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Coasting in Retirement Ep 14: How Not to Screw up Passing on Your Wealth Thumbnail

Coasting in Retirement Ep 14: How Not to Screw up Passing on Your Wealth

Beneficiaries Coasting in Retirement Estate Tax Financial Planning Inheritance Investment Management Investments Pre-Retirees Retirees Retirement Funding Tax Strategies Wealth Management

Segment 1 (Show Open): 

Good afternoon everyone! Welcome in. Welcome to Coasting in Retirement! That’s right. Josh Null here, along side co-host Michelle Lee Melton, my radio partner in crime, my midnight rider, my Opelika lady helping this Ozark country boy with three syllable words…Michelle, how are you? Well, I’m great, and I’m excited to be back recording here in Coastal College’s podcast studio, located in beautiful downtown Fairhope, and I’m even more excited about the show we have today, as usual, we have another killer show for those of you tuning in. 

Listeners: Michelle and I are here today to discuss financial topics relevant to those in or near retirement living their best life along our part of the coast. If you’re just tuning in to our show, welcome, you’ve listening to what we consider Lower Alabama’s most dynamic financial radio show. Here’s what we’ve got in store for you today: First segment – deep dive on our topic of the day. 2nd segment - at about 15 minutes past the hour - fan favorite “Michelle with the News of the Week”. 3rd segment, roughly 30 minutes past the hour, you’ll hear a good ol fashioned roast of yours truly with our ”Josh’s Crystal Ball and Big Mouth” piece. So buckle up, we pack a lot in, and be ready to be both entertained and enlightened!  

For those new to the show, a quick background on me. Again, my name is Josh Null, and I am a fee-based financial advisor, I hold my FINRA Series 65 securities license and I am the owner of Gulf Coast Financial Advisors, an independent investment management and financial planning firm with offices in Fairhope and Orange Beach, Alabama. You can find more information on me and Gulf Coast Financial Advisors by visiting our website gulfcoastfa.com or feel free to give us a call at 251-327-2124. If you missed that, don’t worry, we will repeat our contact info several times throughout the show! 

Alright, let’s get started with our main topic today. Today’s episode is going to be the most personal one I’ve done to date, it’s about something that affected me and my family deeply. It also has ties to a recent hit show called “Succession”. Let’s start with a question to you Michelle, as someone with a law degree and that has helped many people write their wills. What is the hardest part of putting together a last will and testament? (Michelle – I’m looking for the awkward and uncomfortable conversations with your heirs / family). Josh: would you say that is why so many people put off writing a Will? So, I would agree with that, and with that as our foundation of today’s topic, we’re going to discuss 5 steps on how to NOT to screw up passing your wealth to your heirs, with obviously some of the discussion centered around having a will. But first, a quick story on how this particular issue has affected me so personally.  

My family listens to this show, so I am going to tread lightly because the wounds from the story I am about to share are still raw. Most of our regular listeners and our existing clients know that I am originally from the Ozarks of Missouri, specifically what’s called the Foothills, just north of what is called the Bootheel. (Michelle is welcome to make a hillbilly joke if she wants to; I will counter that I am technically “Hill People” and that the real hillbillies were to the west and south of me). I come from a big family on my Dad’s side, which for most of my life, was a pretty close knit family. The patriarch and matriarch of this branch of the family were my Grandpa and Grandma Null, Eldon and Vergie. I was very close to both of them, particularly my Grandma Vergie, and I spent a significant part of my youth at their house.  

Rewind many decades ago: my Grandpa started buying land in our part of the country, eventually accumulating about 600 acres. My family utilized the land for various businesses – we liked to name things in a practical sense – so there was the Pig Farm, there was the saw mill, the hamburger and ice cream stand, the lumber yard, etc. I even had a “Mama Dog” by my side for my entire youth. With all of this family centric activity, in the eyes of a young boy, we were just one big happy family making a go of it in a rural area, where as my Dad would say, “sometimes you have to work twice as hard to make half as much”.  

Fast forward many years to get back to our topic of the day. Both my Grandma and Grandpa died within a few weeks of each other after 70 plus year of marriage. They left behind 6 surviving children, and while they had prepared several beneficiary deeds, they had not written a final will and testament, at least not one I ever heard of. To make a long story short, over the ensuring years, these beneficiary deeds were challenged, and my once close family was torn apart. We had brothers and sisters taking each other to court, we had multiple disputes on what defined someone’s “rightful inheritance” and eventually, and unfortunately, most of the 600 acres ended up getting sold on the courthouse steps. Thankfully we were in a position to purchase many of the most important pieces of land to our family, but as you can imagine, the whole process took a terrible emotionally toll on my family.  

Now that story is going to sound judgmental to both my grandparents and to my aunts and uncles, but it’s not meant to be. I believe they all tried to find a solution for years, but at the end of the day, the avoidance of really hard conversations led to the lack of one final and complete plan once my grandparents died. I tell you this story because there are some of you listening that are nodding your head – maybe it’s your parents that are in their twilight years and it’s been hard to nail down a final plan, or maybe you yourself are struggling with some of the details of how you want your inheritance to go to the next generation. Whatever the case, today what Michelle and I want to accomplish are to give you all some guidance on how to potentially avoid what happened to my family and so many other families out there. We broke it down into 5 easy steps, that in and of themselves won’t necessarily guarantee family harmony, especially around a sometimes very emotional issue, but I promise that if you follow these steps, you will at least get you closer to leaving this earth with some peace about your legacy.  

Alright, Michelle, you ready? Well then here we go. Here are the 5 steps on how to NOT to screw up passing your wealth to your heirs, we’ll lay the list out then we discuss each individually briefly: 

  • Have a written last will and testament, and if necessary, an estate plan. We’re going to go more in depth on this, but a quick note – you don’t always have to have a large estate to need an estate plan. If your estate is “small”, Estate Plans can also be very useful when there are special needs issues or…an outlaw in-law lurking in shadows, waiting on your demise.  
  • Have a conversation with your heirs. It may be uncomfortable. From my experience, more often than not, it IS uncomfortable. Now, if it’s going to be super uncomfortable, have your professional team with you. We’ll discuss more.  
  • We told you on our last episode to ignore most of the news, particularly news around the debt ceiling. But don’t ignore news about the Estate Tax Exclusion, otherwise known as the death tax. As opposed to the debt ceiling, the estate tax exclusion is a political football that can have real impact on your family. 
  • If possible, think about helping your heirs while you’re still alive and they could probably use the assistance. For example: the gift tax exclusion for 2023 is $17k per done, $34k per married couple.  
  • For our last one, let’s say you’re in a great spot and you feel you’ve done more than enough to leave a legacy for your heirs. In that case, consider charitable gifts to organizations that you believe in. One of the most powerful ways to teach kids, even adult children, to be responsible with money is to give it away to worthwhile causes.  

Alright, let’s dive into each of these items individually and quickly. 

Again, if you’re interested in having that conversation, give us a call at 251-333-5151, or find us at gulfcoastfa.com. That’s gulfcoastfa.com. 

Alright folks, coming up next - There’s always a lot going on in the world! Particularly the world of finance- this past week was certainly an example of big news in finance! Every week Michelle and I scour the interwebs for helpful financial articles related to our topic of the day, especially articles that pertain to those in or near retirement. Join us after the break to hear Michelle and I discuss this week’s relevant headlines in our “Michelle with the News of the Week” segment. Stay tuned! 

Segment 2 - Michelle with the News of the Week: 

Josh: “Welcome back to Coasting in Retirement, your host Josh Null here! As we discussed before the break, every week Michelle and I scour the interwebs for helpful financial articles related to our topic of the day, especially articles that pertain to those in or near retirement. Michelle and I are going to help you all understand and decipher the deeper meaning of those headlines, or at the very least, provide context. So with out further adieu, here’s “Michelle with the news of the week”!:

1. Michelle: Alright Josh, let’s start with a new site I found, The Balance. They have a recent article titled “How to Protect Your Estate and Inheritance from Taxes”. This article is super in-depth and does a great job of breaking down the difference between estate taxes and inheritance taxes, as well as listing the states that have their own estate taxes. Side note – Alabama does not.  I also think this article does a great job of explaining the difference between revocable and irrevocable trusts in plain English. What are your thoughts? 

    (https://www.thebalancemoney.com/best-ways-to-protect-your-inheritance-from-taxes-4178488)

    2. Michelle: Next up is an article that I feel I could have written. Not only is the title of the article right up in the reader’s face, the author Ann Brenoff also does a good job of using odd numbers. It’s called “7 Nasty things that can happen if you die without a Will” and it can be found at HuffPost. Here are some of my favorite lines from the article: “Before your body is cold, someone will ask how much you were worth”. Like that? OK, how about this: “Nobody can read your dead mind, which leads people to calling other people ‘liars’”? Ann makes the case that death does not always bring out the best in people, including not taking care of your pets like you wanted after you die! Unacceptable. Anyway, I found this article did a great job of mixing in humor while being very straight forward and hard hitting. What say you? 

    (https://www.huffpost.com/entry/7-nasty-things-that-could-happen-if-you-die-without-a-will_n_5731f3a5e4b016f37897005b)

    3. Michelle: We often reference well-known news websites, so I thought I would flatter you Josh and pull an article from your website, gulfcoastfa.com. (Josh – you mean my site isn’t national known?) You have an article titled “Are You Prepared for an Estate Tax Sunset?”. According to your article, in 2026, the current state exemption of $12.92 million per person that was part of the 2017 Tax Cuts and Jobs Act is set to expire. The future amount is projected to be reduced by roughly half to about $6.4 million per person. For estates that exceed that amount, the federal tax rate will be set at 40%, in addition to those states that charge their own estate tax. Given that we are almost halfway thru 2023, do you see this playing out as it was written in 2017 or do you see more changes to the estate tax exemption? 

    (https://gulfcoastfa.com/blog/are-you-prepared-for-an-estate-tax-sunset)

    4. Michelle: Alright Josh, let’s pivot to Forbes. They have an article titled “Seven Reasons to Tell Your Kids What They Will (Or Won’t) Inherit. (Josh – 7 again? Are there any articles with even numbered lists out there?). This article has a lot of common-sense advice, such as avoiding surprises, practicing your spiel and setting expectations. That said, as someone that has seen even close knit families become uncomfortable and irritable discussing an inheritance, I feel like this article is missing one piece of advice – what to do when you can’t get everyone on the same page, or worse, emotions start running high, which is not uncommon. Do you agree? 

    (https://www.forbes.com/sites/deborahljacobs/2013/11/27/seven-reasons-to-tell-your-kids-what-they-will-or-wont-inherit/?sh=7579c835689b)

    5. Michelle: So far in this segment we’ve discussed issues from the view of the person leaving the inheritance behind. Let’s move to the other side and discuss challenges facing heirs. Personal credit rating site Experian has an article simply titled “What to do with an inheritance”. Here’s some of the author’s common sense advice: “park your money in a high yield savings account”, “pay off your debt” and “buy a bigger boat”. Just kidding, that’s not in the article, that’s a Josh addition. Anyway, as someone that has helped your clients both pass on wealth and managed inherited wealth, what do you think the biggest mistakes heirs make?  

    (https://www.experian.com/blogs/ask-experian/what-to-do-with-inheritance/)

    6. Michelle: Alright Josh, I decided to lighten it up for our last article and ended up going down a rabbit hole. Listeners, if you want to get sucked into a silly information cortex, just google “funny inheritance stories”. There are DOZENS of articles and hundreds of search results. I narrowed it down to a couple of my favorites. First, did you know that in 1928, an anonymous British citizen donated $500,000 pounds to the United Kingdom’s government with the express written instructions that it be used to pay down the U.K.’s national debt? And that money sat in an investment account for over 90 years and grew to over $640 million dollars in value because no one could work out the legality of using it as intended? Or did you know that the creative director of Chanel Leona Helmsley left her entire £150 million fortune to her CAT when she died in 2019? And that she cut 2 of her 4 grandchildren totally out of her will? She was called the Queen of Mean. I could literally go on and on with stories like these. I have no idea what you have to say about this information Josh but at least I am amused.  

    (https://www.capitalfm.co.ke/thesauce/weird-world-5-of-the-most-shocking-inheritance-stories-ever-heard/)

    (https://www.cnbc.com/2018/05/22/uk-government-looks-to-open-mysterious-fund-to-pay-off-national-debt.html#:~:text=The%20%E2%80%9CNational%20Fund%E2%80%9D%20was%20opened,off%20its%20entire%20national%20debt.)

    Josh: Michelle, great job as always with the headlines, these are all important pieces of information that impacts those in or near retirement! Listeners – if you have questions around the topics in our headlines of the week, or questions related to your investment strategy or financial plan, why don’t you give us a call at 251-327-2124 to have a conversation or set up an appointment, or you can reach out to use via our contact page on our website gulfcoastfa.com.

    Alright folks, coming up next : Josh’s Crystal Ball and Big Mouth. What have been some of my predictions? Have I been right? Was I ever wrong? How wrong? What do I think is going to affect investors in the near future? We talk about all of these things and poke a little fun at my big mouth. Stay tuned! 

    Segment 3 – Josh’s Crystal Ball and Big Mouth:  

    Welcome back! Your host Josh Null here, along side co-host Michelle. So, I am opinionated, I have strong opinions at times, I would say a radio show host that isn’t probably wouldn’t be very interesting to listen to. And I am paid in my profession to offer professional guidance and opinions to my clients, otherwise what use am I? Sometimes I feel so strongly about something that I talk about it publicly, on the various podcasts and radio shows I’ve had, sometimes I’ll even make predictions, and while I usually proved right, there are times I swing and I miss. Want to hear me eat a little crow? Then let’s get at with Josh’s Crystal Ball and Big Mouth.   Alright Michelle, what’s first?

    1. Michelle: So Josh, so last week we discussed Meme stocks, with Rivian being one of them at the time. You said that even though Rivian had a $14 billion dollar market valuation, it had only delivered about 100 vehicles, maybe 1000, to buyers. Well, well, well, it appears that Rivian delivered 7946 vehicles in the first quarter of 2023 alone, which was about the same amount they delivered in the 4th quarter of 2023, so you estimate was way off. So, do you still hold that Rivian’s stock price is way higher than it should be?   

    Josh: Rivian’s market cap as of this week is about $14B on revenue of $661M. I compared Rivian to Ford, which has a market cap of about $56B. Ford delivered 1.1M vehicles in the 1st quarter 2023 compared to Rivian’s almost 8000. Rivian lost $1.35B in the first quarter. Fords revenue was 41.5B, with a $3.4B Earnings before interest and taxes (EBIT). Rivian’s individual stock price is almost the same as Ford. Yet Rivian is worth 25% of Ford? So, look, here’s the deal. My point is… 

    2. Michelle: Alright Josh you said recently that you thought artificial intelligence, or AI, would be more of a threat to the job security of investment and money managers than it would be to financial planners. Well let’s take a recent news. It appears that JP Morgan Chase has recently introduced, and patented I might add, a new stock trading advisory chatbot called “IndexGPT”. Here’s a word salad definition for you: the product provides temporary use of online non-downloadable cloud computing software using artificial intelligence for use in computer software selection of financial securities and financial assets”, end quote. JP Morgan Chase is claiming it’s not trying to displace actual money managers, but industry experts say it’s only a matter of time. So, did you nail this opinion coming out of your big mouth? 

    3. Michelle: So Josh after all of the ridiculous news around crypto exchanges FTX and Binance, it looks like a new crypto exchange has just gone live, it’s called EDX. The interesting part of this news is that EDX is backed by well-known and respected custodians Charles Schwab and Fidelity. So given the fact that legitimate US based companies are now getting into the crypto exchange business change all of the crypto skepticism coming out of your big fat mouth? 

    Josh: I saw Michelle, and yes, to be fair, it did give me pause. Both Schwab and Fidelity are 2 of the best known and well-respected custodians in the US. Now, if you look closer at the news, EDX is NOT going to provide custodial services, meaning that rather than handling customer assets directly, it will act as a platform on which a network of firms can execute and settle trades between crypto assets and fiat currencies. Which, in my opinion, means they want to get piece of the trading activity, the buying and selling of crypto, without having the exposure that other exchanges that custody customer assets. So, as we’ve said before, is there the potential for the underlying blockchain technology to have real world applications? Of course, and I’ve heard that it’s already being used to make global shipping more efficient and secure. But guess what other technology had a profound impact on accounting, and shipping, and manufacturing, etc? The Excel spreadsheet! I’m sure there was some “this is revolutionary” talk about in Excel in the 80’s, but I don’t recall people thinking they were going to get rich off it, other than by owning Microsoft stock as a by product. Do you know the estimated total value of all crypto in the world Michelle? It’s about $1 trillion dollars. Not bad. Not bad until you realize that a single company, Apple, has a market cap of…nearly $3 trillion dollars. So, my opinion, probably for a while cause I’m tired of talking about it: crypto as a valid currency in strong sovereign nations? Forget about it. Crypto as a security or commodity? Fine, but watch out when all the fake value created thru wash sales is cleaned up and all of the regulation is added that guys like me deal with regarding stocks. Until the buying and selling of crypto is no longer a zero sum game that more often than not takes money from the average retail investor thru relentless trading but no real revenue, I’ll keep quoting the Jerry Maguire movie – Show me the money! 

    4. Michelle: Alright Josh so you’ve said that most Americans don’t take the time to write a Will until they have a significant health scare, and that most American’s don’t create an estate plan because they don’t feel like their estate is valuable enough to warrant one. A recent poll called the “Will and Estate Planning Survey” found that while the overall percentage of people with a Will has noticeably increased since Covid, still nearly 2/3 of Americans do not have a will or estate plan. So do you still hold to your opinions on the reason why so many people hesitate to take the time to write a will or develop an estate plan? 

    Josh: The number of Americans who lack a will is troubling. Not having a will can create burdens for loved ones with no clear path to resolution. As it relates to Estate Plans, as my old podcast co-host Jay Stubbs often said, “everyone with an estate should have an estate plan, and everyone has an estate”.  That starts with knowledge and understanding the importance of having a plan in place. Josh – re-cap the conversation about why it is uncomfortable for people to talk about wills, especially with heirs. 

    5. Michelle: Last one Josh, you said that after the bank collapses of regional banks SVB and Signature Bank, that not only would folks be nervous about holding large deposits at smaller and regional banks, but that they also would do “flight to quality” less risky types of investments, such as money market funds. 

    Well listeners, I hoped you enjoyed a peak behind the curtain on how I form my opinions and predictions, and more importantly, that I’m willing to admit when I am wrong. Which isn’t very often, but still.   Now, to our listeners that have more questions the various investments and topics we discussed in this segment, we invite you to reach out to us. Call us anytime at 251-327-2124 to make an appointment or find us at on our website at gulfcoastfa.com. 

    Folks, that’s it for us this week here at Coasting in Retirement! I want to give a huge thank you to my lovely co-host, Michelle Lee Melton, a thank you to our awesome radio station 106.5, many thanks to the provider of our show music, local band Sloth Racer, and as always my sincere appreciation for all of your out there that have been listening and joining us on this journey. We would love to be a part of your journey as well. Until we talk again next Sunday, have a wonderful and productive week. This has been Coasting in Retirement with Josh Null!  

    Disclosure:

    Advisory products and services offered by Investment Adviser Representatives through Prime Capital Investment Advisors, LLC (“PCIA”), a federally registered investment adviser. PCIA: 6201 College Blvd., Suite#150, Overland Park, KS 66211. PCIA doing business as Prime Capital Wealth Management ("PCWM") and Qualified Plan Advisors (“QPA”). Certain services may be provided by PCIA affiliates. In this format, Josh Null provides general information, not individually targeted personalized advice, and is not liable for the usage of the information provided.  Exposure to ideas and financial vehicles should not be considered investment advice or a recommendation to buy or sell any of these financial vehicles.  This information should also not be considered tax or legal advice. Past performance is not a guarantee of future results. Investments will fluctuate and when redeemed may be worth more or less than when originally invested.