Transitioning Assets Webinar
This webinar will address key topics relevant to both beneficiaries and those planning their estates, including:
Identifying taxable versus non-taxable assets
Considerations for different types of accounts, such as IRA, Roth, brokerage, and banking
Handling inherited real estate
Essential documents to prepare and locate
Guidelines for dividing assets among multiple beneficiaries
Transferring assets during life
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WEBVTT
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To begin here today.
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My name is Trenton Peacock, certified Financial Planner.
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Um, might be a new voice
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or new, um, new face for some of you out there.
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Most of you probably are familiar with me.
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So I've been with DOS for, uh, almost three years now
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and in the industry for five.
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Um, so looking forward to doing first webinar
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with DOS Financial today.
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So today we're going to be talking about, uh,
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transitioning assets to the next generation.
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Uh, quick note, we do have Tara on the line
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for any tech support.
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If you have issues getting into the webinar, feel free
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to give our office a call, 2 6 9 3 2 1 7 4 7 2,
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and we can help you get in here.
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Uh, there will be a replay avail available afterwards
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for those that that registered.
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Um, and then I will touch on,
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we did have a estate planning webinar specifically
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for state documents earlier this year.
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Um, so we're, we're kind of more
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so touching on the actual transition
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to the next generation in this one.
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So we will begin.
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Uh, so today, full disclosure, anything discussed is
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for informational purposes only.
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Um, if you have ever tried to read tax code,
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you know, uh, it's a mess.
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It, there's a lot going into it.
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So we're keeping things very general,
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very educational today.
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It's not tax legal or investment advice.
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Every individual situation is different, of course.
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So everything that we talk about may
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or may not be applicable to your situation.
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And as always, consult
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with a tax professional financial advisor or state attorney
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before any, uh, implementation.
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So expectations for today, sort of
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to set the stage, so to speak.
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Uh, what happens to individual or specific assets
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after a death occurs?
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What are some rules, regulations, tax implications
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to be aware of, uh, both for you
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and for the next generation
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of your family when assets are passed?
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And then we're gonna run through and,
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and end the end the day on a couple scenarios, um,
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based on actual assets being passed to the next generation.
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So first off, kind of clarifying the difference
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between a federal estate tax
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and assets that are actually taxable to the individual.
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Um, so this is state tax exemption rule is not the same as,
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oh, I inherited certain account,
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I owe taxes when I take the money out as a dis distribution.
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This is totally separate of that.
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So the reason we're gonna touch on it real quick is
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I'd say probably 95% of our, the households that we serve,
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this is not going to be applicable to them.
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However, it is nice to be aware of.
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Um, so if your state is worth more than $13.61 million
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and you are a single individual, the federal state tax, um,
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will come into effect.
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And there's various tax rates,
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kinda like the margin brackets that you see, uh,
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for your ordinary income.
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And then if you're married, this number is 27.22 million.
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So again, most of the individuals,
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there are a couple outliers that we work with
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and we serve, aren't going to have to worry about this,
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but it is nice to be aware of
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because this, these current numbers are set to, uh, sunset
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with the Tax Cuts
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and Jobs Act in just over a year now in 2026.
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Um, so the old numbers single used to be 5 million,
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married was around 10 million.
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Uh, they're expecting if it does sunset those numbers to be
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around seven and 14 million if, uh,
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it's ingested for inflation.
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So nice to be aware of, doesn't apply to most people.
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Uh, however, in 2026, that number could change.
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So that's why we're talking about that off the start.
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Um, so common estate pitfalls, again,
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we aren't getting into the weeds on estate documents, trust,
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wills, anything of that nature today.
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However, we'll touch on that.
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Having a will does not necessarily mean, um, all
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of your assets or certain A assets are going
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to avoid probate.
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And on the same tune, having a trust
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doesn't necessarily mean you're covering all aspects
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to avoid probate as well.
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It's really about what's included, what's not included,
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what can you have a beneficiary on certain accounts,
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what can't you have beneficiaries on,
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and how are you covering those other outside accounts?
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So ultimately, again,
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every individual situation is different.
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It's important to take inventory of your assets.
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Quick plug for Doss Financial Group.
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If you do annual review meetings with us,
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we have your updated net worth and balance sheet.
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We can see what changed.
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We can see what accounts are new versus what are old,
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and we can kind of guide you and help you
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and say, Hey, you know, we just
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opened this account this year.
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Maybe it makes sense to add your estate plan.
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Um, but on top of that, also knowing your expectations
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and your beneficiary's expectations, uh, when the time comes
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that they eventually get your assets.
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So having that deep, tough conversation,
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it's a little morbid, but it certainly helps all parties
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involved once something does actually happen.
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Um, and the estate,
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the estate is actually triggered at that point.
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So first
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and foremost in your estate comes
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identifying your different assets.
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So we use these tax buckets a lot.
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It's going to help us today kind of describe, uh,
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the different tax implications, rules
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and regulations that are involved
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with passing assets to the next generation.
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Uh, so we'll start with the green bucket,
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which is your taxable accounts.
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So clients of ours know these are accounts
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that you may receive a 10 99 on each year can be checking,
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savings, CDs, money markets,
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and then we have non-retirement vehicles such
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as a transfer on death, otherwise known as a TOD account.
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Um, so these are the most common that we see
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on our balance sheet, net worth statements in our office.
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Now, when we're talking about transferring these assets
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to the next generation, at least
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for the taxable non-retirement account,
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we wanna focus on this rule set by the IRS
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of the step up basis.
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So what is the stepped up basis?
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Well, it includes, like I said, taxable accounts
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that include stocks, bonds, mutual funds.
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And here's a little example of how this, this plays out
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when transferring assets,
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so let's say parent invests a hundred thousand into X, y,
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z stock that is out of pocket.
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So they actually made a contribution
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of $100,000 over time.
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This investment appreciates
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to call it 500,000 for easy math.
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Now, if there wasn't a stepped up basis
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when the individual were to pass assets get handed down
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to the child that inherits the account, there could be,
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well, 400,000 of capital gains tax that would be owed.
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Now, a stepped up basis rule comes into a flat into effect
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and says, okay, at passing, uh,
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because you're holding stocks, bonds, mutual funds,
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they're qualified positions for the stepped up basis.
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Now, the child that inherits the stock, the new basis
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for them is going to be $500,000,
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and anything above that will now be capital gains.
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So it's avoiding potentially large sum of capital gains tax.
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Uh, they're getting a new basis in the stock that they own,
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whether they sell it
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or they hold it, that's completely up to them.
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Um, but if it appreciates beyond that 500,000,
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now you're looking at potential capital gains at that point.
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Um, so that is for, again, stocks, bonds, mutual funds,
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um, and, and those are usually held within the tax or
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or non-retirement account.
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Now, in certain instances,
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the stepped up basis rule also applies to real estate.
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Uh, so primary residence, vacation property, whatever it is,
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uh, this stepped up basis.
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Again, same scenario. So you purchased a home
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for a hundred thousand, it gets appreciated in value.
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New appraisal comes in at 500,000.
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There could be potentially some capital gain in there.
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However, if the stepped up basis rule comes into effect
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for your child or your beneficiary, um,
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it could avoid capital gains taxes if the property, uh,
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is still at that $500,000.
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So common question that we get from clients is,
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should I gift property while I'm still alive?
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And the answer is as most things in finance,
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without knowing your situation, it depends.
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Um, so for example, um, if you were to gift your property
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before you pass that stepped up basis rule will not come
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into effect, it will not be triggered.
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Thus, you know, it could have some capital
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gains on your property.
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So really, it, it depends on your situation,
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depends on your beneficiary situation, their plans on what
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to do with the property after you pass
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and having a conversation from there, um,
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based on, based on that.
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Next is tax deferred accounts.
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So key point here, this is money that has not been taxed
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yet, such as traditional IRAs, 4 0 1 Ks.
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When you make the contribution, you get the tax deferral,
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it grows tax deferred,
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and at some point when you plan a ticket out in retirement,
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you are going to be taxed as income on this money.
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So a couple things.
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So the key point here is
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with tax deferred accounts has not been taxed yet.
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If it gets passed in the next generation, you have
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to expect the IRS is going
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to want their cut somehow some way.
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So we're talking today on traditional IRA rollover IRAs,
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4 0 1 Ks and A through in health savings accounts.
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In there, uh, the rules we will be discussing do not qualify
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for health savings accounts.
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Essentially, if you have an HSA at death,
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it ends when the account owner passes.
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The next generation is going to have to take that
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as income taxable.
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Um, so when it comes
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to inheriting IRA accounts, it's important
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because typically the households we work with, a lot
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of times that's their largest, uh,
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investible asset is their tax deferred money.
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In an IRA, so the IRS first,
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when an IRA is inherited by a, um,
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by beneficiary party, they're gonna identify
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what the beneficiary or who the beneficiary is.
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So first we have eligible designated beneficiaries.
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These tend to be a lot more simpler as far as the rules
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and regulations when you inherit the account.
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Um, if you're a surviving spouse, it's very easy.
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You can pretty much roll it into an existing account.
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You don't have to worry about, um, the RMDs
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that were scheduled for the prior person.
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You can kind of follow your own rules, your own game there.
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Um, another eligible designated beneficiary is, um,
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anyone that is less than 10 years younger than the decedent,
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they're kind of looking for siblings there.
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That's, that's their goal.
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If a sibling inherits an account,
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you may have different rules
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and regulations than a non-eligible beneficiary.
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So, um,
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non-eligible beneficiaries are basically everyone else, right?
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So specifically children, nieces, nephews, anyone outside
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of your spouse
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or sibling that is inheriting, inheriting the I a account.
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So once we identify who the beneficiary is,
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when they inherit the IRA, now we have to be cognizant
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or aware of different rules and regulations.
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So since this webinar is about transitioning assets
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to the next generation,
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I do wanna spend the most time on this non-eligible
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designated beneficiary.
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So this would be children, nieces, nephews, um,
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00:12:01.575 --> 00:12:04.165
adult children, any one of that of that nature.
256
00:12:04.425 --> 00:12:07.245
So let's say you have an inherited IRA
257
00:12:08.235 --> 00:12:09.445
$500,000.
258
00:12:10.185 --> 00:12:12.445
You inherit from a parent, it's qualified money
259
00:12:12.985 --> 00:12:16.485
and you open a new inherited IRA account, let's say
260
00:12:16.485 --> 00:12:17.685
with DOS financial group.
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00:12:18.145 --> 00:12:19.845
Um, and you currently own that account.
262
00:12:20.065 --> 00:12:21.605
Now what, what do I have to be aware
263
00:12:21.605 --> 00:12:23.565
of once the account is in my name?
264
00:12:23.875 --> 00:12:26.645
It's open, uh, it's invested and it's ready to go.
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00:12:27.315 --> 00:12:29.685
Well, a couple things. There's a 10 year rule
266
00:12:29.875 --> 00:12:33.645
that the IRS established stating that you have
267
00:12:33.645 --> 00:12:37.245
to deplete the account completely by the end of 10 years.
268
00:12:37.345 --> 00:12:39.525
So once you open the account, get it funded,
269
00:12:39.525 --> 00:12:40.885
that 10 year clock starts
270
00:12:41.465 --> 00:12:44.565
and you have to completely deplete the account from,
271
00:12:45.025 --> 00:12:46.205
uh, years one through 10.
272
00:12:46.205 --> 00:12:47.445
So at the end of year 10 has
273
00:12:47.445 --> 00:12:50.325
to be a zero zero balance in the account.
274
00:12:50.905 --> 00:12:53.045
Why did they do that? Well, they said, Hey, you know what?
275
00:12:53.045 --> 00:12:54.965
Your parents deferred this money for so long.
276
00:12:55.465 --> 00:12:56.645
Um, we want our cut.
277
00:12:56.735 --> 00:12:59.045
We're not gonna let you hold this and defer taxes forever.
278
00:12:59.585 --> 00:13:02.485
So they establish a 10 year rule that again, has
279
00:13:02.485 --> 00:13:05.045
to deplete the account by the end of 10 years.
280
00:13:06.465 --> 00:13:08.525
Now another nuance to that is
281
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required minimum distributions.
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00:13:11.465 --> 00:13:14.845
So for those that are age 72, age 73
283
00:13:14.845 --> 00:13:16.525
and above, you're pretty familiar
284
00:13:16.525 --> 00:13:18.605
with required minimum distributions, right?
285
00:13:18.605 --> 00:13:21.205
Every year you have to take a certain amount out
286
00:13:21.625 --> 00:13:26.125
of your qualified money, your IRAs, um, to file the IRS
287
00:13:26.125 --> 00:13:27.845
and follow the the tax guidelines.
288
00:13:28.215 --> 00:13:29.485
Again, they want their cut.
289
00:13:29.715 --> 00:13:31.245
They want you to take out something.
290
00:13:31.705 --> 00:13:34.125
Um, and you can't defer those taxes forever.
291
00:13:34.385 --> 00:13:38.365
So think of it as a water faucet.
292
00:13:38.865 --> 00:13:40.285
If the decedent or if the person
293
00:13:40.285 --> 00:13:43.325
that passed was already taking RMDs on their account,
294
00:13:43.455 --> 00:13:45.045
their age 73 or
295
00:13:45.225 --> 00:13:50.125
or above at this point, um, then if the beneficiary of
296
00:13:50.125 --> 00:13:53.925
that account opens an inherit IRA, they will also have
297
00:13:53.925 --> 00:13:55.485
to take RMDs each year.
298
00:13:55.485 --> 00:13:56.645
And this is a newish rule.
299
00:13:56.755 --> 00:13:58.405
They established this a couple months ago.
300
00:13:58.405 --> 00:13:59.645
It was a big gray area.
301
00:14:00.305 --> 00:14:02.405
Um, but moving forward, starting next year,
302
00:14:02.405 --> 00:14:05.525
there will be required minimum distributions on
303
00:14:05.525 --> 00:14:07.005
inherited IRA accounts.
304
00:14:07.505 --> 00:14:10.645
Um, so those different rules
305
00:14:10.705 --> 00:14:13.485
and regulations, basically what we want you to be aware
306
00:14:13.485 --> 00:14:16.485
of is that there are too many things you have
307
00:14:16.485 --> 00:14:17.805
to empty the account in 10 years.
308
00:14:17.825 --> 00:14:21.845
You may or may not have to take an RMD that depends, uh,
309
00:14:22.105 --> 00:14:24.485
but get with your trusted advisor, get
310
00:14:24.485 --> 00:14:26.605
with your tax advisor, your financial advisor,
311
00:14:27.265 --> 00:14:29.125
and just make sure you stay on top of this
312
00:14:29.125 --> 00:14:33.565
because there is a excise tax tax penalty if you fail
313
00:14:33.565 --> 00:14:35.325
to take RMDs when you're supposed to.
314
00:14:35.945 --> 00:14:37.805
Um, so a couple things,
315
00:14:38.405 --> 00:14:40.205
a couple side notes as far as planning.
316
00:14:40.305 --> 00:14:43.565
If you inherit an IRA, again, all qualified money,
317
00:14:43.635 --> 00:14:45.405
it's all going to be taxable income.
318
00:14:46.025 --> 00:14:48.725
Uh, most of the time you're probably not going to want
319
00:14:48.725 --> 00:14:51.325
to take that out in a lump sum in one year.
320
00:14:51.625 --> 00:14:54.725
Why? Because let's say you inherit 500,000, uh,
321
00:14:54.725 --> 00:14:57.685
$500,000 inherited IRA, you take out
322
00:14:57.685 --> 00:14:59.445
and completely deplete the account in one year.
323
00:14:59.875 --> 00:15:02.565
Boom, you've taken 500,000 in taxable income
324
00:15:02.985 --> 00:15:05.325
and you've shot your, your marginal ineffective
325
00:15:05.425 --> 00:15:06.525
tax rates through the roof.
326
00:15:06.525 --> 00:15:08.205
So there's a little bit of strategy on
327
00:15:09.425 --> 00:15:12.885
if you inherit an IRA, we have to get the account
328
00:15:12.885 --> 00:15:14.205
to zero after 10 years.
329
00:15:14.995 --> 00:15:17.725
What makes sense from your personal tax tax perspective,
330
00:15:17.795 --> 00:15:18.925
your personal, marginal
331
00:15:18.925 --> 00:15:23.485
and effective tax brackets to take out money each year, um,
332
00:15:23.785 --> 00:15:27.805
or every other year and make a tax plan on distributions
333
00:15:27.845 --> 00:15:28.845
within those accounts.
334
00:15:28.985 --> 00:15:30.125
So that's our plug there.
335
00:15:30.905 --> 00:15:33.725
You have to be cognizant and aware of your tax rates,
336
00:15:33.915 --> 00:15:36.125
getting that down within 10 year timeframe,
337
00:15:36.265 --> 00:15:39.245
and then RMDs along the way if if necessary.
338
00:15:40.065 --> 00:15:42.445
So a lot of complication around qualified money.
339
00:15:42.615 --> 00:15:44.605
Again, if you think about it, it's deferred.
340
00:15:45.085 --> 00:15:48.085
IRS wants their taxes. They're going to implement some sort
341
00:15:48.085 --> 00:15:50.085
of rules to get their fair share
342
00:15:50.085 --> 00:15:51.485
and get their cut at the end of the day.
343
00:15:56.475 --> 00:16:00.525
So that is tax deferred accounts.
344
00:16:00.525 --> 00:16:04.565
Now we are on tax free accounts, so tax free,
345
00:16:04.865 --> 00:16:05.885
our favorite bucket of money.
346
00:16:06.385 --> 00:16:09.845
Um, this typically when we're talking about an estate plan
347
00:16:10.105 --> 00:16:11.605
or, or asset transition,
348
00:16:11.605 --> 00:16:14.765
this typically includes life insurance and Roth IRAs.
349
00:16:14.765 --> 00:16:16.685
Those are the the common ones we're working with.
350
00:16:17.465 --> 00:16:21.125
So life insurance generally not taxable, wherever it goes.
351
00:16:21.505 --> 00:16:23.605
Um, again, there might be a couple nuances out there.
352
00:16:24.185 --> 00:16:27.675
Um, and then Roth IRAs have
353
00:16:27.675 --> 00:16:31.155
that similar distribution rules as traditional IRAs such
354
00:16:31.155 --> 00:16:33.435
as there is a 10 year distribution rule.
355
00:16:34.015 --> 00:16:36.675
Um, there may or may not be RMDs that need
356
00:16:36.675 --> 00:16:37.715
to be taken each year.
357
00:16:38.145 --> 00:16:41.715
However, Roth IRAs are different in that they, as long
358
00:16:41.715 --> 00:16:44.275
as the account was open for five years, it's going to be
359
00:16:44.815 --> 00:16:47.075
tax redistributions to the beneficiary.
360
00:16:47.415 --> 00:16:49.795
So again, one of the most tax advantageous accounts,
361
00:16:49.865 --> 00:16:51.235
both while you're still alive
362
00:16:51.415 --> 00:16:53.955
and then also when it gets passed to the next generation.
363
00:16:54.735 --> 00:16:58.635
Um, so the strategy there is, okay, if we need to take RMDs
364
00:16:58.635 --> 00:17:00.875
or take a little bit out each year, great.
365
00:17:01.375 --> 00:17:03.955
If not, why not let the, the tax free growth
366
00:17:04.955 --> 00:17:06.395
compound over the next 10 years?
367
00:17:06.935 --> 00:17:08.115
And then at the end of 10 years,
368
00:17:08.115 --> 00:17:11.395
since it's not taxable money, then we make the distribution,
369
00:17:11.775 --> 00:17:13.835
um, put funds where they need to go and,
370
00:17:13.895 --> 00:17:15.635
and create strategy from there.
371
00:17:15.775 --> 00:17:16.875
So again,
372
00:17:16.945 --> 00:17:19.995
Roth areas still have some distribution rules when they are
373
00:17:19.995 --> 00:17:23.555
inherited, however, it's, it's much more tax advantageous.
374
00:17:24.295 --> 00:17:27.715
Um, and just being aware of that tenure, tenure period
375
00:17:27.815 --> 00:17:28.955
as well for the Roths.
376
00:17:34.925 --> 00:17:38.665
So after going through our different tax buckets,
377
00:17:39.045 --> 00:17:40.225
now we'll go through a couple
378
00:17:40.825 --> 00:17:43.225
specific case study specific scenarios.
379
00:17:44.485 --> 00:17:48.425
So first case study we're looking at overall pretty
380
00:17:48.745 --> 00:17:49.885
complete estate plan.
381
00:17:49.945 --> 00:17:54.045
So we have Sally, single, female 95, no spouse
382
00:17:54.635 --> 00:17:57.285
with two adult kids, Tom and Sue.
383
00:17:57.985 --> 00:18:01.205
Um, thanks to being a Doss financial group client,
384
00:18:01.765 --> 00:18:03.805
Sally has gotten her estate plan around.
385
00:18:03.905 --> 00:18:06.845
She has wills, powers of attorney, both health and medical
386
00:18:07.745 --> 00:18:11.325
or excuse me, health and financial updated beneficiaries on
387
00:18:11.345 --> 00:18:14.725
all accounts necessary and has a trust established
388
00:18:14.725 --> 00:18:15.765
and trust in place.
389
00:18:16.505 --> 00:18:19.845
Um, we're also going to assume that her
390
00:18:20.485 --> 00:18:24.205
TOD account had an original cost basis of $100,000
391
00:18:24.785 --> 00:18:26.445
and her primary residence
392
00:18:26.555 --> 00:18:31.085
that she resided in had an original basis of $150,000.
393
00:18:32.165 --> 00:18:34.425
And then our last assumption is Tom
394
00:18:34.425 --> 00:18:38.985
and Sue were named beneficiaries 50 50 split even on all
395
00:18:38.985 --> 00:18:42.145
accounts, um, that could have possibly been, uh,
396
00:18:42.245 --> 00:18:43.905
had a beneficiary attached to it.
397
00:18:46.265 --> 00:18:47.445
So who gets what?
398
00:18:48.405 --> 00:18:52.465
So we have remaining from the $250,000 TOD account,
399
00:18:53.205 --> 00:18:56.945
125,000 to both Sue and Tom.
400
00:18:56.945 --> 00:18:59.625
And again, if that goes to direct to beneficiaries,
401
00:18:59.655 --> 00:19:01.745
they're going to get a stepped up, uh,
402
00:19:01.895 --> 00:19:03.305
cost basis in that account.
403
00:19:03.975 --> 00:19:06.705
They will not owe capital gains on the new basis,
404
00:19:06.925 --> 00:19:08.945
but if they decide to keep the investments,
405
00:19:08.975 --> 00:19:11.625
they could owe capital gains on the account.
406
00:19:11.645 --> 00:19:14.945
If they cash out right at the new cost basis, again,
407
00:19:15.085 --> 00:19:17.065
no taxable income income to them.
408
00:19:17.925 --> 00:19:20.945
Uh, they'll both inherit checking and CD accounts.
409
00:19:21.095 --> 00:19:25.425
5,000, 25,000 respectively, generally not taxable.
410
00:19:25.425 --> 00:19:27.505
However, if there is some interest
411
00:19:27.505 --> 00:19:29.585
that is earned in those accounts, uh,
412
00:19:29.595 --> 00:19:31.945
after the time of death of the decedent,
413
00:19:32.155 --> 00:19:35.065
there could be a little bit of of taxable, uh,
414
00:19:35.135 --> 00:19:36.345
gain on that account as well.
415
00:19:36.885 --> 00:19:40.065
And then let's say the children both inherited the property,
416
00:19:40.645 --> 00:19:43.505
um, and then, and then sold the property right away,
417
00:19:43.775 --> 00:19:46.345
they're gonna have some property proceeds call it
418
00:19:46.345 --> 00:19:49.105
$175,000 each to them.
419
00:19:50.815 --> 00:19:52.995
Now we also have an inherit IRA,
420
00:19:52.995 --> 00:19:57.115
which on the previous sheet was a million dollars net worth,
421
00:19:57.115 --> 00:20:01.035
or excuse me, a million dollars worth to, um, the decedent.
422
00:20:01.545 --> 00:20:03.115
They're gonna split that 50 50.
423
00:20:03.295 --> 00:20:05.835
And again, this account is going to be the account
424
00:20:05.835 --> 00:20:08.675
that they want to be aware of rules and regulations on.
425
00:20:08.945 --> 00:20:11.315
They're both going to inherit $500,000.
426
00:20:11.705 --> 00:20:14.675
They open an inherited IRA in both of their names,
427
00:20:15.375 --> 00:20:18.035
so separate accounts and then they're gonna have, uh,
428
00:20:18.035 --> 00:20:20.555
excuse me, 10 years to completely deplete this account.
429
00:20:20.935 --> 00:20:25.275
And possibly, or they will have RMDs since Sally was taking
430
00:20:25.745 --> 00:20:27.035
RMDs at the time of death.
431
00:20:27.655 --> 00:20:29.235
So they're gonna have RMDs outta the account,
432
00:20:29.235 --> 00:20:31.635
they're gonna have to completely deplete it, uh,
433
00:20:31.635 --> 00:20:32.915
within a 10 year timeframe.
434
00:20:33.415 --> 00:20:34.955
And it's a good truck of money, right?
435
00:20:34.985 --> 00:20:36.835
$500,000 is,
436
00:20:36.835 --> 00:20:39.955
could have a huge impact on your marginal and effective bracket.
437
00:20:41.065 --> 00:20:44.675
They're also going to have an inherited Roth IRA account,
438
00:20:45.205 --> 00:20:46.755
originally a hundred thousand dollars.
439
00:20:47.155 --> 00:20:48.845
They split it evenly 50 50.
440
00:20:49.265 --> 00:20:53.005
So they're both going to have $50,000 inherited at Roth IRA
441
00:20:53.005 --> 00:20:57.285
accounts, uh, again, might have RMDs on that money.
442
00:20:57.285 --> 00:20:59.085
However, they're planning
443
00:20:59.085 --> 00:21:01.805
to let it grow over the next 10 years to take advantage
444
00:21:01.805 --> 00:21:04.885
of the, the tax free growth as much as possible
445
00:21:04.905 --> 00:21:07.205
before the i, the IRS requires them
446
00:21:07.225 --> 00:21:08.445
to make the distribution.
447
00:21:10.715 --> 00:21:14.015
So that's pretty easy, pretty simple, pretty clean.
448
00:21:14.915 --> 00:21:17.215
Now let's see what happens if there's an
449
00:21:17.265 --> 00:21:18.935
incomplete estate plan.
450
00:21:20.355 --> 00:21:22.415
So same scenario, Sally, single female,
451
00:21:22.555 --> 00:21:24.535
95 years old, two kids.
452
00:21:25.155 --> 00:21:28.775
She has wills, powers of attorney, but no trust.
453
00:21:30.375 --> 00:21:32.535
Sally also made it a, made a oopsies
454
00:21:32.535 --> 00:21:35.375
and forgot to put beneficiaries on her checking
455
00:21:35.635 --> 00:21:36.855
and CD accounts.
456
00:21:37.755 --> 00:21:40.215
Uh, bigger, oops, accidentally left Ron,
457
00:21:40.275 --> 00:21:44.175
who was her ex-husband as beneficiary to her Roth IRA,
458
00:21:45.325 --> 00:21:47.225
all the other accounts still the same.
459
00:21:47.445 --> 00:21:50.065
Tom and Sue 50 50 beneficiaries on all the,
460
00:21:50.165 --> 00:21:51.305
on all the accounts.
461
00:21:51.805 --> 00:21:54.425
And then same original cost basis, um,
462
00:21:54.895 --> 00:21:56.825
assumptions as the last one.
463
00:21:57.045 --> 00:21:59.985
So a couple nuances thrown into this scenario.
464
00:22:02.605 --> 00:22:03.745
So who gets what.
465
00:22:04.565 --> 00:22:08.665
So we have the brokerage TOD, same as last, last scenario.
466
00:22:08.845 --> 00:22:12.225
So she did name Tom and Sue as 50 50 beneficiaries.
467
00:22:12.615 --> 00:22:16.785
They're going to get that stepped up basis, 125,000 to each,
468
00:22:17.285 --> 00:22:19.385
um, and they can do as they please with that account.
469
00:22:19.845 --> 00:22:22.625
Now the checking and CD accounts, since she failed
470
00:22:22.625 --> 00:22:26.145
to put beneficiaries on those accounts, unfortunately
471
00:22:26.255 --> 00:22:28.825
that is going to go through through probate.
472
00:22:28.825 --> 00:22:32.105
And probate is not a fun process. It's expensive.
473
00:22:32.605 --> 00:22:34.745
Uh, it tends to last many months,
474
00:22:35.265 --> 00:22:36.785
possibly even a year, two years.
475
00:22:37.285 --> 00:22:38.945
Um, so it's not a fun process.
476
00:22:39.395 --> 00:22:42.185
Those assets are going to be exposed to probate.
477
00:22:42.765 --> 00:22:46.345
Um, tax deferred account, the rollover IRA million dollars.
478
00:22:46.895 --> 00:22:50.305
Same scenario. Uh, that's going to go to the kids 50 50.
479
00:22:51.125 --> 00:22:53.185
Be aware of RMDs tenure rule.
480
00:22:53.925 --> 00:22:57.905
The Roth IRA that is unfortunately going to go to Ron.
481
00:22:57.925 --> 00:23:02.505
So Sally failed to update her beneficiaries failed to, uh,
482
00:23:02.505 --> 00:23:04.785
meet with a financial planner or a state attorney.
483
00:23:05.805 --> 00:23:08.625
That's unfortunately going to go to her ex-husband Ron.
484
00:23:08.645 --> 00:23:11.065
So beneficiaries, if we're playing euchre
485
00:23:11.655 --> 00:23:13.545
beneficiaries are, are Trump.
486
00:23:13.545 --> 00:23:14.905
And really not only the Trump card,
487
00:23:14.905 --> 00:23:16.825
but also I would say the right bower.
488
00:23:17.045 --> 00:23:21.065
So it's very difficult, um, nearly impossible to, to argue
489
00:23:21.255 --> 00:23:24.625
with beneficiaries that are listed on investment accounts.
490
00:23:24.695 --> 00:23:27.545
Whether you have a trust wills, no matter
491
00:23:27.545 --> 00:23:30.865
what beneficiaries tend to, to Trump all in those scenarios.
492
00:23:31.565 --> 00:23:34.065
So Ron's going to get the a hundred thousand free
493
00:23:34.065 --> 00:23:36.105
and clear in the inherited Roth IRA.
494
00:23:37.455 --> 00:23:41.115
And then again, the primary residence, um, stays the same
495
00:23:41.115 --> 00:23:42.395
as as the last scenario.
496
00:23:42.695 --> 00:23:44.835
So a couple different nuances, moving parts,
497
00:23:45.385 --> 00:23:47.885
and a little bit messier state situation there.
498
00:23:51.395 --> 00:23:54.215
So as far as our process, um,
499
00:23:54.595 --> 00:23:56.695
and I should say, you know, we've, we decided
500
00:23:56.695 --> 00:24:00.375
to do this webinar because we have unfortunately had
501
00:24:00.695 --> 00:24:03.135
probably a handful of deaths already this year.
502
00:24:03.995 --> 00:24:06.375
Um, so we're getting a lot more familiar with the,
503
00:24:06.555 --> 00:24:10.335
the process of what needs to happen, what tends to happen.
504
00:24:10.905 --> 00:24:13.215
We've seen good outcomes as far
505
00:24:13.215 --> 00:24:14.455
as estate planning scenarios,
506
00:24:14.455 --> 00:24:16.335
and we've seen a little bit more messy outcomes
507
00:24:16.395 --> 00:24:17.575
of estate planning scenarios.
508
00:24:17.575 --> 00:24:19.095
So this is truly coming from the heart.
509
00:24:19.595 --> 00:24:21.575
Um, so this is our process.
510
00:24:21.885 --> 00:24:23.255
Once we receive the news,
511
00:24:23.875 --> 00:24:25.735
we review immediately any estate
512
00:24:25.975 --> 00:24:27.095
documents that we have on file.
513
00:24:27.635 --> 00:24:30.375
And when we work with, with families, individuals,
514
00:24:30.375 --> 00:24:33.615
and we serve the, the individuals we work with, we tend
515
00:24:33.635 --> 00:24:37.295
to collect state planning documents, trusts, wills, powers
516
00:24:37.295 --> 00:24:40.655
of attorneys, just to make sure we have it on file in case
517
00:24:41.355 --> 00:24:43.175
the beneficiaries aren't able to find it.
518
00:24:43.595 --> 00:24:46.295
Um, maybe they didn't ha communicate well,
519
00:24:46.295 --> 00:24:47.535
didn't have it laying around the house.
520
00:24:47.755 --> 00:24:51.215
Not easy to find. We like to keep those on file so
521
00:24:51.215 --> 00:24:53.735
that way when something happens, we're able to get in there
522
00:24:53.735 --> 00:24:56.575
and review, okay, step by step this is what should happen.
523
00:24:57.395 --> 00:25:01.415
Um, next we typically contact beneficiaries either
524
00:25:01.475 --> 00:25:03.575
of a trust account or beneficiaries tied
525
00:25:03.575 --> 00:25:04.815
to their investment accounts.
526
00:25:05.395 --> 00:25:08.335
Um, we are going to reach out for a death certificate
527
00:25:08.355 --> 00:25:10.895
and at that point we are going to be able to
528
00:25:11.825 --> 00:25:13.655
coordinate directly with beneficiaries,
529
00:25:13.805 --> 00:25:15.615
open necessary accounts that need to be open,
530
00:25:16.165 --> 00:25:19.935
give them a heads up on tax implications, uh, rules,
531
00:25:19.965 --> 00:25:22.775
regulations around whatever accounts they're inheriting.
532
00:25:23.195 --> 00:25:25.375
And then we try to make it as seamless of a,
533
00:25:25.595 --> 00:25:27.175
of a process as possible.
534
00:25:27.275 --> 00:25:28.815
You know, it's, it's emotional time.
535
00:25:29.245 --> 00:25:32.495
There's no need to put more stress on money, unfortunately,
536
00:25:32.525 --> 00:25:35.215
when someone passes, uh, that tends to
537
00:25:35.835 --> 00:25:38.415
be the number one issue with family during a time
538
00:25:38.415 --> 00:25:41.055
where they should be connecting, um,
539
00:25:41.195 --> 00:25:42.535
and not be stressed about money.
540
00:25:42.635 --> 00:25:45.415
So it's important to make sure ducks are in order,
541
00:25:45.935 --> 00:25:47.655
documents are located, um,
542
00:25:47.795 --> 00:25:49.095
and things are where they need to be.
543
00:25:52.765 --> 00:25:54.185
So based on that, again,
544
00:25:54.215 --> 00:25:56.305
preparation leads to a smooth process.
545
00:25:56.655 --> 00:25:58.625
Make sure you know where your documents are,
546
00:25:58.785 --> 00:26:02.105
whether it's will's, trusts, powers of attorneys, uh,
547
00:26:02.135 --> 00:26:03.225
make sure you're going through
548
00:26:03.285 --> 00:26:04.865
and updating your beneficiaries.
549
00:26:05.085 --> 00:26:07.865
We saw in the scenario we don't want anyone on
550
00:26:07.965 --> 00:26:11.625
as beneficiary to investment accounts, checking TOD,
551
00:26:11.905 --> 00:26:14.745
anything of that nature, uh, that we don't want on there.
552
00:26:15.825 --> 00:26:18.125
And then again, have the, have the tough conversations
553
00:26:18.125 --> 00:26:19.205
with your beneficiaries.
554
00:26:19.835 --> 00:26:22.645
It's a little morbid. It's, it's hard to do, it's difficult
555
00:26:22.645 --> 00:26:24.925
to do, but it's one and done.
556
00:26:24.925 --> 00:26:26.565
Just have the conversation with them.
557
00:26:27.305 --> 00:26:29.725
Set expectations of what you want when you pass
558
00:26:30.185 --> 00:26:32.445
and as well as, as you know, setting the stage for
559
00:26:32.445 --> 00:26:33.685
what they want when they pass.
560
00:26:34.385 --> 00:26:36.605
And then have a conversation with your trusted advisor,
561
00:26:36.715 --> 00:26:39.805
financial team, a state attorney, uh, making sure
562
00:26:39.805 --> 00:26:42.845
that you are able to get the necessary documents in place
563
00:26:43.345 --> 00:26:44.765
to get assets to who you want,
564
00:26:44.875 --> 00:26:47.045
when you want the way you want, uh,
565
00:26:47.055 --> 00:26:48.325
after something does happen.
566
00:26:48.625 --> 00:26:51.805
So, um, I would say, you know, again,
567
00:26:52.075 --> 00:26:53.565
make sure you're having the conversations.
568
00:26:54.235 --> 00:26:55.605
Make sure you're reaching out to your children.
569
00:26:55.745 --> 00:26:58.045
If we need to have a meeting with the beneficiaries
570
00:26:58.045 --> 00:26:59.885
of your accounts, we absolutely will
571
00:27:00.465 --> 00:27:03.645
can bring them in on estate plan, estate attorney meetings.
572
00:27:04.065 --> 00:27:07.485
Um, so make sure parties that are involved are aware
573
00:27:07.485 --> 00:27:09.165
of all the different moving pieces
574
00:27:09.195 --> 00:27:11.605
that you might have going on in your financial picture.
575
00:27:12.665 --> 00:27:16.845
Um, so that is all I had for today.
576
00:27:17.745 --> 00:27:21.085
Uh, I guess, Tara, are there any questions that,
577
00:27:21.155 --> 00:27:24.085
that popped up during our webinar together?
578
00:27:25.955 --> 00:27:27.215
We don't have any yet.
579
00:27:27.355 --> 00:27:30.695
Um, but if anybody would like to type into the q
580
00:27:30.695 --> 00:27:33.935
and a box, uh, we can get that answered for you.
581
00:27:59.785 --> 00:28:03.125
All right. Maybe leave it open for about 15 more seconds
582
00:28:03.305 --> 00:28:04.685
and see if any questions come in.
583
00:28:04.685 --> 00:28:07.605
Otherwise, um, you can always shoot us an email, um,
584
00:28:07.635 --> 00:28:10.285
give us a call if you think of anything after the fact.
585
00:28:44.855 --> 00:28:46.515
No, we did not get any questions,
586
00:28:46.515 --> 00:28:47.955
so you must have answered 'em all trend.
587
00:28:49.975 --> 00:28:51.985
Yeah, I will add. So, um, you know,
588
00:28:52.015 --> 00:28:54.585
like primary residence property, um,
589
00:28:55.455 --> 00:28:58.465
that can be a little sticky as far as a stepped up basis,
590
00:28:58.815 --> 00:29:00.305
step up cost basis rule.
591
00:29:00.805 --> 00:29:03.145
Um, really depends on what kind of trust you have.
592
00:29:03.145 --> 00:29:05.625
If it's in or out of the trust, depends on, you know,
593
00:29:05.625 --> 00:29:07.825
like there's a, the lady bird deed out there.
594
00:29:08.365 --> 00:29:11.025
Um, so again, it just involves a conversation
595
00:29:11.025 --> 00:29:13.385
with either an attorney, financial advisor
596
00:29:13.685 --> 00:29:17.025
or both, uh, to kind of set the stage on what happens
597
00:29:17.045 --> 00:29:20.785
to my property as well as as my assets, um, after death.
598
00:29:20.925 --> 00:29:22.745
So yeah, a couple different nuances.
599
00:29:22.815 --> 00:29:25.825
It's everyone's situations is different, so it's important
600
00:29:25.825 --> 00:29:26.945
to have that conversation
601
00:29:27.005 --> 00:29:28.625
and get the expectation ahead of time.
602
00:29:50.975 --> 00:29:54.515
All right, if that is, if we don't have any questions,
603
00:29:54.625 --> 00:29:56.075
that will conclude today's webinar.
604
00:29:56.165 --> 00:29:59.475
Again, there will be a replay link available to those
605
00:29:59.505 --> 00:30:00.995
that weren't able to make it.
606
00:30:00.995 --> 00:30:02.035
Even if you did make it
607
00:30:02.035 --> 00:30:04.835
and you wanted to, rewatch can get the replay.
608
00:30:05.255 --> 00:30:09.115
Um, if not, hope to see everybody uh, in our weekly videos.
609
00:30:09.885 --> 00:30:12.555
Those going and we will talk to everyone shortly.