EPS 12 - Gifting with Grace: Avoid Probate Drama: PODs, TODs & Smart Gifting

SPEAKER_01: 0:03

The best things in life Welcome

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to the Pink Money Podcast. I'm your host, Jerry Williams. And with me today, I have one of my favorite financial advisors, Grace, with us. And we're going to have probably a little discussion around quite a few things, but mainly we're going to talk a little bit about gifting. How are you doing today, Grace?

SPEAKER_02: 1:14

I'm good. It's good to be here with you, Jerry.

SPEAKER_00: 1:16

Absolutely. How are the tropics?

SPEAKER_02: 1:18

Lovely.

SPEAKER_00: 1:19

Yeah. You're so lucky. I

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know. It's ramping up right now with the hurricane season, but it's such a beautiful place to be.

SPEAKER_00: 1:25

How are your clients feeling these days?

SPEAKER_02: 1:29

You know, everybody seems to be doing good except for, of course, the cost of living going up.

SPEAKER_01: 1:35

Yeah.

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The prices of fuel everywhere is expensive, right? But in the islands, it seems like even more so. So the other day I saw a Facebook post for St. Croix, and there was a sale on eggs for$5.99. What? That was the sale. Wow. So everything's already expensive, just even more so.

SPEAKER_00: 1:53

What is gas going for?

SPEAKER_02: 1:55

So I just left Puerto Rico, and it was at, I think,$1.25 for a liter, but I think it's gone down a little bit since I've been there.

SPEAKER_00: 2:03

Oh, okay. So they don't do gallons.

SPEAKER_02: 2:05

That's right. So everybody gets excited. They see the price, and they realize, oh, that's

SPEAKER_00: 2:10

right. Yeah, convert that.

SPEAKER_02: 2:12

Exactly. Good luck.

SPEAKER_00: 2:13

Okay. Well, you know, the good thing is gas going down here. Right. Yeah, I saw it actually this morning at$3.09. That was low.

SPEAKER_02: 2:23

Wow.

SPEAKER_00: 2:23

Yeah. Considering we were almost at$4. Crazy. Yeah, that was crazy. And you know, one of the crazy things, and that's kind of why I wanted to talk about gifting today, is because I was overhearing a couple of girls talk, and what they were speaking about was mildly interesting, because I wasn't trying to really listen, but you know when you're stuck in a line, And people are talking and you're just by yourself. You have nothing else to do except for flip through, you know, the people magazine or inquire or whatever, you know, and then you overhear what people are saying and you try to ignore it. And I, sometimes I feel like I should step in and say something, but then I'm like, uh, You know, they're not asking for it. And it's a lot, you know, could be longer conversation than I really care to have with anybody, especially when you're like not in the mood or you're just buying eggs and then

SPEAKER_02: 3:24

you're stuck in the grocery store forever.

SPEAKER_00: 3:26

Yeah. And they're like, really? Or, you know, how about like you were telling me earlier, people like. saying the completely wrong things.

SPEAKER_02: 3:35

Don't you hate that? And you can't do anything about it because they're in a position of authority. So you're just sitting there shaking your head violently, praying to the gods that...

SPEAKER_00: 3:45

Have you ever had to correct somebody just flat out?

SPEAKER_02: 3:48

It's so hard to do it because you have to be nice about it, right? And especially me working with soldiers, there's rank that goes to that. So I can't... There's an E8 standing there and he's telling the wrong information. to younger soldiers, I can't really call him out. But at the same time, it's bad advice.

SPEAKER_00: 4:06

Where do they get their information from?

SPEAKER_02: 4:08

Well, um, A lot from us and then a lot from just history, going through meetings every year and picking something up or from each other. You know the same way even outside the military. There's always people who want to talk about the stock market. Oh, go buy this stock. And you're like, please don't go buy that stock.

SPEAKER_01: 4:27

Yeah.

SPEAKER_02: 4:27

Buy this stock. Buy this much. Don't do this. It's kind of the same information. So these quote-unquote gurus that don't know anything, self-educated, that then want to pass the information along, sometimes it's great.

SPEAKER_00: 4:40

Sometimes

SPEAKER_02: 4:41

not. Right. So these other people will take that information and run with it and it may not be best for them. I think we saw a lot of that with even like Bitcoin, right? Oh,

SPEAKER_00: 4:51

for sure.

SPEAKER_02: 4:51

Yeah. No opinion about that one way or another, but it's not the right move for everybody. And the amount that you put in is not the right move for everybody. So

SPEAKER_00: 4:59

yeah, what goes up can come down.

SPEAKER_02: 5:02

Seems to happen, right?

SPEAKER_00: 5:03

And sometimes very, very fast. Well, so, you know, again, back to these two girls that were talking in line, they were talking about buying houses. And they were just saying how, you know, housing has become so expensive. And a lot of people are being priced out of the market. And so this one girl was saying that her and her husband, you know, over the, I don't know how long, but they've been able to save up enough for a down payment. How much, I don't know. I'm assuming they saved like 20%, I'm guessing, because she made it sound like it was a substantial amount. Just in her, you know, remarks. Of course, I didn't ask, how much did you save? You know, for how much house are you buying? But she's, you know, what she really started telling her friend was that even though she had the money set aside, she didn't feel like it was the right time for her to buy, you know, her and her husband. Because she was saying that Number one, she didn't know if they had enough, although it was not her primary concern. What she really was concerned about is whether they were going to stay in town or not or move. Oh, okay. And so she didn't want to jump into a house and then turn around and have to move and turn around and have to sell it. Sure. But she was telling her friend, who seemed a lot less educated or... In a lot of ways, she asked more questions than the other one who was freely given information, most of it wrong. But she really was saying that her parents, if they could gift her, which is her words, they could gift her her down payment, or at least part of it, and they would not be taxed on it if they paid it directly to the mortgage company. And I was like, yeah, that's not how that works. Because I wanted to say, I think you're confusing something like tuition or medical payments. Now that would work. Yeah, that escapes gift tax if you pay it directly to the institution.

SPEAKER_02: 7:09

Yeah, that's true.

SPEAKER_00: 7:10

But they can gift you up to$16,000 a year. Dad can. Mom can gift you$16,000. you know, so each of them can, and we're talking for the year 2022, but yeah, whether they pay it to you or to, you know, the mortgage company, it doesn't make any difference. It doesn't matter.

SPEAKER_02: 7:30

I wonder where they picked that up from. That's kind of random.

SPEAKER_00: 7:32

Like I said, I think in my mind, that's where I went. I'm, I was thinking if I were to interrupt them, I would say, you must be thinking about paying someone's tuition or again. Yeah. That would be the only way when you pay it directly. that it matters.

SPEAKER_02: 7:51

I'm just so curious as to where they even found this information. As we know, gifting is not something that's talked about often as far as the limitations before taxes, right? I don't think people always know that there's an amount or that it changes, like you said, or that each spouse can give a certain amount to you and your spouse. So there's a lot of ways to get around it, but just random that they would say you have to give it to the mortgage company. They picked up pieces somewhere along the way.

SPEAKER_00: 8:17

Oh, but she was just positive. That's how it worked. And the, you know, her friend was like, Oh really? Oh, I didn't know that really. Which made me again, kind of feel a little bit bad going. I should say something, but again, how much of a conversation do I want to get into? And then I have to explain myself, my background, you know, and all that. Cause I could hear them saying, who are you? You're just buying eggs. Right.

SPEAKER_02: 8:45

It's probably the parents. Maybe the parents told them that so that they would get off their back for the down payment.

SPEAKER_00: 8:49

Yeah, exactly. Who knows? They

SPEAKER_02: 8:51

probably shouldn't be gifting their kid money for pound

SPEAKER_00: 8:53

payment. I mean, because number one, you're not even going to be taxed on, if they gave you$16,000,$32,000 collectively, they would not be taxed on that at all. Right. I mean, if they gave you, let's say,$50,000... then that first$32,000, that would be gift tax-free. They wouldn't even be taxed on the remainder because they would just file that on their form 709 to claim that as a gift that would be taxable. But currently, their threshold, I think the threshold right now is like almost$2.5 million.

SPEAKER_02: 9:30

For the gifting.

SPEAKER_00: 9:31

Yeah. For your estate. Right. You're unified. So, I mean, what that really means is if, let's just, for easy numbers, if it was two and a half million, you subtract 32,000 off of that, that's not going to make a dent in that 12 million. You know, it's not. Right. So. Yeah, you paying taxes on anything, and I'm talking, we're not talking Jeff Bezos or Elon Musk or Bill Gates kind of people. We're talking, yeah, normal everyday people. If your family is talking about or has that kind of money, then yeah, they certainly need to be aware of how much they're gifting. And I'm sure that they would not be willy-nilly gifting$12 million to anybody just randomly.

SPEAKER_02: 10:16

Right.

SPEAKER_00: 10:16

I'm sure they hopefully have some real good tax advice.

SPEAKER_02: 10:20

And that's a big picture, a bigger plan. Everything needs to be considered at that point.

SPEAKER_00: 10:25

Yeah, exactly. So most people's estate, when they die, would have their houses, cars, all their investments, et cetera, savings. But when you subtract out, again, how much money they've actually given away during their lifetime, I would say it's probably... You know, let's say they gave away$100,000 over their lifetime.

SPEAKER_02: 10:46

I think that's closer to normal people's.

SPEAKER_00: 10:48

Yeah. And again, you're not necessarily going to get into that. And we're talking about gifting during your lifetime. Exactly. Because gifting doesn't have anything to do when you die. That goes through your estate and that you're receiving an inheritance, which is different. But there are strategies that do come into play when you're thinking about your estate planning and passing assets on to other people. And even if it's just, say, a regular house, let's say the house is$250,000 and you're going to inherit your parents' house. So the benefit of... I'll just throw the caveat in there because... The way things stand today, which can always change, Congress can make new rules, and estate planning every now and then, like the capital gains rate and all that, sometimes it's subject to change. Nothing's written in stone. But I'll say as things stand today, and back to my example, so if you were going to inherit your parents'$250,000 home, and let's say they bought it for$50,000 way back when, so that's a big gain. that your parents would have to pay potentially taxes on, you know, if they sold the house, right? Because that would be free and clear and that would be cash that's freed up. And that's even probably a poor example because I think you can, you know,$250,000, which you can actually exclude yourself, but bad example. But anyway, in the general sense, let's say you were going to inherit that. If they gifted, gifted, there I go. If you inherited that house from your parents and you would have a step up in basis. Right. So that gain would essentially be collapsed, and that's beneficial to you because if you inherit it, you don't want to pay taxes on$200,000, which, you know, you never enjoy the benefit of.

SPEAKER_02: 12:38

Exactly, especially if you don't have the cash to do so.

SPEAKER_00: 12:41

Yeah.

SPEAKER_02: 12:41

But, you know, even with your example of the house, and I know it wasn't the proper example for this scenario, but it just goes to show there's so many rules and regulations and so many things you can take advantage of, you know, like the payable on death. easy one, right? So, so many things with estate planning that if you just take a few minutes to focus on it, you can get it all set up where you don't have to worry about these issues. So, even with that example, it still turns into a million other ways that you can take advantage of.

SPEAKER_00: 13:08

Well, you know, the good thing that you brought up the payable on death because I don't know that a lot of people even think about that or know about that. And I think sometimes the transfer on death is more common than But I don't even know how common really in terms of everyday, you know, people know that. I mean, I'm sure you told a lot of people that, right?

SPEAKER_02: 13:31

You know, I tell everybody that. So just to be clear, the payable on death for things like checking and savings, any of your bank accounts, and then transferable on death for stocks or a lot of states will allow you to for house and car even. Every state's different. But I remember telling clients to go check with their bank account to set up the payable on death so that when they pass away, it goes directly to a beneficiary. And the bank representatives didn't know what they were talking about. And so I don't know if it's become more common, but it's definitely just an easy step to avoid probate and keep things simple.

SPEAKER_00: 14:06

And it just goes directly to that person. And, you know, if I were to have my checking account paid to you personally, and you knew that it was going directly to you, then you really would have a much easier way of claiming that, you know, than waiting around for probate to get cleared and all that.

SPEAKER_02: 14:26

It makes it so simple. And just like you mentioned, it does not happen until after somebody passes away. So you wouldn't have to worry about me accessing your account.

SPEAKER_00: 14:34

Right, right. Exactly. It's not a power of attorney where you can go in and make any changes or do, you know, have access to the account. That's totally separate.

SPEAKER_02: 14:43

Right. And once again, totally easy, simple ways to improve estate planning.

SPEAKER_00: 14:48

I agree. And if you are going to the extent of putting PODs and TODs on your investment accounts and your bank accounts, then hopefully you're in the same mindset of creating your will and your living will and those kind of documents, which are just as crucial.

SPEAKER_02: 15:11

I would hope so. And estate planning is so hard to talk about because nobody wants to talk about end of life. For me, I look at it as a business transaction. Let's get this paperwork done. And I use the example of my parents. For example, when my mom passes away, I'm not going to be able to function or think. I'm going to be very emotional, very upset. So what I've done is I have a complete list of all her assets, all her debts, and that way I can just go into action mode, not thinking mode. Because at that time... You know, I won't be able to think.

SPEAKER_00: 15:42

Yeah. And, you know, I used to tell people, if you're handling your wife's, you know, estate, she passed away, vice versa, you know, your husband's, you know, you really probably want to take a couple of days to get your thoughts collected. I mean, if they just died today, you don't need to call the bank today. Right. Right. I mean, what's the rush, really? And especially a lot of decisions can even change if you've sat on things for a few months. Sure. Because things can just change. Your mind can change. The strategies you had maybe talked about initially, maybe your plan has changed. So there's a lot of things that can happen. You don't need to rush into things.

SPEAKER_02: 16:29

That's true.

SPEAKER_00: 16:30

That's true. My thought.

SPEAKER_02: 16:31

And if you have it planned out now, then whenever anything happens, it's just set in place. So if you have, unfortunately, a friend of mine recently had passed away with cancer, and it went from zero to just really quick. It was just too quick, and her husband didn't have time to plan. So now he's picking up all the pieces, trying to find where she had 401Ks for the past 20 years, finding all the information. And if you just organize it, take a little bit of time, organize it, it's there. Yeah. And ready for whenever it's time.

SPEAKER_00: 17:04

Right. And, you know, there's such a thing as like deathbed gifting, et cetera. But, you know, I'm not a huge fan of that. I mean, if you haven't prepared a will and you're on your deathbed, I mean, you can do an oral one and, you know, or a handwritten one. That would be even better, you know. But... sometimes those things can just be contested.

SPEAKER_01: 17:28

Sure.

SPEAKER_00: 17:28

You know, and it probably is not the ideal time to be thinking about your assets when you're, you know, if an accident happens, of course, you know, you don't have that luxury of time. And, you know, if you're on a gurney because, you know, what happened? So, you know, you just don't have that luxury, which is why you should be thinking ahead. And that's just what everybody should do. And, you know, when I also, when I really think about Right. Right. Well, I wonder if I hate them. Exactly. Do you get along? Yes. Is

SPEAKER_02: 18:19

everybody going to be working together? Are your spouses going to work together? I think nothing brings out the crazy like funerals or someone passing away. And all the things that weren't important two weeks ago all of a sudden are so crucial. And like you said with the contested will, you say, oh, well, Dad said this was mine. Here we go into a fight, and now you've got split families.

SPEAKER_00: 18:38

Who was it? Somebody told me that... That somebody, a family member passed away, I want to say mom, dad, somebody, and like their aunt or somebody went in the house and started ransacking it.

UNKNOWN: 18:51

Oh, wow.

SPEAKER_00: 18:51

And took, you know, things that they felt belonged to them and which didn't, you know, or maybe even if it did, you know, there wasn't anybody overseeing it. But they just had the audacity to go into the residence and And just start picking and choosing the things that they wanted. Unbelievable. Yeah, and they were like, what are you doing in here? And, you know, that's so, to me, so distasteful. It is. And really disrespectful, but that's people for you.

SPEAKER_02: 19:22

I agree. And then you have the combined families, too. So you have step-siblings or whatever, and that's a whole other.

SPEAKER_00: 19:27

Or they're being influenced by their significant other.

SPEAKER_02: 19:31

That's a big one.

SPEAKER_00: 19:32

We see that one a lot. Yeah. Yeah. That's unfortunate,

SPEAKER_02: 19:35

too. It's really sad. It's heartbreaking for me because there's nothing that a relationship I would lose over assets. But once again, if people just get things in place, take a little bit of time, put it all together, it makes things so much simpler. And for the gifting that we were talking about earlier, you can make that part of the plan. So if you wanted to gift your grandkid$16,000 for the down payment, for example, make that part of the plan.

SPEAKER_00: 19:59

Yeah, definitely. Yeah. You know, and I think about, like, you know, as my mom gets older and, you know, she has, you know, some dementia issues. I know when we went to speak to her attorney about her estate planning, you know, her will, et cetera, and I brought up the fact that, you know, my mom has dementia. She's sitting right here and she can hear you and talk to you. So it's not like she's, you know, in a memory unit right now. But I was worried. I said, you know, whatever we put in place today– you know, might that have an effect if this should get contested later on down the road? You know, you never know. You never know. No,

SPEAKER_01: 20:38

you don't.

UNKNOWN: 20:38

Yeah.

SPEAKER_00: 20:39

And the attorney said, well, what we will do is contact or get, uh, from her, uh, neurologist or her doctor, you know, the state of her condition. She said, because even people who have, um, acute Alzheimer's, there are moments of clarity. And at that moment is when they're hopefully executing their wishes. And as long as they have that, you know, and I'm no attorney, you know, so get yourself some good legal advice. You know, there's my caveat. But, you know, because the situation could be that, you know, again, you have to have that backup, that safety net, because things can, you know, unfortunately happen if you haven't thought ahead.

SPEAKER_02: 21:23

That's a really good point to bring up. The other one I bring up a lot of times is, how people will name beneficiaries, name children as beneficiaries. Right. And it may or may not work out the way you want it to. For sure, for sure. So you want to leave the money to your five-year-old, but it's not exactly the way it works. And a lot of times people will say, oh, well, there's a trust that will say she can't have it until she's 30, and they don't know the pieces of that, setting up the trust and who's going to run it. Yeah,

SPEAKER_00: 21:51

I know of a situation where money was set aside for this individual's education.

UNKNOWN: 21:57

Mm-hmm.

SPEAKER_00: 21:57

They got like a settlement from an auto accident. And there was money set aside for, you know, education. And apparently some cash that was coming in on an annual basis too. Okay. Guess who didn't get that cash? Yeah. Didn't find out about it either until years and years later.

SPEAKER_02: 22:16

And the money's gone.

SPEAKER_00: 22:17

Well, yeah. And what are you going to do? What do

SPEAKER_02: 22:20

you do? Yeah, there's that thing.

SPEAKER_00: 22:21

Even if you wanted to sue them, you know, what kind of rift is that going to create? Right. And... I don't know.

SPEAKER_02: 22:28

And the legal rights that they may or may not have had.

SPEAKER_00: 22:30

Well, if they're guardians, you know, it's a really cruddy situation sometimes. And I know that like in California, they have like these Jackie Coogan laws, you know, because of that child star back in the 30s. And, you know, when he was a kid and he made, you know, oodles of money back then. And his parents just, hey, free money. So when he got to age of majority and emancipated himself or whatever, I don't know exactly all the mechanics, but anyway, when he's out on his own and you would think he'd have a pot of money to fall back on to support himself because he did do some acting later on in life as an adult, et cetera, et cetera. But as a kid, sometimes these kids earn lots of money. Nevertheless, yeah, they spent it. They spent it. So he didn't have any money. How sad. Yeah, and that was the impetus of putting into place these Jackie Coogan laws so that you can get a Coogan account and the money has to go in there and it's managed for the child. And it's not necessarily an open safe that they just can go in and grab.

SPEAKER_02: 23:45

So it ensures that they have the money when they get of age. Yeah. Thank goodness for that.

SPEAKER_00: 23:49

Yeah. But I don't believe that, as far as I know, those laws may not even exist outside of California. I don't believe they're federal laws, but it could

SPEAKER_02: 23:59

be wrong. I'm personally not sure of those, but it just goes back to the point of everybody doesn't always have the best interests at heart. Yeah. For the finances. Or maybe they're not good at managing money. Because I tell people all the time, when you're setting up your will, for example, in guardianship for your children, the person that takes care of your child physically may not be so great with money. Right. So you can leave money elsewhere for the benefit of, but it's very important to set it up.

SPEAKER_00: 24:25

Yeah. And, you know, speaking of, you know, gifting too, I was thinking about, you know, as you were talking, people gifting money to parents. people into their IRA. A lot of grandparents want to do that for, you know, their grandbabies, etc. Because they're like, wow, you know, they know how hard it is when you're young and getting started and the power that time can have, you know, on your money. So if you can get started early, you can do that. But gifting for children can be done. into an IRA by grandparents' parents. You know, because the kids don't necessarily have to be working. They don't have to be actors or what have you. They can gift money into it. For adults, different story. Because if your dad wanted to gift you$5,000 for your IRA, well, he could gift you the$5,000, but he can't necessarily put it into your IRA for you. And if you're not working, that's not going to work either because... You have to have earned income.

SPEAKER_02: 25:30

Unlike your girl's example that you were talking about earlier where you have to gift directly to the mortgage company. Yeah. You kind of have to go around. Yeah. Make it a roundabout way.

SPEAKER_00: 25:38

Yeah. It just, like I said, it just, they can just give you the money and I don't think it's going to be a problem unless they're giving you, like I said, maybe, I don't know,$200,000 and then you probably need to be more conscientious about, and really all you have to do is file that 709. Not you, your parents. Right,

SPEAKER_02: 25:56

the gifter.

SPEAKER_00: 25:57

Yeah. So, that's, probably a non-issue, but, and once that money goes into the IRA, I mean, you could yank it out yourself. If you need some money for next, you know, some more cash for your down payment app, if you needed it, you could do that.

SPEAKER_02: 26:12

Financial planning is so much fun. There's so many pieces and parts that go together and estate plan. This sounds weird, but I really love estate planning. It sounds weird because obviously it's for the end of life, but just having it in place and having the organization and making it easy on those that you leave behind is, It's just really a great thing when you have it all put together in the right way.

SPEAKER_00: 26:32

Yeah, and I think we said this last time, but it's worth repeating to me, that your beneficiaries should be reviewed and your whole entire estate plan, I would say at least on the annual basis, by you, nobody else, just to make sure that when you're thinking about, I got my IRAs, I want that to go to this person, this my spouse, what if me and my spouse are not alive, then where does it go from there? You know, wonder if you're going to give your IRA to your child because, you know, maybe they were remarried, you know, so that goes to your biological child. My IRA goes to my biological child. Um, then you just need to make sure that that's really the case and anything can happen to anybody. You know, when you've set that up, that maybe you're, children are married right now and you're thinking well the money will go to my son and then what happens if my son's not alive right then you've just given money potentially to his wife who you hate it's always that way

SPEAKER_02: 27:42

you're right it i would review it at least once a year And then, of course, anytime anything changes, if you get married or somebody gets divorced, or like you said, you give it to your child and they get married or divorced, maybe that changes things.

SPEAKER_00: 27:54

Yeah, it can be really super complex.

SPEAKER_02: 27:56

But beneficiaries are so easy to update. And just like we talked about the payable on death and the transferable on death, easy, simple, just a matter of paperwork, update that.

SPEAKER_00: 28:05

And, you know, gifting too can always be done a lot easier too. If you're so concerned with, you know, how... many times you'd have to change names, et cetera. You could name a trust as a beneficiary.

SPEAKER_01: 28:18

That's

SPEAKER_00: 28:18

true. And if it's an irrevocable trust, no one's going to be able to go in and make changes to it. So, you know, that's always a good possibility. If again, you're talking about a significant amount of money and I guess it doesn't even have to be everybody's relative turn of what's significant, you know, is to, you know, relative to them. Right. So it just, however you do it, as long as you're doing it, number one, And then getting good sound advice, number two, and then reviewing it on a regular basis is important.

SPEAKER_02: 28:49

Those are the best steps. And the good sound advice, not in the grocery line.

SPEAKER_00: 28:53

So when you talk to people, have they ever brought up, will you look at my estate plan or are they just kind of mouth it to you, here's what I've got in place?

SPEAKER_02: 29:01

Not usually. Usually with estate planning, nobody wants to talk about it.

SPEAKER_00: 29:05

At all?

SPEAKER_02: 29:06

Never. And I'm always bringing it up. And I sometimes feel bad about that because I know it's a sad topic. But once again, I go back to thinking about my mom. And that day, if she were to pass away, I am not going to want to think about anything. So I just wanted to go on autopilot. It's already done. The thinking's done. The emotions are out. And so nobody ever wants to talk about it. I bring it up constantly. It's such a big deal. And especially, you know, when you lose a loved one and now you're stuck trying to find all of their assets, all of their debt, all their 401ks from how many jobs they may or may not. What a nightmare, honestly. So for me, I bring it up constantly despite the fact that nobody wants to talk about it.

SPEAKER_00: 29:46

Yeah, because I think even things like your life insurance beneficiaries, that could be a situation where people inherit a significant amount of money very quickly. Um, you know, they could get a 250,000, what 250 is on my mind. I don't know why, but you know, you

SPEAKER_02: 30:04

have said it several times,

SPEAKER_00: 30:05

but anyway, yeah, you get$250,000, you know, from a life insurance policy and maybe that's more money you ever had in your entire life.

SPEAKER_02: 30:13

Yeah. That's a big sum all at one time.

SPEAKER_00: 30:15

Yeah. Yeah.

SPEAKER_02: 30:15

Of tax free money. Sure.

SPEAKER_00: 30:17

Yeah. And you know, that's not gifting, you know, your parents didn't gift you that money. You, inherited that money.

SPEAKER_02: 30:24

Right, totally outside the

SPEAKER_00: 30:26

gifting exclusions. Yeah, it would have no bearing on your gift tax at all.

SPEAKER_02: 30:31

But it's a huge, life-changing amount of money, so it can be blown through really easily, as we see, unfortunately, too many times. Yes. Or you could talk to someone and make a plan.

SPEAKER_00: 30:41

I've seen, you know, speaking of the military, I know that there are definitely spouses who get left$400,000 and they get left it one day and they have it gone the next. Right. And that happens.

SPEAKER_02: 30:55

It's so sad that it happens. But you think about at that time, it's money that you probably haven't figured out how to manage. And then you have people that probably show up out of the woodwork that need all kinds of help. And then, of course, you're emotional. You're sad and not thinking about the long-term aspects. So having the plan, once again, ahead of time is why I keep pushing it down everybody's throat. It's amazing people still talk to me, really.

UNKNOWN: 31:19

Yeah.

SPEAKER_00: 31:19

It's because you sound so sweet.

SPEAKER_02: 31:21

Oh, maybe so. It's good intentions, I promise.

SPEAKER_00: 31:23

Yeah. They're like, will you help me with my financial planning and what are you doing Tuesday night?

SPEAKER_02: 31:31

And who's your beneficiary?

SPEAKER_00: 31:33

I'm talking about more financial planning. And no, I don't want to go out with you.

SPEAKER_02: 31:40

But thank you.

SPEAKER_00: 31:41

Yeah, you're like, that's very kind of you. Can you leave? Do you have anything else you want to add today?

SPEAKER_02: 31:52

No, I think it's a lot. It's so much. And one of the things I want to tell people is estate planning and gifting is just so many different small aspects of it. It doesn't have to be overwhelming. It can be taken piece by piece and really simplified, but just mostly to take advantage of all the tools that are available. for you and for your loved ones.

SPEAKER_00: 32:14

Yeah. And you know, I'll just throw in one last piece too, because I know that a lot of people think about it is the cost. And I know that, um, you should just shop around. I know some attorneys, I'm just going to throw this out. Um, I went to one attorney and they wanted to charge a thousand dollars just to write a will.

SPEAKER_01: 32:32

Oh, wow.

SPEAKER_00: 32:32

I thought that was a lot. I mean, and we're not talking about again, you know,$12 million giving that away. Um, So I just thought for an average person, that was quite a bit. And I know you can do that online for a lot, lot less. A lot less, yeah. And that would be better than nothing. I mean, just go online. But when you are thinking about this, I definitely recommend you get some recommendations from people and then ask. How much do you charge to do estate planning documents? And which ones are you going to do? I'll do the will, the power of attorney, medical directives, living will for...$300. Right. Well, okay, I can bear that. I'll do it for$3,000. No, I... Yeah. Thank you. I'm moving on.

SPEAKER_02: 33:17

Yeah, if it's a simple estate plan, that doesn't make much sense to me either. And the things like the payable on death, transferable on death, and beneficiaries... You don't need an attorney for, so yeah.

SPEAKER_00: 33:27

But I would say that it's probably a good idea to sit down with somebody who can help you dot your I's, cross your T's. I agree. And I'm talking about not necessarily the girl in the checkout line.

UNKNOWN: 33:39

No.

SPEAKER_00: 33:40

I'm talking about a financial planner, financial advisor, somebody who really can help you see things from an outsider's perspective and just provide you that additional set of I's that you know, their recommendations might bring.

SPEAKER_02: 33:53

It's so important. And if you get that done in one year, then you don't need to keep messing with it next year. Just review it.

SPEAKER_01: 33:59

Right.

SPEAKER_02: 33:59

If you need to make changes, get that done. But otherwise it's kind of on autopilot. Once you've sat down with someone and I agree, it's important to get it done with a professional.

SPEAKER_00: 34:08

Yeah. And, you know, just dawned on me too, you know, like, cause my mom wanted to change her will and she was just hell bent on, she'd actually lost it. She didn't remember where it was. Anyway, what ended up happening was my sister had it. Yeah. I don't know how she ended up with it, but anyway. So my mom was just really concerned that she needed to get it back from her. She's like, I need to get it back from her. And I said, no, you don't. You really don't.

SPEAKER_01: 34:40

That's

SPEAKER_00: 34:40

true. Because when you get a brand new well done, all those other ones will go by the wayside. That's true. They'll be invalid. And yeah, they might have it, but you've, hopefully wherever the most current updated one is, wherever it's at, whomever has it, your attorney, you know, whoever you trust, if let's say in that case. Yeah, your attorney is just going to draft you a brand new will. Right. So you can add a codicil or whatever, but generally they're just going to create a brand new will for you.

SPEAKER_02: 35:12

I think that's the easiest way to do.

SPEAKER_00: 35:14

Yeah, start fresh.

SPEAKER_02: 35:15

Right,

SPEAKER_00: 35:16

I agree. And I know, too... Um, I remember a lot of times where people had a power of attorney and we would not take powers of attorneys past three years.

SPEAKER_02: 35:27

I think that I hear that most times too. Whenever I send mine in working in the islands, I often give power attorney for my mom in case I cannot handle something and they always want an updated one.

SPEAKER_00: 35:37

Yeah. So I, you know, I remember originally that surprised me because I always thought, well, once you have it, you have it.

SPEAKER_02: 35:44

I thought so originally as well.

SPEAKER_00: 35:45

And that's not always the case. Yeah. Like in, Well, like we just said, yes, based on your institution, that could change. Well, that's it for me.

SPEAKER_02: 35:58

It's good stuff.

SPEAKER_00: 35:59

Yeah, I guess my dog decided to let us know that time is up. And

SPEAKER_02: 36:03

there's so many stories out there that we could go on all day about bad things that have happened, and I'm sure everybody has one, but just make it simple on yourself and your loved ones.

SPEAKER_00: 36:12

Yeah. Good advice, Grace. Thank you for joining me today. I'm so glad to be here. Yeah, and hopefully I'll get to see you in the island soon. I

SPEAKER_02: 36:20

hope so. I would love that.

SPEAKER_00: 36:21

Yeah, definitely. You have a great day.

SPEAKER_02: 36:24

You too.