Welcome to how to retire on time. A show that answers your questions about retirement, 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 go 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 advisor, insurance agent, and tax professional, which means when it comes to financial topics, we can pretty much cover it all.

Now that said, please remember this is just a show. Everything you hear should be considered informational only as in this is not financial advice. If you want financial advice, then request your wealth analysis by going to www.yourwealthanalysis.com. That's www.yourwealthanalysis dotcom. Doesn't cost you a dime to start exploring your lifestyle and legacy potential with someone from my team here at Kedric.

Now with me today, a part of my team, one of my colleagues, mister David Frandsen is joining me. David, thanks for being here today.

Yeah. Glad to be here.

Now David's gonna be representing you. He's gonna be reading your questions, and I'm gonna do my best to answer them. So you can send those questions in right now or really anytime, but right now especially. Just text them in 913-363-1234. That's 913-363-1234, or you can email them in hey mike at how to retire on time.com.

That's hey mike at how to retire on time.com. Let's begin.

Okay. Hey, Mike. My husband and I are putting together our estate plan. Do you have any tips? Speaking of people living long or or not.

Yeah. Yeah. Let's just go through some of the common mistakes that I see. Now I'm not an attorney. I'm just taking this from a financial standpoint.

I see a lot of people have their qualified accounts. They have the spouse as the beneficiary. That makes all the sense in the world. And then their secondary beneficiary would be then their trust. Uh-huh.

I don't see how that makes sense. And and people miss this, but if your if your IRA goes to your trust, then the whole thing's taxed. Do you wanna just blow up the tax bracket of your estate, pay all the income tax, and maybe even, like, the the estate tax or whatever your situation is? That that's a problem. The way I typically like to see it is all of your non qualified assets.

So like your house, right? That's that's an after tax situation. There's no tax advantages there. Your house, your cars, if they're to be sold, you know, all of that stuff, your savings count, all of those assets go into a trust. And then your qualified accounts, your IRA or your Roth, to put it simply, have the beneficiaries go to the kids or charities based on percentages.

So you have to kind of divide qualified retirement accounts and not qualified retirement accounts and then organize it as such. Okay. That's the first one.

Alright.

The second one is when it comes to your estate, what what is your legacy plan? What does it look like? Do you want to grow your assets as much as possible and then give money? Do you have extra to give? So the the estate tax is something to consider.

And when you pass, there's a threshold whenever whatever it is, it keeps changing. But look it up, the estate tax limit, and make sure you look it up federally and within your state. Some states have estate tax as well. But if if your total estate, your net worth is less than the estate tax, then you've got nothing to worry about from a an estate tax standpoint. That gives you some freedom.

Let's say you've got $2,000,000 and the estate tax is 6,000,000. I'm just making it up here. You don't need to worry about estate taxes, but that allows you to start gifting money while you are alive.

Unpack that for us.

Affordability is a problem, especially with housing right now. So what if you could just gift your kids $50,000, so they get 50,000 today instead of 50,000 when you die, and that's the down payment of their house. It's a gift. Oh, that's above the gift tax limit. Yeah.

I know. So work with a tax professional, fill out form 709, if I remember right, and and just take it out of your estate tax. No one's paying taxes on it. It's just you have to just account for it. Let the IRS know it happened.

You're just taking a portion of the estate tax exemption and gifting it now. So you're helping your kids from a you're leaving a legacy in the moment. You're helping them in the moment. They're getting into a house when they need the money as opposed to when they're already established, when things are fine, and then you die. And they're like, oh, well, I could have used this 20 years ago.

Mhmm. Yeah. That makes sense.

If you can afford to gift now, how much more effective is the legacy that you will leave from an emotional standpoint, from a a memory standpoint by going on trips with them, by helping them buy a house, by whatever it might be. If you can afford to do that, that's the conversation that should be had. If you can't afford it, then don't. As they say in the airplanes, put the mask on yourself first and then help those around you. Make sure that you don't have a bleeding heart, that you're not creating codependent relationships with kids that will drain your accounts, and then you're both out of luck.

So be careful of that. But, yeah, the the the 2 tips, the 2 big things I see is, 1, you probably can gift more than you realize and help them now you just have to work with a tax professional who understands how to report this correctly to the IRS and then the other one is make sure that the money goes to the right places so that you are tax efficient from an estate planning standpoint. So qualified assets are divided and organized as such, and nonqualified assets are going to a will or, you know, or dictated by the will or going into a trust and and so on. And there's all sorts of other things we can talk about. If your estate is over 6,000,000, let's say, or 5 or 6,000,000, then we're getting into more advanced tax planning of how to gift now, how to give later, charitable remainder trusts, foundations, endowments.

That's more complex from a gifting standpoint, but it's tax efficient. It gives your money more purpose. I mean and we can go down that rabbit hole there for those that have more than 6,000,000, but there's a lot of things that could be done for those estates. AB Credit Shelter Trust is another one. How do you take your estate divided into 2?

So you have 2 estates and they're all below the limit. I mean, there's just so much that can be done. That's Well Yeah. This is the fun stuff right here.

Yeah. Going deep. It's a deep cut.

But in the end, yes, there are a lot of things involve a tax professional, a financial professional, and an attorney in making these decisions. So if you want more information about that just go yourwealthanalysis.com, that's www.yourwealthanalysis.com to understand what you could do in your situation. It Doesn't cost you a dime, but it really could open your eyes to your lifestyle and legacy potential. You can also text analysis to 913-363-1234 to learn more about it and get started. That's analysis to 913-363-1234.

Now that's all the time we have for today. If you want more tips about retirement, income, taxes, social security, health care, and more, make sure you subscribe to this show wherever you get your podcast, just search for how to retire on time. Also, you can catch this show via our 247 digital broadcast by going to www.retireontimeradio.com. You can stream various episodes on your phone while you're on the go, in the car, or wherever you are on a run. Just go to www.retireontimeradio.com.

From everyone here at Kedrec Studios, thank you for spending your time, your most precious asset, with us today.