Dave and I were in a meeting where one of the gentleman said that his ex-wife was still a beneficiary. So, I mean, yes, absolutely. Excellent point.

Keith Ellis Jr: I usually remind folks we do a lot of it internally but any outside accounts say you’re still contributing to a 401(k) or you have whatever it is, life insurance policies, things like that that are older, you want to make sure those beneficiaries are up to date and continue to check them because your life changes. You know, what is now is not going to be 2 to 3 years.

Keith McManus: Some people even naming minors as contingent beneficiaries. It could be so much more effective if it was their trust.

Keith Ellis Jr: Exactly.

Dave Chaves: Yeah. These are the things the planning is so important for. And Keith had mentioned before we came in here, instead of seeing people reactive, it’s planning so that you’re prepared when that time comes. And because being reactive isn’t going to resolve in most cases anything that you want to accomplish so you could do so earlier. But other things that we talk about, guardianship plans, who’s going to be in charge for the care and custody of the children? And people come in and they’re like, “It’s the most important possible thing they could be thinking of,” yet they haven’t to that point done anything. It’s like keeping your fingers crossed and hoping that nothing happens.

Keith McManus: If that first responder has passed away and let’s say there are proceeds of a life insurance policy, maybe there’s a home, is it a great idea for their minor children to get all that money all at once when they’re 18? Probably not. You know, what if we want to make sure that there may or may not be a surviving spouse? All of those issues you can bake right into the estate plan and it’s just such peace of mind once it’s in place.

Dave Chaves: What I found amazing is I learned and sat in on this is it’s not an ad or can be. You have three kids. Here’s the money, no restrictions. It’s just an outright distribution. Or like most of us, when I have an issue with one or two of our kids and it’s like, “Okay. We might have to protect this a little better.”

Keith Ellis Jr: Money one is it?

Dave Chaves: Yeah, exactly. Or maybe they were in a…

Keith Ellis Jr: How often do I hear that?

Dave Chaves: Yeah. Or marriage situation that isn’t necessarily stable and these are real-life issues. So, there are ways to protect all of that which I find amazing and my tip number seven I think you’ll like but it’s get investment guidance and that is really important.

Keith Ellis Jr: Again, sometimes something that folks think is not approachable and you want to be able to guide people through building a long-term plan. Just like you build a plan for their estate through trusts in different vehicles, our goal is to look at all facets of people’s financial picture to then push them in the right direction and help them get the right advice through their working years and then through their retirement years. And then the beauty of it is a lot of times we’re helping the kids beyond that. And I think it’s really important to have that succession planning as well. So, I think it’s important as you start to look towards retirement to have an income plan where you’re taking distributions from and why. Look at your investments. Make sure they meet your risk tolerance but also your risk capacity. Can you afford to take that risk? I think tax planning is a major underserved facet of retirement or of financial planning. We spend the majority of our meetings looking at taxes through estate planning but also taxes in retirement accounts, health care, helping folks understand what health care options they have.

And then the final piece, as you know, which why we’re here today, is really that estate planning in that legacy piece, it’s really driving home the ability to leave a legacy not only financially but make an impact in the world as well. You know, as you start to look and instill values in your kids and grandkids, to me, it’s more about money. It’s more than just leaving them money. What are you leaving them for values? What are you leaving them for the way they’re going to conduct themselves beyond your life? I think that’s what legacy means.

Keith McManus: An interesting facet of trust planning is how you can incorporate those values into the trust. Now, the fancy word for it, I would throw out a fancy word. It’s called the precatory guidelines. So, if you really want to impress your family and friends, you can say, “I’ve got some precatory guidelines in my trust.” All that really means…

Keith Ellis Jr: I’m 6’4. It went over my head. No, just kidding.

Keith McManus: There you go. All that means in plain English is you can put in those values. You can put in those guidelines. Hey, is it going to be come one, come all, blank checks for everybody? Probably not. Is it going to be, hey, we’re going to make sure to prioritize education, completing the education, perhaps not becoming reliant upon the trust and having the person become gainfully employed, maybe getting over some bad habits? You can build in those things into a trust. And that’s a way of protecting your family long after the protector is no longer there. And it’s good to look at that, all those different phases of life, and being able to bake that into the trust.

Keith Ellis Jr: Yeah. And so, as we start to talk about this and we start to talk about different needs, right, so the need for trust, the need for estate planning, the need for specific first responders estate planning. We also talk about the need for basic estate planning for adult children. And you’ve seen that really escalate. And frankly, you’ve been asked quite a bit about it over the last, say, two to three years. Tell us a little bit more about that and kind of what that entails.

Keith McManus: Yeah. Well, so Attorney Chaves was kind enough to put together another e-book on just that topic. This is so, so helpful. So many people, you know, you and I, we both have minor children, minor, 15 and 10, and they grow up so fast. And I’m thinking, “Gosh, just in three more years, my daughter’s going to be an adult and I’m not going to have access to medical records. I’m not going to be able to sign tax returns or move around money and financials. I need some set of documents to be able to do that and as well as making medical decisions and being that person who can continue to help without having to get in front of a court.” So, if there’s a listener and the person has children that are adult children that are maybe between the ages of 18 and say, 22 or so, it’s entirely appropriate for those 18 to 22-year-olds often to want their parents to continue to be able to access their medical records and make financial decisions. You can’t do it without this set of documents.

Dave Chaves: And I think parents are shocked when they realize their child’s 18 and all of a sudden they’re hospitalized and they can’t receive information or provide guidance on types of treatment.

Keith Ellis Jr: That’s the worst time to find out.

Keith McManus: Yes.

Keith Ellis Jr: So, when it comes to those types of documents, I agree, it’s so important and it’s something that you don’t think about. So, again, Attorney Chaves was nice enough to put together two e-books to complement this podcast, one on estate planning specific for first responders and the other one specific to basic estate planning documents for adult children. And I think those are both very pertinent topics. And I hope the listeners take advantage of them. And thank you for doing that and thank you for providing them out to the public. We really appreciate it.

Dave Chaves: We’d like to educate them. And we spent some time on these to get them right but we think it’s call for action. It’s like what you’re not thinking about that really can be your blind spot, right? One thing I did want to mention, Keith, is 9/11. And I mention it because on that day, 2,974 people passed away but today more have passed away who were survivors of 9/11 or first responders due to respiratory and other medical issues. So, for first responders, it’s not just a matter of coming home that day. You look at these derailments with the trains and the toxic waste and you’re the first one on the scene. Are you prepared? Do you have the gas mask? Do you have all the protective gear? So many of my friends have passed on years later. Just most recently, another individual that was at the recovery efforts like myself, because 9/11 was or the World Trade Center was just blocks away from our offices at 26 Federal Plaza. Every year people are passing and passing. So, this has manifested itself in you but may not be known for 10, 15, 20 or 30 years.

So, it’s important that we have this mindset and the mindset not just physically, but mentally. We look at the PTSD incidents from 9/11. I worked the morgue. I was in charge of the morgue for the FBI on certain shifts where we were just identifying individuals, cause of death, meeting with families to provide some degree of closure. What first responders see day-to-day in a constant fight or flight response is exhaustive and it manifests itself into too many things, most of which are not good so they need help. They need support. And we’re hoping that this kind of call to action is flagging that for them and their families.

Keith Ellis Jr: And we thank you so much for, again, providing this for them, helping us do this recording. You know, we thought it was extremely important to bring you both in, especially since noticing what you guys are doing specific to this. And like you said, I hope there’s some, you know, even if it’s one person that raises their hand out there, you know what you said earlier about being a first responder, police, you’re protecting people, right? Well, the same is true with estate planning. You’re protecting people, protecting families from maybe financial catastrophe or financial disarray. And thank you guys so much for coming in and being a part of this.

Dave Chaves: Well, thanks for having us.

Keith Ellis Jr: We really, really appreciate it.

Keith McManus: Thanks for having us.

Dave Chaves: Thank you, Keith.

Keith Ellis Jr: Absolutely.