Business Innovators Radio - Interview with Brian Sirota Founder of BES Financial Discussing Inheriting Money

Episode Date: December 16, 2024

Brian is a Financial Representative with extensive knowledge and understanding of Financial Products to assist clients in planning for their retirement needs.Learn More: https://besfinancial.com/Securities and investment advisory services offered through Osaic Wealth, Inc., member FINRA/SIPC and a registered investment advisor. Insurance products may be offered through Brian E. Sirota, also Known as BES Financial which is not affiliated with Osaic Wealth.Influential Entrepreneurs with Mike Saundershttps://businessinnovatorsradio.com/influential-entrepreneurs-with-mike-saunders/Source: https://businessinnovatorsradio.com/interview-with-brian-sirota-founder-of-bes-financial-discussing-inheriting-money

Welcome to influential entrepreneurs, bringing you interviews with elite business leaders and experts, sharing tips and strategies for elevating your business to the next level. Here's your host, Mike Saunders. Hello and welcome to this episode of Influential Entrepreneurs. This is Mike Saunders, the authority positioning coach. Today we have back with as Brian Sherrod, the founder of BES Financial and we'll be talking about inheriting money. Brian, welcome to the program. Thanks, Mike. Great to be back. Hey, this is a fun topic because I know if you get the letter from, you know, long lost, second removed uncle cousin with inheritance, it's a fun time.

Or if you have some money coming in from an inheritance, it's something like, you know, unexpected surprise. So I know that there's a lot of things that go into, what do you do with it? So what are some of the first steps that someone should take when they start hearing that there could be an inheritance or receiving an inheritance? to make sure that they're using it wisely. One of the first things I advise clients to do is speak with a financial professional or a tax consultant as well, because there may be situations where taxes may be avoided or solutions that can navigate them through the inheritance that might be more beneficial than taking a distribution as a lump sum and voila.

You have to pay significant taxes in one. particularly here. So there's definitely reasons to review what the existing holdings are. Stocks, for example, they have a step up in basis, at least under current legislation. So all the appreciation in those holdings might have been beneficial as far as no capital gains need to be paid by the beneficiaries. However, there's other financial instruments that may have had tax deferred gains or IRAs that have ways to be distributed in the a more beneficial manner. That's a really good point because there's no right answer for every single person.

Everyone's different. But like you mentioned about IRAs, no taxes have been paid on that because you've been putting it in pre-taxed. So even if you are pulling it out yourself, you have to deal with the taxes. Now, there's a lot of ways to deal with it. And that's what getting with a good financial professional would do. But if it's inherited and it's coming from an IRA, some of that non-taxed money still needs to be taxed and dealt with. And then there also is time deadlines on that too,

right? So if you don't do something with the money in a certain time frame, that can create other issues. IRS rules governing the distribution manners of inherited IRAs have changed tremendously over the last five years, where before you used to be able to take an IRA that you might have inherited over your lifetime expectancy, now currently it's within a 10-year distribution period. So it's important to be aware of that and when it would be efficient for you to take those distributions as well as are you currently working, what's your current income, and how that might impact your overall plan, not only the tax implications, but the distribution through retirement as well. When we're talking about inherited money, it typically carries with it an emotional impact because maybe it came from mom or dad, maybe it came from a close relative. what do you do with your clients to help them work through that emotional aspect of the inherited money? I emphasize that you should pause, not make any immediate decisions.

So you won't look at a window of six months, for example. One of the examples I use is one of my neighbors before I was even a financial advisor back when I was a stock trader. And they actually lost a parent. He and his father had always talked about going fishing, going. hiking, going camping, and he really didn't do anything like that with his father, and he kind of felt like he wasn't the best son. He ended up immediately going out, buying a boat, buying an SUV, buying a trailer, and within three months, he sold all of it because he realized he didn't like boating, he didn't like trailing, and he wasn't even enjoying the truck that he bought. Impulsive

decisions can be dangerous and costly. And so you want to make sure that you're making the right decisions and that you have someone guiding you to help you digest as far as, is this the best decision that we can make based on what we know? And is there more information that is needed to make the best decision? That's a really good point. In that scenario, it might have been smarter for him to go out and rent an RV trailer boat and try it out for a few weeks and go, wow, I just don't like it. So I didn't waste my time and effort. But the point is, don't make immediate rash decisions, sleep on it or test it out.

And I do like the fact of honoring the memory of that person. Like in that example with the fishing, you know, it's like, hey, I couldn't do this. So maybe you knew something about the person like, hey, you know, they were really passionate about whatever charity or nonprofit. Let me honor that. So in some cases, the emotions tie into maybe even a charitable event, right? Yep. And actually, I've come up with a little slogan, you know, where if you were, God forbid, caught on fire, right? It would be stop, drop, and roll. So for my clients that are inheriting money, one of the things I emphasize is we're going to stop, consult, commit. So we want to stop in our tracks, evaluate everything that's realistically expected and then for the unexpected. And that's all done through the process of the consultation. And then we want to stop in our tracks, evaluate everything that's realistically expected and then for the unexpected. And then we're, we commit to a plan. And that plan is the best tool we have to efficiently get us to the end objective. That reminds me of the old saying ready, aim, fire. Most of the time, people in many areas of

life are just like fire, fire, fire. They don't get ready. They don't aim. They just want to go. And that's what you just described with that scenario of the person that bought the boat. You know, they got money and then boom, I just went out and did this. It takes some time to make your plan, see how it sets with you. Talk to people, and I like your, your acronym there as well. What are some common mistakes that people make with inherited wealth? Going back to what we touched about just a few moments ago, they'll make an expenditure that they probably shouldn't be doing right now. Another one is that they're cashing in investments and dealing with significant tax ramifications because they thought that was the best thing to do

was to convert it from whatever investment philosophy was. And they might have done that because their risk was different than their parents. They might be more conservative or maybe their parents were more conservative or whomever they inherited the funds from may have had a different investment philosophy. So their thoughts are, let me just cash this in and reposition these assets to the way I like to invest. But that might not be the best solution because if you're going to lose 25, 35, 37 percent of the money, because of what you're doing or what your current income is and how those tax ramifications are going to be blended in the set of circumstances that have arisen, it's not going to be

the best plan of action. So we want to review what those tax ramifications would be and how the best foot forward would be based on that information we have at hand. I would also suspect that if someone is working with a financial professional like yourself and you put together their retirement plan with a good income plan and safety and security. And then here comes inherited money. Maybe that inherited money can just fold right into what you have already put into place for your personal financial retirement plan, factoring in the best tax approach and all of those. It's almost like, don't go out and like you hear the people that hit the lottery and they, just blow it all. Just follow the process that you're already on with your personal retirement plan. Maybe you have a little bit of extra for vacation, but now we're going to put the rest right into our

retirement plan to help maybe fill in some of the gaps that we weren't able to meet anyway. Yeah, a great point. And you bringing up lotteries is a very relevant factor because if you look at the majority of people that have lottery winnings, I don't recall the statistics, but I know it's a high percentage end up being worse so off than they were before they're spending at such a high rate. Just because you've gotten a wind full of assets doesn't mean you can just go out, continue spending and going on elaborate vacations every other month versus doing some planning and realizing how much you can have to make sure that you can accomplish your goals, but they don't know what they all have to be achieved in one year, right?

For most people. impulse and emotion are some of those drivers we've been talking about you know you've got the emotion of you know this family member or personal family friend that died that is now the inherited money is coming from you're dealing with that loss then well i don't want to make unwise use of that money because you might trigger other consequences so let me get with someone that can guide me in that decision making process the same way you need to get with someone that can guide you in making a good retirement plan, you should not go out and Google best ways to use my inheritance money. Who knows what you're going to find?

And one thing you may want to consider is that the person leaving the inheritance may have had a particular objective for that money. It's not common in my industry where I see, you know, where the father wanted the monies to be lasting for the financial security of one of their children, taking that into consideration, whether it be a special need situation or a child that has a spendthrift. issue or just in general just to make sure that the child might not have been saved enough to accomplish their retirement goals. We want to honor that parent and we want to make sure that not only is the inheritance

being put to good use, but it's also honoring the memory of the individual that left that inheritance. You know, that's a really big point and it made me think about something. I always like looking at the opposite. So let's contrast that with if you. are planning your retirement and you're planning your legacy and passing your funds to your family, you might want to make sure that the money your family inherits from you. If you have certain needs or plans that you want some money to go to, you might want to make sure that those wishes

are written down in wills or whatever the case is. So I agree with your statement 100%. Think about yourself. When you are passing along your legacy to your family, would you want to guide you? some of that so that they're putting your wishes into use after you're gone. Absolutely. And there's particular investment vehicles that can be utilized to accomplish those goals. Life insurance is one, annuities or another, where you can structure those investments for the ability of lifetime transfer of wealth, lifetime income streams, or tax-exempt

distribution of wealth. Many different strategies that can be utilized from that, as well as from the possibly a managed account that has a step up and cost and basis. All of those collectively can assist in the transfer of wealth and making sure that all the objectives of what you're looking to accomplish as far as gifting or allowing that inheritance to transfer to your loved ones, that becomes an important factor on how we're going to come to that's final solution for if and when. Well, I'm sure it's going to be when, not if, but when, that will take place.

You know, I think that so many people think I need to get to retirement at the age of X. And then they don't think about, well, I might live to whatever age, so I need my money to last. Some people might want to go, you know what, I want to get to retirement, I want to enjoy my retirement. I want to have enough money to do what I want, when I want. And then when I actually do expire at whatever the ages, I want to have so much money left over that I'm leaving that legacy for my family, It becomes the ultimate gift, but then to put the cherry on top is what you just said, which is when that money passes to your errors, let it pass in the most efficient possible way. Take on the front end, make sure that you put some things into place that your wishes are taken care of. Or maybe you make it as tax efficient as possible for your family so that they're not hit with some taxes.

if you can set that up beforehand, you then can rest easy and know that you've got some wonderful plans in place and that is such a gift to your family to have that legacy pass on to them in the best possible way. Absolutely. One of the things that I emphasize when sitting with clients is the whole reason you're in retirement is because you want slew sailing. If you can't put your head on the pillow at night and sleep restful, then you're in the wrong plan. Yes. That's what it's all, You're not just selling insurance. You're selling sleep insurance. We want you to sleep well at night.

We want the knots at your stomach to go away. We want you to know that you've made a great plan. We're checking it every year. You've got protection. And when everything goes as scheduled, then you're going to pass it on to the family and the best possible way. I think that is spectacular. Well, Brian, that's some great tips on inherited money. What's the best way that someone can reach out and connect with you if they have some questions about that?

If they want to speak with me personally, can call the office at 954-366-1649, or they can read a little bit about me and my company, and you can go to BESfinancial.com. There's some videos on there that you can go look through and get to know a little bit about who we are and how we can assist you. Excellent. Well, Brian, thank you so much for coming back on. It's been a real pleasure talking with you. Thank you. The views expressed are not necessarily the opinion of the interview guest and should not be construed directly or indirectly as an offer to buy or sell any securities or services mentioned herein. Investing is subject to risks, including loss of principal invested. Past

performance is not a guarantee of future results. No strategy can assure a profit nor protect against loss. Please note that individual situations can vary. Therefore, the information should only be relied upon when coordinated with individual professional advice. Securities and investment advisory services offered through Osayek Wealth, Inc., member of FINRA, and SIPC, Osaceaic Wealth is separately owned in other entities, and marketing names, products, or services referenced here are independent of Osceic Wealth. You've been listening to Influential Entrepreneurs with Mike Saunders. To learn more about the resources mentioned on today's show or listen to past episodes,

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