The Personal Finance Podcast

The Complete Guide to Generational Wealth: Part 2 How to Pass Down Generational Wealth

In this episode of the Personal Finance Podcast, we’re gonna continue the ultimate guide to Generational Wealth by talking about how to pass on generational wealth.

In this episode of the Personal Finance Podcast, we're gonna continue the ultimate guide to Generational Wealth by talking about how to pass on generational wealth.


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On this episode of the Personal Finance Podcast, we're gonna continue the ultimate guide to Generational Wealth by talking about how to pass on generational wealth.

What's up everybody, and welcome to the Personal Finance Podcast. I'm your host Andrew, founder of Master money.co. And today on the Personal Finance podcast, we're gonna be talking. How to pass on generational wealth. We are continuing on the ultimate Guide to Generational Wealth. If you guys have any questions, make sure to hit us up on Instagram or Twitter at Master Money Co.

And follow us on Spotify, apple Podcast or whatever podcast player you love listening to this. Podcast tune. If you want to help out the show, leave a five star rating and review on Apple Podcast. Cannot thank you guys enough for leaving those five star ratings and reviews. And also, if you are looking for more content, we have the Master Money YouTube channel where we are releasing two videos every single week now, and really excited about some of these videos we have coming out.

One of them we just had was the 13 Roth IRA Mistakes to avoid. These are really important mistakes that you have to avoid if you have a Roth ira. We just released another one on how to get to your. K White. It's so hard to get to your first a hundred K, and we have a bunch of other videos planned that are coming out as well.

So make sure that you check out the Master Money YouTube channel. Now, in part one, we talked about how to build generational wealth, and we went through so much information. It was one of the longest solo episodes we've ever had here on the Personal Finance podcast. And in part two, we're going to the next phase on how to pass on generational wealth.

And I'm gonna give you a bunch of. Think about, we're not gonna go through every single thing on how to pass on generational wealth because a lot of this is very specific to your current situation. So what you want to do as we go through this stuff is make sure you have the right advisors in place in your life.

Whether it be maybe you have a certified financial planner who put together a financial plan, not a financial advisor. Hear what I'm saying here? A certified financial planner with you. Pay them hourly to put together a financial plan for you, for your trusts and everything else. Maybe you're also talking to your cpa.

Who is putting together your tax plan for you. Maybe you also have an attorney in place who's gonna put together some of this estate plan stuff for you. We'll talk through how to pass on generational wealth, and there's gonna be some actionable steps that you can take here. But in addition, I want you to talk to your advisors about your personal situation.

This is very, very important to you because passing it on and doing it the right way is gonna save you a lot of money in taxes. It's gonna save you a lot of money where you can actually preserve a lot of your wealth if you do it the right way. I want you to make sure that you are talking to your network, networking with some of these people and having this plan created.

So all you have to do is just set it up and you are done. Then you can review it every year, and we'll talk about that here soon. So that is your very first step as you get ready to start to pass down generational wealth. Now, if you're ready to get into some of the actual steps, let's get into it.

Alright, so the first thing we are going to do is we are gonna talk about creating a solid estate plan. Now, when you put together an estate plan, I'm gonna go through some of these documents that you should have inside of your estate plan and maybe some other options that you have available to you. And then once you want to build this out, then you wanna talk to your advisors.

But I wanna make sure that you recognize what each of these documents are that you want to have in place when it comes to creating a solid estate plan. So we're gonna talk about. We're gonna talk about revocable trusts. We're gonna talk about irrevocable trusts, beneficiary designations, durable power of attorney.

We're gonna talk about guardianship designations and healthcare power of attorney. These are things that you may need, you may not need, but I'm gonna go through and I'm gonna explain each one in plain English so that you can understand, hey, maybe this is something I need to look deeper into so that I have it available in my plan.

So this is the first thing we're gonna go through. So the first thing we're gonna talk about is a will, and we're gonna talk even more about wills in a second. But if you don't know what a will is, I think everybody should have a. A will is like a letter that you write before you pass away. Now, the problem is a lot of people wait to write a will later in life.

I think that any person who lives on their own should have a will if they have possessions that they want to go to a certain place. Why? Because wills A are free to write, or B, if you want to have a rock solid will. There are places where you can write a rock solid wilt for really cheap. So even if you have a.

If you have money, if you have pets, all of these different things, you need to have a will in place. So that is step one, is to making sure you have a will. We're gonna dive deeper into wills in a second. The second thing I want you to understand is called a revocable trust. So revocable trust is a special account where you put your assets, things like money, maybe your property while you're still alive.

The key revocable trust is that you can change it. You can take stuff out, or you can cancel it anytime you want. And when you pass away, whatever is in there goes to the people that you choose, your beneficiaries. And this allows you to get your stuff, the stuff you wanna pass down to, the people you want it to go to without having to go through probate.

Now the probate process is going through the courts. It's a very annoying process for your beneficiaries. So this allows you to do that without having to go through this process. Now, this may be for someone who has a million dollar. Worth or more, if you have less than a million dollar net worth, a will will probably suffice for what you need.

But if you have a a greater than $1 million net worth, then a trust is a great option for you. Now, there's also something called a irrevocable trust. And the irrevocable trust in plain English is just like a revocable trust, but you can't change it once you set it up. So a revocable trust has a lot more flexibility, which is why I like revocable trusts.

An irrevocable trust has less flexibility. It's a done deal. People who use these when they wanna save on taxes to protect certain assets from certain situations like lawsuits and creditors. So irrevocable trust can protect you from certain things more so than revocable trust can. So that's why you wanna look at your personal situation and have somebody kind of talk through this with you so that you know what you're going to be doing.

Number four is beneficiary designations. What is. So what you wanna do is you wanna designate your beneficiaries and things like your bank account, maybe things like your brokerage account, things like life insurance policies. This is the easiest ways to get to the things that you want to hand down to the right people.

Next, we have durable power of attorney, so a durable power of attorney. Is something where, imagine you're in a coma and you can't make a decision yourself. The durable power of attorney is like a document where you can pick someone to handle your financial and your legal matters for you. They can pay your bills, they can manage your money and do other important things on your behalf.

So you need to know who do you trust, who can actually be your durable power of attorney. This is a great thing to have in place so that everything that you have in life can still be handled, especially as you start to build a ton of wealth. You want to have this durable power of attorney in. Now guardianship designations.

If you have kids and something happens to you, you want to have that taken care of. And so a guardianship designation is going to let you pick someone you trust to raise your kids. This can go inside of your, your will and your trust. This can be in place for you. And then healthcare power of attorney is, you know, if something happens to you health wise, maybe you're in a coma.

This allows a certain person that you designate to make healthcare decisions on your. Having these seven things in place, and depending on which trust you want for certain assets, having these in place is a very important thing, and it's a baseline for any wealthy individual. If you're building wealth or you're building generational wealth, you should definitely have these in place, including some more advanced things, depending on your situation.

If you're real estate specific, then there's some things that you can add in there. If you're stock specific, there's some things you can add in, but these are the things that you definitely. Consider having inside of your trust and having that available to you so you have a solid estate plan. Because creating a solid estate plan is step one to saving on taxes.

You could save hundreds of thousands of dollars on taxes if you have the right estate plan in place. So this is incredibly important step that you have to do if you wanna build generational wealth and if you want to give to charities and pass down money to charities, then there is also other options that you wanna make sure that.

Sitter when you put together this estate plan because giving to charities, there are so many different ways that you can do that and help save you money while you're alive on taxes. So making sure you have this estate plan set up. There's some cool things that you can do with estate plans and understanding this is one of the best things that you can do.

Now on step two, today we're gonna be talking about drafting a will. Because like I said, I think anybody, regardless of their health should have a will. I don't care if you're 18 years old and you're just getting out on your own for your first time. If you have any possessions that you want to go to a certain person, you should draft a will, whether it's a one page letter will, you can look at a will online and copy it and see, hey, what are the some of the things that I need simply.

Or you can go to a place like Trust and will.com, which is where I put mine together. Easiest thing in the world, it almost feels too easy when you go to trust and will.com. And so when I fill the information out, they ask you some questions, you put together a will and boom, it's done. You can do this very quickly@trustandwill.com.

They also have trust that you could put together there as well. So if you know what type of trust you want to put together, trust and will really cheap way to do this. I think you could draft a will for like less than 200 bucks. And trusts are less than 400 bucks. So great place to look at this if you want to have a will.

Now, here is why you want to have a will is you want to help your family locate your assets. When you pass, you wanna make sure that your family can locate where your assets are. Your will is gonna have that information in there. You wanna provide specific instructions on your last wishes. I have seen people go through the process of someone in their family passing away and they don't have specific instructions on the last wishes, and all of a sudden there is family issues because that happens whether it's who gets this specific jewelry from grandma, for example, and all of a sudden the siblings are fighting because they all want this specific jewelry and there's no last wishes put into play.

You have to have that into place and making sure you have that available to you when you draft. That will designate a. Person to handle your estate. So your will is gonna have a trusted person that's going to handle your estate, and you're gonna communicate your wishes regarding your children's care. So if you have children and you don't have a will, this is one thing that you need to put on your list to do next week because you have to have this available to you because if anything happens to you and your spouse, you have to have this in place.

Otherwise you're gonna have a lot of complications for your kids and they don't deserve that. So making sure you have this. Trust and will is the fastest way to do it. Get it done instantly. Really quickly. We'll link it up down below. That is an affiliate link. If you want to use that link. It helps support the show.

You can do this in 10 minutes time, though. I mean, that's how long it takes you to put together a will. There is no reason not to put together this will. So make sure that you do that. Now, step three, on building out this generational wealth plan on how to pass down wealth is while you're alive, you need to introduce your kids.

To the wealth manager. What I mean by that is you need to introduce your kids to your team that we've been talking about here, because they need to know who they need to talk to if anything happens to you whatsoever. And the same goes if you handle all of this stuff. And this is a lot of situations. The wife or the husband handles all of this stuff.

So in that situation, if the wife handles all that stuff, she needs to make sure to tell the husband where to find all of these people who are handling your money. So you want to introduce your kids and your spouse. If you're handling it all, if you're both doing it together, then they know who it is. But you wanna make sure that you introduce your kids or your heirs, or whoever you're passing this stuff down to, to your wealth manager.

So if you have a wealth manager, a certified financial planner, who put together this financial plan for you, you need to make sure that you introduce your kids to that person and they have that contact available. You can put it on. Format in terms of you can put it inside some of the documents for your estate plan so they have that available, but also make sure you make that introduction.

It can be an email introduction. It doesn't have to be anything crazy. Your accountant and C P A. They need to know who to contact for this information so that they can be kept up to date And listen, this is also a learning process. You can be teaching them stuff on why you're doing what you're doing as you're doing these introductions.

Very important to. Because if they understand why you have these people in your life, it is so much better for them going forward because they can still utilize some of these folks to help look out for them in their best interests. When you're not around it anymore, you're a estate planning attorney, so if you have an estate planning attorney, you can talk to them and introduce that person.

If you don't have estate planning attorney, just reference, you know, if you're using a trust and will or.com or something like that, just reference the site that you're using because they can also talk to folks in those places when you go through this process. And the beautiful thing about this is when a terrible time comes, if something happens to you, your airs know exactly where to go.

They're not stressed out and panicking while they're grieving. They know exactly where to go, and you've laid out the steps on what they need to do. You can put this in a binder if you want to. I know people who have binders with all this information in there. I know people who have put this into folders inside of Dropbox or Google Drive or whatever you use, making sure that you have.

Is a simple strategy that's going to save everybody involved a ton of headaches, so making sure you do this is going to pass down a gift to your family. Now let's dive into step four, which is the fun stuff, which is funding legacy accounts and 5 29 plans. All right, so this is going to be some of the fun stuff, is making sure you put together legacy accounts and 5 29 plans for your kids.

So as you start to build generational wealth, there are ways that you can build a ton of wealth for your children as well, and if that's something you're interested in, that is one of the fun things that we'd love to talk about here on the Personal Finance Podcast. We talk about it on master money as well.

This is something you can really change your children's. Just by putting a small amount of money every single month into some of these legacy accounts and 5 29 plants. Now, if you've never consumed our content before, one of the first videos we did on TikTok went completely viral talking about one of these accounts that we did, because we talk about how you can put a small amount of money and it can grow to a.

Large amounts of money over time. And when you do this because your children have such a long time period to be able to compound, it's going to absolutely change their life forever if you actually do some of this stuff. So the first account I wanna talk about is a Roth ira. Now we are gonna do an entire episode on this that is really going to deep dive on how to set this up, and I'm gonna talk about a lot of this today so that you can have the steps.

To build out a Roth IRA for your children if you see fit. So the way that you can invest in a Roth IRA for your kids is through something called a custodial Roth ira. Now, what is a Roth ira? If you don't know, it's where you have money that you're putting into this retirement account, and it's going in when it's already taxed, meaning you already had the money taxed when you got it in your paycheck.

The money's already been taxed. You put it in the Roth IRA and you invest the money. Once it's inside the Roth ira, the Roth IRA is not the investment. You have to invest the money once it's inside of the Roth ira. Then, Is invested, it will grow tax free and you can pull the money out tax free. This is extremely powerful for a number of reasons, because the growth of your money, especially when you have that long of a time horizon that your kids have, is going to be the majority over that timeframe.

Now, with a custodial Roth, I r a. The way that it works, it's opened by an adult or a parent on behalf of a minor who is under 18 or under 21. It depends on the state that you live in. So if your child is age 19, for example, you can check your state laws. They can open their own Roth IRA in some states, depending on where you live.

Now, the key to a custodial Roth IRA is your child has to have. Earned income to open a custodial Roth ira, meaning that they have to earn income from somewhere, and it has to be claimed on a w2. So this can be from mowing lawns. This can be from washing cars. This can be from working at the grocery store down the street.

This can be from baby modeling. If you have a baby and you have a business where that makes sense, but it cannot be income under the table that's never been in accounted for. Remember, the Roth IRA is a government account, so when you open the Roth ira, they can track where the income came from on the w2.

So you have to have W2 income and claim that income so that you can put money in a Roth IRA and you could put up to whatever amount they make that year up to the limits, obviously. So $6,500 or less up to what they make. To clarify that, what I mean by that is if your child mows lawns for an entire summer and they make $1,500 mowing lawns, then they can put $1,500 into that Roth ira.

They cannot put up to $6,500. If they put more than $1,500, then you will be penalized and you'll have to go through this whole process. So you can put up to $1,500. If they make $10,000, they could put up to $6,500, which is the max of the Roth IRA at the time recording this in 2020. So what you need to understand here is it doesn't have to be the money they made.

You could put it in for them, but it just has to be up to that amount that they made, the amount that they earned. Now, if you have a business, you can pay your kids where it makes sense inside of that business so that you can max out these Roth IRAs for them, if that's of interest to you. So the cool thing about this is as they get to that point where they get to the $6,500 every single.

I mean, they have so much time for this to compound, and it's tax-free money that they'll be multi multimillionaires by the time they retire if you're funding this account, and when we get to the taxable brokerage in the second one, you're gonna see how powerful this can be if you start to fund money inside of a Roth ira.

Now, what about control here? How do you control this ira? Well, the adult custodian manages the account until the minor reaches the age of majority, meaning that at that point it is transferred to the young adult. Once they reach age 18 or 21, depending on your state, then it's transferred to your child and they have that Roth IRA available to you.

Now, if you're worried about that transfer, meaning that you want to control the account for as long as possible because you want that wealth to be preserved and you don't want a 19 or a 21 year old holding onto a Roth IRA cuz you're scared, they're gonna pull the money out, take the 10% penalty, pay the taxes, and just blow the money.

Then there are other options that you have available to you. Like what we're gonna talk about here in option two. All right, so here is part two. This is the next thing that you can do, which is the taxable brokerage. Now, when it comes to your taxable brokerage, I have a very simple system on how to put this together, and the reason why I'm doing this for my kids at least right now, is because they don't have a earned income.

A, so I'm using a taxable brokerage because I have a lot more flexibility than I would with. The custodial accounts, which I will talk about here in a second as well. I will talk about the U G M A and the U T M A, but when it comes to a tax brokerage, this is the way I'm doing it right now because I like having this extra flexibility.

And the first time we talked about this, we had 3.5 million views on the video that we talked about this in like 24 hours. So this is something where you definitely wanna learn how this works because it's a very simple system where you can put a small amount of. Into a taxable brokerage account, and it can grow to a very, very large amount of money.

So I'm excited to share this with you. So here's how it works when your child is born, and if your kids are seven or eight or nine, you can still do this. Uh, obviously you can still see the power of compounding, but when your child is born, put a thousand dollars into a traditional brokerage account. And think of this as the cost of having a child.

So you can think of this the same way as you have to pay a hospital bill when you have a newborn baby put a thousand dollars into a brokerage account. That's part of the cost of having this as a child. Now I have it in a standard brokerage account for that flexibility because I can still maintain that account for a longer period of time.

Now, how do I set this up so that it goes to my kids? The way I set it up is it's in my. Both accounts are in my name. I actually have it this infidelity. I have each account labeled with my kids' name on it, but the accounts are in my name. That way I can just differentiate. They each have their own account, and then I list my kids as the beneficiary.

So for example, my oldest son's also named Andrew, so it's labeled Andrew. And then when it's time for him to get that account, or if I pass away suddenly at any point in time, he is the beneficiary of that account, meaning that that account would go directly to. And the same thing goes for my other son.

And then if we have a third child, then that third child will have their own account that, that we will build out as we go through this process. Now, step two. So you have the initial a thousand dollars. Then every single month I put a hundred dollars into their accounts. If you can't afford a hundred dollars, no problemo, you can put.

$20, you could put $15, you could put $10. It doesn't matter how much you put in there, because they have so much time to compound that it will really grow to a massive amount no matter what. But I put a hundred dollars because you're gonna see the result here in a second. And I invest this money into an s and p 500 etf.

I like VO O. There's a bunch of other options out there, but I invested inside of an s and p 500 et. Now, if you can only afford $20, do that. If you can only afford $5, do that. But this is the ultimate asset that your kids have, which is time. Now, step three, every birthday and every Christmas or whatever holiday you celebrated at the end of the year, I add $250 to that account.

If you can't add two 50 as this bonus, don't do it or add their birthday money into there. But I add two 50 to this account, which is an extra $500 per year. This is just a bonus during those two time. That you can add or you can just increase the amount that you invest every single month. There's a bunch of different ways that you can do this, but this is what I do.

Two 50 at birthday, two 50 at Christmas, or whatever holiday you celebrate at the end of the year. Now, here's the crazy part, with a 10% rate of return, which I'm just using, the historic returns of the s and p 500, obviously in the future it may not be 10%. It could be 7, 8, 9, 10%, but with a 10% rate of return if they got the same historic returns by the age of 18.

If you did not add another, This account would've $86,186. So you contributed about $34,000. The account would've $86,186. Now, if you never added another penny from age 18 all the way till age 65, when they turned age 65, this account would be worth 7.6 million, not adding another penny. And all you did was contribute $34,000 over the course of 18 years.

This is. You can pass down a massive amount of generational wealth by putting together a simple account in investing a small amount of money over time, because compound interest is absolutely amazing. In fact, if you let this compound even longer, this thing would grow to tens of millions of dollars if it had more time to compound.

So if you did this, say for example, for your grandkids and just set it up for 18 years while you're still alive and you had grand. Over that timeframe and just let it go. There are so many cool things that you can do with long-term generational wealth. I have so many wacky ideas. I wanna do an episode on that at some point in time because I've compounded money for over a hundred years before, and it's contributing money like this over that timeframe is well over a hundred million dollars that you can grow that money to.

So it's absolutely crazy what you can do with compound interest if you have a ton of time. So that is the cool thing about this taxable brokerage is that you can set this up, you can have flexibility, and you can do this where they have a massive amount of money. The problem is they're gonna have to pay taxes when they pull that money out.

Who knows what the future tax rates are gonna. Will inflation eat into that? Obviously, 7.6 million will not be the same amount as it is today. I know all of this stuff, but at the same time, this is a massive gift that you can give to your children during that timeframe. Now, there's also custodial accounts, which a lot of people like, so there's the U T M A and the U G M A account.

And if you've never heard about these two accounts, they are basically like savings accounts for young people designed to help you save and invest for the future. So with these two accounts, the U G M A is the Uniform Gifts to Minors Act, and the U T M A is the Uniform. Uniform Transfers to Minors Act.

Now these are ways for adults to give money. Or assets to minors without having to set up a formal trust. So you can set these up and not have a formal trust, and then the adult who is the custodian opens the account for you and manages it until you reach the age where you're legally allowed to take control, which is either 18 or 21, depending on the state.

And the money or assets in the account are actually technically the minors, but the custodian is responsible for managing that. So say for example, you open up A U G M A or A U T M A for your kids, you're responsible for managing that money, but the money is technically theirs. Now you can use the funds for things like education, a car, or other expenses that benefits you.

I wouldn't do that. If you're gonna build it out in here, though, I would invest it for the long term. And you can invest those dollars into stocks, bonds, and even in some situations, real estate. So if you're looking to invest in real estate, this is one that I would look more into than maybe some of the other options because you can do that inside of A U T M A and U G M A.

So the difference between the two is A U G M A is more limited, only allowing cash, stocks and bonds in other financial instruments Where U T M A. Flexible, allowing pretty much any kind of asset, including real estate and intellectual property. So U T M A for real estate investors is going to be the option that is going to really benefit you.

Or if you want to add intellectual property in there, maybe you have an invention or something along those lines. You can add that in there also, which is kind of cool. And then once the person reaches age 18 or 21, they have full control of the account. Now, the reason why I haven't done this is because I want to have control over the account come time when my kids turn 18 and 20.

I don't know what's gonna happen, so I wanna have full control at that point in time for that reason. Otherwise, I love having that flexibility. I think it's a really cool way to set this up for your kids having a U G M A or A U T M A. So if you like those options, if you think there's some pros to that for your personal situation, then you can look at those also.

Then we have 5 29 plans. So this is for. Education savings. If you're not saving for your kids college, this is an option that you can look at. My preferred way is a flexible 5 29 plan. So with a 5 29 plan, we have an entire episode on this that you can check out on how to save for college. The smart way is what the episode is called.

We'll link it up down below, but inside of a 5 29 plan, this is a tax advantage college savings plan, so you can set the account up for yourself. Or your child. You can set it up for your niece or nephew. You can set it up for your grandkids. Anybody can set this up. And investing for your child's education is one of the best things that you can do.

So you can take this money, put it inside of the account, and then you're investing those dollars so that it grows faster. So it's not just like a glorified savings account. Now the cool thing about a 5 29 plan is what if your kids don't go to college? That's the number one question that I always get when we go through this.

Now, if you listen to the previous episode, I break down the math on how it's still more beneficial for you to have the 5 29 plan, even if your kids don't go to college. Cause there's a number of things you can do with it. But also the math and the breakdown of you investing those dollars is way more than just saving this in.

But at the same time, if you think your kids are not gonna go to college, there's a new provision that is being passed and it's going to go into effect in 2024 where you can roll over tax free $35,000 of your 5 29 plan into a Roth IRA for your kids Really cool provision. It's going to allow you to take $35,000 out of the 5 29 plan at any given point in time and roll it into a Roth.

I. This allows the 5 29 plan to be so much more flexible, and it's a really cool provision that I'm super, super excited about for 2024 because then you can roll over $35,000 into a Roth IRA if your kids don't go to college. So make sure you check out our 5 29 plan episode. It is one that. We'll really help you go through this process and figure out how to save for college a SmartWay.

We talk about some other college savings account as well, but the flexible 5 29 plan is my favorite. Now, if you're in a state and they have state specific 5 29 plans, I do not like state specific 5 29 plans. For example, where I live in Florida, we have something called the Florida Prepaid Plan. I hate the Florida prepaid plan because not flexible.

You can't really invest the dollars in the things that you want to. There's not a lot of things that you can do with. Whereas opening a flexible 5 29 plan in something like Fidelity or Vanguard is a great place cuz you can buy great investments, you can grow that the way you wanna grow it. And in addition, it has flexibility where you can do all of these things that we are talking about here today.

Now let's talk about beneficiaries and your accounts. All right, so the next step or step five is to name beneficiaries on your account. So this is incredibly important, one of the best ways to put together an estate plan when it comes to your investment accounts. I mean, most people miss out on doing this, and I cannot get Why?

Because it takes you two seconds to do this. So here's exactly how this works. You're gonna go into your investment accounts and you are going to designate who your beneficiary is gonna be. You're gonna fill out the information that your specific account is going to ask for, tell them who the beneficiary is, and that's it.

All you have to do is it literally takes you five seconds and you have the person that this account would go to if anything should happen to you. So here's an easy way that you should go through this. First, look at your IRAs. So if you have a Roth IRA or a traditional ira, go into those IRAs and just Google.

How to designate a beneficiary at X brokerage. So if you have at Vanguard how to designate a beneficiary at Vanguard, or how to designate a beneficiary at Fidelity, it'll show you exactly how to do it for each of your accounts. You absolutely have to do this if you have accounts, and you should do this, anytime you open a brand new account, make sure you just designate the beneficiary right away.

If you don't know who it should be, just put it as your spouse. Or if you're not married, put it as your parents or your siblings or whoever else you want this to go to. If anything happens. Then go into your four make sure your 401k has beneficiaries. A lot of people, their largest account is their 401k and they never designated beneficiary.

So go into there and if you don't know how to do it, talk to hr. Say, where is my 401k? And what are the steps to designate my beneficiary? They're either gonna direct you to how to do it, or they're gonna show you who will help you do that. Then go to your annuities. If you have annuities at all, makes you designated beneficiaries.

Go to your life insurance. Make sure your life, I mean, the reason why you have life insurance is to have beneficiaries. Yet there are some life insurance policies out there that don't have designated beneficiaries. So make sure you designate who that is, no matter what type of life insurance you have.

Then look at your crypto accounts. If you have cryptocurrency. Most crypto companies do not prompt you to add beneficiaries. You need to add those beneficiaries, so your Bitcoin or whatever else you have goes to the right person. You're checking in savings accounts, believe it or not, need beneficiaries.

So make sure you put that inside of your checking in savings account. Just Google your bank's name, how to assign beneficiaries, real estate partnerships. So we're in real estate partnerships. You gotta figure out who the beneficiaries is gonna be in your family. Say you own a property with somebody else, 50 50, does it go to your spouse?

Does it go to your kids? Is the agreement that it goes back to your business partner? If anything happens, you gotta figure out what that agreement is, have designated beneficiaries for that, and take the time to review all other assets that you have, whether it's business assets, because otherwise, if you have a partner and you don't have a beneficiary there, it could very well go to your partner without it going to your family members, which is what your original intention was.

So making. That those beneficiaries in place are very, very important. And also, if you have something like a business, make sure you leave instructions on what you want done with that business. So say for example, you have a business in place that can be sold, then go through the process of saying, here's the steps that you should take to sell this business.

And then take that lump sum and do what you want with it. Use it to fund your lifestyle and help with X amount of things, and you can even list the people who are interested. If people have reached out to you and said, I'm interested in buying this business, then make sure you list those contacts inside of that document as well, because you want to have that available for your beneficiaries so that.

They can reap the rewards of your business that you work so hard to build out. So having that available is definitely one of the main things that you want to do. Now, a pro tip is in most cases you can name a primary and a contingent beneficiary. So say for example, you want the primary beneficiary to be your spouse, but you and your spouse go on a trip, and both of you get involved in a plane crash, for example.

Obviously a drastic result, and it's not something that's very likely. But if that happened and you both went down at the same time, then what could happen is you could have a contingent beneficiary, meaning that if it does not go to your spouse, your husband, or your wife, then it can go to another person, your niece, nephew, children, whatever else you want that to go to.

So you should consider adding both to all of your accounts when you go through this process and looking through each of these accounts. We'll list out these accounts in the downloadable PDF guide that we have for you on this episode. And you can check that out in the show notes below, but we will list all these accounts and make sure you have this as a checklist so that when you go through this process, it'll be seamless for you.

So making sure you have that contingent beneficiary is an awesome, awesome way for you to go through this. Now, number six, after you set those beneficiaries is I want you to set a time every single year, and you can put this in your year-end checklist. I think that's the best time to probably do this and review your estate plan and beneficiaries annually.

I want you to go through every. And make sure that this is going to the right person. If not much has changed that year, then you probably aren't gonna change anything. So this is not something you have to really spend a lot of time on if nothing's changed. But you wanna review this stuff yearly because life's gonna throw you curve balls.

So, for example, you may get involved in a divorce. If you get involved in a divorce. Your beneficiaries need to change all over the board, and you need to change the ways that you have that set up. After the divorce is settled, obviously, and all the assets are. Those types of things. Or maybe one of your beneficiaries passes away.

Maybe you're giving it to your parents and it's 20 years down the line, your parents pass away and you need to adjust those beneficiaries. So I'm looking at this yearly as something you definitely want to consider. Or you may have a falling out with a beneficiary. So say your beneficiary was supposed to be your niece or nephew, your niece or nephew grow up to be drug dealers and you don't want them to be your beneficiary anymore, then you gotta consider giving this to someone else if that's your in.

And then any other life changes, you gotta just consider, you know what life changes are going to happen to you along the way. Obviously life is going to change. You're gonna have to make changes to these over time for one reason or another. So just making sure you're reviewing this yearly. Put it at your year end checklist if you don't know where else to put it, because that's probably the most.

Common sense time to do it is at the very end of each and every year where we're prone to making these types of changes. The number seven, I'm gonna take a little bit of time on this one too, on number seven. Now, we talked about this in the first episode on teaching your kids about personal finance, and that's what we're gonna talk about here again, but this is a little deeper because when it goes down to passing down your estate plan, what I'm gonna talk about is this is for your.

Older children typically, and when you're getting ready to pass some of this down, you wanna make sure that you give them some very specific insights on why you set up things the way that you did. Because not communicating about this is definitely going to be detrimental to the relationship of your family when you pass away if you don't do this.

Too many people I've seen pass away and their family starts to fight because. There's assets involved, there's money involved, there's emotions involved, there is family heirlooms involved. There's so many different things involved in this process. And so you need to discuss this stuff upfront because these are your things that you need to put together.

And here's what we're gonna talk about here. So upfront, when your kids are young, they're under your roof. You wanna discuss all the basics of personal finance, which we talked about in episode one, and you wanna go through all those different things. Teaching 'em about investing and saving and earning money, and how to handle money and how to budget money, and all those different.

As you get to the point where you are setting up some of these advanced estate plans, we're gonna talk about some deeper stuff here. So number one is your values. So what I want you to do is put together and share your values that have guided you through your financial decisions with your teenage to adult children, like hard work, saving, investing, giving back.

What are your values? Why are these your values? Because we like to spend our money here at the Personal Finance Podcast on things that bring us value, things that bring us us. Joy. Why did you do what you. So they understand exactly why this is all set up this way, and discuss how these values have shaped your life and why they are important to you.

I'll give you this in a checklist so that you can go through this thought, exercise and process yourself with your family, and encourage your kids to develop their own values and think about how they can apply some of these to their financial life. So their values are not gonna be the same as yours.

You gotta realize that early. But what you need to do is explain why your values are, your values, and if theirs are different, encourage them to develop their own ideas when it comes to their values. But make sure that you have this in place so they can take maybe the best parts of yours, maybe the best parts of your spouse, maybe the best parts of other people that they read, and they can put all of those together.

Now, number two. There's a reason why I asked this question to all of our guests, and it's a very important question, and that is, what does wealth mean to you? Because I want people to go through this thought exercise as they start to develop a wealthy mindset. And what wealth means to you is all about explaining not just about money, but it's also about security freedom.

Opportunity provisions. This is what wealth can do for you, and you need to explain this to your adult children on why they need to handle this money with care, and if they grow this money, they can create this freedom, security opportunity, and all these other benefits for their future generations as well.

So talking through this is very, very important. What does wealth mean to you? And make sure you share your thoughts on the importance of balancing, you know, material possessions and experiences, relationships, personal growth, all these different things. This is a great time to do that, is during this conversation, And encourage your kids to think about what wealth means to them as well and what is really important to them.

Because determining your values and determining what wealth means to you is going to help you maintain that North Star for a much longer period of time. That's what we're developing here. If you know your why and you understand why you're doing what you are doing, It's going to change the way that you operate.

Instead of, if you don't understand it, your heirs could squander your wealth away. The third thing you talk about is how you gained your wealth, because you can share your personal story, your successes, your failures, lessons along the way, but talk about this with your kids over time so they understand you worked really hard for this money.

And the importance of education and hard work and what it took to actually get to building out this money. These are the lessons that you can teach your kids, and people are always worried, well, my kids won't work hard if I give them money, or if they know money is coming, the lessons are there for you to teach on how hard it was.

To get this money and why they need to work hard as well. And then discuss the strategies that you use, like saving and investing, why you saved the way you did, why you invested the way you did, and your beliefs in that. If you're a full on real estate investor where you believe that real estate investing is the only way to invest, talk about why and explain exactly why that is, and go through that process with them.

Go through the entrepreneurial things that you did. If you did any entrepreneurial things or you owned a business, and talk about how you can apply these lessons to their financial. These conversations are so important because if you wanna preserve that generational wealth for generations, these conversations need to be had.

Number four, financial planning and strategies for your air. So you're gonna talk about some of these financial planning strategies. You already introduced them maybe to some people within your financial circle, like your cpa, like your C F P, like everybody else who is. Inside of your circle that is helping you along this journey and teach your kids the basics of financial planning, like budgeting, saving, managing debt that we talked about in the first episode, but also discuss the importance of why you have these professional people in your circle and what they help you do.

And this financial planning is gonna be, Imperative and then show them your investment plan or your financial plan. If you have that written out, show them that and show them why you have this plan Put together. If you don't have one in place, or you're using something like the Stairway to Wealth, which is our plan that you can use in your financial life as well, then check out the Stairway to Wealth and you can go through that process.

And then number five, if you want your errors. To do certain things with your money, maybe give to certain charities, or you want them to do certain things with wealth, whether it's for education for their children, or you want them to use this in specific ways. Maybe you want them to buy a house or whatever else you want them to do.

Make sure you have that conversation with them because a lot of people will pass away and they don't tell their heirs what they want them to do with their money, and sometimes your heirs kind of don't know what to do. So making sure that you kind of talk through some of this stuff and encourage them to be responsible and why it's important to be responsible within inheritance is another thing that you really need to talk to and tell them.

You'll help them through having a plan in place when they receive this inheritance, on ways to invest it, on ways to use this money where they can build more wealth for the future if they are interested in that also. So you can put that plan together if you want to. If you're in. So that they can actually pass down that generational wealth.

And I think it's a very, very wise to put that plan to get there. So listen, this is part two of the Ultimate Guide to Generational Wealth on how you can help your family build generational wealth and how you can pass down generational wealth. I hope you guys enjoyed this two-part series on the Ultimate Guide to Generational Wealth.

There's obviously so much more we can dig into here and we will make those into more episodes for you so that you can learn how to build generational. Throughout the entirety of this podcast. So excited to share some of the future episodes that we have with you cuz we have some heat coming and really, really excited for that as well.

If you guys have any questions though, I'm always here. Make sure you ask on Instagram or on Twitter at mastermind co. I cannot thank you guys enough. For listening to this episode, and if you got valued outta this episode, share it with your family members, share it with your friends, and help spread this message that we all can build this generational wealth.

Thank you guys again so much for listening. We will see ya on the next episode.

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