Wills & Wishes: The Emotions Behind Assets

Today I discuss the anxieties many baby boomers face with estate planning and the importance of having those sometimes uncomfortable but crucial conversations that accompany it. Join me as I share relatable experiences from my recent client interactions. 

Online Resource:

https://www.elderlawanswers.com/estate-planning/101

Episode Transcript

(00:02):
Welcome to Actual Advisor Value, the behind the scenes look at how fiduciary financial advisors enrich baby boomers lives.
.999I'm Taylor DeMars, a third generation financial advisor and certified financial planner, making a positive impact on hundreds of retirees.
.117614515Join me to hear short, specific stories of how I address the issues baby boomers like you face, and consider, could this help me or someone I know? Today, I'm looking forward to recapping a conversation I had with a bit of two clients recently I met with Roger. 4 00:00:39,258.117614515 --> 00:00:43,68.117614515 And Annette recently, and they came down to a state planning. 5 00:00:43,638.117614515 --> 00:00:45,588.117614515 And I hope I'm not coming off the beaten path here. 6 00:00:45,588.117614515 --> 00:00:52,498.117614515 And you thinking why is a financial advisor talking so much about estate planning recently? Hopefully in today's stories at all, exemplify how. 7 00:00:52,898.117614515 --> 00:00:56,468.117614515 Important of an issue it is and how to few people. 8 00:00:56,748.117614515 --> 00:01:04,311.450947848 don't bring it up It's a sensitive issue, right? To talk about what you're going to do with your assets, that what you've worked for and save for a lifetime. 9 00:01:04,731.450947848 --> 00:01:09,591.450947848 And emotions can run high when it comes down to what you're going to do with that. 10 00:01:09,644.784281181 --> 00:01:10,424.784281181 When you pass. 11 00:01:10,964.784281181 --> 00:01:13,94.784281181 And that conversation came up today. 12 00:01:13,544.784281181 --> 00:01:14,894.784281181 With Roger in particular. 13 00:01:15,434.784281181 --> 00:01:25,764.784281181 And we had our regular discussion or regular review went through a variety of items, but there are always things that I bring up to, make sure we're on the same page about and I think some clients think it's. 14 00:01:26,184.784281181 --> 00:01:32,94.784281181 Because I have nothing else that's on my mind and it's really not the case there are certain items that I bring up often. 15 00:01:32,554.784281181 --> 00:01:36,354.784281181 Like this I, and today I asked let's review your beneficiaries on your IRA. 16 00:01:36,414.784281181 --> 00:01:37,434.784281181 For example, Roger. 17 00:01:38,34.784281181 --> 00:01:40,14.78428118 And it went through and said, we've got three children. 18 00:01:40,444.78428118 --> 00:01:41,404.78428118 X, Y, and Z. 19 00:01:41,494.78428118 --> 00:01:48,934.78428118 And you have them all as equal beneficiaries and mind you, this was the end of the conversation, right? This was almost like an afterthought. 20 00:01:49,264.78428118 --> 00:01:52,444.78428118 I meant to bring it up earlier in the conversation, but the discussion went all over. 21 00:01:52,954.78428118 --> 00:01:54,184.78428118 But I wanted to make sure I brought it up. 22 00:01:54,184.78428118 --> 00:01:54,844.78428118 And so I did. 23 00:01:55,324.78428118 --> 00:01:57,94.78428118 And so this was at the end of the conversation. 24 00:01:57,94.78428118 --> 00:02:02,44.78428118 And when I asked what I thought would be just check the box kind of question to make sure we're on the same page and move on. 25 00:02:02,764.78428118 --> 00:02:09,784.78428118 He paused and thought and he said, I'm glad you brought that up and he seemed sad about it. 26 00:02:10,204.78428118 --> 00:02:13,204.78428118 And I was worried that I had, crossed the line, but he had said that. 27 00:02:14,84.78428118 --> 00:02:16,351.45094785 One of his daughters had brought up some family drama. 28 00:02:16,444.78428118 --> 00:02:17,674.78428118 That he wasn't really happy about. 29 00:02:18,84.78428118 --> 00:02:20,154.78428118 for the sake of his privacy, I won't go into detail. 30 00:02:20,154.78428118 --> 00:02:29,584.78428118 Of course, But he went on to explain that he had been pondering on the decision to go ahead and, exclude her as a beneficiary from his IRA. 31 00:02:30,274.78428118 --> 00:02:31,654.78428118 And is a state. 32 00:02:32,224.78428118 --> 00:02:34,134.78428118 And brought up a little bit of a conversation. 33 00:02:34,134.78428118 --> 00:02:38,484.78428118 What are the implications? The pros and cons, from a financial standpoint, And the end. 34 00:02:38,844.78428118 --> 00:02:39,534.78428118 I don't know her. 35 00:02:39,534.78428118 --> 00:02:42,444.78428118 And even if I did, it's none of my business, whether it goes to her or not. 36 00:02:43,104.78428118 --> 00:02:44,204.78428118 But said, no pressure. 37 00:02:44,204.78428118 --> 00:02:45,74.78428118 We can make this change. 38 00:02:45,74.78428118 --> 00:02:46,274.78428118 It's super simple. 39 00:02:46,524.78428118 --> 00:02:52,274.78428118 You can print off the paperwork today and get that done or, get it done for any electronic signature at your convenience later on. 40 00:02:52,754.78428118 --> 00:02:55,558.11761451 And he decided to just sit and think about it for a minute. 41 00:02:55,558.11761451 --> 00:02:57,598.11761451 And he said, no, I want to make a change. 42 00:02:58,288.11761451 --> 00:03:01,68.11761451 So we said, okay, we got it, brought out the paperwork and, within. 43 00:03:01,638.11761451 --> 00:03:05,538.11761451 30 seconds later, he had signed the paperwork and just divided the IRA between his two other children. 44 00:03:06,348.11761451 --> 00:03:10,338.11761451 Now, why does this matter? Why am I bringing up this story? I think it's relevant because. 45 00:03:10,454.78428118 --> 00:03:12,704.78428118 I didn't pressure him of course, to make a change. 46 00:03:12,794.78428118 --> 00:03:18,224.78428118 But I brought up the topic that I think he may have felt was too sensitive, embarrassing to bring up. 47 00:03:18,494.78428118 --> 00:03:25,704.78428118 He felt embarrassed to bring up the topic of family drama, but it was obvious that he felt strongly enough about it, that he wanted to make a change. 48 00:03:26,224.78428118 --> 00:03:32,501.45094785 And I assured him that not only could we make a change easily today, but should he change his mind in the future? We can make a modification. 49 00:03:32,951.45094785 --> 00:03:34,301.45094785 Back to how it was before. 50 00:03:34,811.45094785 --> 00:03:36,221.45094785 But there are some key. 51 00:03:36,328.11761451 --> 00:03:38,8.11761451 Points to keep in mind. 52 00:03:38,848.11761451 --> 00:03:46,258.11761451 When it comes to how an IRA's beneficiaries are set up in relation to these state plans specifically, I remind clients or educate them that. 53 00:03:47,191.45094785 --> 00:03:55,611.45094785 you want your IRA a certain way, let's say for example, he had remembered to update as IRA And say, I want everything to go to my two other children and not this other third daughter. 54 00:03:56,301.45094785 --> 00:03:57,981.45094785 But he had not updated his will. 55 00:03:58,381.45094785 --> 00:04:00,421.45094785 And it still said go to each of the children. 56 00:04:00,578.11761451 --> 00:04:01,538.11761451 Equally in thirds. 57 00:04:02,258.11761451 --> 00:04:03,488.11761451 When it comes to settle the estate. 58 00:04:04,358.11761451 --> 00:04:07,868.11761451 The beneficiaries of an IRA overrides a will. 59 00:04:08,618.11761451 --> 00:04:16,98.11761451 And, it's up to him, whether he wants to make those agree with each other or keep the way that things are in the will and the IRA different. 60 00:04:16,98.11761451 --> 00:04:16,278.11761451 But. 61 00:04:16,788.11761451 --> 00:04:19,308.11761451 But it's a key distinction to know And important to bring up. 62 00:04:19,911.45094785 --> 00:04:20,631.45094785 Zooming out a bit. 63 00:04:20,631.45094785 --> 00:04:26,931.45094785 I think it's important that a financial advisor brings those value to the table by just reviewing the estate plan. 64 00:04:26,961.45094785 --> 00:04:31,621.45094785 And you say, gosh why do I need to review the estate plan once or twice a year? At least. 65 00:04:31,951.45094785 --> 00:04:34,531.45094785 Eh, how often does it change? That's a good question. 66 00:04:35,71.45094785 --> 00:04:38,251.45094785 And I think that I, at least with the baby boomer clients that we work with. 67 00:04:38,581.45094785 --> 00:04:42,541.45094785 Life changes a surprising amount, right? People will pass away. 68 00:04:42,981.45094785 --> 00:04:44,451.45094785 Assets can move around. 69 00:04:44,821.45094785 --> 00:04:51,421.45094785 I had a client who sold their forever lake cabin recently, and that was a significant six-figure check that came their way. 70 00:04:51,421.45094785 --> 00:04:53,71.45094785 And that was an, a, his own, her marriage. 71 00:04:53,501.45094785 --> 00:04:54,851.45094785 That the Johnson's brought in. 72 00:04:54,851.45094785 --> 00:05:03,571.45094785 And so that could significantly alter not only their finances today, but also their estate plan in the future, because may have, they may have planned on the cabin being put in there one way. 73 00:05:03,571.45094785 --> 00:05:09,981.45094785 And if you don't bring it up and think about it, you just keep the status quo, but now there's a significant amount of cash that's been redistributed in the estate. 74 00:05:10,491.45094785 --> 00:05:15,571.45094785 And how does that change things? So I think our own lives can change, over the longterm. 75 00:05:16,231.45094785 --> 00:05:20,831.45094785 When you work with a financial advisor, they're familiar with your preferences, your lifestyle your family situation. 76 00:05:21,191.45094785 --> 00:05:27,491.45094785 And so when things come up like a marriage and the family or a divorce, we had a client that just in the past week had a divorce after. 77 00:05:27,891.45094785 --> 00:05:32,281.45094785 Two plus decades of marriage and we needed to help him make some changes to, as a state because of that. 78 00:05:32,871.45094785 --> 00:05:35,331.45094785 Or family conflict, like I explained in Roger scenario. 79 00:05:35,741.45094785 --> 00:05:37,571.45094785 There, there are changes in our own personal lives. 80 00:05:38,201.45094785 --> 00:05:41,201.45094785 But in addition to that, there are changes out of our control. 81 00:05:41,591.45094785 --> 00:05:45,251.45094785 Taxes and laws, that could have affect how we manage our state. 82 00:05:45,561.45094785 --> 00:05:47,841.45094785 For example, there was the secure 2.0 83 00:05:47,841.45094785 --> 00:05:51,411.45094785 act that was passed back in December of 2022. 84 00:05:51,831.45094785 --> 00:05:56,101.45094785 So it's relatively new legislation, right? Secure act 1.0 85 00:05:56,101.45094785 --> 00:05:57,961.45094785 was passed and the end of 2019. 86 00:05:58,471.45094785 --> 00:05:59,551.45094785 The next phase 2.0 87 00:05:59,551.45094785 --> 00:06:03,421.45094785 was passed in 2022 making changes to RMDs and a variety of other things. 88 00:06:04,111.45094785 --> 00:06:10,531.45094785 That we value shouldn't get sidetracked into in this episode today, but can significantly impact the way you think about your estate plan. 89 00:06:11,71.45094785 --> 00:06:13,258.11761451 And unless you're a nerd like I am. 90 00:06:13,648.11761451 --> 00:06:15,928.11761451 You're probably not going to, keep up on that legislation. 91 00:06:15,928.11761451 --> 00:06:18,178.11761451 And not only that, but how it affects you personally. 92 00:06:18,698.11761451 --> 00:06:23,958.11761451 So there are things outside of your bubble or your world that may affect your estate planning. 93 00:06:23,958.11761451 --> 00:06:27,138.11761451 That's worth reviewing, even if nothing in your own world has changed. 94 00:06:27,534.78428118 --> 00:06:33,744.78428118 So just to recap a few of those points there, it's important to review your estate plan regularly because life happens. 95 00:06:34,254.78428118 --> 00:06:35,454.78428118 The only constant has changed. 96 00:06:35,484.78428118 --> 00:06:36,174.78428118 That's number one. 97 00:06:36,624.78428118 --> 00:06:38,844.78428118 Number two, that we changed this to your assets. 98 00:06:39,84.78428118 --> 00:06:45,924.78428118 Things like if you, Use all the funds within a certain account and start drawing funds from another account to sustain your lifestyle. 99 00:06:46,284.78428118 --> 00:06:53,871.45094785 Or other changes within your income, right? Things can happen within your assets that may make you rethink your estate plan. 100 00:06:53,961.45094785 --> 00:06:54,711.45094785 That's number two. 101 00:06:55,131.45094785 --> 00:06:58,11.45094785 And number three, there are things outside of our control outside of our own. 102 00:06:58,381.45094785 --> 00:07:01,621.45094785 Prerogative that may influence how we can control our estate plan. 103 00:07:02,71.45094785 --> 00:07:10,511.45094785 That a financial advisor who is keeping up on a regular basis can, trust and verify that's the plan and if changes are needed we can make them accordingly. 104 00:07:10,991.45094785 --> 00:07:20,271.45094785 One thing that I find is helpful for clients is not only saying, Hey, here's your IRA and things are divided up say, and thirds or fourths or halves. 105 00:07:20,451.45094785 --> 00:07:23,751.45094785 Amongst these people in your family or your relationships. 106 00:07:24,351.45094785 --> 00:07:26,121.45094785 But you can also break it down by dollar amount. 107 00:07:26,241.45094785 --> 00:07:27,531.45094785 I again, I nerd out. 108 00:07:27,531.45094785 --> 00:07:33,201.45094785 So I talk in percentages a lot, but what it really means for the clients individually has taught. 109 00:07:33,201.45094785 --> 00:07:34,311.45094785 Let me tell me in dollars. 110 00:07:34,761.45094785 --> 00:07:35,271.45094785 Tell him. 111 00:07:35,371.45094785 --> 00:07:37,171.45094785 Dollars and cents, what that actually means. 112 00:07:37,171.45094785 --> 00:07:38,71.45094785 So when you say. 113 00:07:38,311.45094785 --> 00:07:40,621.45094785 Hey, you have a million dollar IRA today. 114 00:07:41,71.45094785 --> 00:07:42,901.45094785 All right, just to get them a number simple, of course. 115 00:07:43,261.45094785 --> 00:07:45,61.45094785 And it gets split across your four children. 116 00:07:45,61.45094785 --> 00:07:47,71.45094785 They're each going to get a quarter million dollars. 117 00:07:47,611.45094785 --> 00:07:49,561.45094785 Rather than just saying it's 25% each. 118 00:07:49,921.45094785 --> 00:07:52,651.45094785 And the number is never so easy to calculate which is why. 119 00:07:52,981.45094785 --> 00:07:55,171.45094785 It's important to be able to say, Hey, it's this much today. 120 00:07:55,651.45094785 --> 00:07:57,691.45094785 And this is how much gets distributed. 121 00:07:57,714.78428118 --> 00:08:00,574.78428118 To each of your children If you were to get hit by a bus tomorrow. 122 00:08:01,144.78428118 --> 00:08:03,364.78428118 And this is how much it fluctuates a year from now, et cetera. 123 00:08:03,581.45094785 --> 00:08:04,144.78428118 At other. 124 00:08:04,144.78428118 --> 00:08:08,644.78428118 Layer of complexity that an advisor can assist with when it comes to estate planning. 125 00:08:08,714.78428118 --> 00:08:16,811.45094785 Is how each of your assets are treated from a tax standpoint upon passing to the next Air or generation. 126 00:08:17,481.45094785 --> 00:08:20,271.45094785 For example I've mentioned that I had a net come in recently. 127 00:08:20,781.45094785 --> 00:08:26,278.11761451 And, she loves her children to death and her three grandchildren, and she wants to take care of them. 128 00:08:26,338.11761451 --> 00:08:30,548.11761451 She says, she goes on these walks and she wrestles her brain, all the problems. 129 00:08:30,548.11761451 --> 00:08:33,298.11761451 And then she comes in to meet with me and we iron it out together. 130 00:08:33,298.11761451 --> 00:08:35,308.11761451 And I think I helped her with some of those. 131 00:08:35,718.11761451 --> 00:08:42,988.11761451 Which is what I wanted to share today is in regards to the taxes that her children would incur upon her passing. 132 00:08:43,48.11761451 --> 00:08:43,588.11761451 She's got a. 133 00:08:43,734.78428118 --> 00:08:46,824.78428118 Variety of different assets around and a significant state size. 134 00:08:47,64.78428118 --> 00:08:48,174.78428118 So she wanted to know. 135 00:08:48,368.11761451 --> 00:08:57,808.11761451 Am I burdening them? Am I giving them a, curse of sorts with taxation upon my passing, which is a fair question, right? Most people, don't have to worry about that. 136 00:08:58,198.11761451 --> 00:08:59,488.11761451 The federal state. 137 00:08:59,758.11761451 --> 00:09:00,268.11761451 Tax. 138 00:09:00,548.11761451 --> 00:09:02,168.11761451 Exemption is around $12.6 139 00:09:02,168.11761451 --> 00:09:03,308.11761451 million today. 140 00:09:03,338.11761451 --> 00:09:06,184.78428118 So most of us don't have That size of a net worth. 141 00:09:06,184.78428118 --> 00:09:08,314.78428118 That we have to be worried about being taxed above that amount. 142 00:09:08,824.78428118 --> 00:09:09,814.78428118 Washington state. 143 00:09:09,831.45094785 --> 00:09:11,688.11761451 Where we are has a lower exemption amount. 144 00:09:12,138.11761451 --> 00:09:14,178.11761451 But all the same, that's one thing that she was worried about. 145 00:09:14,238.11761451 --> 00:09:15,198.11761451 So we ruled that out. 146 00:09:15,408.11761451 --> 00:09:17,838.11761451 But another thing was to say, okay, why don't I just gift. 147 00:09:18,168.11761451 --> 00:09:22,98.11761451 My lake cabin and my primary residence to my children while I'm still around. 148 00:09:22,458.11761451 --> 00:09:24,468.11761451 Won't that help them out? Won't that? Give them a benefit. 149 00:09:25,98.11761451 --> 00:09:30,128.11761451 And we had to step back for a moment and say if we really are worried about this from a tax standpoint, the answer is no. 150 00:09:30,788.11761451 --> 00:09:32,168.11761451 That's not the best thing for them. 151 00:09:32,768.11761451 --> 00:09:36,594.78428118 And we went through the steps to talk through what is a step up in basis. 152 00:09:36,984.78428118 --> 00:09:37,554.78428118 Meaning. 153 00:09:37,924.78428118 --> 00:09:39,934.78428118 To make the math simple she bought her lake cabin. 154 00:09:40,444.78428118 --> 00:09:44,284.78428118 At a hundred thousand dollars years ago, right? Fast forward today. 155 00:09:44,284.78428118 --> 00:09:46,444.78428118 There's only so much lakefront property in the world today. 156 00:09:46,444.78428118 --> 00:09:47,14.78428118 And so her. 157 00:09:47,414.78428118 --> 00:09:49,564.78428118 Asset has Significantly appreciated. 158 00:09:49,984.78428118 --> 00:09:52,444.78428118 And I think it was around $700,000. 159 00:09:52,444.78428118 --> 00:09:59,274.78428118 On the Zillow estimate And I said, if you were to pass on that asset to your children, As you're still alive. 160 00:09:59,904.78428118 --> 00:10:03,244.78428118 Sunday, when they go on to sell it, they're going to be liable for that. 161 00:10:03,334.78428118 --> 00:10:08,464.78428118 Appreciation from the time that you purchased it, right? $600,000 worth of gains today. 162 00:10:09,94.78428118 --> 00:10:09,544.78428118 Ouch. 163 00:10:10,64.78428118 --> 00:10:13,114.78428118 That, that quickly bumps you up into the 20%. 164 00:10:13,474.78428118 --> 00:10:18,124.78428118 Capital gains rate, right? Depending on the individual situation, but that can be a significant tax. 165 00:10:18,278.11761452 --> 00:10:26,468.11761452 What if we did nothing, right? What if you just passed away someday? And passed on both the primary residence and the lake cabin to your children. 166 00:10:27,98.11761452 --> 00:10:27,668.11761452 And. 167 00:10:27,938.11761452 --> 00:10:30,248.11761452 Take advantage of the step-up in basis. 168 00:10:30,348.11761452 --> 00:10:45,238.11761452 What's that? I will step up and basis is no longer will the IRS recognize how much you paid for that home or property? When it goes onto your children, but instead do an appraisal of the property to say, how much could we sell that for today? And that is the new basis. 169 00:10:45,538.11761452 --> 00:10:53,238.11761452 So say if you pass away and it's worth $700,000 upon that time, any amount that they sell it for above that amount would be considered. 170 00:10:53,348.11761452 --> 00:10:54,188.11761452 Capital gains. 171 00:10:54,341.45094785 --> 00:10:58,394.78428118 Which is a huge benefit, right? $600,000 worth of capital gains. 172 00:10:58,511.45094785 --> 00:10:58,841.45094785 Just. 173 00:10:58,944.78428118 --> 00:11:01,284.78428118 Erased from a taxation standpoint. 174 00:11:01,364.78428118 --> 00:11:08,234.78428118 And It's how some consider the ultra wealthy to build wealth, which is to buy, borrow die. 175 00:11:08,294.78428118 --> 00:11:14,594.78428118 Now this is no strategy that I am endorsing by any means, but just to prove a point, the extreme form that, some of the ultra wealthy. 176 00:11:14,731.45094785 --> 00:11:16,921.45094785 Families out there do it they buy. 177 00:11:17,141.45094785 --> 00:11:18,191.45094785 Significant asset. 178 00:11:18,491.45094785 --> 00:11:20,321.45094785 So they buy and then they borrow. 179 00:11:20,351.45094785 --> 00:11:24,411.45094785 So they borrow a lot of money, and pay very little cash to actually acquire it. 180 00:11:24,411.45094785 --> 00:11:29,61.45094785 But they finance the rest of it and never worry about the debt during their lifetime. 181 00:11:29,421.45094785 --> 00:11:33,261.45094785 And then upon their passing, whatever that value of the property is. 182 00:11:33,711.45094785 --> 00:11:38,811.45094785 That is the new basis rather than however much the property was worth upon their purchasing of it. 183 00:11:39,801.45094785 --> 00:11:42,978.11761452 So buy and borrow and they die passing on to their children. 184 00:11:43,578.11761452 --> 00:11:47,148.11761452 Again, taking advantage of that step up and basis, I'm not going to call it a loophole. 185 00:11:47,178.11761452 --> 00:11:48,858.11761452 It's just an advantage of the tax code. 186 00:11:49,308.11761452 --> 00:11:53,478.11761452 That the ultra, which take care of, so can us as everyday people. 187 00:11:53,868.11761452 --> 00:12:01,798.11761452 So coming back full circle to a net, I explained to her that the best thing to do from a taxation standpoint regarding, her two properties is to. 188 00:12:01,798.11761452 --> 00:12:03,658.11761452 Let sleeping dogs lie actually. 189 00:12:04,108.11761452 --> 00:12:07,438.11761452 And let them just pass on to the next generation. 190 00:12:07,624.78428118 --> 00:12:08,944.78428118 And that was one piece of real estate. 191 00:12:08,994.78428118 --> 00:12:10,134.78428118 And then we went through each of her. 192 00:12:10,221.45094785 --> 00:12:14,408.11761452 Accounts and assets to say what would happen from a tax standpoint for her children. 193 00:12:14,798.11761452 --> 00:12:16,788.11761452 And that brought up the subject of her IRA. 194 00:12:16,854.78428118 --> 00:12:20,164.78428118 And going from her ownership to her children's ownership. 195 00:12:20,321.45094785 --> 00:12:22,901.45094785 An IRA becomes an inherited IRA. 196 00:12:23,421.45094785 --> 00:12:25,371.45094785 Can't, they consolidate that into their own IRAs. 197 00:12:25,791.45094785 --> 00:12:29,381.45094785 All the answer is no, actually, because are now subject to there. 198 00:12:29,481.45094785 --> 00:12:30,651.45094785 Own required. 199 00:12:30,651.45094785 --> 00:12:32,211.45094785 Minimum distribution schedule. 200 00:12:32,481.45094785 --> 00:12:33,291.45094785 Of 10 years. 201 00:12:33,951.45094785 --> 00:12:35,451.45094785 Didn't they used to be during their whole lifetime. 202 00:12:35,451.45094785 --> 00:12:35,931.45094785 Yes. 203 00:12:36,291.45094785 --> 00:12:36,681.45094785 Yes, it did. 204 00:12:36,711.45094785 --> 00:12:38,511.45094785 It used to be called a stretch IRA. 205 00:12:38,841.45094785 --> 00:12:45,761.45094785 But guess what? The impatient IRS started to bring their hands and say, no, And inherited IRA has to be liquidated entirely within 10 years. 206 00:12:46,18.11761452 --> 00:12:46,378.11761452 Okay. 207 00:12:46,708.11761452 --> 00:12:51,18.11761452 So again, Zooming out to a financial advisor, reviewing the estate plan. 208 00:12:51,348.11761452 --> 00:12:53,328.11761452 I can bring out different questions and may. 209 00:12:53,405.64691139 --> 00:12:56,255.64691139 Because a client to rethink how they're structuring their estate plan. 210 00:12:56,675.64691139 --> 00:13:01,245.64691139 Based on the taxes of say a bank account of which there's no taxes. 211 00:13:01,315.64691139 --> 00:13:03,445.64691139 Life insurance proceeds at which there's no taxes. 212 00:13:03,865.64691139 --> 00:13:07,835.64691139 Property and assets, of which there's a step up in basis, which could be significant. 213 00:13:08,175.64691139 --> 00:13:08,715.64691139 From a tax. 214 00:13:09,45.64691139 --> 00:13:09,735.64691139 Perspective. 215 00:13:10,165.64691139 --> 00:13:14,755.64691139 Especially in contrast to an inherited IRA where one has to pull it out. 216 00:13:15,325.64691139 --> 00:13:17,815.64691139 We'll say I'm that child is in their forties. 217 00:13:17,915.64691139 --> 00:13:20,975.64691139 They're not even really going to be close to retirement potentially within 10 years. 218 00:13:21,335.64691139 --> 00:13:24,575.64691139 Yet, they still have to take out the entire amount and be taxed on it the entire way. 219 00:13:25,485.64691139 --> 00:13:29,275.64691139 So the difference between a million dollar home being inherited. 220 00:13:29,605.64691139 --> 00:13:32,305.64691139 And a million dollar IRA be inherited from a parent. 221 00:13:32,725.64691139 --> 00:13:34,945.64691139 Is significant from a tax standpoint. 222 00:13:35,335.64691139 --> 00:13:36,985.64691139 And those things are important to way. 223 00:13:37,92.31357806 --> 00:13:40,62.31357806 Depending on the complexity and the wishes of an estate plan. 224 00:13:40,625.64691139 --> 00:13:46,655.64691139 And lastly, as to just to wrap things up from a financial advisor's perspective and involvement on a baby boomers life. 225 00:13:47,165.64691139 --> 00:13:50,68.98024472 I think it reduces a lot of anxiety for the client. 226 00:13:50,68.98024472 --> 00:13:56,98.98024472 When I, as the financial advisor, get to meet their children and many clients, children become clients of ours as well. 227 00:13:56,548.98024472 --> 00:13:59,818.98024472 I don't know right now, which they don't have to be, but all the same. 228 00:14:00,358.98024472 --> 00:14:02,518.98024472 Just having a simple, zoom conversation right now. 229 00:14:02,578.98024472 --> 00:14:15,948.98024472 I just set up, Hey, let's just have a 15 minute introduction and maybe ask a random question or two, but at the very minimum, I think it does ease a lot of tension for both our clients, as well as their children who are most likely their executors to say, Hey. 230 00:14:16,578.98024472 --> 00:14:19,308.98024472 This is our guy, and this is who we talked to about all our stuff. 231 00:14:19,338.98024472 --> 00:14:19,848.98024472 Maybe. 232 00:14:20,178.98024472 --> 00:14:20,808.98024472 No children. 233 00:14:21,198.98024472 --> 00:14:26,208.98024472 Do or do not know much about the parents' finances and they don't have to be brought up in that conversation about. 234 00:14:26,568.98024472 --> 00:14:27,108.98024472 The least. 235 00:14:27,558.98024472 --> 00:14:30,918.98024472 I hate to meet my clients' children at their funeral. 236 00:14:31,348.98024472 --> 00:14:32,548.98024472 That's not the cheery place. 237 00:14:32,828.98024472 --> 00:14:33,218.98024472 We want to. 238 00:14:33,278.98024472 --> 00:14:34,268.98024472 Start to get to know each other. 239 00:14:34,268.98024472 --> 00:14:38,588.98024472 It's much easier when we're together and they can see that there's a trust, a relationship there. 240 00:14:38,838.98024472 --> 00:14:43,238.98024472 They can confide in because, I advise a lot of clients, children. 241 00:14:43,548.98024472 --> 00:14:47,898.98024472 Nearly every time on their inherited assets, whether they continue to work with us or not. 242 00:14:48,198.98024472 --> 00:14:54,118.98024472 But things like this inherited IRA and to say, Hey, This is the tax implication of this significant asset you now have. 243 00:14:54,538.98024472 --> 00:14:57,748.98024472 And here's some ideas of how to manage it according to your situation. 244 00:14:58,318.98024472 --> 00:15:03,498.98024472 But at the very minimum to be able to say, Hey, here is say Taylor, in this case And he's been our guy. 245 00:15:03,988.98024472 --> 00:15:06,548.98024472 Don't hesitate to give him a call and here's his card. 246 00:15:06,728.98024472 --> 00:15:06,908.98024472 Yeah. 247 00:15:06,938.98024473 --> 00:15:08,858.98024472 For when you, you needing to reach out to him. 248 00:15:09,38.98024472 --> 00:15:15,128.98024472 I know I've touched on a variety of topics here, and this episode came out to be longer than I expected, but I just. 249 00:15:15,282.31357806 --> 00:15:28,495.64691139 Felt like it was relevant to package several good nuggets of examples of the value and advisor brings when it comes to reviewing from a third-party perspective, who is really unbiased as to where your assets go. 250 00:15:29,5.64691139 --> 00:15:30,85.64691139 And just to. 251 00:15:31,105.64691139 --> 00:15:34,225.64691139 Make sure that everything is according to your wishes and we're on the same page. 252 00:15:34,407.62347389 --> 00:15:35,270.95680722 And I come to think of it. 253 00:15:35,300.95680722 --> 00:15:40,280.95680722 I could be wrong, but I doubt many people speak so openly about their assets and their estate plan. 254 00:15:40,820.95680722 --> 00:15:42,410.95680722 Two people in general. 255 00:15:42,740.95680722 --> 00:15:44,450.95680722 Other than a professional, right. 256 00:15:45,110.95680722 --> 00:15:46,250.95680722 And even then. 257 00:15:46,670.95680722 --> 00:15:50,630.95680722 I doubt that those conversations are had with people who have. 258 00:15:51,360.95680722 --> 00:15:54,580.95680722 no biased interest on what that estate plan is. 259 00:15:54,610.95680722 --> 00:15:57,827.62347389 And as a financial advisor, I obviously have no preference. 260 00:15:57,827.62347389 --> 00:16:01,67.62347389 From a monetary standpoint, how, when our, to whom. 261 00:16:01,177.62347389 --> 00:16:02,407.62347389 Assets are distributed. 262 00:16:02,707.62347389 --> 00:16:10,227.62347389 So being able to provide that informed and educated third-party perspective, I think brings a lot of value to clients As they're evaluating these significant decisions. 263 00:16:10,750.93597389 --> 00:16:19,600.93597389 Past performances, no guarantee of future results, and the experiences shared in this podcast may not be representative of all clients as each individual's situation is unique. 264 00:16:19,870.93597389 --> 00:16:23,200.93597389 This podcast is for informational and entertainment purposes only. 265 00:16:23,290.93597389 --> 00:16:27,800.93597389 And should not be relied upon for making financial, legal, tax, or investment decisions.