Safeguarding Your Family's Future Through Smart Planning

Does The Firm Offer Estate Planning Advice Or Legacy Planning Services?

Explore effective estate and legacy planning with Jeff Bingham, President of B&H Wealth Strategies, as we explore how to protect your family's wealth for generations to come. Through a touching narrative of a client relationship lasting over 35 years, Jeff shares invaluable insights into the sensitive nature of managing family dynamics, especially in situations like remarriages and multi-state assets. This episode promises to enlighten you on the importance of patience, expertise, and empathy in crafting harmonious legacy plans that honor the needs and perspectives of every family member involved.

We also dive deep into the complex world of estate planning and taxation, offering crucial strategies to navigate these financial waters. Jeff meticulously unpacks the tax implications of different asset types such as retirement plans, after-tax money, and Roth IRAs, highlighting recent legislative shifts like the SECURE Act. Learn how to strategically minimize tax burdens on beneficiaries and preserve your family's hard-earned wealth. This conversation bridges technical knowledge with personal experiences, empowering you to make informed decisions that will secure a lasting legacy. Don't miss the chance to turn these insights into action and ensure your financial future is on solid ground.

To learn more about B&H Wealth Strategies visit:
https://www.BHRetire.com
B&H Wealth Strategies
423- 247-1152

Chapters

• 0:04 Estate and Legacy Planning Strategies
• 11:28 Estate Planning and Tax Considerations

Transcript

Speaker 1: 0:04

Welcome to the Four Seasons Podcast brought to you by B&H Wealth Strategies, serving Northeast Tennessee and Southwest Virginia since 1966. Here we guide you through the ever-changing seasons of your financial journey, offering insights to help you grow, protect and enjoy your wealth. Ready to turn your financial dreams into reality, dare to dream. And now here's your host. President of B&H Wealth Strategies, jeff Bingham.

Speaker 2: 0:54

Your legacy matters and Jeff Bingham explains how B&H Wealth Strategies can help you safeguard your estate and create a meaningful plan to provide for future generations. Welcome back everyone. Skip Monty here, co-host slash producer, back in the studio with president of B&H, jeff Bingham. Jeff, how's it going?

Speaker 3: 1:10

Going great Skip. How are you?

Speaker 2: 1:13

I'm doing just fine, doing just fine. I'm really excited to get going here today. So why don't we start off with Jeff? Does B&H offer estate planning advice or legacy planning services?

Speaker 3: 1:28

We do, of course. We're built on that and one of the things that we say about B&H Wealth Strategies is that family is our business and that's what estate and legacy planning is is family and could be charities and various things. And when you've been doing this as long as the firm like I said, the firm was founded in 66, as the intro says so almost 59 years, coming up On April 1st we've got families that have been around with us since then. So you can, if you're doing that, you've got your legacy plan and things going on, and so it's where we cut our teeth and we're also kind of built on that because my dad and and so it's where we cut our teeth and we're also kind of built on that because my dad and the co-founder again founded this. I came on board in 1989 and began to work with my dad and now my son, jake, is working with me as my dad is kind of past the dawn. So I in the legacy plan of B&H Wells Strategies, I'm kind of the link of the chain between those generations right there, which is really cool, and that's what we're working with our clients on.

Speaker 3: 2:26

I had a meeting yesterday that was about two and a half hours long with clients that have been with us. The lady has been a client of ours for probably 35 years, probably since before I started. I've got clients that have been here longer than I have, and that's quite something. The fact that I've got clients that have been around longer than I have is really cool. But when I was talking as I go through the yesterday's meeting was there is that the couple that was in here yesterday that have been clients of mine for that 35 years. Her first husband died about 15 years ago, about five years before my dad and my dad and these folks were good friends and if you ever walk him off you'll actually see they're kind of on our wall of fame as you come in through the back door. So they've been an intricate part of B&H Wells strategies for that length of time. But as he passed away, she's now remarried and just got remarried at 81 years old, which is quite a unique thing, but it also creates a lot of unique challenges their kid you know the husband and the wife that were, but the wife that was in here yesterday they're also clients of mine, so you've got multiple generations in here and they have children as well. Now you've got a new husband at 80 years old and they have their own children and grandchildren right. That they're and we're sort and so we had a plan for that right. So it's a different situation.

Speaker 3: 3:47

So there's complexity to that right. I mean, again, we try to keep these things as simple as we possibly can. There's complexity. There's homes in three different states. You know there's assets and there's income and there's where they live now and you know how to just sort all these things out and live now and you know how to just sort all these things out.

Speaker 3: 4:07

And that takes patience, it takes perseverance and it takes some expertise that we fortunately have and, like I said, this is not expertise that that has been passed down to me from my dad. I'm not sitting here saying that I'm the end all be all, but I've been trained by the best and I've been. I have gifts that have been bestowed on me from the lord above and I know how to listen to my clients and have relationships with them. And again, it's complicated as that situation can be, there are some pitfalls that are there when you're planning for something like that, because you know a marriage that late in life, children that are on both sides of that. You know there could be eyebrows raised Right and then there could be eyebrows raised right and then there could be feelings it could be hurt about assets and money. So you really have to be very gentle in walking through that and understanding you know what, to listen to the clients. You've got a couple that just got married that may not see it exactly the same way, and they just don't. You, you know, and so there's.

Speaker 3: 5:06

And so my job on my side of the table, or ours again, with jake working in here with me, is to is to be very, very subtly gentle, listen and then kind of, as you see them begin to maybe break apart a little bit. You've got to put it back together so you can come up with a plan right, so you can talk about how you might solve these issues. And at the end of the day, as we were working through those things yesterday, we didn't come to absolute resolutions on all of it. The real estate in some instances is probably the most complicated part of it, but we will solve this when we're close to the solve on it and it'll be an acceptable outcome. You know, for both of them the plan will be acceptable, and then also the children, I believe, will. There'll be no animosity, I suppose is the right word. So you know, that's just an example of one. I mean they're not all that complicated.

Speaker 3: 6:05

I've got clients. I mean it was a conversation that came up with you and I had, or I had with someone just recently was like, what's the average age of your client, or what percentage of your clients is, you know, 85 years or, let's say, 80 years or older? It's 15 percent or so, maybe you know. And so that there's late in their season and if they get married and their kids are adults, maybe they have their own way, but they're taking care of mom and dad, or they're much more involved in taking care of mom and dad. So they're looking over mom and dad's shoulder about the money and the planning and this legacy planning that we're talking about. You know it's ground that you need to be careful when you're walking over with them.

Speaker 3: 6:45

And I think, like I said, you know I was fortunate to to train in this area under my dad, who was again. He was a, he was a gentle soul but a very strong personality as well, which is quite a unique thing to have, but he was in this room that I'm sitting in right here, which is his his conference room. This is kind of his room here. He did that better than anybody I've ever seen. I've been around some of the best people in this business over the years and and been fortunate enough to do that and I've never seen, I've never seen, anybody any better than him and at doing that and you know, fortunately some of that rubbed off on me and I'm trying to pass that along to Jake. So you know we are. I think we're good and unique at it because we've done it right.

Speaker 3: 7:28

Our family has done it with complexities. I came to work with my dad in 1989. My dad died in 2010 and my mom was still alive and I have two brothers one that has passed away, but two brothers at the time and the business and the real estate that was here passed to me right, and if not for the cooperation, the understanding and the planning, you know, and the conversations right, the openness of the conversation, the truthful conversations that need to be had amongst the family. You know, if everybody didn't get along and understand what the plan was, you could see where that could create problems. Right, because this became my business. I didn't, you know. So the other things had to be ameliorated in a different manner, but we all had an agreement upon that. That was understood. Basically, we did it with more of a handshake than we did anything else. But that's my family. Not a lot of families should do that. I would say you know that because it's loose. But you gotta have that trust and they trusted my dad and they trusted me and my brothers and my mother and it worked.

Speaker 3: 8:35

But navigating those waters right, those can be pretty turbulent waters to navigate for any plan that's out there. If you look at my client list, the people that I've seen since January the 1st, and what my meetings look like next week, it is all about estate planning and legacy planning. Because what we go through first is what people want to know when they come in and sit down and talk with us is that they want to know, first and foremost, that their money that they have, is it going to take care of them? Is it going to last as long as they do right? So we go through, you know, the, the, the all seasons gps that I've spoken of a couple of times, to kind of determine that funny where are you and are you going to have financial success and freedom and retirement dollars that aren't going to run out of time.

Speaker 3: 9:18

Before you do, kind of take into account all the inflation, the spending, the blind spots of long-term care, all the things that can come in. Try to think of all the blind spots and what the expense of what those blind spots might be, but also make sure that they're having their dreams and their goals met of enjoying a fun retirement, let's say going on vacation and doing things. But if the money is there to take care of that and you can get comfortable around that, then the next step is here's how much money is going to be left over if you die. You go through that and now you show at the end of the road for both on some calculated number. You don't know when any of these things are going to happen, but you have to put some data in there and assume death at some point in time.

Speaker 3: 9:59

How much money is going to be left? What do you want to have happen with that money? Right? Who do you want it to go to? How do you want it to go to? So you got a million dollar retirement account. You got children that inherit that If they just dump it out and want some. What you're going to do, you're going to see that million dollars turn into about $700,000 or maybe less, maybe 650, you're going to pay 30, 35%, but it doesn't have to work that way, right?

Speaker 3: 10:22

So there's where you begin the planning process. Like, you know, how do you, how do you plan that? How do you, you know? Do you have kids that need special attention? Do you have grandchildren you want to give? Do you have charities you want to get to? What does that look like? You know, I mean just a list of things.

Speaker 3: 10:37

But again it goes back to what I talked about right in every episode that we probably had it's where are you? Where you want to go? How do you want to get there? What, if you could control? You know, estate and legacy planning says is basically this if you could control your estate from the grave, right strings from heaven, how would you want to control it? You know you're dead, but you can still control it.

Speaker 3: 10:57

Where do you want it to go? Right? How do you want your kids to get? How you want your grandkids, your charities and and washington, right in the dome of the dome and wash, how much of it do you want to send up there generally answer there is none you know, or as little as, other than what's. I want to break the law, but I don't want to. I'm not interested in sending more than I need to up there, and if you don't have a plan, you'll send more than you need to up there, your kids and your grandkids and your charities, and everybody will get less. So, okay, well, that's the first thing you do. Well, how do we do that? And so you just sit down and go through the process.

Speaker 2: 11:28

Tax considerations are absolutely complex and, as it relates to estate planning, it sounds like that's the first thing you do is try to address any tax considerations. How do you do that? How do you assist folks with that?

Speaker 3: 11:42

Well, you know again. You have to. First of all, you have to understand because they've provided this. You have to understand where their assets are right, like is it retirement plan assets? Are they after-tax monies, before-tax money or the Roth IRA, iras? There's a lot of complexities to that. Like you know, tax qualified monies like I, like 401k plans have become IRAs. So you think about what that kind of money looks like. Like. It's great. It's a.

Speaker 3: 12:04

They are great accumulation vehicles because you get to put the money in on a before tax basis, right, and the money and sometimes you're working in a 401k you get matching on top of that, so it it's a great place to have. So all the money goes in on a before tax basis, so you get to use some of the money that you would otherwise be sending to Washington. So the government actually gives you right. They kind of lease you out the tax money that would otherwise be going there, right, which is really a good thing. But again, on the back end of that, every dollar that comes out of that is taxable and every dollar that is inherited. If it's not, there are some ways to minimize. You're not going to get rid of it, but you can minimize it and you can control it right. What you want to do in those kind of assets is you can control taxation on it. You can't get rid of it. There's no way to get rid of it, but, again, the control over it.

Speaker 3: 12:49

What the beneficiaries have the opportunity to do as far as receiving it, like a husband and a wife, that kind of money that I just talked about, right there there is no tax ramifications upon the death. Let's say the husband dies first. It's his 401k or IRA plan. I do easy math. It could be a hundred thousand, a million, whatever the number is. But it passes to that spouse without any taxation on it whatsoever. But it passes to children or other grandchildren, et cetera. If not done right, they don't get that free pass on passing like the spouse does. So they can either take it and there's multiple, there's some nuance underneath this, but in today's world they can take it two ways. Basically, they can either take it as a lump sum and that means it just comes out into the taxable world and they're going to be responsible for all the tax. So, again, $100,000, they receive $100,000 of tax of IRA money or what was 401k money. There's some differences, obviously, but it's all before tax money. Now it comes out it's all taxable, right? Say it's a hundred thousand dollars. You inherit a hundred thousand dollars like that and you put it out there in the taxable world. You're going to lose 20 to 30% of it just paying just like that. So in other words, a hundred thousand dollars immediately upon taking it. That way, receiving it as a lump sum like that, becomes 70 to $80,000, but it does not have to be done that way.

Speaker 3: 14:09

You can set up again. This is your legacy planning. You can set up a stretch IRA or a beneficiary IRA, as they're known. There's several different names of them. If it came from mom like she preached, she survived dad and it came from mom, mom's name will stay on. It will be for the benefit of the survivor. Skip's name would be on it. There's no taxation due at that point in time. Now you control the assets. You name your beneficiary to it, but you've paid zero tax on it. Now you have a beneficiary IRA that hadn't had any tax paid on it and you control how you want it invested. You have to take some distribution from it each year.

Speaker 3: 14:44

In today's tax world you have to have it out in 10 years. We used to have better before 2020, we world you have to have it out in 10 years. We used to have better before 2020, we had even better rules where you could stretch it over a lifetime, but it has to be out in what we call out in 10. It looks like how the IRS is going to rule on this and it's been a murky thing because it's a fairly new law that was passed at the beginning of 2020 and COVID made everything kind of take a backseat from the SECURE Act. Obviously, we had the CARE Act from COVID, so those kind of collided with each other and so the SECURE Act has had a little less is a little less attention. Until just now, we've seen letter rulings where they're coming down and ruling on these things.

Speaker 3: 15:24

So I don't mean to go into too much complexity here, but you can control it. Basically, you do have to take it out and you're going to bring some out into the tax world, let me tell you. But if you can take it out over 10 years, versus at one point in time, on a hundred thousand dollars, you take out $10,000 a year. You're not going to pay as much tax on that. You will keep the bulk of it working right over a period of time and you're going to be the future. You is going to be a lot better in a lot better shape as a result of that and mom and dad's legacy that they passed to you, that they worked their lifetime to accumulate, now to pass to the next generation or generations as the case may be is going to be a lot better off, and that's so. Their hard work is not just, you know, diluted immediately upon their death and sent to Washington.

Speaker 3: 16:06

You know other assets, depending on what it is. You know a lot of people have, like appreciated Scott. Other assets, depending on what it is. A lot of people have appreciated stock. They work for a company. They acquired it. A number of clients that'll have a pretty big position have what we call a very low cost in that stock and it's appreciated in value. But that asset passed along to the next generation. If they want to liquidate it or sell it or whatever they want to do with it, they get a step up in basis on that. That means if you let's say that you bought a stock or mom and dad bought a stock for $10, it's now worth a hundred when you inherit it, so that cost basis is $10 for mom and dad. So if mom and dad sell it during their lifetime, they got a gain of $90 per share, let's say in that stock right and they're paying capital gains on $90. You get it at the date of death, your cost basis steps up to $100. You sell it the next day, your tax liability is zero on that. Right there. So far the government has left that alone. The step-up in basis. There's always some noise around it, but so far they've left that alone.

Speaker 3: 17:05

So probably it was more complex than I needed to be. Apologize for the, for those that are out there listening, but those are the complexities in it. But the answers, the solutions are we can provide solutions to it and simplify it down to know that you've got it buttoned up Right. You dot your I's, you cross your T's, you lay out what the options are. I mean I sit in this room often with beneficiaries that are looking at that and even if you might need the money in short, you know on that tax qualified money where you bring it out in that taxable world, you might need it but you might not.

Speaker 3: 17:40

But if you take it as a lump sum immediately, you can't put the genie back in the bottle, right, you can't put it back in. But just because you can turn it into a beneficiary IRA, right, you can still take it out anytime you want. So if something arises out of that you know a situation comes up you still cash it out, let's say, in shorter than a 10 year time period. But if you get it out at one time you can't put it back in and go. I didn't mean to do that. Right, it's out, it's done. So you know, I would always encourage people unless they're going to spend it the day that they get it and you leave it in that beneficiary IRA. That's a rule to live by right there in the planning world.

Speaker 2: 18:17

Absolutely Very, very helpful and informative, jeff, but a subject that affects us all. I'm sure you're a busy guy, we've got to let you go, but I say I'd like to delve into that a little deeper in a future episode.

Speaker 3: 18:32

And taxes are, you know, obviously moving into tax season, one of the things that we all know. I'm not a CPA, I don't do taxes. I understand how taxes work and understand how they work from investments, you know estate plans and things of that nature. But you know, if you can control and minimize your taxes right, you know, using all the tools that are out there, that are legal tools to use right Then you need to be informed to be able to do that, as I think it was Judge Lerner-Hans said. You know, the difference between tax avoidance and tax evasion is about 20 years.

Speaker 2: 19:02

Yeah, that's true and that's a good note for us to end on, but Jeff appreciate it. Very helpful episode, very informative and, like I said, maybe we can delve into that a little on retirement planning a little later in another episode.

Speaker 3: 19:18

Absolutely, we'd love to. And again, this is a, it's a, it's a blast enjoying it.

Speaker 2: 19:24

Absolutely Same here. Appreciate it, jeff, and we will catch you in the next episode, all right.

Speaker 3: 19:29

Thanks, jeff, you too.

Speaker 1: 19:35

Thanks for tuning into the Four Seasons Podcast brought to you by B&H Wealth Strategies, where your financial success is our priority. Schedule your free 20-minute consultation today by calling 423-247-1152 or by visiting bhretirecom. Take the first step toward making your financial dreams come true. Until next time, remember every season is the right season to plan for your future. Securities and registered investment advisory services offered through Silver Oak Securities Inc. Member FINRA, sipc. B&h Wealth Strategies and Silver Oak Securities Inc. Member FINRA, sipc. B&h Wealth Strategies and Silver Oak Securities Inc are not affiliated.