BiggerPockets Money Podcast - 49: Wealth Transfer—How to Financially Prepare for Inheritance Money with Hari Mix

Episode Date: December 3, 2018

Hari Mix figured out money in grad school and started saving for his future before he graduated. He became an assistant professor at Santa Clara University—and then, his mother was diagnosed with terminal cancer and his whole focus shifted. Today, Hari shares his experiences with his mother’s passing and how discussing it before she died made it easier for him to manage her estate afterwards. He shares some REALLY great tips for ways to handle an estate, including having all your documents in order and having a will. This episode gets pretty deep into topics that no one ever wants to think about, but that everyone will have to deal with, both with their parents and for their children. Having a will is a great first step, but there are lots of other things you can do to ease the financial transfer burden—and things you need to know before making any moves. The more prepared you are, the easier this process will be during one of the most difficult times of your life. If you’re in a position to inherit wealth from a parent or transfer wealth to heirs upon death, this is an episode you cannot miss. In This Episode We Cover: Hari's journey with money Why prioritizing saving and long-term goals for retirement is so vital The steps he took to handle his mother and grandfather's financial affairs How he ended up creating his own estate plan The importance of being open and honest with your family about financial affairs Steps for approaching your loved ones' financial affairs How to avoid the probate process How he fielded the discussion with the other heirs in his grandfather’s financial affairs The importance of talking to a professional The right time to contact an estate planning attorney Tips for investing an inheritance His written investment policy statement How he came up with his investing plan What he did after his mother died His idea of inflating his lifestyle The checklist you need for when somebody dies Peculiarities of inheriting money and IRAs And SO much more! Links from the Show Mr. Money Mustache American Academy of Estate Planning Attorneys LegalZoom Nolo.com Bogleheads Investing Advice and Info   Learn more about your ad choices. Visit megaphone.fm/adchoices

Welcome to the Bigger Pockets Money podcast show number 49. Really, if you look at people managing windfalls across the board, a lot of people lose them. Like a lot of people squander it. You hear about professional athletes. You hear about lottery winners like being broke within five years after getting that money. So those are people who don't have a plan to really hold on to it for long term. Now, your audience is probably not in that crowd. If they're listening to this, they're probably much more likely to have a plan for themselves.

and stick to it, but none of us are immune to these behavioral things. And I think it becomes much less of a math problem and much more of a behavior problem. It's time for a new American dream, one that doesn't involve working in a cubicle for 40 years, barely scraping by. Whether you're looking to get your financial house in order, invest the money you already have, or discover new paths for wealth creation, you're in the right place. This show is for anyone who has money or wants more. This is the Bigger Pockets Money Podcast.

How's it going, everybody? I'm Scott Trench. I'm here with my co-host, Ms. Mindy Jensen. How are you doing today, Mindy? Scott, I'm doing pretty good. I actually hit my finger with a hammer this morning. I was trying to fix my daughter's flooring, and I think I broke the tip of my finger, which is my pinky finger. You wouldn't think that that would be such a big part of your life, but when you spend a lot of time typing, you would be astonished at how many letters you use your little pinky finger for. So I always say that I'm having a great day. Today is the tip. Just the tip is really painful. Well, you nailed this episode.

That's awful. That's awful, Scott. Sorry. I couldn't resist. Sorry to hear that. Okay. So today we are chatting with a man named Hari Mix who reached out to me when I commented that we were looking for guests who could speak to financial windfalls. And Hari has sort of a bittersweet story of inheriting a fairly nice took a change when his mother passed away. And he learned a lot about estate planning, both through her illness and, And then after she passed. And, you know, there's a lot of different things that go into the transference of wealth at the end of a life. And this is not necessarily like the most happy go lucky episode of our podcast. But if you have parents who are living, you are going to need this information at

some point. And even if you don't, if you are a parent, if you have any sort of estate at all, you are going to need this information. So I really wanted to present this because there's a lot of things that I learned during this episode as well. I think that's a great point. And I think that, you know, he mentioned something really important on the episode, which is that this is particularly important to you if you plan to build a large estate over the course of your life, which is going to happen, FYI News Flash. If you're listening to the Bigger Pockets Money podcast and working toward early financial freedom, going to build a portfolio of millions of dollars in your 20s, 30s, 40s, you know, you're going to have likely,

very high odds of passing on a very large estate. And the importance of this kind of encreaps up dramatically as the value of the estate gets bigger. Yeah. And even if you don't have dependents, if you're just piling up this big wad of cash, it's all going to go away if you don't tell it where to go. Absolutely. Yeah, there's a whole bunch of different things you can do with it. If you don't have a dependent and you want to donate it or whatever, set up a trust,

he's got a bunch of really good tips on how to just take control of that whole process. So definitely was a great episode. And I think very important, even though it's going to be an uncomfortable topic for some people to hear. Yeah, I think it's going to be uncomfortable for most people to hear. And I do want to point out that Hari is not an estate planning professional. He is a professor in Santa Clara. Is that what he said? I think so.

Well, he'll tell you in a minute. But this is all of the things that he discovered as a person who had to actually go through this fairly recently. So I thought it was really great that he could give more of a layman's perspective of what you need to do when you're facing these same choices. Choices is not the right word. When you're facing these same decisions. Yeah. And facing the discussion, even before you have the decision. Yeah. Facing the discussion and then the decision. You did, but that's okay because your side will work. Tax season is one of the only times all year when most people actually look at their full financial

picture, including income, spending, savings, investments, the whole thing. And if you're like most folks, it can be a little eye-opening. That's why I like Monarch. It helps you see exactly where your money is going, and more importantly, where your taxed refund can make the biggest impact. Because the goal isn't just to look backward, it's to actually make progress. Simplify your finances with Monarch. Monarch is the all-in-one personal finance tool designed to make your life easier. It brings your entire financial life, including budgeting, accounts and investments, net worth, and future planning together in one dashboard on your phone or your

laptop. Feel aware and in control of your finances this tax season and get 50% off your Monarch subscription with the code pockets. What I personally like is that Monarch keeps you focused on achieving, not just tracking. You can see your budgets, debt payoff, savings goals, and net worth all in one place. So every decision actually moves in a needle. Achieve your financial goals for good with Monarch, the all-in-one tool that makes money management simple. Use the code pockets at Monarch.com for half off your first year.

That's 50% off at Monarch.com code pockets. I love Matt, said no one ever. Nobody starts a business thinking, you know what would make this more fun? Calculating quarterly estimated taxes. But somehow every small business owner ends up doing it. Your dreams of creating, selling, and growing get replaced by late nights chasing receipts, juggling invoices, and wondering if that bad sushi lunch with Scott counts as a write-off. Change all that with Found. Found is a business banking platform built to take the pain out of managing money.

It automatically tracks expenses, organizes invoices, and even preps you for tax season without you doing the heavy lifting. You can set aside money for business goals, control spending with virtual cards, and find tax write-offs you didn't even know existed. It saves time, money, and probably a few years of life expectancy. Found has over 30,000 five-star reviews from owners who say, Sound makes everything easier, expenses, income, profits, taxes, invoices even. So reclaim your time and your sanity. Open a found account for free at found.com. That's fowundd.com.

Found is a financial technology company, not a bank. Banking services are provided by lead bank member FDIC. Don't put this one off. Join thousands of small business owners who have streamlined their finances with Found. Audible has been a core part of my routine for more than a decade. I started listening years ago to make better use of drive time and workouts, and it stuck. At this point, I've logged over 229 audiobook completions on Audible alone, and I still regularly re-listen to the highest impact titles. Lately, I've been listening

to Bigger Leen or Stronger for Fitness, the Anxious Generation for Parenting Perspective, and several Arthur Brooks' audiobooks that have been excellent for mental well-being. What makes Audible so powerful is its breadth. Beyond audiobooks, you also get Audible Originals, podcasts, and a massive back catalog across business, health, parenting, and more, all accessible in one app. If you're looking to turn everyday moments into real progress, Audible has been indispensable for me over over 10 years. Kickstart your well-being journey with your first audiobook free when you sign up for a free 30-day trial at audible.com slash BP Money.

Hari Mix, welcome to the Bigger Pockets Money podcast. How's it going today? It's going great. Thanks so much for having me. Thank you so much for reaching out and answering our call for people. who have happened into a financial windfall through whatever set of circumstances. And I'm really excited to start into your story. But first, before we get into the whole how to deal with the financial windfall, let's talk about

your journey with money. And can you walk us through where your journey with money begins? Sure. I think really a good starting place is just with my parents. My dad was a high school teacher. My mom was a nurse. And we know we were middle class, but I never felt deprived with money. They were always very frugal.

They had a good long-term vision, and they kind of prioritized savings and definitely didn't like debt. So that was kind of where I got my vision with money. And I started kind of having a long-term vision with money, put prioritizing experiences and bigger ticket items when I was growing up. Kind of, let's see here, coming out of college and starting into grad school is really when I started to have my own kind of money. And I was able to max out my Roth IRA each of those years.

So even with a small stipend, I was able to kind of, prioritize savings and long-term goals for retirement. So that's really where it kind of all started for me. Then kind of getting into postgraduate school, I got a job as a professor at Santa Clara University. And that was my kind of preparing for that is really when I started to have my main education around money. And I just started reading a ton. I realized that I was already saving money in grad school. And I knew that I'd be making a lot more money after that. And so I really started to think about, okay, what do you actually do with major savings and things like that? And one of the kind of places that I initially found was the whole Bogleheads community and kind of the Vanguard kind of diehards and all

that stuff. I actually, when I was doing my Roth IRA and everything, I was actually at Vanguard just by chance, but I was actually invested in active funds. I didn't understand, you know, why do I want to be average, you know? And I didn't get what passive investing was all about. But really in 2013 is when I started to get my knack for it and really understand what passive investing was about. And so, starting in my career at age 28 is when I started, you know, maxing out all my retirement accounts that were available to me at work and really kind of all in on the index fund investing train. Fast forwarding a couple years is really when we enter, I think, kind of chapter two. And that's when my mom got diagnosed with terminal cancer. And I took leave from my university and I went home to

Virginia to take care of her. And that's when I really started to get a sense of like what her finances were like, what her, all of her arrangements were like and her affairs were like. And I started taking over them. I was also taking over all my grandpa's affairs at that time. So he's over a hundred and she was taking care of him and all his affairs. And so I basically started managing both sets of their finances. And I mean, at its peak, it was just a mess. I mean, there were probably over a hundred different accounts when you factor in everybody's bills and utilities and taxes and insurance and really it was just a monumental amount of work. So I got this kind of crash course in estate planning and what happens to the end of life and also how to take care of someone who's

in advanced age that's not you. And then I also started to kind of manage my own affairs. After my mom died, I inherited some money. And it was definitely enough to where it changed my financial position and my financial goals and all that stuff. And so I ended up creating my own estate plan. So kind of zooming head to today, I'm still taking care of my grandpa's affairs. He's 104. And I've got my own affairs to take care of as well. And I've now wrapped up everything, all the loose ends that were there for my mom's life. Did you say if you have any siblings? I'm an only child. However, my dad is remarried and I have some step siblings. Okay. Okay. So your step siblings, I'm assuming, don't factor into your mother's financial affairs. Is that correct?

Correct. Yeah, correct. And shout out to your 104-year-old grandfather. Yeah, he's doing it. And his story also, I don't know if we want to go there, but he's really an unbelievable testament to the power of long-term investing. I mean, his entire life, he's just been invested entirely in the stock market. And, you know, he was unbelievably frugal, like more than Mr. Money Mustache frugal. Like, there were years when he was spending $5,000 and investing the rest. I mean, absolutely ridiculous. So he was actually kind of the primary wealth generator of our family. And I really owe a lot to him. I think there's no way that I would have gotten through college debt free without my grandfather's help. So it's pretty unbelievable. And it's a proof in the pudding, right, that if you actually stick to a plan and have enough of long term vision, long time scale, you'll do unbelievably well. So what are some of the kind of first tips that you would kind of say when you're looking at someone, you're a family member's financial position? And, you know, like, how do you begin, how do you begin approaching the problem of saying, hmm, my loved one is going to pass away, but there's also this financial component I've got to, I've got to deal with. Like, this is business. I got to, I have to take care of business in the process as well.

Yeah, fortunately, my mom was, was really honest with me. I didn't know that much about her affairs before her diagnosis. I had a general sense, but I didn't know specifically what the accounts were, where things were held, how she did things, what her organizational strategy was. And it really, really helps if you're open and honest with your family about this stuff. And if you're not, you're going to leave a mess. You know, I think Mindy will probably say this in the podcast, but just because you pretend something isn't there doesn't mean that it's not, you know. So really making sure that you're actually on the same page and just being open and having good line of communication. So when the time was ready, I mean, she was resistant to it. I mean,

I think she was kind of grappling with the idea that she was dying. But she opened up to me and first just kind of shared things. Step two for us. us, I think, was getting me on some accounts. She added me as an owner to her checking account, for example, so I could take care of basics. And then some of the other bigger investment accounts and things like that, we ended up just having me sort out later. So it was a, it was kind of a combination. But getting the person up to speed, she had one big filing cabinet and there was a lot of information in there. So I'm coming at this episode a little bit differently than maybe Scott is. I don't know the age of your parents, Scott, but my parents have, I think they've kind of accepted that at

some point they're going to pass away and they've started gathering up all their financial documents and putting them all in order. They haven't shared exact dollar figures with us, but they have shared, you know, here's three people that you need to contact once we pass away. Here's this guy does this and this person does that. And my cousin is an accountant and he is the executor of their will. So he's been given all this information to, which is really nice to have this all in. And, you know, as uncomfortable as this subject is and as, you know, I want to just stick my head in the sand, like you said, just pretending that it's not going to happen isn't going to happen. Spoiler alert, if your parents are still living, they're going to die. And that is not a happy thought at all.

But ignoring it is not going to make it go away. So, you know, that's what this episode is today is just, you know, sharing some tips. And you're going to have to have an uncomfortable conversation with your parents. If you're older, you're going to have to have this uncomfortable conversation with your children. But do it so that it's easier on everybody involved for when the time comes. Well, and just to your point, like, just take my family, for example, my grandfather had both of his daughters die before him, right? They both died of breast cancer. And so I'm in charge.

And that wasn't the way that it was set up, you know? Nobody assumes that the children are going to die before the parents. but it does happen and it just happened in my family. So it's really remarkable. And if you go all through one person or if you don't have good organization, you're kind of setting yourself up for a mess. I think another piece of this to consider is making it really clear what you want to happen with your money prior to having these situations go through. Because if you're not clear, I've observed in the past that it can have some really negative consequences when people are not understanding what was the intention behind certain things, you know, whose money is whose, especially if there are

multiple errors to the estate, right? Which I think there's some, there can be a problem there. So I mean, in your case, it's very simple because there's one person. You can able to handle that. And in some ways, that might have helped simplify a couple of things. But in other cases, it may not be quite as simple as that. And your function becomes even more important in those, in those types of situations. And that's the situation I'm in with my grandfather. There are multiple beneficiaries. It, you know, it sounds really morbid to lay all this stuff out and actually, put it on paper, but the exact opposite is the case that if you don't say anything about it, you actually lose control. You lose control of what you're wishing because nobody knows.

And so then it goes through whatever procedure is out there. That is a really good point. You know, you will lose control of what you want. You want all of your beneficiaries to receive 30% each or 33%, let's say you have three of them. As in my case, there are three of us. Well, but 100 isn't divided by three. evenly. So somebody is going to get 33%, somebody else is going to get 33% and then somebody else is going to get 34% or 33.3 and then 33.4, like whatever, it doesn't go evenly. So you need to specify that. And depending on the size of the estate, that could be a sizable chunk of change. That's a really great point that you lose control. I'm sorry, Scott.

Well, I was going to ask, what happens if you don't have this all set up? So what's the kind of default process that goes in if you got nothing set up? It goes into probate court. And it takes potentially over a year, and it costs potentially tens or hundreds of thousands of dollars. It depends on the, you know, the dollar amount of how big your estate is. And then the way that, you know, the beneficiaries and all that just get distributed according to what the law is. You know, I can say one thing about my grandfather's estate. He had it set up that basically my mom and my aunt were going to split it, but they both died before him. And he didn't have a setup. So we actually had to change all of his estate planning documents so that it went, continued on

to the grandchildren. So, you know, there are procedures for all these things, but it's much less pleasant to go through the probate process and what we might talk in a bit about, you know, setting up a trust, which is one way to avoid probate. And that's what my mom had and that's what my grandfather has and I've actually set up a trust of my own. So, yeah, you can get a lot more control that way

than you can get with just a will. Okay. So let's start at the very beginning. your mother gets this awful diagnosis and you fly back to, did you say Virginia to take care of her? Yeah. And the first thing you did is talk to your mom about her finances. Yeah, I mean, obviously we're talking about other things too. Not like the very first thing.

But yes. And she opened up kind of her financial world to me and showed me, you know, how to pay all her bills and, you know, which accounts she had where and all that. and we started to kind of get that organized. She added me on as a co-owner of some of her accounts, like, for example, her main checking account so that I could at least pay basic bills and things like that. There were some other accounts that she added me on as well, but she basically kept her own kind of investment accounts and things like that.

But basically she brought me up to speed on all of her kind of things. And she was very, one of these manual type people, like every single thing was done by hand, you know, writing a check every single bill or whatever. So I actually was taking the lead in terms of, of when I was organizing her fares, I was starting to put everything that I could on auto pay and, you know, on a credit card and just basic stuff so that kind of automate things and really simplify things down and reduce her paperwork.

She was signing some things even very late in life. And I just felt horrible for her because she was so sick. And she was still insisting on writing the check where that was becoming hard for her. So I just started to take more control and just take more things off her plate as the time went on. Let's move on to the estate of your grandfather because that has some more moving parts, it seems like. How did that discussion go with the other errors? What did that process look like? It was weird because they were kind of out of the loop and my aunt was still alive at the time.

And so the kind of question was really whether or not I was going to do it versus my aunt. But she wasn't as fully functional as I was. And I was probably the more logical person to do it because I was already taking care of it at home with my mom. Because my mom was really the one who was taking care of it. So I had all my grandpa's documents and everything like that. And I was basically masquerading as my mom handling a lot of my grandpa's bills and stuff and trying to put them on autopay and trying to get his property tax paid on time and all that kind of stuff. So I think I was the logical person to kind of take over to that. And I wasn't actually in communication with the other grandchildren at the time.

It was more of just like a kind of rise to the occasion type of a moment where I just did what was the most logical. I was receiving my grandpa's bills in the mail, and I was paying him. It was kind of just fight or flight. We needed to do that, kind of keep everybody up and running. Let's think through, you said your grandfather owns real estate, right? He has just a personal residence, but the rest is in basically in the stock market, individual companies. He started investing long before index funds were out there, right? He was born in 1914, so he was investing probably in the 20s or in the 30s. And so a lot of these companies that he's investing in, they've merged several times. It's just that no one today would ever design a portfolio like this, it's extremely complicated. He's got hundreds of individual

securities because these go back to paper certificates in the Great Depression. Yeah, that's interesting. But let's talk about the property, though. So suppose that that gets passed along and between three airs, right? How do you kind of focus that? Is it just like a vote plurality to sell or keep it as a rental or that kind of thing? Or like, how does that kind of work? And what you have to do if you're passing along real estate in a will? Great question. So, and I'm not an expert with this because that's not what's going to happen in my case.

I have spoken with the other kind of grandchildren and nobody wants a house in Green Valley, Arizona. And so this is going to be easy. We're going to sell out and the proceeds are going to get distributed. If it is that someone wants it, they can usually, I think the way to do it is that they basically buy it out, right? So, you know, say he's got an equity portfolio and he's got a house. and somebody wants the house, well, then they can just deduct that amount from the remaining kind of liquid part of the portfolio.

I think things get messier when there aren't really many assets and there is a house that's not easily divided. Then you have to have that much harder conversation about who's going to get what and how. I see. But in the case of my grandfather, he's got enough of a portfolio that if someone wanted the house, they could just deduct the amount that they get from the proceeds of the portfolio. Did you talk to a professional in this process? Yes, and I highly recommend doing that. Okay, so who do you talk to?

Who's the professional you talk to? So in our case, what we did is we looked up the American Academy of Estate Planning Attorneys. I think that's aAEPA.org. Don't quote me on that. But yeah, that's what I did for my lawyer and for my mom's lawyer. He was a member of that. And actually, the first person, first lawyer I'd ever really met in a professional setting was my mom's estate planning attorney because we had to get some of her stuff

changed. And I asked him, I was like, who do I talk to if I want to find, you know, someone like you out in California? And so this is the group that he was part of. So whenever you're doing something that involves, you know, writing a trust or something like that, you're going to want a real attorney. Although I do believe there are ways of doing this online if you want kind of a lower key one, you know, in the same way that you can get wills online. I think you can get other documents online as well. But I don't have experience with that. Yeah, I've seen those as well. Maybe we can link to a couple in the show notes, but we can't. I don't think I can remember any off the top of my head. Yeah.

Right. Legal Zoom or things like that, no low. Would you recommend contacting the estate planning attorney before your parent passes away? Like, at what point do you contact them? Well, it's whenever you kind of need anything, but I would recommend kind of keeping the line of communication open. And then I would also recommend calling them for sure after the passing. So in my case with my mom's stuff, we had changed some stuff when we were in good communication.

beforehand, and I didn't actually need any of his assistance afterwards. In the case of my grandfather, we needed some things changed, and I was in communication with him because that was really critical because my mom was dying and she was the one that was actually formally in charge of my grandpa. And so we had to actually really quickly get documents available for me to take care of my grandfather. So that was actually one of the more stressful aspects of my mom dying, frankly, was that my grandfather was still alive and he still had needs on a day-to-day level and I couldn't pretend to be my mom anymore. Like I had to actually step up and be legally in charge. And so there were a lot of things that were really hard for me to do. Right in the wake of my mom's death, I had to be in touch

with the IRS. I had to be in touch with, you know, social security and Medicare and his health insurance. And it's hard. It's hard to like convince the IRS that you're in charge of someone else. You know, you have to go through some serious hoops. And that was one of the hardest things. following my mom's death, following my grandfather's death or anticipating my grandfather's death, it's not going to be nearly as hard because there isn't anybody else that's kind of a dependent. So there's no like kind of rush. But I felt like I was really under pressure after my mom died because I still had the living grandfather. I want to kind of maybe change your subject a little bit and get into investing the proceeds of an inheritance, right? Investing in inheritance because

that seems to like it's going to be, it's a lifetime of wealth accumulation that you're going to, you're going to inherit all at once in one kind of like lump sum. And do you have a different approach to doing that than maybe just like investing all of it in an index fund all at once? Or is there, or is that what you do? Like, can you walk us through your kind of philosophy to that? I have a written investment policy statement and I made it kind of modeling off of some of the ones that are on the Bogleheads forum. And so I plan on plugging the money into my plan. And I have, again, I have my plan in writing in advance. And it basically says where my new found money goes from whatever source. I will say this.

and this is the standard advice for any type of solid inheritance, you know, something that's a sizable amount of money. If it's large enough where it's going to change your plan, they really, they really emphasize not making any major decisions quickly. So setting the money away for six months or something like that at least, you know, in my case, it's two years since my mom died and I've now bought a house that I wouldn't have

bought otherwise, you know, I had enough money for the down payment, all that kind of stuff. So that was two years or maybe a little bit over a year before I made. I bought the house. So basically, don't make any major decisions if it's enough to really change your plan. So in my case, I went from having a great start in my career and was solid investing plan, maxing out all the retirement accounts and a taxable account. But then I kind of jumped up with my mom's wealth to being kind of at a kind of lean fire, I would say, is where I am now.

And that's enough where it's a big life change. Yeah. So I love everything you just said. Like all that makes perfect sense, right? and you have a written investment policy statement that you refer back to whenever you have a different have it right here let's go through that can you go can you walk us through that scott smiled when you said that you want you want to walk through it is that what you want let's do it i'm very excited yes i'm champing at the bit here you can see all right i say right up front i say this is my side hustle do it yourself no one will care about your money as much as you do when i get into kind of the investment philosophy it's a quote from jack bogel and again i'm actually plagiarizing this from where i'm

I found this online, but I liked it so much that I had to use it. It says, buy and hold, long-term, all-market index strategies implemented at rock-bottom cost are the surest of all routes to the accumulation of wealth. And we won't go through necessarily every single sentence on this, but my asset allocation is basically 50% U.S., 50% international, all-equity index portfolio. Most of it's at Vanguard. Some of my work stuff's at Fidelity. But that's basically what I'm doing. And that's the plan that I think I can stick to. And I'm keeping it aggressive, even though I inherited money. I'm keeping it aggressive because I'm 33. I feel like I've got a long enough time horizon where I would actually be able to see this stuff grow in the meantime. So

I'm trying to just do that. Now, I have added one thing to my asset allocation, which isn't on this plan. And that's that I have basically bought an investment in commercial solar. And it's basically a debt-style investment, and I'm earning 7.5%. And the reason I did that is because I didn't want this very volatile portfolio where I live in the Bay Area now where there's really high housing cost. And so I wanted to basically be able to pay the mortgage with a really steady income. And so that's basically what I'm doing. The solar is actually paying for the mortgage. And then everything else is just kind of on autopilot in the stock market, just growing. So I'm trying to not really have very large withdrawals. Yes.

Wait, what is the solar investment that is paying your mortgage? How does that work? Well, I mean, I'm earning 7.5% and my mortgage is 3.75%. So I've got a sizable chunk in this commercial scale solar investment. And yeah, basically I get, I actually set up at Vanguard, I have an account that basically is just a money market account. And I have ACH transfers come in from the solar. And ACH transfers go out for the solar. And ACH transfers go out for the, the mortgage. And yeah, basically, the solar is bigger than the mortgage. So I'm just on autopilot here and I'm loving it. That's awesome. Yeah, yeah. And again, I did it because I was scared of being in an economic downturn and then having to sell chunks to cover the mortgage. I didn't like that idea. So I took some chips off the table and put them into something else that I really care about. And, you know, it's somewhat similar to having rental income in real estate. I know this is a real estate based kind of crowd. And yeah, it's, it's really hard to get good rental real estate in the Bay Area. I mean,

it's ridiculously expensive. Basically, none of the numbers work. I mean, you can't cash flow a house out here, like, at all. So I wanted to do something similar. And this was very easy and fit my needs really well. So, yeah, basically, if I were in a lower cost of living area, maybe I'd be a landlord or something. But being out here, I wanted to do it, this solar route. So I got a question here about the large chunk of money thing. So I have, say I have this written philosophy and it's invest everything in equity index funds long term by a hold. So let's suppose that I inherit a million dollars, and that's way more than my year-long accumulation. So I'm accumulating 50K a year or 25K a year in savings, and I accumulate a million dollars after tax from an inheritance.

Now I'm at really extreme risk to the market going down next year rather than if I maybe dollar cost average. Is that what you're talking about to kind of change your plan? Does that kind of change the philosophy a little bit in those types of circumstances? Or how would you think through that problem? I'm not talking about dollar cost averaging. And I'm actually not a big fan of dollar cost averaging. The math kind of shows that it's just not as good as lumps I'm investing. And the market is tending to go up.

You could get really unlucky, but you could also lose that dollar cost averaging as well. So I'm not a big fan of that. What I would say is if you get a big chunk of money for any reason, if it's big enough like you're talking about where you had 50,000 and then you go to a million, you need to probably revisit your investing plan. So maybe you've got a written investment policy statement that made perfect sense for you before, but it doesn't later. And so you can go and think about it, spend some time.

I wouldn't make any decisions right away. You can also meet with professionals, meet with a certified financial planner or somebody like that. And actually, I did. I talked to a CFP at Vanguard after all this and wanted to kind of revisit my investing plan. He basically said, go for it. So that's what I would do.

I would definitely spend some time. time after a major chunk, if it really changes your whole financial picture, you should definitely revisit your investment plan and make sure it's still going to work for you in the future. If you're the type that, you know, I'm not, but if you're the type that, you know, kind of once you've won the game, stop playing kind of crowd, then you might actually take a bunch of risk off the table and go more into safer investments. Again, I'm not, but that's also due to my kind of personality and my age. Yeah. And I'll chime in that I think that this, that your financial, your investing statement, your written policy for all of this is critical to doing the right thing

when it comes to this estate planning stuff. Because if you don't have this in place, then you're doing a disservice, I think, at some level to maybe the person who passed it on. If you don't have a plan that's going to actually improve your life or the life of your children and your family going forward. So I just love the fact that you did that and have this all in place and that your first answer is go back to your written financial plan if you inherited an amount of money that is more than, that changes your plan. Yeah, and having it written down definitely helps keep you on path. The fact that you can write it down, print it out, whatever it is, that'll keep you on track

much more than if you just have an idea in your head because that idea can change on you. And really, if you look at people managing windfalls across the board, a lot of people lose them. Like a lot of people squander it. You hear about professional athletes. You hear about lottery winners like being broke within five years after getting that money. So those are people who don't have a plan to really hold on to it for long term. Now, your audience is probably not in that crowd.

If they're listening to this, they're probably much more likely to have a plan for themselves and stick to it. But none of us are immune to these behavioral things. And I think it becomes much less of a math problem and much more of a behavior problem. So how did you come up with your investing plan originally and how much did it change after your mother passed? I think originally it was just reading like intense. intensely reading this stuff like several hours a day. I was reading all these, you know, the same types of sources that I think a lot of your audience reads, you know, like a lot of the online blogs and things like that. I was reading quite a few books on investing. And I was just becoming

more convinced in the all equity kind of path that's also internationally diversified. And so that was basically my plan. And I basically haven't changed it. I didn't change it after my mom died. What I did do after my mom died, you know, again, in some time, was do this solar thing, which is kind of out of left field and I bought a house. Beforehand, I was pretty much a diehard renter and living very, very frugally. No car in California from 2004 to 2016. All that money was basically getting saved. So I loosened the purse strings is one of the major things I did. I actually inflated my lifestyle. Hopefully not extravagantly and hopefully not, you know, in a way that's going to like where there's any financial disaster in the future. But I definitely inflated my lifestyle.

Well, so this is a not necessarily frugality podcast, but definitely a be conscious of your money. How did you inflate your lifestyle? Because I think your idea of inflating your lifestyle might not be the same as what other people think. Yeah. I mean, there are a few things. Like, for example, this year we're doing a lot of different jobs on the house, like major kind of cap X, if you will. But I'm still keeping it within bounds in terms of like safe withdrawal rates and things like that. And I know the 4% rule gets kind of cited a bunch. But yeah, I'm trying to keep basically

my spending out of the portfolio at a very sustainable level. So I basically, yeah, doing that. The mortgage is large. Like it's California. And so that's one aspect of this, that that alone has really, you know, led to an inflated lifestyle having that big expense each month compared to where I was living before. Well, but are you actually spending any money on your mortgage? Because you've got the solar that covers your mortgage. So is it your lifestyle a little bit less because now you're not paying rent? You're right. But at the same time, money is fungible. So I mean, money coming in, money going out. It's a nice mental accounting for me to say that I'm paying my mortgage with it. But really, I just have income coming in and expenses going out. Tax season is one of the only times

all year when most people actually look at their full financial picture, including income, spending, savings, investments, the whole thing. And if you're like most folks, it can be a little eye-opening. That's why I like Monarch. It helps you see exactly where your money is going, and more importantly, where your tax refund can make the biggest impact. Because the goal isn't just to look backward, it's to actually make progress. Simplify your finances with Monarch. Monarch is the all-in-one personal finance tool designed to make your life easier. It brings your entire financial life, including budgeting, accounts and investments, net worth, and future planning together in one dashboard on your phone or your laptop. Feel aware and in control of your finances this tax season and get 50% off your

Monarch subscription with the code Pockets. What I personally like is that Monarch keeps you focused on achieving, not just tracking. You can see your budgets, debt payoff, savings goals, and net worth all in one place. So every decision actually moves the needle. Achieve your financial goals for good with Monarch, the all in one tool that makes money management simple. Use the code pockets at monarch.com for half off your first year. That's 50% off at monarch.com code pockets. You just realized your business needed to hire someone yesterday. How can you find amazing candidates fast. Easy. Just use Indeed. When it comes to hiring, Indeed is all you need. That means you can stop struggling to get your job notice on other job sites. Indeed's sponsored

jobs helps you stand out and hire the right people quickly. Your job post jumps straight to the top of the page where your ideal candidates are looking. And it works. Sponsored jobs on Indeed get 45% more applications than non-sponsored posts. The best part? No monthly subscriptions or long-term contracts. You only pay for results. And speaking of results, in the minute I've been talking to you, three people just got hired through Indeed worldwide. There's no need to wait any longer. Speed up your hiring right now with Indeed. And listeners of this show will get a $75 sponsored job credit to get your jobs more visibility at Indeed.com slash bigger pockets. Just go to Indeed.com slash bigger pockets right now and support our show by saying you heard about Indeed on this

podcast. Indeed.com slash bigger pockets. Terms and conditions apply. Hiring, Indeed is all you need. When you want more, start your business with Northwest Registered Agent and get access to thousands of free guides, tools, and legal forms to help you launch and protect your business all in one place. Build your complete business identity with Northwest today. Northwest Registered Agent has been helping small business owners and entrepreneurs launch and grow businesses for nearly 30 years. They're the largest registered agent and LLC service in the U.S. with over 1,500 corporate guides, who are real people who know your local laws and can help you and your business every step of the way. Northwest makes life easy for business owners. They don't just

help you form your business. They give you the free tools you need after you. you form it, like operating agreements, meeting minutes, and thousands of how-to guides that explain the complicated ins and outs of running a business. And with Northwest, privacy is automatic. They never sell your data. And all services are handled in-house because privacy by default is their pledge to all customers. Visit Northwest Registeredagent.com slash money-free and start building something amazing. Get more with Northwest Registered Agent at Northwest Registeredagent.com slash money-free. Okay. So we have, I mean, this is very interesting. you're investing and, you know, the plans that you have that, that is all very interesting,

but we've kind of strayed a little bit from the estate planning and like the main topic that we're going to talk about today. So I would like to go through some of the documents that you filled out and, you know, submitted while your mother was still alive and then after she passed and all the different things that we've talked about in regards to inheriting her estate. once you got over the initial shock of your mother's diagnosis and she started putting you on the checking accounts and all of that, what are some other things that people need to really start thinking about? Well, and this is something that you can do no matter who you are, no matter what age you are or whatever. If you've got an account, like a checking account or a savings account, one simple way to have your wishes kind of met is to add a POD or TOD, payable on death or transfer on death.

you can go into like your bank or whatever it is and you can write down who the beneficiaries of that account are going to be. And that'll just go straight to that person. You can bypass all these other, you know, legal shenanigans by just having a transfer on death or payable on death, you know, designation for that account. So the entire account would transfer over anything in that account would then transfer over to the person. Okay.

That's right. Or it would split up too. If you want to put multiple people on it, you can totally do that. it doesn't have to be just one person. Similarly, retirement accounts, you have to really keep on top of what those beneficiary designations are. If you don't remember, you know, on your first day of work, what you wrote down, I mean, you really should go and figure out who the beneficiary of your 401k is or your IRA or whatever it is like that. So that's another one that can just bypass any legal shenanigans and just go straight to the people that you care about. But you've got to stay up to date on it. And also, I will say that those retirement accounts, don't go through the trust if you have a trust. So it's especially important that you stay up to date with what those beneficiary designations are because those kind of supersede anything that is laid out in your will or your trust. So you could say in your will, I want my 401k to go to Sally, but if your ex-wife is on there instead or whatever it is,

that's who it's going to go to. It's going to kind of supersede it. Another thing just about inheriting real quick is the kind of peculiarities of inheriting an IRA. If it's a spouse, the spouse can just get the IRA, like basically, and it'll become theirs, just like normal. If it's non-spouse, say it's a child or a grandchild or something like that, it's critical to do some things and it's critical to kind of do them in the right order. You want to have a direct transfer, kind of in the same way that if you're, like, rolling over an IRA, you want to go direct from institution to institution. You don't want to take any of that money personally because it's very hard mechanically to get it back in the system

without it incurring like a whole bunch of taxes. So you want to do a direct transfer. And the other thing is that you probably, if you're a grandchild or a child, want to do what's called the stretch IRA. And so IRAs, they have required minimum distributions starting at a certain age.

I think it's 70 and a half. You're going to have to start taking required minimum distributions if you're a child or grandchild immediately, but you want to take them based on your life expectancy. So you want to start taking them, you'll get really small amounts of them, out in the first years. So in my case, for example, I wanted to stretch my mom's IRA over my life expectancy. So I was like 31 at the time. So that's a really small amount that has to get pulled out.

Yeah, 104. By the way, I do know I just looked up my grandfathers. His IRA distributions are like roughly 50 percent or something very, very high like that. So about half of his money has to come out each year. So the account is getting much, much smaller. So again, you want to do it over your expectancy and not over his life expectancy. So again, look up the stretch IRA if you have that. That's an awesome tip. Yeah, it's huge. And by the way, if you don't do this, it's so bad. So if you don't take RMDs, you get basically kicked out and you have to remove all the money from the IRA within five years or else you get even bigger penalties. So it's a huge deal. You got to set it up right. My advice would be go to the institution where you want to have the IRA and then work through them and get their professional assistance setting this up the right way and make sure that, you know, the required minimum distribution is calculated the exact right amount and all that stuff.

Is this something you can do prior to the passing of the parent? Nope. Yeah, you have to do it afterwards. Great. Is there a time frame that you have to do this in? Can you take a moment to breathe and just kind of process? process everything that's happened. This is something that I really want to talk about is like, I know there are some things that have to be done instantly and some things can be done a little bit later and some things are like whenever. Well, you can breathe, but you have to do it on time. So you have to start taking like, for example, in my case, I had to take my mom's last remaining requirement is minimum distribution for her. But you can't like wait more than a year or something

like that. If you miss an RMD that should have been taken out of that account, like the government is going to penalize you for doing that. You can't just leave money in a tax sheltered account and not take required minimum distributions out. So you better set it up somehow or else you're going to get kicked out of the account within five years and get taxed on that full amount. Okay. That's a really good point. As income, right? So if it's $100,000 and you magically increase your taxable income by $100,000, you're going to feel it. And this is a problem. The required minimum distribution is really comes into effect if I'm wondering this. So please, I need education on this. If the person dying is over that age and has to take required minimum distributions, suppose you're 40 and pass away, you're creating

your well, right? And you're not taking any distributions yet. You pass along that to your wife or kids. They don't have to start taking minimum distributions. Is that right? Your wife. Your wife doesn't. Your kids do. Okay. The spousal just becomes basically your, It's as if it's your IRA, if you leave it to your spouse. If you leave it to non-spouse, then they need to take it no matter what. So that's where it becomes different than a regular IRA. It's an inherited IRA is what it's called or an inherited Roth IRA. The same thing with the Roth, by the way, you still have to take required minimum distributions,

but they are Roth distributions. So they are after tax, but you still have to take them. Okay. So the other kind of thing are kind of these family of documents, you know, everybody's probably heard of a will, that's probably kind of like the bare minimum, especially for people in the fire community or listeners of this podcast, if you're going to accumulate a sizable amount of money in your life, you really might want to think about something more than just a will. At the very least, I'd recommend that you get some ancillary documents to go along with

the will. The ones that I would suggest are powers of attorney. And these don't have to be invoked until you're incapacitated or something like that. Power of attorney only happens when you you're alive. It's not for anything after death. And basically, it's going to let someone else that you designate. And ideally, you have a few backups, right? That's one of the things that we had to actually adjust with my mom and my grandpa's estate plans were what those backups were. But in any case, they're going to make decisions for you. So there's one power of attorney for health care, all health care related decisions. And when you actually, you know, go and create one, there are going to be a million different decisions like things like organ donation or can your body be used

for science or would you rather be cremated or buried. These kind of decisions can come into play. So there's a healthcare power of attorney and there is a durable financial power of attorney, someone who can make decisions for you financially, someone who can pay your bills if you're incapacitated or do anything like that. These are almost, in my mind, almost more important than having a will. It's like these are really critical. These are things about you when you're alive, what decisions you want to be made for you financially, what decisions you want made for you with regards to your body. So those are really key. Then there's kind of trusts. And a trust is basically creating a legal entity. So it's oftentimes like your name and then revocable trust or

your name and then living trust. So you create this legal entity yourself. And usually what you'll do is you'll create yourself as the sole person in charge of it. So basically, you know, in the case of my trust. I've created the hard remixed revocable trust, and I'm the sole trustee of that trust. You retitle your accounts and you put them into that. So, you know, like you have, like, I put my like investment account in there and, and my home is titled. It's deeded to the name of my trust. Everything goes in there. And then basically, I get to decide in the trust who handles everything. So I get to decide who is the successor trustee. Should I pass away? Who's following that? Who's following that, you can basically put anything you want in there, all the beneficiary designations,

all the kind of everything that you do, you know, do with your assets after your death. If you want the home to go to somebody in particular, anything like that can go in. And so the main power that people talk about with the trust, in addition to basically giving you a lot of control over your affairs, is that it also avoids the whole probate process. And probate is where basically things go to court after you die. And this is so if you had a will, you would have to go to probate court and get the will kind of verified. All your assets and everything would have to be inventoryed. Everything would have to be checked by the court.

Everything would have to be distributed through the court. It's a very long and very expensive process. Many months to over a year or sometimes you hear about things being even over a couple years. And the costs of it depend on the size of the gross estate. but they're non-trivial, probably tens of thousands of dollars at the minimum for someone in the fire community. So trusts are a way of avoiding that. Trust costs, I think, about $2,000 to $3,000, maybe $2,000 to $4,000, but at the same time, you get a lot of control over your life as you're living and over your life after you die. I mean, this is all just such good advice and just things that

I've never thought about from this perspective before. Like, yeah, like, if you don't make these decisions about health care financial power of attorney or trusts or you don't set this up, then somebody else is going to decide this for you. And it's probably going to be someone from the government basically trying interpreting it in a way that is not necessarily as what you would want. Or your family is going to fight over who decides for you. Yep. So you don't want that either. Like you leave a massive mess and a massive void behind. And what do you think is going to happen? You know, people are going to disagree on stuff. And if you didn't lay it out or make yourself clear and especially make yourself clear in a legal, formal way, then there you go. I'll say this. I,

you know, I'm only 33. I've already used my estate planning documents. I had a manic episode. I'm bipolar, apparently. So this was news to me. I wasn't planning on having a psychotic episode, but I gave my girlfriend kind of full control because I was scared that I was going to do something that I didn't want to do. So I invoked my own, like, power of attorney and basically told her that she was in charge of what happened. And I don't know if it physically would have prevented me from doing anything if I really wanted to, but it basically, you know, in my mind, I felt a lot more secure after I did that, basically saying, like, I can't make decisions right now is basically the place that I got to. So for me, it's already worked out that it's kept me on course during a true

crisis that I had in my life. So yeah. I think it's great advice. Any other kind of things to keep in mind for folks, let's assume that the majority of listeners are between their 20s and 50s and are kind of thinking through this stuff. Any other kind of advice for them generally as they set up their own lives and estates or are planning for inheritance or those types of events? Well, I just think if you're not planning on it, like you're going to get there, you're going to get to a situation where you have, you know, more assets than you initially planned on, all that kind of stuff. Like if you're on this path where you're listening to the bigger pocket money podcast and you're actually going to stick to these ideas for a while, you're already in a situation or you're going to

soon find yourself in a situation where some of these types of legal and financial issues really come into play. And it's part of actually, you know, it's part of your whole thing. We focus so much on like investing. But these are the bigger questions that you're going to have to solve about your life. And these are the bigger kind of ways of getting organized that everybody's going to have to do or or they're not going to do it and they're going to leave a mess. So this basically is pertinent to everybody. I mean, we started the podcast about, you know, well, if you have a parent that's sick. Yeah, well, that's one scenario, but everybody's going to be in that scenario at some point.

So you can't really avoid it. Yeah. Well, do you have a good recommendation for how to broach this subject with parents who are avoiding the idea? Like I said before, my parents have already started setting it up. so it's a conversation I don't have to start. But let's say Scott is going to call his parents and talk to them. Scott's eyebrows go up.

If you're watching on the, if you're not watching on the video, Scott's like, what? What am I doing? You know, but Scott has significantly younger parents than I do. So perhaps they haven't had this conversation yet. They haven't even started thinking about estate planning. What is something that he can do to sort of like ease into this? I mean, it's going to be an uncomfortable conversation. Yeah, it's like two of the worst taboos.

in our culture, money and death at the same time. It's just, I don't have great advice. I'm really thankful to my mom that when push came to shove and the time was right, she opened her financial life to me and helped me make some of those decisions alongside her as opposed to just leaving me a bunch of a mess later. Boy, I don't know. I would just try, try hard to communicate, be gentle with it. People aren't like eager to open up their finances. People aren't, eager to talk about death, you know, so just be calm and gentle and see if you can get there at all with them and maybe phrase it about you, you know, that, hey, I've been thinking about these kind of things lately and I was thinking about getting an estate plan.

I don't know. That's, no, that's a really good one. Hey, mom, I was thinking about this, you know, I've got small children. I want to start doing this. Have you done anything like this yet? Where did you start or what do you have or that's, I think that's a really good suggestion. is to make it all about you. Yeah.

I like that. Okay. Well, should we head on to the famous four now? I think we should. Is there anything you'd like to add before we transition over to the famous four questions? No, not at all. Okay. So, Hari, you are a listener of the show.

You are familiar with the famous four questions. But for those who are just tuning in for the first time, the famous four questions are the same five questions that we ask everybody. It's really four questions and a command. First one, what is your favorite finance book? I think it has to be the Boglehead's Guide to Investing. But I will say that for this topic, if you're interested in learning more, there is a really thorough resource. It's called The Everything Executor and Trustee Book by Douglas Wilson.

And I spent a lot of time reading and rereading that book as my mom was dying because I was taking care of both her and my grandfather at that time. So that book helped me out a lot. It's pretty fat. You don't need to read everything. and it's pretty dry because it's all about estate planning documents. But if you need to learn more about that or want to learn more about that, that's a good resource. Yeah.

Awesome. You know, as I'm listening to this podcast, I'm like, oh, yeah, my parents have already done this. I haven't done this. I have two small children. I'm married. We have an estate that I want to go to my children should we pass. But I've not actually planned anything. So I feel kind of guilty about that, especially after having talked to you.

I do need to go and get this everything. and trustee book. I'm going to go. My husband's at the library right now with the girls because they just get out of school. So I'm going to make sure he picks up a copy of that. Super fun book to read. Yeah. All right. What was your biggest buddy mistake? Fortunately, I didn't have all that much money at the time. I think it was in 2013, maybe 2012, when a friend and I were pretty much convinced that the crash was coming. And so I placed a bet on the VIX volatility. And it was just stupid. And it lost a ton of money. And, you know, I lost most of my investment there. Fortunately, only a few thousand dollars. But yeah, that was my last time

speculating. That was kind of right before I kind of read the Vogelhead's guide to investing and really understood what long-term investing was about. And yeah, just making a stupid speculative move. How did you mechanically place that bet? I bought it. I bought an ETF that was triple leveraged on the VIX volatility index. And it was basically designed to lose money. It was only to be used by day traders. But of course, I didn't read the prospectus. So it was basically this thing that basically lost money every single day because that's the design of it. So it was horrible. Whoopsies. Yeah. Oopsies. Hey, good lesson. Turned you into a lifelong booglehead. Yeah. That's great. By the way, there's a community called boogleheads online, where if you can talk about

this kind of stuff if you're interested in learning more about Jack Bogel's philosophy, it's a, it's a winning formula. It's, I mean, it's, it's, you just read out your entire financial philosophy and written statement and one sheet of paper is super simple. It's gonna work. You know, it's a fantastic place to kind of read up on all that kind of stuff. And it's worked to the tune of trillions of dollars. Yeah. Okay. This next question I've discovered is a little bit ambiguous. What is your best piece of advice for people who are just starting out? And it's kind of as it pertains to your story. So what is your best piece of advice for people who are just starting out with estate planning or something like that?

Oh, I don't know about for estate planning, maybe getting in touch with an estate planning attorney. But I would say in terms of just starting out in their financial life at all, I don't think you need to start there. I think you should start by tracking your net worth. That's a big one. If that's too complex or sounds too amorphous, invest in an enormous. Roth IRA is probably a pretty good idea if you're just starting out financially. That is a great tip. All right.

What is your favorite joke to tell at parties? Ooh. I hope this isn't too embarrassing. A bear and a rabbit are taking a poop in the woods. The bear turns to the rabbit and says, hey, do you have problems with poop sticking in your fur? And the rabbit says no. So the bear wiped his butt with the rabbit.

I've heard that one before. Okay, Hari Mix. Where can people find out more about you? I have a blog. It's mostly a climbing blog. I'm a high altitude climber. It's HMiX.org. HMix.org.

You can also email me at harrimix at gmail.com. Harimix at gmail.com. Okay. Before we go, I want to say that Hari has very generous offered to share his experiences, but he's not a estate planner professional. So if you're thinking about emailing him with very specific questions, it's probably not your best choice. We will link to that Academy of Estate Planning, whatever, in the show notes, which can be found

at BiggerPockets.com slash Money Show 49. So we will link to all of that in the show notes so we can give you a better place to go for this estate planning. I'm going to have to get an estate planning attorney, too. This was really helpful. I really feel like if something happened to me and my husband at the same time right now, my kids would be so out of sorts. I mean, they're like 11 and,

oh, I guess Stephanie's 9 now. They're 11 and 9. So it's not like they're going to be doing much with the planning anyway. But there would be a lot of problems. And I need to just get over the fact that I don't want to talk about my own death because I don't want to talk about it. I just want to live forever. But I'm going to die too.

Spoiler alert. My estate planning attorney actually asked me what he calls the exploding turkey scenario where you and everyone you like love dies at the same time. And it's it's ridiculous that lawyers think this stuff up. But like the point being that like you should have a flexible plan with like lots of backups and lots of other options and ideas in it. So yeah, that's what that's what they're for like thinking up these horrible scenarios and then coming up with solutions for you. Yeah. That's a really great plan. And I mean, if you have kids, you need to do this. You owe it to the children that you brought into this world to have a plan so they're not stuck with all this stuff. And, you know, if I were to pass today, I don't know what is the death tax like 55% or something. They would be hit with the sizable tax from my estate. I don't want that to go to Uncle Sam.

I want that to go to my daughters. That's only if your like estate is over 11 million though if you're single and more if you're married. Oh, no, we're not there yet. Fortunately, yeah. Yeah. Like most people, if you have to pay the estate tax, you're, you're doing pretty well. But perhaps in the future, we can't have a discussion with someone who, you know, hey, that's a valid concern. If you're, if you're going to be, become a millionaire in your early 30s, you know, multimillionaire, you're going to potentially have a estate.

Yeah, this is, I think they use life insurance. I think they use life insurance to get around that, but I don't know how. Yeah. It doesn't really pertain to me. But if you're going to have an estate that's going to, if you're going to get become a millionaire in your 30s or late 20s or whatever, like you're going to have a tens of millions or hundreds of millions of dollars potentially a state by the time you live to 104. And, you know, it's, that's right. If you're interested in passing that along, there are ways to do that, I think, that are really advantageous. And that's where you need to get really kind of crafty and get some real professional help and think about it early. You need professional help. Yeah. Yeah. Well, Scott, we already know you need professional help.

Oh, man. Oh, come on. You didn't think of that first. Okay. Woohoo. Mindy wins one out of what, 50, 49. Okay, anyway, Harry Mix. Thank you so much for answering my call.

And thank you for coming on and sharing your experiences today. I know this is going to be super helpful for everybody who's listening. It was very helpful for me. And it really, I've known I need to do this for a long time, but this really is kind of the kick in the pants that I needed to really put this place into motion. So thank you very much. Cool. Thank you. Okay. And we will talk to you later.

All right. Take care. Yeah. Bye bye. All right. That was Hari Mix. Mindy, what did you think? You know, Scott, I got a lot out of this episode. There is a lot of information that Harri learned kind of the hard way he had to kind of slog through it. And it's really shed a light on the fact that I need to get off my butt and get this done. I have two small kids and I want my estate to go to them. I don't want it to go to Uncle Sam. So I need to just do it. I need to sit down and make it happen. And, you know, it's not my favorite topic. Obviously,

I don't want to think about not being there for my kids, but I need to just get over that. What did you get out of this episode? I thought it's a very difficult subject. And I think it makes you, you got to think about first what you want to happen, which I think is a very fundamental philosophical question, right, in terms of how you want your estate to be carried out. And then you need to be prepared to assume that estate, if loved ones do pass away and leave you something and put that to the best use, the way that they would want it to be used, right? Whether that's giving yourself freedom and achieving financial freedom early as a result

of that and kind of going on to make a big contribution or live your best life. Just having that in place ahead of time, I think is a critical thing to think through. and it's not going to get easier if you just avoid the discussion. In fact, it'll be harder. This kind of thing can rip families apart, not handled appropriately, not thought through, right? And so one of the worst things you can do is potentially give away, leave out and a step, tears apart your loved ones. Yeah, you know, you have a finite amount of time on this planet,

except unless you're Hari's grandfather, who apparently is just going to be here forever. 104 years, I love his grandpa. But, you know, you have a finite amount of time on this planet. planet, you are going to leave. Make a plan so that you can do what you want with your money. Okay, Scott, should we get out of here? Let's get out of here. Okay. From episode 49 of the Bigger Pockets Money podcast, this is Mindy Jensen and Scott Trench and we are leaving.