Wealth from Wisdom

How Not to Go Bust With Your Inheritance

July 28, 2018
Wealth from Wisdom
How Not to Go Bust With Your Inheritance
Chapters
Wealth from Wisdom
How Not to Go Bust With Your Inheritance
Jul 28, 2018
Carson Wealth
Show Notes Transcript

Baby Boomers are set to inherit $11.6 Trillion from the greatest generation. But, 1 in 3 people who receive an inheritance will go bust in 2 years. On this episode, Paul and special guest Jeremy Willner of MAG Wealth Management will talk about how to handle receiving an inheritance.



Speaker 1:
0:00
Okay, and here's the legal Mumbo jumbo. The opinions voiced and wealth from wisdom with Ron Carson or for general information only and are not intended to provide specific advice or recommendations for any individual to determine what is appropriate for you. Consult a qualified professional. All indices are unmanaged. I may not be invested into directly. Investing involves risk including possible loss of principle, no strategy. It's your success or protects from loss. Past performance is no guarantee of future results. Advisory services offered through CW m L L C an SCC registered investment advisor.
Speaker 2:
0:30
The stock market hit another all time. Records as much as $10 billion in social security benefits go unclaimed every single year. Federal Reserve announced that they will raise interest rates by 250 the skyrocketing cost of healthcare and retirement could now run 350,000 planning for retirement today is a whole new ballgame. It's loaded with challenges, obstacles, and trap doors that you can do this and we can be your guide. Welcome to wealth from wisdom with Barron's hall of Fame Advisor, Ron Carson. Straightforward and objective advice and how you could make your money go further in retirement. And now here's your host, Ron Carson. Baby boomers are sent to inherit a 11 point 6 trillion trillion dollars from the greatest generation, but it's actually reported that one in three
Speaker 3:
1:17
who receive an inheritance will go bust within two years. The, I said that two years. So you think receiving a windfall of money can be a game changer for your life. But what most people fail to understand is that when they received this money, that's when the hard work actually begins. You get faced with an avalanche of new decisions and if you're not careful, you could actually lose it all. Hey, welcome to wealth and wisdom. I, I'm your host today, Paul West, and I'm very lucky to have a special guest, Jeremy Wilner, one of our partners from Willmar, Minnesota and Paynesville. Jeremy and glad to have you on the show today. Thank you very much, Paul. Great to be here. Yeah. Yeah. And so I think it's gonna be fun to talk about this. And I know as you and I were prepping for the show today is we want to help reveal strategies for people about getting the most out of their inheritance and the research actually we've done on this topic and really in running our businesses and our careers here and helping people in, I'm gonna share a stat from market watch and they report that one in three people, one in three when they got an inheritance, went from boom to bust within two years.
Speaker 3:
2:16
I mean that's not a long period of time. And so receiving an inheritance sounds great, but there's a lot more to it than meets the eye. So on today's show we're going to give you real world ways to help combat that. You know, one is how do we help avoid taxes. Many of you expressed pain of paying taxes. I have yet, Jeremy, that find someone who actually likes paying tax because it right, no one likes to pay the taxes, that's for sure. They don't. Um, so we're going to talk about how to actually manage pretax retirement accounts versus other savings vehicles and investments. We'll discuss the really two critical things you should do when you receive an inheritance. And we're going to help talk about how you avoid trap doors so you could lose it all. So as we talk about this, Jeremy, I mean there's obviously inheritance most likely comes directly from family members and we go through the grieving process.
Speaker 3:
3:06
Um, but then when you get the money, people look at it in one of two ways. One way is how can I spend this? That's right. How can I spend this go out? They go out and spend right away. Yeah. And a lot of the spending is, is unfortunately things that if it was their own money that they earned from job, they probably wouldn't spend it on they went. I mean, that's something that we've seen time and time again where people will get this money. They go out, they rush out and they, they purchase something. Yeah. So I think some advice we'd love to share with everything as the first thing you should do is nothing. And you're probably listening to say what? I shouldn't do anything. It's okay if you don't do something, you get the money on a Tuesday. If you don't do anything with it by Wednesday, guess what?
Speaker 3:
3:51
You're okay. Only they went by. That's right. I mean, we call this a financial timeout. I mean, just take that financial timeout. Don't go out, don't spend, don't quit your job. Just take a break and, and really think about what you want to do with that money. Yeah, no, I love that phrase, by the way, Jeremy. So I'm gonna use that. I'm gonna borrow that from you. Okay? Financial Timeout, because it's okay to wait. And part of this is, is when people make mistakes, one of the biggest things they do is don't build a plan. And so as I think about this, they immediately go to their perceived pain points. So one of those from all of our listeners is, Oh, if I got money from inheritance, I'm going to go pay off all my debt. But the reality is paying off your debt may not be the best decision.
Speaker 3:
4:36
It may be. That's right, Paula could be. But that's where you would need to have that financial game plan and really get together and meet with your advisor and talk about talking about the whole entire situation. Yeah. And so don't assume that's the best thing. And the reason why we say that is, is paying off debt absolutely could be worth it. Now, if you've got a lot of credit card debt at high interest rates, absolutely Jeremy, if you or I or any other person meeting with them, we're most likely gonna recommend paying that off, right. Cause the pain with a 5% interest on those credit cards and nobody wants to pay that. Yeah. And you'll probably sleep a lot better at night and the pain. But if you've got a home equity line of credit or you've got home your house and you're at a low rate and you're earning more than that actually on a potential investment idea, then it'd be silly for you to pay off that you're actually costing yourself something.
Speaker 3:
5:25
But we, we, we realized, Jeremy, that people sometimes just feel better without debt. So, but we'll help walk you through that process. People have two main stresses in life. One is financial, and that's why we're here on welfare. Wisdom, helping everybody out with that, but to his health. And those are the biggest two stressors people have in life. And so what can we do to help them reduce in and you see it and building a financial plan. Because when you put a plan together, especially with an inheritance, is how to spend the money. And we all, we don't want you to think from the show today is we're telling you not to spend the money only and invest it or telling you to think about the right way to make it happen. So if you're at a football game, you're not going to say, hey, we're going to throw a hail Mary pass every play.
Speaker 3:
6:09
Right? Exactly. You may need to with five seconds left in the game and you're down by six points. But that's a different situation at then. What we want to do is help you call the right plays. And one of them, Jeremy, I don't know if you've experienced this, is make sure we have an inheritance and you have a married couple that you and your spouse are on the same page. You have to be on the same page. Paul, I mean we've, I've seen this time and time again with, uh, with the clients is that one wants to do one thing, the other ones to do another. So you really have to come back and work together as a team. Yeah. And I think about family. So, um, I don't, not just inheritance is, but, and we've talked, we were talking about children before the show started here at Jeremy.
Speaker 3:
6:47
Uh, and one of those things that drives me crazy is, um, my kids are going to the store, going to the pool and like, Hey, can I have some snack money? And so I'm looking, I'm like, oh, I don't have $2 in my pocket, but I got a $10 bill. And so first time I ever gave him the $10 bill, you know, how much money do you think I got back? Zero. Yeah. Well, I think a quarter, but I didn't get a quarterback. Can I do better? That's right. So I'm like, what in the world did they squander this on? Exactly. I mean, how much Laffy Taffy, your Dr Peppers can you really? Well, I know how much they can eat at that age, but it's it, I had this feeling as the person who gave them the gift, I used the squander word that they squandered it.
Speaker 3:
7:29
So if you get an inheritance, think about the person that's giving to you and imagine that they're looking down, I'm going to use the s word here of steward. They're most likely wondering how good of a steward are you with the money and are you making the right decisions that go along with that. And I know that, uh, that if I hadn't to irritants for my family that I was giving them and you know, my kids are everyone, whoever received it and Allison, I see they just bought a bunch of sports cars or did something else. I'd be turning over. I'd be angry at that point. That is right. I mean, we'd, like you said, you want to be a good steward of the money. You know that person worked hard for that money saved and now it's being passed on to you. And I'm sure would like to see you use it in the best way possible.
Speaker 3:
8:18
Yeah. So I'd love to share this. So a couple of years ago, uh, we had someone come in our office to meet with us and they were retired or he can't see me, I'm doing air quotes. They were retired. So two years prior to that, they had received a sizable inheritance. Guess what happened? Overspent. They bought a lake house, they bought some new cars, they paid off all their debt, but they didn't have a plan in place. They just figured it was about a million dollar inheritance. They got that they would have enough, but they didn't meet with the professional. So now here they work two years later and they needed income. And so, but the problem was is they had put their net worth into a lot of illiquid vehicles, like the house on the lake. So now here they were two years later and what's the problem? How are you going to get income?
Speaker 3:
9:06
Yeah, no cashflow, none. So there they were almost in tears, Jeremy. And so we had to sit and develop a financial plan and one of the unfortunate things we have to do, and by the way, as a advisor we have to be a truth giver and truth receiver and we're going to tell you the facts and we're going to tell you what you need to hear, not what you want to hear. That's exactly right Paul. I mean sometimes the client wants to do something and we have to be the bearer of bad news. I mean we have to really put that out there for them and, and make sure that they know that that's not in their best interest to do. Yeah. So to complete my story here, so this, we told us individually, we really can do three things. One, go back to work and you can imagine their face when I told them that that wasn't good to sell your Lake House.
Speaker 3:
9:52
Again, not a good option. What, what did I do? Or three, you know, we actually talked about some other debt strategies that they should look at. Um, and some reverse mortgages or things like that that we had to give them ideas. None of them are ideal and think about where they work two years before. And they said, I wish I would have found you guys two years ago cause you could, you could have helped me from making mistakes. And that's sad to me. But unfortunately that life is, people want to just go make a quick decision. And that's why I love your phrase there and the financial timeout. It's just, it's so important because there is no hurry. Um, I mean there is time when you do get an inheritance, you have time. It doesn't have to be an immediate decision. And when you can get in work with us, work with anybody, work with a financial advisor that can get you a financial game plan.
Speaker 3:
10:46
Yeah. And I like, uh, some of the things about health help you bulletproof your game plan. So what's happened to my story with the Lake House? They didn't bulletproof it. It, it's, it's unfortunate, but here they are. And here's what happens too. So if you go look in your wallet and if you keep a lot of cash in your wallet, what happens? He just gets spent. It gets spent. Yeah. Some, I don't know. You don't even know on what? Do you ever have that happen? You're like, oh, I had $100 in my wallet last weekend. And what in the world did I spend it on? That's right. You know, Dunkin donuts or where it just, it, it disappears. And the same thing happens to a lot of people with inheritances. They just start spending money. A little things. You know what, let's go on another family vacation. Let's make that happen.
Speaker 3:
11:28
And unfortunately, um, people have to learn from those mistakes. And as I shared to start the show, there's a 11 point $6 trillion. Yeah. The t trillion being transferred from the greatest generation to baby boomers. And chances are many of you listen to, you're actually gonna get this money, but we have to figure out what's the best thing for you to do with it. It could be spending, but it's most likely a spending plan. And what we would like to do, Jeremy has helped people avoid these trap doors like I shared about person who quit their job and two years later was now in an income crunch because they didn't make the right decision. So let us help you with this five step retirement action plan. In this analysis we actually help people with five critical things. One, what's your tax situation to our you invested, what does that asset allocation look like? Three, we're going to talk later in the show about inheritance impact on social security, income inflation. And by the way, there's no cost to you, Jeremy, myself and our team people can help you out. Simple opportunity just to compare what you're doing now and what you could actually be doing. So to learn more about this, give us a call right now at (888) 419-8513 our objective is simple. Show you how to make the most out of this money and avoid the mistakes that so many others have made. (888) 419-8513 that's (888) 419-8513
Speaker 2:
12:48
trust, transparency, accountability. These are the values that drive Ron Carson and Carson. Well, you're listening to wealth from wisdom with bear and Taller fame advisor, Ron Carson. He's a published author and has been featured in Forbes, investment news, the Wall Street Journal, CNBC, and more. Now back to wealth from wisdom with Barron's hall of Fame Advisor, Ron Carson. Hey, I'm Paul West and welcome back to wealth.
Speaker 3:
13:13
Where's the radio? I'm joined by my cohost, Jeremy Wilner. Jeremy, glad to have you on today. Thank you, Paul. Yeah. Hey, so we're talking about this greatest generation is getting to get 11 point $6 trillion given to baby boomers, but the sad part is, is we're seeing that one in three people who receive an inheritance have zero within two years. That's a problem. And our job today is to help you figure out ways to avoid losing it all. And I know you're, what you're saying right now is this could never happen to me, but again, I tell you the story. You got cash in your wallet and your purse and it just disappears. It fades away because you start spending on things you don't realize. And in this segment, we're going to tell you about some ways if you've inherited, to help yourself out from a tax perspective and really understanding what you get.
Speaker 3:
13:57
And there's a lot of different things you can receive an inheritance. So everyone thinks like, here's what happened. You get a check and you go put it in your own personal checking account. Well then guess what? That doesn't happen all the time. No, no it doesn't. Yeah. Well, what are things you get? You could get a trust. So trust me, have a trustee. And as responsibilities, it may say, hey, you get everything now. Or there could be provisions that maybe you only get 5% or maybe you only get the income, or maybe it's spread out and you get it over 10 years. Or maybe you don't get it until age 45 there's a lot of rules that go with it. And if you don't actually sequence your decision of how those things work, you're making a mistake. So here's another way you can get it.
Speaker 3:
14:41
A tax deferred account, like an IRA, an individual retirement account. Well, there's a lot that goes on with this. And as you think about those, Jeremy, you know, maybe what are some good ideas or things for people who get Iras or 401k's as part of inheritance? Well, what I've seen, uh, over the years working with people that do inherit Iras is they don't understand the tax consequences. I mean, there are differences if you're a spousal beneficiary versus a non spousal beneficiary of those accounts and the taxes are different for each one of those. And, and the, uh, required, uh, distributions or the, the amount of time that the amount or that the money has to be distributed out of the account is different with each one of those situations. And for a lot of listeners, they're like, well, that's not going to happen to me. Well, unfortunately, here's the situation is when you get an inherited Ira, you still have to take the RMD.
Speaker 3:
15:33
And for those who don't know what an RMD is, a required minimum distributions, right? And there's different rules that go along with that. And that's actually as we talk about value, so most people think about financial advisors and they give you advice on investments. Hey, what stocks or bonds or ETF's should I own? The really good advisors and the advisors have today in 2018 and beyond and firms like yours, Jeremy and ours together is they give advice and help take away financial stress for people. And so what happens when people are financially stressed and one of them is inheritance is what in the world do I do with this IRA are, how do I handle it? Or, and so they choose what I call the default option, which is they do nothing. And so they check, they check option one on the form. But option one may not be the best form for them.
Speaker 3:
16:21
That's right. Option one may not be the best. And one thing we've implemented and we've done in our practice is that we've really stepped up our communication with existing clients to talk to them early and often about their beneficiaries, to make sure that we know exactly how they want everything to be handled if something does happen to them. And then also the other thing that we've tried to do is they get the clients to actually have joint meetings with the beneficiaries. A because we also need to plan for those beneficiaries with the tax ramifications. And so I think about that. Most people are have fear. And so let me give you an example of this. A couple weeks ago I was meeting with the family and their children don't yet know how much money they have, but this family, um, it was in their seventies and they're like, well, I'm not sure.
Speaker 3:
17:10
We want to tell our kids and their forties and 50s, you know, how much money there may be going to get if we passed away. And we talked to them those. But don't you want to share your vision? One of the things you're most proud of is your family. And you're, you're very proud of their morals and their values and the integrity they have. But don't show up. You going to share your wishes that if, if not probably if, but when they receive this inheritance what you want them to do with the money. And I loved there look at me cause they hadn't really thought about that before Jeremy, but been, they started getting this rice smile like you're right Paul, that is what I need to do. But what will happen? They'll go get back in their car and they're going to be like, Oh you know what?
Speaker 3:
17:50
I got to go buy a gift for the, for their grandkids birthday party. They're going to go do that and they're not going to actually have the conversation. And I think it's our responsibility to help make sure people like that go have that client conversation. Go have that family conversation to tell them if something ever happened to me, I want you to be a good steward and here's the person that can help give you guidance on what we're looking for. That's exactly right. I mean we've seen that time and time again with our clients as well where we, we've made that same recommendation you did. And it's really, it is a personal choice, but the ones that have done it and where we have been able to get the beneficiaries in there with them, uh, it's worked out much. Well when there was a, when the client did pass away.
Speaker 3:
18:32
Yeah. So I'm going to talk about a phrase here, a trust. So many people here about trust. Like, oh, I don't need that. Well, I mean, one of the most beneficial things about a trust is you can spell out your wishes and what you want and you can help you leave your legacy. And it's not as costly as people think, but a trust has to have a trustee and the trustee has a lot of fiduciary responsibilities that they have. Um, that trustees are often bankers, lawyers, family member's financial advisors. Um, but what's amazing to me, if you have a trust, you know, a lot of times there's simple trust and you often have your spouse be your trustee or you know, I trusted child, which is not that easy, but it's a decision to make. But what happens is if you're both in a longer here, your money often flows into a new trust.
Speaker 3:
19:24
And there's a lot of different methods. We're not going to get in that level of detail. But what I do want to share with you is, is you have to choose a successor trustee. So someone else who takes over, and by default, most people choose banks. And why did they do this? Because they have their checking account somewhere, right? It's easy. Yeah. There you go. They hit that easy button and think, oh, I'll just do that. I'm not around. I was thinking about this the other day is, so if I had $1 million that was passing to my kids and I've been working with a financial advisor my whole life, they know me, they know my family, they know it was important to Paul and Courtney. And then that money is going to pass to successor trustee and it's going to go to a bank to somebody I've never met before in my life.
Speaker 3:
20:09
My kids have never met before, and now they're going to have the responsibility for making decisions on my family. That sounds crazy to me. It is crazy. That is crazy. So if you have one thing from our show today, if you have a trust document, go look at it and go figure out who your successor trustee is in. I would always recommend engage with the service that has that. And it's a big reason, by the way, many of our clients shared this concern with this Jeremy, and that's actually why we have a successor trustee division to help our clients feel better, their peace of mind, knowing that Jeremy will learn Paul West and our teams of people will help their family for multiple generation carry out their wishes and be good stewards of their money. None of us want to again be looking down and we're not here on this greater earth and saying, oh my gosh, I can't believe they spent the money that way.
Speaker 3:
21:02
Right. Well it could drive a person kind of crazy. Yeah. So looking at trust, if you haven't figured out, but also one of the things that you need to think about is, you know we talked about can you get the money in trust? Can you get it via an IRA? You could actually get an a 401k and there's a lot of options to consider there, but you could also just get cash. So one of the things though you may not be aware of is so guess what? You get the cash. However, did you complete the estate tax return yet? So Santa, you get cash. What if you actually have estate tax due? So you better be careful. And this has happened by the way, I know it's happened to you, your team, Jeremy in a to us, certainly it was about a year ago, somebody came in and they got money and they started spending the cash and then after they've completed their estate tax return, what happened?
Speaker 3:
21:49
Knock knock. Yeah, liquidity issue and the, and it becomes a great concern. So you have to be very careful and don't is as we say it, take that financial time out to figure out what's the best thing that can happen now as part of inheritance. You know you could also though get certain assets like land that actually get a step up in basis and so there are things from a tax perspective that you need to be aware of that are actually to the receivers benefit because the basis to say, for example, if somebody had some farmland and it was bought by the the mother and father many years ago and they paid $100,000 for it, but as part of the transaction here, it was now worth $1 million. Well now you normally, if you sold it, have to pay $900,000 worth of taxable gain. Right? Right.
Speaker 3:
22:45
But if this is transferred as part of an inheritance, you get stepped up basis to the value there of $1 million. That's a big deal. Think about how much taxes that saved you. It saves you quite a bit of taxes and people don't realize that. It's another thing that, uh, it's just good to hear these things because there's so many different rules with each type of asset and how they're handled. Yeah, and one of the things I would tell you is if you have an inheritance, you can also have a game plan on how to maybe, as you said, Jeremy, I think you're very wise in this advice is have the conversation before it's too late. In a simple way to do it is there's an annual gift tax exclusion. You can give a smaller amount or not small. I mean, $15,000 isn't a small amount of money, but you can, that's a great easy way to dip your toe in the water to have an explanation.
Speaker 3:
23:35
So like I could, if, if, uh, our producer here, Andrew, if I was gifting him $15,000, I don't have to pay tax on it. I'm sure you like it and they say he looks like you might your down now not giving it to you by the way. So I'll put that down. But from an estate tax perspective and helps you, but more importantly it begins the training process and it helps facilitate the conversation. So for our listeners today, I think it's a great thought for you. If you want to dip your toe in the water, how the conversation, use that as an example is hey, I'm going to start gifting you a little bit because that helps us from a tax perspective. It's also going to help you understand our wishes that we have. So if you've actually gotten inheritance and he already expect to receive one, begin having that conversation.
Speaker 3:
24:19
But I know you're going to feel confident. But the reality is you have a lot of opportunities on what to do with this money that actually other people don't have. Not everybody gets an inheritance, but you need to have the right strategy in place and it most importantly, how to reduce your taxes. You also don't want to get short changed on your social security benefits because of the inheritance or you go to the next bracket for Medicare premiums, and we'll talk about that in a little bit and I'm just getting started with all the, the, the, the potential pitfalls that are out there, but to learn how we can help you with this and build it the right plan. Give us a call at (888) 419-8513 (888) 419-8513 you remember, there's no cost for this, so people love to call in and give them a second opinion. And many people, we say you're on the right path, but there's others. If we can help provide you peace of mind and comfort to this, it's going to make you feel better and sleep better at (888) 419-8513 (888) 419-8513 keep listening to Paul Weston, Germany. Wilner on the welfare wisdom radio network.
Speaker 2:
25:21
He seemed good times and bad times and he's got the gray hair to prove it. You're listening to wealth.
Speaker 3:
25:27
Wisdom with Barron's hall of Fame Advisor Ron Carson. He's a published author and has been featured in Forbes Investment News, the Wall Street Journal, CNBC, and more. Now back to well from wisdom with Barron's hall of Fame Advisor Ron Carson. Market Watch recently reported that one in three people who received an inheritance went from boom to bust within just two years. Hey, welcome back to wealth and wisdom. I'm Paul West, joined by Jeremy Wilner and today we're talking about how you can make the most out of an inheritance and really most importantly, avoid the mistakes that could cause you to lose it all way faster than you ever imagined. And in this segment we're gonna keep talking about risk that you could see how to best make investments, how to be diversified. But here's something I want to share with you is when somebody gets an inheritance, what they do is tend to turn to a trusted friend.
Speaker 3:
26:17
And unfortunately, I'm going to share a mistake with you is just because somebody is a trusted friend, does it mean they have experience and walking you through with this? And really what you should do is get a team of people in place. Do you have the right tax professional to help you? Do you have the right attorney to help you? And do you have the right wealth management person to help you? And I think about this and some listeners are like, oh, I'll just keep going to my person. But the reality is if they don't specialize or have enough knowledge and how to help you. So I think about if I have a heart condition, but I got a buddy who's an ENT specialist, am I going to go to my ENT specialist for advice about my heart condition? It's probably not a good idea, Paul.
Speaker 3:
26:59
Well thank you. But it's the same way. If you go to investment adviser who's only good at doing investments but doesn't help and financial planning, what, how are they really going to help you here? And, and they're not going to help you avoid the pitfalls and mistakes. So you gotta put the right team together and it's got to be the best team for you and it's gotta be one that helps you put a financial game plan in place. So one of the things they're going to have to decide upon is actually making investment choices and what the right investment advice can be for you. So Jeremy, any advice you'd love to share with people here and kind of putting the right investment plan together while we have our wealth design life defined process that we go through with our clients and how we work with that is it was just really review everything that they have.
Speaker 3:
27:43
Make sure that we're looking at the inheritance, what they want that inheritance heritage to do for them. Is that to jumpstart their retirement planning? Is it to, uh, just provide supplemental income or are really what is the basis for that? And then we look at um, the goals and objectives and try to come up with the best strategy for them. Yeah. And I think for a lot of people when they get that first money, and I know we talked in the prior segment is don't go spend it or invest all of it right away because you may have an estate tax due if that you're not complete with yet. So I mean at the very beginning it is, if it just sits in a checking account, that's okay. But if that creates, caused her concern, do some short term things, whether it's a CD, a t bill, um, we do a lot right now because interest rates are rising, they're not going down.
Speaker 3:
28:29
At least that's the way it looks today is. So we do a short term bond ladder and help people look at that and have the right decisions that place. But ultimately that's just a stepping stone because then that's helping you figure out what your overall investment strategy. So again, maybe you get an inheritance of $500,000 you may as part of a plan. So you know what, we're going to put 100,000 into a kid or grandkids college fund. We may say, you know what, we always wanted to get a lake house and again it may be the right decision for you, but you were going to take another hundred thousand dollars as a down payment, but the remaining 300,000 hopefully I'm doing the math right here. That's right. Okay, good. Thanks for doing. Jackie with me is the 300,000 becomes part of your retirement plan. So maybe it's invested in an income strategy or you know what, maybe you had a good income strategy in place, but you wanted more growth through your portfolio.
Speaker 3:
29:25
So the 300,000 gets invested in growth or maybe you're very concerned about money. And one of the things that we see a lot of families do with inheritance is is you actually get fear of losing the money. So people I feel like are on one on the spectrum, the people who spend it way too much. And too, I'm like, I've already shared those are the people that lose it in two years or this people who are almost afraid to touch it. And one of the ideas to help them is to go into a downside protection strategy using irreplaceable capital to their benefit. That's right. We've, we've been fortunate to have those strategies, irreplaceable capital strategies where we do, where we do protect and bound markets. Yeah. Well I mean I look at, we're in 2018 right now, Jeremy. We've been on a 10 year ride and you and I, we're not going to be able to predict when the next downturn is, but it is going to happen.
Speaker 3:
30:12
Everyone is going to happen. We cannot go up forever. That you have your crystal ball with you today. I don't have it. Well, and if I did it had to have a little bit of clouds on it right now, you know, we don't see it happening tomorrow potentially. However, I got an inheritance and I don't want to lose it and I'm a little concerned about the market or what's going on. But if I'm able to go into a vehicle that has downside protection and no, I don't mean an annuity, not that at all, high cost would never suggest that to people. But uh, ability to have investments in the market but also know you have a floor. You know what that does for people. It helps free them from worry and helps make them feel like, okay, I am now the beneficiary of an inheritance from my family and I'm being a good steward with that money.
Speaker 3:
31:01
That's right. A good steward. And you know that person that you received the inheritance from, they they plan, they saved and they also want you to have a great, uh, a great start to your life as well and your planning and you may want to do that as well. That might be another consideration for you is what, what do you want your legacy to be? Yeah, no, definitely. Definitely, definitely. Definitely. And so, I mean I'm going to give you another idea out here and, and your listing, you may, after you hear the Saint Paul, are you crazy? But hang on with me here for a second. So there's another technique with an inheritance and it's called disclaim. So what does that mean? So actually you receive an inheritance and you could receive accounts and different types of accounts. You actually as the beneficiary could disclaim it.
Speaker 3:
31:49
So that means you don't want it. And you could actually say you don't want it and there's a process you go through and then the money goes to the next beneficiary. But we've actually done this for people because part of being a good steward is they want to disclaim the asset to then help transfer it to the next beneficiary, the next family member. And often this means disclaiming it so we can go to maybe their kids or their grandkids. And so it's actually, and the reason why this happens, Jeremy, I'll just give you an example. Somebody recently disclaimed, let's say they got $1 million, but they had a $40,000 account, well that $40,000 account and do some taxes and they want to sell. It was going to put them up in the next tax bracket for medicare premiums and other things. And they said this money they wanted to give to their own kids.
Speaker 3:
32:39
So they actually out the paperwork to disclaim the assets in that 40,000 which then saved them taxes and got money to their kids faster. And, and, and that does do that. It, it, it's really a great strategy to be able to, to disclaim. Yeah. And, but a lot of people don't know about it. They don't know. Again, it's like we talked about earlier with taxes. Taxes are so different on each type of investment. It's the same thing. There is so many different strategies and fall finally finding a qualified team to help you work with that will, will do. Great. Great. And so for those of you that gone through this process and your attorney or your wealth advisor didn't recommend that, are they really doing, what's your best interest? So our job is to be great educators. So the disclaim process may not be what's right for you, but at least we should be informing you of options that are available and help you decide, well, we don't want you to do is take the asset when you didn't actually wanted her career, the tax situation.
Speaker 3:
33:36
But vice versa. If you're like Paul, that's crazy. I want all the money and I want to know, okay great, that's fine, but my job is to help lay out those options. And if somebody is not laying out all the options, do they really have your best interest at heart? And that's why, you know, I'm joking about if I've got a heart condition, I'm going to an ENT specialist, I want, I want the person who understands this type of thing because you don't get a second chance at this. It's a little bit like say social security. Once you're, you're going through the process and you past a year, you can't solve this. And so what you also don't want to create as this crazy tax burden because as we know, people hate paying taxes, they hate paying taxes. They do. And it's not something that's simple.
Speaker 3:
34:20
And so you've got to put this plan together. And as I think about all this money transferring and getting an inherited IRA or 401k, that's not simple. It's really not. And people think it is. And if you've been through the process, paperwork, attorneys, Cpas, and what does that do? That creates financial stress. When I say earlier, biggest stressors, people have our financial and health and if there's a way to reduce that and actually help you through the process, I don't understand why you don't want to take that next step to do that. And for us is we'll help you think through that and there's no cost. We want to help explain what that is. So if your listing now give us a call at (888) 419-8513 our objective is really simple. There actually is to show you how to make the most out of your inheritance from a couple of perspectives.
Speaker 3:
35:10
One from the value to the dollars. Three, the tax avoidance for the transfer avoidance, but fifth, how do you be a good steward of the money and do the things that your family wanted to do? I know this for me growing up here because I didn't want to disappoint my parents now, that's for sure. And I certainly don't want my kids to disappoint me. Exactly. Those things happen and monies away that those disappointments can happen. And so when you work with a professional, they can help you think of and avoid those trap doors. So give us a call. (888) 419-8513 (888) 419-8513 you're listening to the welfare wisdom radio network.
Speaker 2:
35:52
How could you make your money go further in retirement? Learn how next unwell from wisdom with their ins hall of fame advisor, Ron Carson. Is it possible you could pay fewer taxes in retirement and keep this money for yourself? You could learn right here and right now on wealth and wisdom with Barron's hall of Fame Advisor Ron Carson. So what if you're receiving an inheritance and maybe the next five to 10 years,
Speaker 3:
36:17
what are you actually gonna do with this money? Hey and be very careful here. Just like lottery winners, one in three people who receive an inheritance are going to go from boom to bust within just two years, a less than two years. Think about how long it took to earn that money and it goes away in two years. So welcome back to wealth and wisdom. I'm Paul last joined by Jeremy Wilner today and we're really talking about how you can make the most out of your inheritance and avoid mistakes that could cause you to lose it all. In our final segment here, we're going to talk about how to help eliminate or minimize taxes and also the impact of what happens from a people perspective. So Jeremy, during the break we were talking about actually a lottery winners and what happens to them. And maybe you should share some stories you have.
Speaker 3:
37:02
Um, our ideas related to lottery winners are often like inheritance p winners where people seem to show up when people hear that other people just got money, they do, they show up. And uh, one thing that we've worked with, uh, some people in the past before they came to us, they, they may have made loans to friends or relatives, personal loan, personal loan, the personal loan. And we've found over time with this that you may as well consider that a gift to them because the likelihood of you being paid back is very low. Yeah. I wonder what the percentage actually is. I don't have a stat on that. I don't either. But I know the few that we've been involved with after the fact, uh, have not turned out well. Yeah. Um, so just as Andrew had his hand out, our producer earlier trying to get money from me is that's going to happen.
Speaker 3:
37:52
Um, and most of the Times it's even more dangerous because it's to family members. So I think what I just heard from you is make sure if you do that you better almost put a thing in your mind ahead of time that you're actually not going to get paid back. That's right. You may never get that money back. So just considered a gift. But if you're going to do that as a gift, there's actually planning techniques to help you do that from a tax perspective. Um, rather than just handing the money over, oh here's my checkbook, here's $10,000 or you go, there may be more beneficial strategies and I think avoiding taxes is a great way to do it. But you have to be able to understand the challenges go with and one of them to avoid not thinking through when retired minimum distributions are going to happen.
Speaker 3:
38:40
So just a reminder, when you are 70 and a half, 70.5 you are now forced to withdraw money from these accounts. And if you don't think about this, the penalty isn't 10% 20% 30 40 now it's 50% five zero if you do not take one of these distributions and the distribution start out, I'll just round here cause it's easier numbers at about 4% right? So if you inherited a million dollar account and you had to take an RMD right away and it was based on whoever's you know, um, life expectancy and you got 4%, that's 40,000 of income that you now have to take as ordinary income that you're going to pay taxes on. But worse yet, what happens then? What if you were very low income before and you weren't paying taxes on your social security? Hey, you could then pay up to 85% of your over, your benefits would become taxable.
Speaker 3:
39:35
Yeah. That feels like a double whammy, right? What's that game show, by the way, with whammies press your luck or a no. Whammies no. Whammies come on. Oh, that's way to alter your life. I think it was pressure left and nobody wanted to get a whammy, right? Yeah, I'm sure. I'm sure Andrew's over here googling this by the way that's happening, but you don't want to get double hit. So now I've got a tax distribution from the IRA and now my social security's tax. You could be in a negative situation there that you don't want to happen, but what if you were able to plan it out in the right way? And sometimes it may be when you get assets, should we begin looking at doing Roth conversions or should we have an inherited Roth or there's a lot of different techniques to use, but that can help people avoid the mistakes.
Speaker 3:
40:22
So one area I also want to talk about here with inheritance is charitable. And so a lot of times with inheritances is can you make the right decisions for charitable gifts? And whether you give, one of the techniques here, by the way, is, is it worthwhile giving stocks and some stocks that maybe have a low cost basis. So if you sold them, they're going to cost you money. Is it worthwhile gifting those highly appreciated stocks to charities? And I think that's something Jeremy we see all the time on our businesses. It drives me crazy. Let it just happen again. About two months ago, somebody came in and said, hey, they wrote a check to their donor advised fund and, and the, and it was like, it was a nice dollar amount. I mean it was like, I think it was $45,000, but then I was looking at their accounts they got from their inheritance and they had a bunch of stocks that if they sold, there's some tax consequences that go along with it.
Speaker 3:
41:18
Uh, and I think people need to understand that there's other ideas that could help them make those charitable gifts. That's right. They're able to actually give those stocks directly into that charitable fund. Yup. And so I think about a little bit what you said earlier, so lottery winners, people tend to just show up on their door. I'm telling you also on, people learn, you get an inheritance, they somehow just start appearing. And I think about, you know, another analogy to this is professional athletes. So what happens to professional athletes? They get their entourages around them, of people that again have their hands out wanting their money. And you've got to be careful of that. And one of the things I think you got to be careful about is that the generation below who's receiving the inheritance, because now all of a sudden they're thinking, Huh, how much money am I going to get out of this?
Speaker 3:
42:06
That's right. And I hate to say that, but it is human nature. You can't avoid it because you do think about money. It is a financial stressor and we're all trying to avoid that. But now if I got it, you know, and inheritance from my family, I'm wondering, why are my kids thinking, well, how much is dad going to give to me? That's right. They do. And it causes stress in families as well. We've seen that many times over the years where they're become battles between family members. Yeah. And so there's two routes here. One avoidance, which then creates additional stress. Cause now you're sitting there and you're at the 4th of July barbecue. And so, Hey dad, you know, hey, not now that, uh, grandpa's no longer here. What are you doing with his money? And by the way, if you don't think that happens, that conversation does happen.
Speaker 3:
42:55
It does. Maybe it doesn't happen out of the 4th of July barbecue. Maybe it does after they have a couple of cold beverage and they have the, um, let's call it the liquid courage to bring up that tough conversation because it's a financial stressor. But they should actually just be proactive and say, you know what, I did get an inheritance from my mom and dad, however your mom and I were going to use that to make sure we have a great retirement. And assuming we do the great things like mom and dad did at some point when we're not here, you that money will transfer onto you. Right? And I think if you had a simple conversation with your kids like that, you know what you're going to do, I think you're actually going to feel better because how many of you have had that conversation in the back of your mind?
Speaker 3:
43:37
You know you need to have but you avoid it. Everyone has done that. But yeah, I think we probably all have one going right now in our brains and whatever it may be, you know, like our producer, Andrew's getting married and maybe he needs to have one more conversation about, hey, spending less money on the reception or whatever. So those types of things are, but once you have those conversations, I call it the freedom that comes along with it because you feel better. And, and that's why I think is you're having a situation with inheritances, and this has been fun to talk with you about this today, Jeremy, is we just want to help people feel better than if they have a conversation and they figure out they avoid taxes and they don't get higher, higher and higher, higher, higher taxes every year because of inheritance or were shed the government gets more of their family money than they ever wanted.
Speaker 3:
44:26
There's really simple strategies, but you have to know a professional that can help you. So if you want, give us a call, (888) 419-8513 we can really help you figure out how to save thousands of dollars in taxes on your Ira, your 401k, your inheritance. And if you're the kind of person that really wants to make the most and make sure you do the right thing for your family, this is going to go back to that feel good factor. Jeremy, you're gonna feel great if you make that decision to bring yourself peace of mind related to your inheritance. Right? Exactly. Yeah. So if you want to hear from us and get a talk through that. (888) 419-8513 (888) 419-8513 and you know, once again, thanks again Jeremy. Love having you on the show today. Hope you have a great time back in Minnesota. I'm Paul West, you listening to the welfare, wisdom radio network
Speaker 2:
45:15
risks, social security, income taxes, estate planning. Every week we talk about how to make your money go further in retirement right here on wealth from wisdom with Barron's hall of Fame Advisor. Ron Carson,
Speaker 1:
45:29
okay. And here's the legal Mumbo jumbo. The opinions voiced and wealth from wisdom with Rod Carson or for general information only, and are not intended to provide specific advice or recommendations for any individual to determine what is appropriate for you. Consult a qualified professional. All indices are unmanaged, I mean, not be invested into directly investing involves risk, including possible loss of principle. No strategy assures success or protects from loss. Past performance is no guarantee of future results. Advisory Services offered through Cwm LLC, an SEC registered investment advisor.
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