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Flight #18: Money Advice To Share With Your Kids

Pilot Money Guys:

Kids and Money!

Welcome to Flight #18, where we are discussing kids and money!

This podcast is all about helping your kids take the first steps to financial freedom and independence. We discuss some of the steps we all wish we would have taken when we were first starting out as new savers and investors.

We believe we should help our kids learn from other's successes and mistakes - We do not have time to make them all ourselves! In fact, life is a series of building off the successes and failures we all experience. Sharing those lessons with our kids is easy in some areas but with finances it can be tough. Don’t let that stop you from preparing them for a great financial future.

“Children are sponges—they are going to absorb whatever is around them, so we need to be intentional about what surrounds them.” — Dave Ramsey

Our kids will learn from our money habits whether we like it or not. We encourage parents to communicate money matters to their kids as well as be honest and transparent as much as possible, so they don’t make the same money mistakes we made.

In this podcast we cover the most important financial topics for getting started. We believe this content can help you have great conversations with your kids. They still won’t think your cool, but I bet they’ll listen and learn something.

Our goal for our clients is to help their kids build a foundation of financial knowledge that will set them up for success in the future!

Thank you for listening!

This hypothetical illustration assumes an annual 6% return. The illustration doesn't represent any particular investment, nor does it account for inflation. Source:https://investor.vanguard.com/retirement/savings/when-to-start

This chart shows that if you start saving earlier, you can have a higher balance at retirement than someone who saves more but starts later. If you contribute $10,000 a year from age 25 to age 40, for a total investment of $150,000, it could grow to $1,058,912 by the time you're age 65. If you contribute $10,000 a year from age 35 to age 65, for a total investment of $300,000, it could grow to $838,019 by the time you're age 65.

 

Can You Beat COWBELL in timing the market?!

https://www.personalfinanceclub.com/time-the-market-game/

 

Podcast Transcription:

Flight #18: Kids and Money

[00:00:00] Voice Actor: ladies and gentlemen, welcome aboard the pilot money guys podcast, where our mission is to help clients build and protect wealth to achieve their dreams. And. This podcast is brought to you by leading edge financial planning without further ado. Here is your host Robert equity.

[00:00:31] Rob: Hey folks. Welcome to flight 18.

[00:00:34] We're talking kids and money today. The tip of the Kaptio. Thank you for joining us here at the pilot money guys podcast, where we cover some airline news except for today. And of course, a financial times. We aim to educate and bring some lighthearted financial fund to your day. I'm your host, Rob Ackland.

[00:00:50] I'm a little under the weather. So the godfather Charlie Madingley certified financial planner and leading edge founder is with us. Hello godfather. Hello? Hello.

[00:00:59] Charlie: How's it going? I'm sorry. You're feeling feeling badly, but uh, we're gonna, you all were trying to keep me down last time. I was feeling bad. So this time we kicked you out, you're down to.

[00:01:12] Rob: So you

[00:01:12] Ben: wouldn't fight and he's also rocking a mustache for all that. Anyone on

[00:01:17] Charlie: YouTube, how to do the YouTube, which really makes my teeth look huge. It looks

[00:01:21] Rob: great. Yeah. Does dentist nice? I've of course set a little shout out to Alaska or Borealis. That's my background. Yeah. Ben's got the max. You got the max is your background.

[00:01:34] Ben: And I do, I do have the max. Yeah. Um,

[00:01:38] Charlie: the good oldest button that was the good old days.

[00:01:41] Rob: Oh, that's the ejection button don't hit that don't hit. Oh yeah. Yeah. Excellent. Well, and of course we've got Mr. Cal bell Ben tickets and welcome Ben. Thank you. Good to be

[00:01:51] Ben: here. All

[00:01:52] Charlie: right. Did you introduce yourself as a mallet?

[00:01:55] Rob: I did it today. You know, why, why have calls me the Viking idiot? Any of those can, I

[00:02:02] Charlie: will answer. You can substitute. And I mean, I'm starting to like Malad a little bit, I think it sounds kind of cool if you, if you just absolutely reject that notion, we will, we will start again, but you can't. But I like it because we started off as the MC hammer, which was a little too much too strong, but you are the MC and you are a hammer, but then you said, Hey, let's soften that a bit.

[00:02:22] So we went to rubber. Rubber mallets too many syllables and too many words. Yes.

[00:02:29] Rob: Well, last my days is an evaluator MC hammer.

[00:02:34] Charlie: I'm seeing him. So, I mean, I don't know a mallet that is really starting to sound pretty good. Just as long as we keep the story from straying too far from the temporary nature, we have 10% rule.

[00:02:44] Rob: Okay, fantastic. Well, we're going to talk some aviation news. I've got this one. I think. So there's this day in history, actually, it wasn't from today, but it's from two days ago. Close enough. On October 12th, 1944. First Lieutenant Charles Elwood, Yeager of the air Corps army. The United States shut down five count of five.

[00:03:11] in one second. Wow. Becoming an ACE in a day. That's air quotes. They're ACE in a day. The termination today is used to designate a pilot who shut down five or more airplanes in a single day, based on the usual definition of. As one with five or more aerial victories. Right. Wow. That's incredible.

[00:03:28] Charlie: That's

[00:03:29] Ben: amazing.

[00:03:30] Was it just, uh, you know, best, you know, right place, right time.

[00:03:34] Rob: Oh man. So I've got, I've got his, I've got his whole quote cause it's it's worth now. He was a P 51, a Mustang fighter pilot signed it a three 63rd fighter squadron near the village of, uh, I might be butchering this, but that Britain Suffolk.

[00:03:50] Albertson's pretty good. Pretty good.

[00:03:52] Charlie: As far as I

[00:03:52] Rob: know, anyways, here's Jagger's quote, it was almost comic scoring two quick victories without firing a shot. By now, all the airplanes in the sky had dropped their wing tanks and were spinning and diving in a wild wide open dog fight. I guess two of them collided.

[00:04:07] I stopped shooting at him. I blew up a 1 0 9 from 600 yards, uh, my third victory. So he shot at one of them and he hit his wing man and they both had. So he didn't. So I guess he barely had to do two for one, two for one. And then when I turned to see another angling in behind me, man, I pulled back the throttle.

[00:04:26] So bleep hard. I nearly stalled rolled up and over. It came in behind and under him kicking right rudder and simultaneously firing. It was directly underneath the guy less than 50 feet. And I opened up the 1 0 9 as if it were a can of spam.

[00:04:40] Charlie: Less than 50

[00:04:40] Rob: feet. 50 feet that made four that's incredible moment.

[00:04:46] A moment later, I waxed the guy's Fanny and a steep dive. I pulled up at about a thousand feet. You went straight into the ground. Crazy. Wow. You're talking 12, 19 44. Top. That really is awesome. Top that

[00:05:01] Charlie: cowbell. That's

[00:05:01] Ben: pretty incredible. I mean, I've done some cool stuff. My drone. Yeah. Yeah, that's amazing.

[00:05:07] I mean, Chuck would be proud, but I can't beat that. You're right.

[00:05:14] Rob: That's a good one. All right. Any other things we want to

[00:05:19] Charlie: talk about? Nothing going on at all in the world of aviation to see here. Nope. Turn away from anything you see in the news. Yeah. Vaccinations airlines. We're not, uh, we're not, we're going to stay lighthearted today, folks. Okay. There's a lot of serious stuff going on.

[00:05:37] And I told Rob today, look, we got to have some humor. How else can you get through these times? Without some humor, you gotta laugh. You gotta laugh about it. Otherwise you'll go crazy. So that's what we're doing. We're not going to address those things today. Too many variables too. Uh, too many unknowns and let's do a hurtful still.

[00:05:53] So we'll wait. Yeah, we'll wait

[00:05:55] Rob: too soon to right. Well, let's get into our financial topic then this one, actually, I'm really excited about it's kids in. And how do you talk to your kids about money? What are some things to think about? We're going to cover the mentality you should use, how they should use money.

[00:06:11] When they first get started at a young age, the savings and investing, they should do, um, three different ways. You can choose to save with them. And of course, in that, we're going to talk about UTMs and Ross. Um, and we'll get into. Charlie, what have you got anything? Oh, right off the bat. We're talking mentality.

[00:06:31] Oh,

[00:06:31] Charlie: we got tons of stuff. The toughest part about today is keeping it, , succinct and meaningful. , we're going to try to give some real practical applications to kids and money, just stuff we've learned from other,, people that we know clients have taught us a lot of things to do with their.

[00:06:51] Ben is, uh, is the one that remembers it the most clearly, I think. Right. And so he can help us a little bit. It's been a while for you and I Rob, especially, especially me, but I do remember a lot now, in fact, that the first thing that I remember, uh, or sticks in my brain and, and, and helped me get a good star and overcome some of my other Follies down the road.

[00:07:13] I was just starting early. And let me, I'm going to share with you guys, um, and, and our YouTube audience as well, but check the power of starting early is unbelievable. Okay. So here we go. Um, and we'll talk to this graphic, but again, our podcast listeners go to YouTube, check this out or Google it it's everywhere.

[00:07:35] So here's an example and the power of starting now and Ben, you and I, the other day, we're talking to, uh, one of our. Sons. He just is getting started in the workforce. He's got a great job, right? And he's like, Hey, he called us up, which is awesome. We encourage all of our clients, kids to call us. We love to talk about it.

[00:07:55] He was actually 25. So he said, this is perfect. This is you. So if you start saving at 25 and in this example on the screen, You say you start saving at 25, you save $10,000 a year. I don't know the rate of return in this particular example, I think it's five, six or seven doesn't matter because it kind of cancels out.

[00:08:12] The point is still the same, uh, in the, in the, in the examples. Anyway, so this person started saving a 25, 10,000 a year. They invested it and they stopped saving at age 40. Now at age 65, they had a little over a million. Now, this person's friend, we'll call him. Ben Dickinson started saving at 35 and they saved all the way they did not.

[00:08:40] You know, they started at 35 instead of 25. They started, they saved all the way through 65 and they only ended up with 840,000 versus the over a million. So let me re reiterate Ben's friend saved at 28, 25 for 15 years in. They had a million bucks, Ben say from 35 to 65, 30 years. And it has 840,000. I mean it's yeah,

[00:09:08] Ben: that hurts.

[00:09:08] That really hurts seeing that I knew my friend was doing well, but I, I didn't realize that. Well, he saved half as much as me. Yes.

[00:09:18] Charlie: It's that really was wild. All right, Rob, what do you think? Beautiful. Any thoughts? I love it. It's powerful.

[00:09:25] Rob: I, you know, I think it can kind of tie into, um, you know, just the power of saving early, which there's a mentality on that.

[00:09:34] And I think we should get in a little bit of that. I think when you talk to your kids about money, you should have an abundance mentality . And instead of using certain language, like we can't.

[00:09:44] When you go to the store and you're looking to buy a toy or whatever. Um, it's I think a little bit more helpful to say we haven't budgeted for that at this time, or how are we going to afford that? How are we going to budget for that in the future? So if we prioritize that you want that Tonka toy, well, let's save for it.

[00:10:01] Let's see how we're going to get there. Um, and I think families that actually have conversations about money. It probably as long as they're not too negative. I think it has. People get comfortable with the idea, as opposed to, , there's certain families that, that money is taboo. Ask your dad how much he makes is just not anything you would do.

[00:10:20] And I think that just kinda makes the subject of money taboo. So you don't want to talk about it, maybe it's evil. And, uh, the other thing is when families get into the, to a, probably a bad scenario where they're highly. Certain, thanks from their significant others, such as you hide, you know, you go off to a clothing store or toy store and you say, Hey, it's going to be our secret.

[00:10:43] We're not gonna tell mom about this. Probably not the best thing. Cause you're just teaching them. You know that again, money's kind of evil. Um, so yeah, we wanna, we want to teach the abundance mentality where you're saying, Hey, you've got to. Well, let's see how we're going to get it. And then the reason they're getting the toys, because you were smart with your money, as opposed to just saying they can't have it.

[00:11:05] And the reason why they can have it is because of money. Absolutely. Yeah, yeah,

[00:11:10] Charlie: yeah. Same. We can't afford it kind of, kind of a cop out just saying we can't afford it and maybe that's true, you know, sometimes, uh, but, uh, but I like what you're saying, especially. Um, about the communicating abundance mentality, you know, and, and to me, abundance mentality means being generous.

[00:11:24] And I think there's a whole lot to learn there. That's a whole nother podcast, but one of the things, um, before I hand it off to, uh, the, uh, what's your name again, been the, uh, we call on because Jesus, today we call you cowbell. Before I ended off to Cabell, , one of the things I, I tried, I've tried this with my 15 year old daughter, because when we.

[00:11:45] See clients and, uh, talk to them and just friends and family, you know, sometimes their parents did it, right. They did a good job or the best they could, but if it's not communicated, there are misunderstandings. So not only is it important to behave well as an example to your children, but you have to tell your children how you're behaving to make it clear because there will be misunderstand.

[00:12:10] , you're talking about a young kid looking at something that they don't understand, and they're going to learn lessons from that, whether you like it or not. So I just wanted to expound on what you said, Rob, it's super important, but a cowbell. What do you

[00:12:21] Ben: think? Yeah, I think I'm going back to what Rob was saying that, that kind of teaches more financial independence as well, which is what you're going to.

[00:12:32] When you, when you go out on your own is okay. All of a sudden I'm not getting any support from anybody. Would I, how am I going to manage my finances? And personally, um, I had a lot, uh, I had support going through school and, and, um, but once I graduated, once I got my job after school, it was like, well, here you are, you're on your own.

[00:12:53] You know, you have to, you have to budget. You have to, uh, set your goals. If you want to buy something, you can't, you maybe can't buy it right when you want. And sometimes that can be a really difficult transition, um, and starting to, to create that mentality of abundance. And Hey, if you want something you're going to have to work for it, um, or you're going to have to save or set it as a goal.

[00:13:14] I think starting that as, as early as possible is going to be, there's going to be really huge. I think, um, we've talked about, about this. , you want, you want the best for your kids. You want them to, you know, maybe be in a better position than you were at their. Um, but sometimes there are lessons that need to be learned.

[00:13:31] , and the only way to learn them is to , let them do it themselves. And so you, you may even be able to afford the toys that, that they're wanting, but sometimes it, maybe it's better to just say, Hey, let's, let's figure out how you can buy this yourself. And not only that, but at the end of the day, you feel better about yourself.

[00:13:45] You've accomplished it and you've worked and saved and gotten the thing that you want. Um, and that's a really valuable lesson. , when you're a young adult,

[00:13:52] Rob: Yeah. I think there's a key distinction there. When you're talking abundance mentality, it's just the way you're going about your life, that money.

[00:13:59] Isn't something that is so limited that you can't do certain things. It's more, Hey, we can use money to our advantage. And how do we do that? It's not, um, would, I think a lot of parents who have gotten into the habit of, and I'm certain, I'm probably guilty of it. Myself is just, you know, you know, handing my kid, whatever they want at certain times.

[00:14:18] And that's not helpful either. I don't think, uh, just giving them whatever they want or, you know, obviously they get spoiled and they don't understand the meaning of money. Tell you we're going to say something.

[00:14:27] Charlie: I mean, I think this podcast is, is fun because we're talking about. We're talking to young adults that are just getting started at college, was talking to parents of young kids.

[00:14:37] Like we have a Rob and we're talking to. Ben's age group as well on, on maybe even some things on what accounts to invest in. We'll talk about that in a minute, but it's a funny story real quick with my, uh, gosh, I can't remember how old my daughter was. I don't know, 8, 9, 10. I would give her like five bucks and said, you can have these $5 and let's go to Walmart and, you know, take her to the toy section and hunter, you can buy whatever you want.

[00:15:02] Cause I wanted her to make these choices for trade-offs. Well, you can have this, but, uh, but you could also have this and just, you know, thinking about that. So you probably know already what I'm going to get get at. And that's when I gave her $5, she came back to me after 20 minutes, I was like, dad, I can't buy anything, nothing to buy when $5.

[00:15:22] I was like, okay, sorry. A little out of touch here, but just some practical, stuff. As far as savings, we talked about saving early, , parents, you can start a custodial Roth. We'll talk about the nuts and bolts of that in a minute, you can start a UTMA or sometimes they're called . We'll talk about the pros and cons in a minute as well.

[00:15:44] Uh, we could do a whole podcast on each one of those, but another technique is to match the CA your, your child's savings. Hey, you save a hundred bucks. I'm at you a hundred dollars. That's training, , for, for future savings and 401ks and such,.

[00:15:58] Somebody told me . One time, they said, we give our kids allowances or pay them for chores. And we encourage them to save 10% to give away 10% to something that they find meaning. And then do the rest with whatever they want. You know, that's a pretty good little habit pattern and kind of like you said, Rob teaches , the abundance mentality.

[00:16:18] And so I think that's a really good technique as well.

[00:16:22] Rob: Yeah, for sure. I think I'm kind of backing up a little bit when you very first start with your kids being tangible or using tangible money, using cold, hard cash. Yeah, that's helpful. Yeah. When they can see the value of a dollar and they can see it coming in and you pay them for whatever work they did and they see it going out when they buy whatever it is they want, that helps them get an understanding of, oh, I can't work for this.

[00:16:50] I got this amount of money and it's going out. Eventually they're going to graduate. Right. They're going to graduate to apps. And of course, with all the technology, these days, they're going to have debit cards or credit cards or whatever they're going to use. And they're going to have an app on their phone.

[00:17:03] Tied to that. And even then be as tangible as you can be right with them. So like for my son, we have a capital 1, 360, a high yield savings account for him. And we'll get into that a little bit. I think it's, uh, uh, it's too much fun. I geek out about it, but I think, you know, when I, when I pay him for doing, uh, an extra job around the house , he does certain chores just because he's part of the family.

[00:17:23] He doesn't get paid for that. He can go above and beyond and do other things. Did he gets paid for it. So when he does those, I actually slide and there's a transfer, uh, slide to transfer on your, on your iPhone. Uh, when you're in new capital 1, 360 account, and you just slide it and it shows it going into his account and you can actually look and say, okay, the money's transferred from my account and now your accounts up $10 or $20 or whatever it is.

[00:17:48] And I think just kind of having that, Account where you can see that's a, I'm losing the word here, but a tangible, tangible, there we go. That's the one where you can actually feel it. , see it, touch it. And they see, okay. Yeah. That's, that's, uh, in my account now, as opposed to you just give them an open-ended account and all of a sudden they're out of money and,

[00:18:10] Ben: so yeah, my, my parents tried to teach me how to balance a checkbook and I don't think since then, I have ever used to balance a checkbook cause everything's on, on the app.

[00:18:20] I mean, they're so, um, anyway, that's just kind of, didn't really help me at all.

[00:18:27] Rob: Right?

[00:18:28] Charlie: What I liked about what you said, Rob, when you pay your children allowance, there's there's stuff they should be doing because they're part of the.

[00:18:37] Cleaning the room picking up after themselves, whatever. Hey, you're part of this unit. However, if you want to do something extra, , like Polish my shoes or something. No, no, I'm not. I'm positive. Mow the grass or whatever then. Yeah, that's an allowance, so we talked about, , saving how to help your children get started on that, you know, spending plans and Ben, you mentioned setting goals and saving for them, , teaching that delayed gratification, which is huge, which I don't think any of us have anymore, but what we call this, uh, in the nerd nerd world or financial planning is bringing these future expenses into the.

[00:19:14] And that applies to all of us, by the way, today I was working on my spending plan for the next quarter and I had to put on there, uh, a new car, probably not a new car, but a used car. And I haven't had a car payment a long time and it's going to hurt, but we, we just recently lost a car, which is another story for another day, but it's painful.

[00:19:34] So I had to put it in there and it's painful. I got to face. But bring those expenses that are 1, 2, 3 years out, bring them in platform right now.

[00:19:43] Ben: . Yeah. Um, absolutely. The first thing, just, just for, for the spending plan thing.

[00:19:49] Uh, first, first big purchase. After I started my first job, I went out and bought a, a medical. Um, literally with my first, my first paycheck. And then I had, uh, I had the rest of the month where then I realized, oh, oh crap. I didn't not have no more, no more money left for groceries. I really did. And so then.

[00:20:14] Everybody was asked it was worth it. Yeah. And then I had to call a call, uh, call my parents. And can you send me like a hundred dollars for some groceries? And they're like, what happened? Uh,

[00:20:29] Charlie: nothing at all. I would never do such a thing

[00:20:36] Rob: as we're talking about that budgeting. I think I do think one of the things we should touch on here is automating it, right?

[00:20:42] If you can, and there's two sides to that coin. Obviously, if you audit. You know, the payments going in, they don't see it. And they just, they just get used to money coming in. If they don't see that it's tied to the work, but when you automate it, when they, uh, you know, as far as their savings and investing, it can make it a lot easier.

[00:21:01]

[00:21:01] Charlie: Another technique is,, when you're, I don't know what age is appropriate, maybe 12, you know, when they can first start understanding stock ownership, as we're driving down the road, I would talk to my daughter, Hey, , you can own part of Walmart, , Hey, we go to Disney, you can own part of it.

[00:21:16] And what are you talking about? So then you go, Hey, I'm going to buy you a, a piece of a stock. You can actually buy single stock, stockpile.com. We should get paid for all our advertising today, by the way. But I stockpile dot copy, print out a, um, a certificate and frame it.

[00:21:30] Put other walls, say you own a piece of Disney. , that's great learning. Now, once you learn that lesson, then tell them we don't want to want to own just one company that we want to talk about. Mutual funds, ETFs, et cetera. But the lesson of ownership is good. Just be careful, you know, don't make, don't make a bunch of speculators out of your children at age 15.

[00:21:50] Ben: Just going to say, I need, I need a piece of paper like that for my Bitcoin. Um, so that it makes me feel like I own something other

[00:21:58] Charlie: a second. I thought you had coins. You don't have coins.

[00:22:02] Ben: Oh man. Here I go. Now we'll talk off the, off on this one. Just actual coin, the recording. Okay. I hate to break to you.

[00:22:10] There's nothing there. I don't have a gun.

[00:22:13] Charlie: Oh, this is. Yep. We're gonna have another, have another podcast on the Bitcoin. Uh,

[00:22:19] Rob: another one. Well, they should just go and look at what was it? You can't hide 7, 7, 7, 7. So Bitcoin, Jesus and Jesus.

[00:22:27] Charlie: That's called. I call it. You called that. So

[00:22:32] Rob: let's talk, speaking to the peak and the bottom.

[00:22:34] Can we, should we, should we do that, that little. Or save that for like, which graph you're talking about. Oh, the little a game trying

[00:22:42] Charlie: to time. That's right. So, so that was one of the lessons here for, for all of us, but especially as a young person starting out, it's not about timing the market. And this was our first point of compound interest, , Einstein said.

[00:22:57] Eighth wonder of the world compound interest. So it's not about timing getting in, getting out of the market. You know, it's about putting your money in there, saving it, and then, uh, investing wisely of course, but not trying to run for the Hills when things get scary. So we've got a little game we're gonna play on, uh, for our YouTube folks here.

[00:23:16] And this is personal finance club.com. You can, uh, Google, uh, timing the stock market game. And if several leads will pop up, so here's what we're going to do to put it

[00:23:27] Rob: in the show notes.

[00:23:28] Ben: And if you get, yeah, and if you can time the market, if you can beat this, if you beat us. Yeah.

[00:23:33] Charlie: We're going to get into today.

[00:23:34] . If you can beat this game, then send it in and let us know that it's possible. So. One Ben coin, we're going to hit play. And then Ben is going to try to time the market. So what's, we don't know it's going to be 10 years of the market and it's going to go up and it's going to go down.

[00:23:50] We don't know which 10 years. Right. But Ben's going to, what's your strategy, Ben, are you going to sell high and try to sell high buy low? Cause , sometimes the market gets too high. It's overvalued and you just want to sell, right. That's right.

[00:24:00] Ben: Yeah. If it goes up too much, I'm Def I'm definitely gonna sell.

[00:24:03] Um, you know, I don't want to just sit there while

[00:24:05] Charlie: let's go. Okay. That sounds good. So then we're going to compare Benz. With a buy and hold strategy for that 10 years. So, okay. Now remember, it's going to start off. First thing you got to do is you're going to be buying right off the bat. So if you want me to sell, you got to see it pretty quick.

[00:24:21] So here we get to say pretty quick. Okay. All right. So the market is going, oh wow. It just jumped up 10% going up like crazy 40% sell, sell, sell, sell. That's right. That's pretty high. And that's scary. That's

[00:24:32] Ben: scary. Oh no, it's still going. It's going through.

[00:24:35] Charlie: Oh, tell me when

[00:24:37] Ben: should I buy?

[00:24:37] Charlie: I'll know. Bye bye.

[00:24:39] Okay, we're going back in the market then I got to go back

[00:24:41] Ben: in with you. I couldn't stand it. All right. All right. Now I'm definitely waiting. Okay. It's going down a little bit. Yeah. All right.

[00:24:47] Charlie: Sell, sell, sell. Okay. That's scary. You're right. That's very

[00:24:50] Ben: scary. All right. All right. Bye-bye bye. I'm getting it's about to, I, I have a feeling right now as soon as it's about to spike.

[00:24:57] Oh, no. Yeah. Oh no. It's. You're struggling. You're in the market. How much longer we got you're in the main cell. So am I, but yes, I sold. All right. All right, now. Bye. Bye. Yep, let's go. And I think it's about to go. It's very scary, man. Come on. I need, I need some help here. I

[00:25:16] gave

[00:25:16] Charlie: him the 200 day moving average right here.

[00:25:18] Did not use that.

[00:25:20] Ben: Oh my gosh. I didn't even realize that's what that was. Or you could have used

[00:25:24] Charlie: the. Well, I mean, I think I've looked at this graph. I'm like, man, you did terrible. I was going to try to find something positive, but you did terrible. Your investment grew from October 21st, 1996 to 2006. Hey, that was a tough time.

[00:25:39] I was looking at this skill market. I was looking at this timeframe going, goodness. That is that's like two or three years. That's the beginning of my investment Rob year two. Right? We're the same age, right? Yup. Right? Yup. That's the beginning of our investment life right there. It was terrible. Anyway. So Ben, let's see how you did from October 96, doc Tober, 2006.

[00:25:57] Your investment grew your $10,000 investment grew to $17,000 almost while a buy and hold strategy netted $22,200 or thereabouts, you lost $5,260, you know, versus the market annualized told me, oh yeah, you did terrible. The market grew 8.3% per year. Your investments Ben grew 5.4% per year because. You, uh, got a little scared sometimes and you thought the market was overvalued and I thought you were going to nail it because I was like, oh, you sold and you're going to, and the market's going down and then, but you just don't know.

[00:26:35] I

[00:26:36] Ben: think I missed the buy

[00:26:37] Charlie: side. Yeah. Anyway,

[00:26:39] Rob: it's so funny. Cause that's exactly, even though you didn't have any news, you know, news media in your ear there, or any pandemics or anything, you know, you're still obviously underperforming. So that in the mix, and that's exactly what you see for a lot of investors who don't have the discipline and

[00:26:58] Ben: well, that first couple of years it went up, so it was up by 20, 30%.

[00:27:02] And so I was like, there's no way I can keep going at that pace. And then sure enough, as soon as I sold it kept going. Yeah. Double. Yeah. Yeah.

[00:27:10] Charlie: Great. Okay. Well, all right. All right. Nice, nice work then tumbled me. That's

[00:27:14] Ben: humbled.

[00:27:16] Charlie: So let's shift gears a little bit because it's so important to talk about what you mentioned earlier, Rob, the, how do parents save for their children , and kids are, you know, young adults.

[00:27:25] How do they save? We've had a lot of parents lately go. I want to get my, my kids started off on the right foot. What's the best way to do it. What's the best account. And I'll okay. Do you all? Yeah.

[00:27:38] Rob: Um, I, I've got the three ways kind of that we we've talked about. Uh, here, you've got of course joint bank accounts that you can do, just like you have with your spouse, with your spouse there, you've got your custodial accounts, which is the UTMA, which we'll get into.

[00:27:55] And then you have w I kind of just, the first salvo, I guess, is the prepaid debit card. If you just want to go out, get, you know, uh, get a debit card that you just. Fun. Whenever your child runs out of money, that's one way to do it. That's probably the first option. People who don't aren't comfortable opening up a bank account or custodial account.

[00:28:17] .

[00:28:17] Yeah. Ben,

[00:28:18] Charlie: what do you think

[00:28:19] Ben: I wish I had, I'd got to do earlier and just like we showed with the compound interest is actually get to save and invest. I mean, my first, my first account was just a custodial savings account at the bank and, uh, or a joint account.

[00:28:32] And that, that was a great place to start saving, just saving my money. But I think, um, really, I would love to have gotten investing early. And like we saw on that and hold and saving for the long-term and the way to do that, I know we've talked about it, the custodial, uh, UTMA accounts, but also the, the custodial Roth IRA.

[00:28:52] Um, Charlie, I think you're actually going through that right now for, for your daughter. Yeah.

[00:28:57] Charlie: I printed out the application and had some other parents asking me about it. Cause Rob, you nailed a couple of great strategies for just savings and spending and we could even get into how to start credit for your kids.

[00:29:09] But I think that's probably easy to put off until 18 early twenties, maybe. Um, but as far as investing and saving, if you want to start that, uh, for your, for your kids, um, , I did just like what you said, Rob? I took my daughter's, uh, sounds terrible. I took her Christmas money. I mean, I, how do I say this?

[00:29:30] Uh, in fact I've got a reputation. All the family. Yeah, there we go. I helped her. I helped her. Thank you. I was, I was really struggling there because everybody in my family was like, do not give your birthday money to your dad. Okay. But my daughter did part with some birthday and Christmas money and I invested before.

[00:29:48] And a joint brokerage account. And so now what I'm going to do is I'm just going to take equivalent cash and start her a custodial Roth. . Now custodial, anything Artemis , uh, custard a Roth becomes the property of the child at the age of majority, which is either 18 or 21, depending on. So it's going to become your, your kids. So just get over that part, whereas a five to nine doesn't ever have to become the property of your child.

[00:30:13] So there's some flexibility there, but in this case, we want our kids to have this. I want my daughter to have her birthday money, Christmas money back. I'm finally going to give it back to her and, and yes, it has multiple. Thank you very much. A couple of times. We'll see. Anyway, up until September of this, put it in there yet.

[00:30:30] Anyway. Um, so I'm going to do a custodial Roth. Now here's a couple of nuts and bolts about the custodial Roth. How young can you do this Schwab, , that's who we're working with. That's up for not the application. I called them. I said, Hey, is there an age limit? You know, Nope, no age limit. Now your custodian, sorry for using the same type of language.

[00:30:47] Let me clarify that. Fidelity, Schwab, Vanguard, who. They are not going to be the police of your custodial Roth. They do not care how old your kid is for them. You know, as far as, especially Schwab. I know that for sure. They're not going to ask. I mean, you're going to put it on the application, but they're not the police of that.

[00:31:02] They're just going to open the custody to a custodial account. They're going to do it now. Here's the rules your, your child has to make. So that's what

[00:31:11] Rob: I was just about to say, Charlie. So I am the police on this, so

[00:31:14] yeah,

[00:31:14] Charlie: you're the police.

[00:31:15] Rob: So now your child, you're not, you're not taking any birthday money and putting it around.

[00:31:19] No, no, no, no money she's earned.

[00:31:20] Charlie: She has to earn money. So my dog, so yeah, thanks for that clarification, Rob, because what I was actually doing is, was breaking the rules. My daughter does earn money so she can contribute now to a Roth. And in anybody, any child can earn money. Here's the sticky wicket. How do I prove if I get.

[00:31:38] Does my child have to file a tax return. Do they have to get a W2? What if they're mowing grass? They're not going to get a W2. So, if they work for a restaurant, they're going to get a W2. , if they work for someone else, they might get a 10 99.

[00:31:49] If they don't then just have records of that income, create a log, you know, making notes of it, uh, show bank accounts or receipts or deposits or something, , because your child, even though they make money, they may not have to file the tax return depending on how much they make. So those are the nuts and bolts of the custodial Roth.

[00:32:08] The limit is right now, $6,000, uh, for our child, they have to make, you can put a hundred percent of their income in it, so they can only put 6,000 in it if they make 6,000. Does that make sense so far? Am I on track here? If

[00:32:23] Ben: they only make 3000, they can't put in 6,000, they can only put in, correct?

[00:32:26] Charlie: Correct. Earn income. .

[00:32:28] Awesome. Yeah. So , last thing I'll say on just savings accounts is the utmost are pretty good. Um, but I th I think depending on the tax laws and things like that, sometimes they lose some of their advanced. So, but, but they're okay. I mean, they're all right.

[00:32:43] I'm not a huge fan of personally. I'd rather do the Roth, but everybody's circumstances are a little different. So,

[00:32:49] Rob: so I've got, um, I, my personal, I'm just going to disagree with disagree there. Charlie, I'll let it out. So. Yep. I think it's important to give them the UTMA is a little bit for, you know, some clients that are maybe a little bit higher or net worth, and it's a uniform transfers to minors, act it expounds upon the UGME, which is, was a little bit older it's uniform gift to minors act where that I think was only securities.

[00:33:16] The UTMA can be money, , real estate, fine art, all of that. If the account allows it obviously, but, but that's covered under the act and. And you're deaf in your example of the birthday money. I love UTMs for that example, because that's a, that expands on the gift act, right? So if there's a gift, that's where you can put that that's a great place for a gift and a TIG to get invested in the market or whatever you want to do with it.

[00:33:42] But that's obviously what we, uh, most of the time advice for longer-term assets, you're going to invest in the market and the UTMA does that fidelity Schwab I'm sure. Almost everyone does that. So that that's kind of where we get it. To, uh, the difference between if it's earning income than a Roth IRA for the kid is great.

[00:34:01] If it's not earned income, then maybe a UTMA works for

[00:34:06] Charlie: no, that's a great point. And I like the point you made too about watching out for, if you think you might get some student aid, uh, then, then those are going to count against you. That's why the 5 29 is really a powerful cause it, it doesn't do that, but.

[00:34:20] Ben: Yeah, and you can give $15,000 a year right now without filing a gift tax return. So if you were going to give money to. Know, that's just something to keep in mind. , the UTMA I think that for the majority of states, I believe it is 21. When the, when the custodian sturdy in ship ins custodial ship ends,

[00:34:40] Rob: uh, Colorado in Tennessee, at least it is.

[00:34:42] Ben: Yeah. Yeah. So. You know when w and we've experienced this with some of our clients, as soon as they turn that age. Well, that money is theirs.

[00:34:50] Rob: That's a good point. And I think it's important. Define some of these terms. So you, if you give them money or if you're a parent and you give your kids some money, that's going to go into a UTMA. You are the donor, you can name a custodian. Usually it's the, still the parent, that's just a custodian and you have a fiduciary duty.

[00:35:08] We've talked all about fiduciaries. If you've heard any of our other podcasts, you have a fiduciary duty to your kid in that scenario. So you have to do what's best for them in managing that investment, which means you can't take any of it.

[00:35:21] Ben: That's right. You can't invest in meme stocks, right? I guess you could.

[00:35:28] Rob: And part of that UTMA though, as far as tax wise is when it does become there, let's say at 21 who is then out on their own is they're taxed on the, any kind of capital gains on that. They're, they're taxed at their rate, not on their parents.

[00:35:43] Yeah. If I'm saying that that's a good

[00:35:45] Charlie: point. Yeah. Taxes and Artemis is, is, uh, not an easy subject. It confounds me continuously.

[00:35:54] Rob: The other part, I think that's important about Roth. IRAs is all the advantages that we've talked about. Roth IRAs, and we maybe do another podcast on that. Let us know, hit me up at Robert, uh, leading edge planning.com, but the Roth IRA.

[00:36:12] Are in a retirement account. However, when you contribute money to them, you can always take that money out because you've already been taxed on it without any penalties, any fees, any taxes. So you can take a take out your contribution amount and that's an important distinction. So some people might say, oh, Roth IRA.

[00:36:30] Well, my kid's 10. He doesn't get to see that until he's 59 and a half. Well, if something happens and he needs. He can take out the mountain. He's contributed now not the part he has earned or it's made, right? Not the part that, um, is getting pounding and gains. Thank you, Ben. Not

[00:36:48] Charlie: the kids call it these days.

[00:36:52] Rob:

[00:36:52] Yeah. Not the gaze. You, if you take out the games, then you're penalized and taxed on the gain. So anyways, I think that's a great thing that a lot of people don't understand is, oh, well, they can actually, they need to buy a car or whatever they can access.

[00:37:05] Yeah. That was contributed now, is that, why is that? May not be wise,

[00:37:09] Charlie: but they could do it. It's like an emergency emergency fund emergency, super remote. And

[00:37:15] Ben: don't buy a new car. Yeah, there we go. Don't

[00:37:18] Charlie: bind, you know, we're coming upon the baby coming up on the end here, but what, what final thoughts?

[00:37:22] You know, Ben, you've got some techniques as a young, young guy, young, newer investor. You've got something you're passionate about. I think you were talking about you'd liked about new cars or something.

[00:37:32] Ben: Oh man. Yeah. I love buying. Uh, I see these fancy, , Mercedes and I'm actually, I'm more of a truck guy, we were admiring a nice Dodge truck the other day.

[00:37:42] Man, I need that. Oh, it's $120,000. Nevermind, but no bug. Yeah. Oh yeah. The T-Rex yeah, the thing is awesome. I'm sure it's always been this way, but we see, we, we see social media that we see our friends with w you know, maybe nice cars we see are, are the people that we look up to with nice cars.

[00:38:01] Um, and we, it's really easy to fall into the trap of obviously wanting that, um, you know, you go to a dealership to get a new car, and they're going to talk you into, instead of maybe buying this used car one. Pay monthly and you can get this nice new car and, uh, and take out a loan for it. And so I would just say, you know, it's not always the best idea just to go and buy a new car.

[00:38:22] It is a, it is a wealth killer. Is that what we put on the sheet there? Charlie? But so, so that's one of the things, you know, don't fall into that temptation. Don't feel like you need to keep up with anybody. Um, number two, I would say is, um, you know, I'm, I'm currently renting property instead of, uh, I don't, I don't own a home right now and I think that's perfectly fine.

[00:38:42] Um, if you look at, if you look at some of the math, we can get into it, the pros and cons, but, um, don't feel like you need to go and just buy a house, right. When you graduate or right as your, uh, your, you know, your, your. You're out in the workforce. Um, you know, there that you may not, it may not actually be, uh, be thrown away money renting, which we hear a lot.

[00:39:02] And then the last one I know we talked about automating your, um, your savings. When you're setting a budget, just take 10, 20, 30 minutes to set a budget you don't have to stick to it, you know, by the penny, by penny, but make sure you have at least a savings goal , you can do it on an app. You can do it right now. Take out your phone and set a savings. I have a transfer and money into my savings account. Every, every few days it just transfers money into the. That has helped me tremendously with saving. I don't like to look at my, my account statements very often.

[00:39:31] I don't like to look at what I'm spending my money on, which is not, not necessarily a great thing, but I have a budget budgeted out where I know I'm meeting my savings. And I'm able to, um, to, you know, buy the things that I need, um, by doing that. So that has been really helpful to me. Those are the things that I'm passionate about.

[00:39:48] Charlie: I love it. Well, put you get off my pedestal. Drop the mic box. Yeah. Oh, total drop. That that's expensive. Rob, what do you got, man?

[00:40:00] Rob: That's all I got really? He nailed it. We've talked. Uh, we talked quite a bit. They did talk to mentality the use of money, tangible. The savings or automation, the three different ways to joint custodial and prepaid debit card that mothers, and obviously Roth IRAs.

[00:40:16] Charlie, what do you got anything to wrap it up? Oh boy,

[00:40:18] Charlie: this is a good one. I just love what Ben said, you know, set goals that are important to you. Not somebody else. We see so many people with this FOMO, right. And they're missing out. They feel like they're missing out, but it's like take the time as a young person to go.

[00:40:33] What do I want? And go after that. If you don't ever do that, then you're going to be constantly trying to meet a goal or benchmark that's moving on. You constantly and you will drive yourself crazy. I hope that makes sense to people, a lot of people say, it's know your values. That's a little bit vague and maybe, uh, a platitude of sorts, but know what's important to you and then write it down.

[00:40:59] And then set those goals because it's the L keeping up with the Joneses and we just see so many people through the whole life chasing this unattainable money goal. And then sometimes they get it and guess what? They're disappointed because it wasn't what they really wanted all along.

[00:41:17] So know what you want, know what's important to you and go through. That's it.

[00:41:21] Ben: I've just, I've just, I love that. That that's such a good point. He made me think of one more, one more thing that I find important right now. Um, we're in Tennessee just recently, uh, passed the, uh, the sports gambling act. I don't know what it's called, but you can now gamble on sports.

[00:41:38] And it's very tempting. If you can do it through an app on your phone and it tells you that it has pretty, uh, you know, graphics and everything that pop up when you win and they say you can win tons of money. And, um, you know, every day they say, they say, Um, and I think it's the same with some of the Robin hood stuff that you see on commercials.

[00:42:00] Um, I was seeing, I saw a Coinbase commercial the other day, and it's like, you know, you go and buy doge coin. It was literally a thing about dose going and how it was started as a joke, but you can go and invest in it and coordinate. So I would just say stick to the, you know, have your, have your long-term money that you're saving and don't, don't try and gamble it away on literally gambling or, um, these meme stocks trying to try to win it all on, uh, you know, following people on Reddit or in these Twitter groups or whatever it is.

[00:42:29] Um, you know, that will cause more stress in the long run. Most likely you're going to lose money. You're not going to be able to beat the market. We just, I'm, I'm an expert investor, as we all know. And I, I just lost to the game. So, I mean, right there, you can't beat the market. Um, no, but, um, I really think like as a young person, especially creating those habits and not falling into this trap of trying to, um, gamble your money away and really invest in investing is not gambling and, and really learning about that and sticking to that.

[00:42:59] I

[00:42:59] Rob: love it. Nice. That's it. All right. I've got the two quotes to wrap it up. We're not a fan of everything Dave Ramsey says, but this one I am. You've got to tell your money what to do, or it will leave. They Ramsay. If we command our wealth, we shall be rich and free. If our wealth commands us, we are poor indeed.

[00:43:17] By Edmund Burke, we've arrived at our final destination. Let us be the first to welcome you to the end of flight eight. Thank you for joining us here at the pilot money guys podcast. If you liked what you heard, please hit that subscribe button and leave a review so we can reach more people. If you have any questions or you'd like to, uh, anything answered on the show, she does email info@leadingedgeplanning.com or robert@leadingedgeplanning.com.

[00:43:42] And as Emerson said, the world makes way for those who don't know where they are going. So plan accordingly. Thanks for listening. Take care.

[00:43:52] Voice Actor: Thank you for listening to the pilot money guys podcast. It has been our pleasure to share some information with you today. Give us a call to discuss absolutely any investment question. You may have click on the subscribe button below to be notified when new episodes become available. Visit leading edge planning.com to learn more.

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I’ve Inherited Money, Now What?

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Hello folks! We are excited because this is the first podcast in a 3-part series called “I’m Dead, Now What?”. That’s right, we are covering the exciting topic of death!

  • I've Inherited Money, Now What? – Should you spend it, save it, tax implications, your family legacy?
  • I’m Dead, Now What? – A discussion on estate planning. How can you pass on money to your heirs in the most tax-efficient manner possible?
  • I’m Disabled, Now What? – A discussion on becoming disabled during your career. What if you lose your medical? How much income will you have to live on? For how long?

    Although a very difficult subject to face, these topics are important to plan around. In this first podcast of the series, we discuss what happens when you inherit money. We talk about the emotional decisions that must be made, the tax consequences, and how we believe inheritances should be handled.

We’re thankful for the feedback we have received on the Pilot Money Guys podcast. We are striving to bring useful insight on important financial topics to you. If you have suggested topics, questions, or comments for us, please email us at info@leadingedgeplanning.com.

See you next time!

I've Inherited Money...
Charlie: ladies and gentlemen, welcome aboard the pilot money guys podcast, where our mission is to help clients build and protect wealth to achieve their dreams and goals. This podcast is brought to you by leading edge financial planning without further ado. Here is your host, Robert.

Rob: Tip of the cap to you.

Thank you for joining us at the pilot money guys. Welcome to you. We're going to be doing a new, uh, series and it's gonna be a three-part series. So hang with us here. It's called I'm dead. Now. What? Part one of that we're going to be doing again, three of those, the second uplifting,

Charlie: uplifting series.

Rob: Yeah. I can tell everyone's really excited on the edge of their seats right now.

Click, turn it

Charlie: off.

Rob: Darn it. Um, episode two or flight two, if you will, will be I'm dead now. What, excuse me, let me back up episode ones. I've inherited money now. What? But it's all part of the somebody

Charlie: dead. If somebody. Yeah, I'm inheriting money. You're not

Rob: dead and I'm dead now. What? And the third one is I can't now what?

We're, I'm disabled now. One. Yeah. Wow.

Charlie: That's it. Which is, yeah, maybe it's wrong. Maybe I'm just messed up, but I'm excited about this year.

Rob: Well, we all know you're a little messed up then. Yeah, that's perfect. All right. Hey, I'm your host, Rob, back then. We've got been depicted. The advisor, Mr. Cowbell. And of course Charlie Mattingly, certified financial planner, the godfather, we got it.

We got us all here. All three of us. Uh, we're missing mark today, but uh, we're ready. Ready? What do we got for aviation news? Ben. Charlie, what do you got? Ben, Charlie

Charlie: Ben. Well, first we've got to one of these days. We'll have to give you a call sign. I've just been thinking about that. Well, that's Lisa, she's the bullet.

Oh, she's bulldog. Yeah. You're the MC MC hammer. Oh, there we go. That might be all right. Hammer. The hammer

Rob: standardization, evaluation pilot. So, oh, I

Charlie: need a hammer for sure. Yeah. So

Rob: a soft hammer. Yeah, exactly.

Charlie: Like a rubber mallet

Rob: or something. Santa Claus,

Charlie: wherever from the ballot. So Ben, you start us off today because you've looked more into this one than I have, or so you've said anyway, about this trans air flight 8 1 0 that ditched in the water in Hawaii.

What's up with that? Yeah, no, uh, pretty crazy. I was, uh, when I woke up in the morning, uh, after the, I think it was like July 2nd or something, I woke up and saw, saw the news. Uh, pretty, pretty wild. Um, it looks like it was a cargo plane, um, out of Honolulu that, that crash had it, or had a ditch into the, uh, the water at about one, uh, one or 2:00 AM local time there.

And luckily the two people on board, the captain copilot were, rescued and were safe. First officer. Yeah, first officer, I'm sorry. You know, I'm still learning guys. I'm still learning. Um, but they were rescued by the coast guard. So good on them, obviously, a pretty crazy experience. I was telling you, you guys, before we started that.

You know, one thing as me just not being a pilot or knowing much about it, I was like Landon water. I didn't realize it would tear up the plane like it did. And, uh, give them such a hard time, but it looks like there was debris field, a huge debris field and everything, uh, that for the coast guard to have to spot them in.

But, uh, yeah, pretty crazy. Thank God everybody survived. Um, absolutely double engine malfunction. I, I don't, I'm not exactly sure. Yeah. Is that, does that, what you all T engine? Yeah, they lost one. And then, uh, they S they were talking to air traffic controller and they said, Hey, we're going to lose the other one.

We think we're going to, you know, I guess it was overheating. Plus the plane was like 30 years old. I believe it was. Boeing 7 37, not 200, not a max, not a max, not a max. Uh, that's what the article kept saying. Stressing, not a max. Yeah. So those things and, and I'm thinking maybe that's why it broke apart as well, you know, but anyway, no, I think it's very difficult on an airplane when you hit the water because you're hitting it at an angle.

It's very, very difficult to land completely flat, which is what you might be envisioning. But, um, we rarely practice. Um, multi-engine or, or a complete engine failure, Robin. I think they, they, I, it, Southwest. Anyway, they talked about doing it. You may have just done it at your recent SIM, but when I was there, we never did it.

We had a, like a memory item, but we never practiced it. So you all just practiced, right? Yeah. Yeah.

Rob: In the air force, we practiced it quite a bit. It seems like. Yeah. But for Southwest, we just practiced in this last AQP

Charlie: session. Yeah. Are, are there, uh, are there emergency exits in the cockpit? It's called a window.

Yep. There's window windows.

Rob: Yeah.

Charlie: Yep. You got windows. Do you have ropes ropes coming out, coming out of the windows? Oh my God. Yeah. The technology they got these days. It's crazy. It's crazy.

Rob: Crazy. Yeah. That was funny. It's a 7 37, 200. Thank goodness. Both pilots survived

Charlie: They were the only two people on there. So that was. You know good because who knows what would've happened? Had somebody been in back because it did break apart, like you said. .

Rob: Yeah. What else, what else? You got anything? So,

Charlie: so the next bullet here, I'm looking at my notes and, um, I guess these are shown notes, right? As what we'll call these things. Yes. So I've got what's going on with the airlines and why do they suck so bad?

Right?

Rob: Oh, I'm not lying.

Charlie: Oh my goodness. It's uh, it's pretty crazy out there. Let me give you. Rob the non-pilot perspective now in, and a passenger being Ben or passengers now. So then you can give us the, the insider, but, um, you know, we were stuck in, when we came to visit you if a couple of weeks ago, you know, we got stuck, right.

We got, I suppose, to take off, we're supposed to land at our, uh, in Knoxville at 1130. We in Atlanta, I think I walked into the door, Ben and his. Girlfriend were kind enough to drop me off. I've walked in and got in bed probably about 5 38. So that was painful instead of about in 30 minutes. But anyway, that was, that was whether there was a lot of weather in the Midwest.

There was weather and yeah, so, uh, it was painful, but people are, you know, testy in the airports. Uh, now, especially they have mask on everybody's kind of angry, whatever, but I will tell you that. I'll look at this as like a business kind of thing. And then you can give me the other side, but I just can't imagine running a business.

And at one month it seems like you're trying to offload as many employees as you can, to, to stiff arm bankruptcy, to, uh, just not run out of money. And in fact, every airline would have run out of money. It had it not been for the government, but, um, so one month you're doing that. The next. You got full airplanes again?

I mean, again, I'm exaggerating a little bit with this full, , next month thing, but man, a laugh, can you imagine not to mention getting everybody back instantaneously, it's not going to happen. There's still lots of unemployment benefits out there that people are on and, um, maybe affect the motivation to return to work.

However, getting a bunch of pilots. You know, is, um, is not easy because everybody needs to get retrained. Yeah , I made the call to get all the captains back. What, when was that call maiden? April, may. And then they said, come back in July. So there's some lag time just on the callback alone, not to mention the training, but right.

Rob: Yeah. It's, it's, it's crazy out there right now. Uh, Ben, you, you were in the airport, you saw it, right?

Charlie: Yeah, it was so crowded. I mean, everyone's, everyone's going on vacation traveling around right now, schools. I mean with school out and everything too, I think. Uh, but yeah, it, it was wild. We saw some, some altercations, actually a flight I had before this one to Denver.

Uh, the last one that was a couple months ago, but there was a mask incident on, on my plan. Uh, and it was just like people. Are so wild up right now. It seems like with this, uh, everything that's going on and, and I mean, like our flight, Charlie, luckily we had you there cause I was probably getting pretty frustrated, but uh, you know, I mean, it's weather.

I mean, what, what can you do? There's nothing that you can do. I mean, they have to wait, wait it out. Luckily we got to get to our destination that night, but,

Rob: um, you know, it's tough, right? It's not cool. You got to kind of have the perfect storm. Uh, you've got, yeah, you got weather and those kinds of things that we're used to dealing.

But use most of the time of the airlines is fully, you know, fully functioning. And right now they're not even close to fully functioning. You've got that. Then you've got the airports that are packed. Cause there's all this pent up demand, like you said, vaccines are going great. Everyone's recovering. Um, so you have all that pent up demand.

And like you said, summertime kids, right school. Let's go. Unfortunately, the flip side of that is that, like you said, there's so many benefits out there from code. That you know, the airports aren't, aren't fully functioning either. Not, not, not to talk about the airlines, but also the airports are, I think, I think the airports are actually functioning worse than the airlines.

If you can even imagine that. Um, and it's an index across the board. It's not just, I would love to point the finger. Yeah. One airline or another, but I think it's across the board. Um, I don't know anyone who's doing really, really well right now.

Charlie: Yeah. It's a matter of who can. Who can suck them the least, right?

Yeah. In the airline world, who's the least terrible. Who's the least terrible, but, but you're right. And you go to the airports. There's no, you can't get food. , some of these places aren't open because they don't have any workers in there

yeah. It's a tough time. We're gonna have to just, just suck it up for a while. Right. But it's a wall street journal article that, uh, that I was looking at to prepare for this as, uh, aviation consultant at McKinsey said, airlines had to make choices about summer staffing before they knew how quickly the man would come back.

Many of those decisions were made at a time when we, as a country, Optimistic about the recovery of air travel. That's, that's his, uh, his opinion now, Rob, you know, you, and I've talked to that day was like, well, you can't necessarily just give the airlines a pass either, you know?

Rob: Yeah. .

That's one of those things. Well, if that were true, why did you schedule so many flights? Like, yeah, I mean, yeah, up at the top, it's a different ball game, but you're trying to, you know, schedule flights and then you can pair back and obviously you don't pair back when there's all that demand. So yeah, it's tough.

And

Charlie: it's not easy. You may have to start flying again. Yeah. Sorry. No, they're not that desperate. I promise you.

Rob: , . All right. Anything else on the, uh, aviation news? Okay. Well, moving along, we've got, uh, you know, just a quick break here. We're before we jump into the I've inherited money.

Now, what we're fiduciary fee only advisors. This is brought to you by leading edge planning. If you need, if you have a question you need, uh, some financial planning help re you can reach us at 8 6 5 2 4 0 2 2 9 2 or that good old electronic mail we've been talking about. At info@leadingedgeplanning.com.

All right. Okay.

Charlie: Right on. I bet. Ben, I've been, your phone has blown up since the last podcast, mostly with spammers spam calls, but yes, it has your stuff. Love it. Yup. Yup. You can't talk to a lot of people that have inherited money from princes. Exactly what money from you? Yeah. Yeah. That's always interesting.

They always want my credit card.

Rob: Mother's maiden name. All right, let's do this. I've inherited money now. What Charlie, what do I do

Charlie: now? All right here. Here I go. Let's say you inherit a million bucks, man. I'm going to quit my job. I'm going here.

I inherited a million bucks. Well, that's a, if we, if we look at the 4% rule, what's that about $40,000 of income per year before tax. So, you know, a million bucks, that's a lot of money. It really is. And I'm not scoffing at that bunny by any stretch. But sometimes I think in our minds we might go, oh my goodness.

That's, uh, that it changes everything. I'm quitting, I'm quitting. I'm going to print a vacation will not really right. , I think that is the emotional thing that sticks out in my mind for the most. What about, what about you guys?

Rob: Yeah, I, I think it's one of those things.

Yeah. A lot of times you get that, you get that windfall, if you will. And people are thinking, okay, I've got this money. I'm also hurting because I probably was pretty close to the person I just lost. Yeah. And they wanted me to have this money. So, um, it seems like a lot, like you said, that 4% rule in the millions 40,000 that's, that's not a lot of money, but you can't think of it like that.

Most people are thinking, oh, I've got a million dollars. This is great. And I think that's where people can get themselves in. Um, one of the statistics I came across was by it from, uh, Elizabeth O'Brien, I guess one study found that a third of the people who received an inheritance had negative savings within two years of the event.

So even if they were great savers beforehand, you get this money, this million dollars and the budget they were on and their spending habits kind of go out the way. Because they've got this million dollars, they maybe don't have an exact plan for it. So they're just kind of spending and going along and you can outspend your income easily, even when it's an inheritance.

So yeah, I think they, they get into that trap. And then all of a sudden, you know, at some point that inheritance has gone and not only have they lost that inheritance money, but they've lost the good spending habits. So they really get themselves into kind of a bind. They're being deliberate with whatever inheritance you have.

Charlie: , , I think you have to write down your goals I've got to send my kids to college. We have his house payment when they really start digging and going, these are all the expenses that I'm going to incur in my lifetime. You can almost attribute, , that money to the, to the goals and. And again, you get to see how far it goes or doesn't go.

And then you get a real, a reality check on how much is it. We really have, how much is it? We really have left over to spend after all those goals are accounted for. And part of that goal process is going, whoa. If I save this money and invest it , at a reasonable rate, how much income will I have when I am ready to.

You know, I think those are just absolutely critical to do.

Rob: Yeah. I think you're exactly right. I think you, if you've already are talking to a, you know, a good fiduciary financial. You're probably on some kind of a financial order checklist or a financial order of operations or whatever you want to call it, that goes through those priorities. And you can just fit that money right into those priorities, if you want, you know, um, it, it's a, it's one of those things.

If you've already thought about it, you already have goals written down. Like you said, Charlie, and you already know what you're working towards this money. It can go right towards it. It doesn't have to be anything new or special.

Charlie: I think the closest thing I've seen to this , and again, we've we just had clients last week told us they inherited some money, but they're like you said, they're the ones you just said, Rob, they are on track.

They've got their goals, all laid out. They knew exactly where this is what really a surprise, but they're not going to go. You know, do something too crazy. They're going to have some fun enjoy that. That's great. But the closest thing I've seen to this, um, in a negative way is someone that I was close to.

And in fact, a family distant family member, their husband, her husband passed away at an early age and they thought he had plenty of life insurance, , Hey S 500,000 sounded like a ton of money and it is a lot of money.

. But when you start to take inventory, , her kids are going to private high school. That was very important to her. That's what her family had done for generations. Then they got to go to college. She needs to retire at some point and she needs, , she's, doesn't want to cut her lifestyle in half or have to sell it.

That $500,000 was, was accounted for really quickly, ? And, it was pretty amazing, , that's just one of the things that I saw firsthand, a couple other things that I think are really important if this happens, , and if you're anticipating this happening is that things may become important.

Now, planning wise that weren't important before, such as uh, estate planning. You know now, uh, have this inheritance, is it going to be protected when I pass away? Maybe that was an issue before, maybe it wasn't, maybe it just became an issue because now, , have a whole lot more money, uh, liability.

Thanks. , w what kind of liability risks do I have out there? , if somebody gets injured on my property, if somebody's driving my kid's car, or my child wrecks my car, , or am I going to get sued now? They're just much more at risk is what I'm saying. So there's a couple of other things to think about, and I know we're going to get into it in a minute, but taxes, you know, when you inherit it, you know, that's going to be a big issue.

Uh, maybe I should say, maybe we'll get into it, but what about. Again, when I pass it on to my children, I want to create a legacy for my family. You know, as I get older, I start thinking about that more than I did when I was, when I was Ben's age, you know, but I would love to raise my children and, and, uh, create a legacy.

And, and that takes a lot of work, a lot of responsibility and a lot of planning.

Rob: Absolutely.

But it's one of those things. I think it was at the notorious VIG set at the best.

Charlie: Oh, I love it. When you call me big Poppa,

sorry

Rob: that one also, but when you get all, you know, you get this windfall of money, you got to make sure, or one of the things you would want to make sure you don't got to do anything. You want to make sure that your taxes are covered. And I think , we're going to get into that.

But, Charlie tax consequences of inheritance.

Charlie: Yeah. So, , somebody out there listening and you're thinking, Hey, I'm, I'm possibly gonna going to inherit some money here in the near future, , parents or whatever, then, , you're probably wondering, Hey, am I going to owe taxes on this inheritance?

And the answer as always is it depends. Let's start with a very, very basic, uh, the easiest one. And that's the federal estate taxes. Let me back up even one more level and just define it. What the heck are death taxes. That term gets thrown around a lot. And, um, and I've kind of had to clarify that myself because it's some of the verbiage is like, well, what are you talking about?

You say death taxes, because I know we have inheritance taxes. We have a state taxes. Uh, what are death taxes? Well, death taxes is just a generic term to describe all of those. So we're going to talk today about mainly state, federal, and state. Uh, state taxes. I gotta, I gotta say that it's the federal state and federal, uh, estate taxes, and then there's an inheritance tax.

So we'll talk about those. Now the easiest one to delineate right off the bat is the federal estate tax. Right now, there is an exemption, meaning you're not going to pay any estate taxes. If you pass away and you have $11.7 million. Correct me if I'm going to say, oh yeah, let me double check my numbers.

$11.7 million. As of now that adjust each year to inflation as of now, or if you're married, it's $23 million. So in other words, Rob, you and Janet can leave me $23 million and you won't. Yes. Thank you. And you will not put here me. You will not, you will not pay any tax. Any federal taxes, state taxes. Okay.

Um, now what about Colorado? What about the state of Tennessee? If , if your S your, your son inherits that money in Colorado, he's not going to pay and your, your state is not going to pay a state taxes, because if you have less than 23 million, but is it going to pay, are you going to pay state estate taxes?

And, uh, Colorado let's see, are they on the list? I think they are not on the list for the state or inherited. Okay. So, you know, there are some states, in fact, there are a, I believe 12 states, that still have in a state or inheritance tax. Okay. So there's a little bit confusing. So let me explain again, the difference between estate and inheritance.

If you pass on an estate, Rob, then you're going to take in your house, your cars, your IRA, 401k. And they're going to add all that together. That's the value of your estate. Okay. Now, if you pass on a $10,000 to me, you know, then I'm going to pay. If I'm in one of those states, I'm going to pay an inheritance tax.

If that state, uh, ha has an inheritance tax. So a lot of states recently have gotten rid of those inheritance taxes, but I'm going to stop right there. Cause that's maybe very confusing. And maybe I didn't say that really well, but what do you think?

Rob: I think you got it, you know, you got the Federalist state taxes.

That's what most people are thinking about. And if you, uh, I think it was a flight too. We talked about, uh, the Biden tax plan and what might happen. And we've got that sunset, uh, a state tax exemption that basically is going to expire in 2025. And I believe. It will revert it back

but, uh, right now, if nothing, if, if nothing else happens and, and Congress doesn't act, or the president. It's going to expire and a revert back. So something that all of us who plan on living past 20, 25, want to think about is more estate planning because you know, that 23 million for, for couples ish, uh, will be, um,

Charlie: won't be exempt.

Won't be 23. Yeah. So, you know, there's a couple of things there I'll, I'll, uh, clean up a little bit. If you're again, if you're going to inherit some money, I'm from Kentucky. So Kentucky does have an inheritance tax. So let's say my mom leaves me some money. Well, I'm not going to have to pay inheritance tax because most of these states that have them, they have exclusions.

Like, uh, if you're passing it onto your children, then you're excluded. But if you're passing it onto your. They're going to pay some inheritance tax. Now, most people that if I'm going to leave money to my buddy and I'm from Kentucky, then I'm going to put in my will that just take the inheritance tax out of my money and then pass the rest onto my, my buddy.

That's usually how it would work. So there's a lot of exemptions in a varies wildly by state, but let's do talk about that sunset provision, Rob. Cause that's, that's really important because people go, wow. That, uh, you know, we don't have 23 million now, but it's, uh, the sunset provisions coming in and, you know, we might one day have a decent estate, you know what, meaning a lot of money.

So it's going to go down to a five point, basically 5.8 million per person, which is still a pretty good amount. And I can't remember what year it's reverting back to. I was like half it is half. It is still half you're. Right. It has happened and, and, and by the time 20 and that's adjusted to inflation. So by the time 20, 26 rolls around, it's going to be a little more than that.

Uh, but, but for today's discussion, it's going to revert back to $5.8 million per person, or about 11.6 million per married, couple. , so. If you have, let's do a quick example, let's say you're single and you have, your estate is worth 10 million. And after the sunset provision, uh, uh, 20, 26, you pass away and you leave 10 million you're exempted, uh, amount is 6 million.

So there's 6 million of the 10. I do not have to pay a state taxes on. Now, usually, I don't know what the, I can't remember what it's going to revert to, but usually above that exempted amount, you're going to pay anywhere between 35 and 45% tax rates.

So 10 million amount of 6 million, which is my exclusion leaves me for a million. Let's say it's 35% and I can't do the math that good, but let's say it's about two and a half million dollars. Check me on that. Ben. And, and so you're going to pay two and a half million dollars in estate taxes, which is disturbing to a lot of people because, oh, by the way, I've probably already paid tax on that money once.

So that's a little disturbing. So now we've got a lot of clients. Our average client range is probably in their fifties or early fifties, but we have some people that I think. , down the road, they very well could be in this, in this situation. If things don't change, , one day they might be looking at a state taxes and going, how can we avoid this and how can we prevent this?

That's the other part of that. So again, that's a lot of talking, but, uh, what do you guys have to fill in or add on to? Yeah, just say one thing that I've heard is just that, uh, the trust, you know, being, being used or coming back into favor, once those provisions come back in, um, I've heard that, you know, , a lot of people.

We'll start using trusts more to avoid those estate taxes. Um, and so, especially if you hadn't been considering that before, um, and, and you may be in the category, .

Yeah. Yeah. So let me address the trust because it's it's can be confusing now prior to like back in the Clinton administration and maybe even the early Bush administration, we had the exclusion again. Let's just say is 11.7 million per person. Back in the day, I remember flying with people and talking about this, cause it was, uh, it was low.

It was like a one and a half to 2 million. So even though that was back in the early two thousands or whatever, I still wasn't that much, because if you have an insurance policy, let's say you got a million dollar insurance policy, half a million dollar house, half a million dollar 401k, that's $2 million estate.

You know, if the exclusion is 1.5 million, I'm going to pay 45% of 500,000, which is about 200,000 in taxes. So again, I went through all that , really quick, but the point is more people were, were, um, included in that then they thought they were going to be so, um, So back then there were things called bypass trusts.

You know, there was a lot of very sophisticated, uh, state planning using trusts, but let me be clear right now, you cannot go out do just to your standard old, plain Jane living trust and think you're going to have it. Estate taxes. It's gotta be a very sophisticated bypass trust, which are basically irrevocable generation skipping , stuff that estate planning attorneys get into, you know, into a lot more detail.

They haven't done it in a long time because it's not been necessary as necessary that could come back into, into Vogue, so to speak. But I just want to be clear that a regular old trust has no tax benefit whatsoever . , but one of the things people used to do, if they had large estates, especially like, uh, back in the day, these farmers big farmers out in Midwest, let's say they had, they had a huge farms, all this equipment, and let's say the farm and the equipment was worth 10 million bucks.

But the farmer let's just say they're making a hundred thousand a year. Um, they don't consider themselves wealthy, but next thing you know, they pass away. The farm gets put in the estate and oh, by the way, now you got a $15 million estate in the, in the family is like, wait a second. Okay. We're going to owe millions of dollars in estate taxes.

So that was a big deal. People were losing family farms, , and that, again, this is way back in the day. So, uh, but what those people did to protect. I know you're going to cringe when I say this, Rob permanent life insurance. So back in the day, uh, permanent life insurance, , when people say I want whole life or whatever, or universal life, I'd be like, why , and one of the few reasons, uh, uh, answers to that other than just like, I just, what I want is what I prefer.

I understand that. But one of the other, you know, techniques. Uh, we have an estate tax problem, so we need permanently life insurance and they had even the, the, uh, the life insurance trust, the islets. I forget what the, I first honest stands for. But anyway, it's a very specific strategy to allow that permit life insurance to pay those estate taxes.

So that's why people had permanent life insurance. And so, uh, so again , those are just a couple of things that, that may come back in. You're revokable thank you. Irrevocable life insurance trusts. Thank you. It's been a while. Those were all the rage, not just, not just five or 10 years ago, you know, a lot of people had those and they'll probably have them again, if, if these things become an issue.

Yeah.

Rob: Yeah. For sure. Yeah. Let's pivot just a little bit and maybe back up a little bit when you inherit, you know, this month. Well, obviously what a lot of our listeners have and, uh, maybe their parents have, uh, or whoever they're going to inherit the money from our 401ks and IRAs. And I think that's something that we need to touch on a little bit.

It it's important to know that if someone dies and they had an IRA and they were required to take a required minimum distribution out of that IRA, If they've died and they're past the age of 72, where they're doing that, you're going to also have to take in required minimum distribution, an RMD on the year they died.

They haven't already something to keep in mind. If they've had, if they have multiple IRAs, the IRS treats all of those as one pot, if you will. So they might've paid the RMD out of one pot and you wouldn't have to pay it. So something you're wanting to think about, um, when you get, go down that.

Charlie: Yup. Yup.

That's good stuff. Um, because we've seen this happen before and it, you scramble to kind of go, Hey, has the RMD been paid? , again, it's, you're dealing with people who are dealing with a lot of stuff and, uh, it's awful, , it's just awful, but, but it's just one of the many things you've gotta account for.

Otherwise. There's a, there's a huge penalty on not paying RMDs. Yeah. , it's just one of those things, but, um, And, and you're probably getting to this Rob or, or, uh, at least it's on our script anyway. So I'm going to tell you about the importance. You know, what, if I do inherit a 401k, an IRA, what are the laws now?

What are the rules now? And this starts, uh, the secure act of 2019. So if someone had died, um, 2019, , if, if they died prior to that year, then what I'm going to say is very different. But after the security. The stretch. IRA is basically. So, uh, without, without muddying the waters too much, I used to be able to inherit an IRA and then I could take out an RMD for the rest of my life, just a small portion for the rest of my life, so I could stretch it.

You know, that was a big, big deal. That's pretty much gone. Uh, the rule now is, uh, whether it be a Roth or, or a non. IRA or 401k. You've got 10 years, 10 years to draw it all down. So I'll throw in a plug real quick again for Roth conversions. You know, Ben, you and I are working with one of our clients, a father, son duo.

And we're like, Hey, maybe we should do Roth conversions. So that, yeah, at a lower tax rate, , when, because he's retired, he's, uh, he has a lower tax rate. His son's a pilot. So when his son inherits this money, someday, it's going to go right on top of his income. He's got to take it out within 10 years and he's going to be taxed at the marginal highest margin rate, you know, that he's in at that time.

So, so that's, that's an idea. That's a strategy that, that might work. 10 years is the, is the date is a timeframe. Now there's some exceptions as an, every IRS regulation out there. There's some exceptions I'm going to read those because it's important. And these

Rob: are, these are called eligible, designated beneficiary.

Yeah.

Charlie: So it's a 10 year withdrawal rule unless you're a surviving spouse. A minor child of the account owner, a disabled or chronically ill beneficiary, and a beneficiary who has not more than 10 years younger than the original IRA or 401k participant. So, uh, So basically,

Rob: and that's just a throw in, on the disabled and chronically ill.

It's, it's a pretty high bar to reach, I think. Yeah. You have to be, you know, medically qualified for that. It's not just, if you have, you know, chronic tinnitus or something, you gotta have a, you can't do more than two of six activities or something like that. So

Charlie: it's a high we're counting, you know, we're counting on.

Most of the beneficiaries having 10 years, you know, and again, a spouse is completely different. Um, just to throw out another nugget here, a spouse has the option to roll it, make it their own IRA, or roll it into an inherited IRA. And there's some decisions to make there. Unfortunately, again, we've had this experience as well, and we decided to have the spouse use an inherited IRA because that meant she could take out money, you know, without paying penny.

So that's something to think about, you know, if you're under 59 and a half, you know, so, so something to think about there as far as, uh, the options that people have.

Yep. Excellent. There's a lot of misunderstanding around gifting and estate planning. And so again, if some of our people are like, Hey, my parents, uh, they're getting up at night age and maybe they should just start giving us money. Well, just understand that, , a lot of people think, well, there's that 15,000 a year a gifting limit.

And there's a ton of confusion around that. So, so in, in that limit changes a little bit every year, but I think it's 15,000. All that means is if, if someone were to give you Rob $20,000, that person does not have to pay gift taxes and you don't have to pay gift taxes, they just need to file a gift tax return to account for the gift above the $15,000 a year.

Exclusion. In reality, again, this is today's numbers. You could give away $11.7 million and never pay gift tax during your life. So again, I just want to clarify those rules. It doesn't mean that your, your elderly parents are start gifting you money right now. I'm not saying that at all. In fact, the step-up in basis is something you got to take into consideration.

If someone passes away, you're going to inherit a home or, or a capital asset, a non IRA, a non 401k. Then right now there is a step up in basis, which means you're going to inherit that potentially tax. So that's, that's something to think about.

Rob: And they're in, they're thinking about doing away with that.

Am I correct? And you are correct talking about doing away with that step up in cost basis. Yeah. And that

Charlie: requires a little clarification too, because , the media has a field day with some of these, but the, the real, the real, uh, proposal is that it would be excluded for gains in excess of 1 million.

For a single person in $2.5 million for a couple. Yeah. So that's changes it drastically and oh, by the way, people have been trying to get rid of the step-up in basis for a long time and it never happens. So the likelihood of that happening is very low, , if nothing else, for the reason of, can you imagine people going back 30, 40, 50 years and going, Hey, what's the, what's the cost basis?

I mean, there's no way people are gonna be able to do that. It's just way too common.

Rob: Yeah,

Charlie: Bitcoin. Jesus, what do you got? Yeah, you can leave me some money. See what I think you should gift me some money. Yeah. Well, you did build that house and maybe, maybe I should. I need some gifting.

I can do. I got, I'll put you on my will, but you can have like my old baseball trophies or something. I get you some of my cryptocurrencies as well.

I'm going to inherit something with losses in it. No. Yeah, no, I think this is a great topic though. And, um, it's pretty confusing. So maybe we should, we can do a little recap here of some of the things we've covered, because I know we've kind of jumped around a lot.

Rob: Yeah. Well, here's a little fun fact. Uh, we talked about the penalized, the penalty, the penalty for not taking an RMD.

And you said it was, yeah, it's 50% if you miss. So God forbid something happens. Uh, to someone you love and you inherit that money and they're required to do RMDs on an IRA or 401k then, and you miss it. It's 50% is the penalty that RMD not, not the entire amount, but, but I'll be RMB. They had to, they had to take, you can ask for forgiveness on a fancy IRS form, but, uh, That if you don't ask for forgiveness, that's what you're paying 50%.

Yeah. That's high. That's deep. Yeah, it is.

Charlie: It is. And, and I'll do, I'll take a hack at re you know, kind of rehashing what we've talked about today. Cause I think the most important thing we talked about early on was just chill out, recover for a year. Don't do anything and, and then find someone you can trust to get some good guidance.

And then you've got to, I think you've got to get a plan and I don't care if that you write down on a legal pad. All the things, all the costs, other things that you want to do because that money is going to go away faster than most people think. I believe bar bar napkin is my favorite. Yeah. I use a bar napkin, whatever.

And then, um, neighbor. And if you, yeah, if you think,

okay, if you think that, um, you know, at some point in the near future, you're going to have some inheritance coming your way. Um, think about taxes, estate taxes at the federal level, a state taxes at the state level inheritance taxes, which is just a few states, uh, that it applies to.

So look those up because there's a lot of moving parts at the state level, a lot of moving parts, but most likely if you're. A son or daughter and you're inheriting, then you're probably not going to pay state inheritance tax. Okay. So that's, there's some exclusions. There is what I'm saying. , estate planning, estate tax changes coming our way, 20, 26, no reason to do anything drastic right now.

But a trust bypass trust revokable trust, permanent life insurance may come back into play if you're above these limits and they're still pretty hefty limits of right now, but basically $5.8 million per person. , last thing is we talked about the step up in cost basis. I don't believe that's actually gonna happen.

Take it for whatever it's worth, but if it does, it's only for gains above $2.5 million per married, couple of 1 million. Per into individuals. So, so that's my, uh, attempt at a summary. .

Rob: . It's super important with those 401ks and IRAs or anything or insurance policies that you have beneficiaries named at that. And that they're accurate because what that does is that bypasses probate. And that is key because then you don't have to wait for all that time for the probate courts to do their thing.

And for debtors. You know, the water guy or the lawn guy or the pool guy are all the debtors that come out of the woodwork, uh, during probate to go after that money, they can't do it. It goes directly to that beneficiary. That's why beneficiaries for you, military folks out there, they always make us make sure that that those are correct, because it's so important because it passes directly through you to that, to that person, uh, without having to go through the probate court.

So anyways, yeah.

Charlie: Check your accounts, check your accounts. And if you need any forms filled out for that, just let me know. Ben's the one they can do it@schwab.com. Ben. Oh yeah, that's true. Yeah, no forms, please do yourself. Yeah.

Rob: Perfect. Perfect. Uh, the other thing is you got 10 years and unless you're an eligible, designated beneficiary to take out that money.

IRA RA even a Roth IRA. You gotta take that out within 10 years, even though the ROS have already been taxed. So that's good. And remember, there's a difference between IRAs, 401ks, IRAs and 401ks, even Roth 401ks have required minimum distributions. So, uh, that's all I got. What else you got? Yeah.

Charlie: Bear inheriting money.

Uh, contact us, please. And we'll put spin by Ben Dickinson as a beneficiary. Contact me

Rob: planning doc. Uh, all right. That's all we got. We've arrived at our final destination. Couple of leave you with a couple of quotes. They're kind of related here. They're all just, uh, um, dealing with investing in finances. The first one is from PTC. Money is a terrible master, but an excellent servant. Think on that for a bit.

The second one is from a fellow pilot, Amelia Earhart. The most difficult thing is the decision to act. The rest is merely tenacity. That's

Charlie: it?

Rob: That's all we got. We're at the end of a flight 11. Thanks for joining us here at the pilot money guys podcast. If you like, what you heard hit that subscribe. And we want to hear from you, even if you didn't like what your, we want to know that too.

So just shoot us, uh, shoot me an email@robertatleadingedgeplanning.com and has always remember the world makes way for those who know where they're going. So plan accordingly from

Charlie: all, all of us here at leading edge Godspeed. We out see you next time. See ya.

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