Welcome to How to Retire on Time, a show that answers your questions about all things retirement, including income, taxes, Social Security, health care, and more. This show is an extension of the book, How to Retire on Time, which you can grab today on Amazon or by going to www.how to retire on time.com. My name is Mike Decker. I'm the author of the book, How to Retire on Time, but I'm also a licensed financial adviser, insurance agent, and tax professional, which means when it comes to financial topics, we can pretty much cover it all. So that said, please remember this is just a show.

Everything you hear should be considered informational as in not financial advice. If you want personalized financial advice, then request your wealth analysis from my team today by going to www.yourwealthanalysis.com. With me in the studio today is my colleague, mister David Fransen. Thanks for being here today.

Yes. Glad to be here.

David's job is reading your questions, and I'm gonna do my best to answer them. Now you can send questions in at any time by texting them to 913-363-1234. Again, that's 913-363-1234, or email them to hey mike@howtoreontime.com. Let's begin.

Hey, Mike. I'm having a hard time bringing up my estate plan with my kids. I don't want to create problems when I pass. Any tips?

Yeah. This is a wonderful question, and it's very timely question because we're entering into the holiday season where people are probably gonna see more of their family.

Yeah. It's a good thing.

So, yeah, we encourage families. We encourage spending time with your families. We we encourage healthy relationships, but it's hard to broach the subject. There are many situations to where people of very great net worth, their kids have no idea. I I remember talking to someone.

Had $20,000,000, and the kids thought they were near broke.

Oh, wow. That's interesting.

Yeah. It's actually quite common. The people who look like they have money often don't have as much, and the people who look like they don't have as much money many times have a lot. Yeah. So this idea that you have to show your money is is a misnomer.

It's not true. And there's exceptions. I mean, there are people that have a lot of money that show it, and there's nothing wrong with that. Do whatever you want with your money Yeah. As long as it's legal.

Yeah. Yeah. Yeah. With

caveat there.

Yeah. So let's just answer the question quickly here. Because this is, I think, a pretty straightforward situation. First off, make sure your estate plan has very clear terms. You don't want any confusion for the kids to have to fight over in the interpretation after your passing.

Make sure it's clear as day who gets what and and that there's just there's no way that your executor could be accused of favoritism or bias or manipulation, whatever it might be. K? The second thing is if you don't know who wants what, and many times people are surprised of what matters to which kid, I call it the sticky note game. Just play this with them. The it went Christmas, Thanksgiving, Hanukkah, Kwanzaa, whatever you're gonna celebrate.

Give everyone different colors, sticky note and saying, hey. I'm not gonna live forever. We're putting together our estate. Let me know what you want. Put a sticky note on all the things that you care about because the grand piano can't split 3 ways.

Mhmm. So you're either gonna sell it and give the cash or maybe only one kid really cares about it, but you wanna monetarily kinda give things a little bit differently. And so you just let them tell you what they want, and then you go back and you make decisions. Make sure the estate plan is funded correctly. And then last but not least, be very cognizant of the behavior of each kid.

You can give a kid who has poor spending habits a lot of money, and it would actually ruin their life. It would be better to give it all to charity. So this is the lottery effect, but sometimes you may want to structure an estate plan to give them a lump sum first, knowing that they're gonna just fail. They're gonna spend it all, be worse off. And hopefully that experience and that pain they would experience will start to adjust their behavior so then the next lump sum, whether they know it or not, would then pop in.

And, hopefully, they learn from it. And maybe you try it 3 times on the 3rd time, and that's the charm. Right? That's when they get it. But kids who spend through money or just are not financially prudent may actually be worse off with your your lump sum of money.

Maybe they're saving. Maybe they're taken care of. Maybe you wanna just gift some of it now. Maybe you wanna gift it later, but just be very weary of giving too much money to people who don't have the behavior to be good stewards of it. You don't wanna end up with the lottery effect with your inheritance.

That's that's kind of that's my take on it. It's just these things matter. And and be wary to Trump was elected into office. Right? So who knows what the tax cuts and jobs acts will look like in the future?

But, right now, the estate planning exemption is like 12,000,000 or something like that, but it's expected to go down in 2026 to 6,000,000.

Okay.

So if you have an estate of that's greater than 6,000,000, maybe you're gifting for the next 2 years depending on your age and your intention. Maybe not. It's form, I believe, 709 that you could just gift some some funds away under the higher exemption right now, but find a CPA or someone that can help you with that. But these are things that you wanna be cognizant of so you're not paying a lot in a state tax. You know, how to give it efficiently.

Are you gonna navigate, endowments, cruts, kratts? You know, the list goes on for charitable donations, but be deliberate. But going back to the original question, how do you talk to your kids about it? They don't necessarily need to know how much, but structure it, take out any sort of confusion, make sure that it's not gonna be a fight afterwards. It's just set in stone.

And make sure that you're setting up payments or how they're receiving it in such a way that that it's not gonna destroy their lives. I know it's just so weird to say. Yeah. Most of the time, it's a success. Okay.

But I've seen enough failures that I wanna at least bring up the possibility for people to be aware of. That's all the time we've got for the show today. If you enjoyed the show, consider subscribing to it wherever you get your podcast. Just search for how to retire on time. Discover if your portfolio is built to weather flat market cycles or if you're missing tax minimization opportunities that you may not even know exist.

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