Funding a Real Estate Opportunity

Summary

Funding a Real Estate Opportunity: In-Depth Analysis and Strategic Guidance

In the March 26, 2025 episode of "Jill on Money with Jill Schlesinger", hosted by Audacy, Jill Schlesinger, CFP®, and co-host Mark delve into the complexities of funding a real estate opportunity faced by a couple from Idaho, Lisa and Jason. This episode provides a comprehensive look into partnership buyouts, asset management, and strategic financial planning, offering valuable insights for listeners navigating similar financial landscapes.

Introducing the Challenge

The episode kicks off with introducing Lisa and Jason, a couple from Idaho seeking advice on a pressing financial matter. Lisa recently became a partner in her company, a position that was granted without an initial monetary investment. However, the sudden retirement of one of the three partners has necessitated Lisa and Jason to buy out the retiring partner's share, particularly concerning the company's real estate holdings.

Key Quote:

Mark (03:32): "What can we do for you guys?"

Understanding the Partnership Dynamics

Lisa explains that while the business operations side of the partnership has been managed without additional financial input, the real estate portion—which includes the building they co-own—now requires significant financial maneuvering. The building is valued at approximately $611,000, owned jointly by the three partners, with no outstanding mortgage.

Key Quote:

Lisa (06:25): "The building is worth $611,000."

Financial Overview and Obligations

Mark probes deeper into Lisa and Jason's financial situation, uncovering that buying out the retiring partner's share would require Lisa to contribute over $250,000. This figure emerges from the need to cover both their fair share of the building's value and additional obligations. The couple considers selling the land under the building or potentially relocating the business if the buyout isn't feasible.

Key Quote:

Mark (07:01): "So you guys have to come up with $200,000 to buy out this guy and eat $100 each because I'm..."

Income, Expenses, and Savings

Lisa and Jason present a robust financial profile with a combined household income of $200,000, comprising both salaries and distributions. Their monthly expenses stand at around $8,500, allowing them to save and invest a substantial portion of their income. They have diversified their savings across traditional and Roth 401(k)s, SEP IRAs, and taxable brokerage accounts, indicating a strategic approach to retirement and investment planning.

Key Quote:

Jason (10:28): "We cleared $200,000 between the two of us last year."

Asset Portfolio and Liabilities

The couple owns a $950,000 house with a low-interest mortgage of $190,000 on a 15-year term at 1.99%—a favorable rate that minimizes interest payments over time. Additionally, they hold significant assets in high-yield savings accounts, taxable brokerages, inherited IRAs, and annuities. Their investment strategy includes both passive and active investment vehicles, with a careful balance between growth and liquidity.

Key Quote:

Mark (13:10): "Yowza. And do you have a mortgage that's outstanding?"

Inherited IRAs and Annuities: Navigating Tax Implications

A critical aspect of their financial situation involves inherited IRAs and annuities totaling approximately $285,000. These assets are subject to a five-year distribution rule, compelling Lisa and Jason to strategize withdrawals to minimize tax liabilities. This scenario underscores the importance of proactive financial planning to adhere to tax regulations while meeting immediate financial obligations.

Key Quote:

Jason (14:16): "We've got one IRA that's about $140,000. And we've got two annuities."

Strategic Financial Recommendations

Mark provides a comprehensive strategy to address the buyout while managing their inherited assets. He emphasizes the importance of consolidating their financial accounts for easier management and recommends tapping into their annuities and high-yield savings to fund the buyout. Mark advises pulling funds from the annuities within the five-year window to avoid higher tax burdens and suggests reallocating these funds into more efficient investment vehicles like brokerage accounts and 529 plans for their children's education.

Key Quote:

Mark (18:22): "We have to get rid of that... to pay him, we need to clear $125,000 from the annuity and your high-yield checking."

Consolidation and Simplification

A significant portion of Mark's advice revolves around financial consolidation. By moving all taxable brokerage accounts into a single platform, such as Vanguard, Lisa and Jason can streamline their investments, reduce complexity, and enhance their ability to manage and monitor their assets effectively. This consolidation also facilitates better strategic planning and investment diversification.

Key Quote:

Mark (23:08): "Move the Robinhood account into the joint brokerage account. Just move it into one account."

Tax Efficiency and Future Planning

Mark underscores the necessity of maintaining tax efficiency, especially concerning the inherited IRAs and annuities. By strategically withdrawing funds in a manner that keeps them within favorable tax brackets, Lisa and Jason can mitigate potential tax spikes and ensure they remain compliant with IRS regulations. Additionally, he touches upon estate planning, highlighting the importance of wills and trusts in safeguarding their financial legacy.

Key Quote:

Mark (19:48): "We're going to have to take the money out and you have to pay the tax on it. So that's the priority right now."

Addressing Emotional and Relational Aspects

Beyond the numbers, Mark acknowledges the emotional strain of buying out a partner, especially when the relationship is familial. He advises maintaining professionalism and minimizing personal conflicts to ensure a smooth transition. By fostering clear communication and setting defined financial boundaries, Lisa and Jason can navigate the buyout process with reduced stress and enhanced clarity.

Key Quote:

Mark (17:29): "How do you want this to just go away with your now former partner?"

Future Investment and Asset Management

Looking ahead, Mark encourages Lisa and Jason to leverage their existing assets to fuel future investments. This includes potentially investing in the real estate parcel their office occupies, thereby expanding their investment portfolio. He also advises maintaining a balanced approach to their asset allocation, ensuring liquidity is preserved to cover unforeseen expenses or future investment opportunities.

Key Quote:

Mark (25:16): "Any money that grows in those annuities is growing and you have to pull it out and pay."

Final Recommendations and Takeaways

In wrapping up, Mark emphasizes the importance of having a cohesive financial strategy and the benefits of working with a dedicated financial advisor. He advocates for eliminating unnecessary financial products, such as additional insurance policies or redundant investment vehicles, to streamline their financial portfolio. By adhering to these recommendations, Lisa and Jason can achieve financial stability, effectively manage their buyout, and position themselves for future growth.

Key Quote:

Mark (27:35): "You got plenty of money. It's just a question of managing this and this process."

Conclusion: Empowering Financial Decisions

This episode of "Jill on Money with Jill Schlesinger" serves as a valuable resource for individuals facing complex financial decisions within partnerships and real estate investments. Through Lisa and Jason's case study, listeners gain practical insights into managing buyouts, optimizing asset portfolios, and strategizing for tax efficiency. The episode underscores the significance of proactive financial planning, consolidation of assets, and strategic withdrawals to navigate financial challenges successfully.

Notable Closing Quote:

Mark (29:45): "I can't emphasize enough that when you have all of these things floating around in one story, it's really good to have a quarterback of your financial life with whom you can work."

For more detailed guidance and personalized financial strategies, listeners are encouraged to visit jillonmoney.com and explore the wealth of resources available.

Transcript

[Jill Schlesinger]

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[Mark]

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[Jill Schlesinger]

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[Mark]

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[Jill Schlesinger]

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[Mark]

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[Jill Schlesinger]

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[Mark]

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[Jill Schlesinger]

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[Mark]

Make Whole Foods Market your destination for all spring gatherings. Welcome to the Jill on Money Show. It's Wednesday, March 26th and we are here answering financial questions, trying to give you a little bit of support and guidance, especially as the world seems very uncertain right now. So if you've got something bubbling up in your life, in your financial life, in your real life, anything that touches money, get in touch with us. Go to jillonmoney.com, click the contact us button and let us know if you would like to join us live by checking the box that's what Mark makes available to you. He chases people down. Now, he also just told me that we must start doing some more email episodes because the questions are piling up. So the shy people out there, if you just want to send us that email, that's fin. We're going to start doing more of those. I just love talking to everybody live. It's so much fun for me. But yes, we are going to get to many emails. Hey, while you're on the website, sign up for the free weekly newsletter. And don't forget that we've got a lot of content that lives on the website. It changes all the time. Mark does a great job making it very lively. So check that out. Okay, let's get to you. We are talking to a couple, Lisa and Jason. They're on the line from Idaho. Hello, you two. How are you?

[Lisa]

Oh, we're doing well. Good morning.

[Mark]

Good morning. Oh, of course. What can we do for you guys?

[Lisa]

We need some advice. I'm at a point in my professional career where I have become a partner with my company, but one of my partners, there are three of us, is retiring and I need to buy out his portion.

[Mark]

Wait, wait, wait, wait, wait. Stand by. So you are an equity partner. You had. Did you have to put money up to become a partner?

[Lisa]

I. I did not, actually. It was something that, where it was gifted, it was earned.

[Mark]

Oh, I love that. Okay, so right now there are three partners, including you, or there's four of you?

[Lisa]

There's three, including me.

[Jill Schlesinger]

Okay.

[Mark]

And one is retiring and the two remainers have to buy out number one. Yes, correct.

[Lisa]

And the company is kind of twofold where the business side, I have already paid. I've already paid that portion of it. But there's a real estate side where we own. We own the building.

[Mark]

And so dude wants to off. Off the note. He wants. He's like, take me out of the building. Okay. Take me out. Wait a second. Wait a second. Standby for one second. How old are you, Lisa?

[Lisa]

47. I had to think about that.

[Jill Schlesinger]

I love it.

[Mark]

Jason, how old are you?

[Jason]

I'm 49.

[Mark]

Lisa, you have been with this partnership as an employee for how many years? And then how long has it been since you've been a partner?

[Lisa]

I've been part of the company for 22 years.

[Mark]

Ooh. Okay. So you feel confident, you understand the business. You feel confident about the business, which is why this is all good for you, right?

[Lisa]

Yes.

[Mark]

Jason, are you working also?

[Jason]

I am, yes.

[Mark]

And kids or no kids?

[Lisa]

2 kids.

[Mark]

How old?

[Lisa]

11 and 13.

[Mark]

You have a hard time with the ages, don't you, Lisa?

[Lisa]

I do.

[Mark]

She had to do the math. I heard it. I heard the calculation. It's great. Okay, so how did you pay for the business side of the partnership? Did you just take, like, any distribution and put it towards buying the partner out?

[Lisa]

Correct.

[Mark]

Okay, and so what was the total amount paid for that? So what is the value of the partner, the business side of the partnership?

[Lisa]

Oh, my goodness sakes. It was hundreds of thousands.

[Mark]

Many, many hundreds. Oh, thousands. Okay.

[Jill Schlesinger]

All right.

[Mark]

So the building, Are you guys the only occupants of the building or is there other income associated with it?

[Lisa]

We have some other small tenants in there as well, too. It's like a business incubator for them.

[Mark]

Okay.

[Lisa]

Yeah. It's not like a high yield giant building. It's a small building and a small company.

[Mark]

Okay, I got it. The company rents the space from the partnership which owns the building. Is that right?

[Lisa]

Yes.

[Mark]

Okay, now, are there just two people who own the building and are on the mortgage?

[Lisa]

There's the three of us.

[Mark]

Oh, so you're. So you are on the lease.

[Lisa]

Correct.

[Mark]

How much is the building worth?

[Lisa]

The building is worth 611. 611,000.

[Mark]

How about if I call it 610? You know, I don't like those extra thousands. Is there a mortgage outstanding?

[Lisa]

No, we paid cash.

[Mark]

So you guys have to come up with 200 grand to buy out this guy and eat 100 each because I'm.

[Lisa]

A minority partner in that portion of it. I. I owe a little over $250,000.

[Mark]

Wait, what?

[Lisa]

Like to buy. To buy them out?

[Mark]

I don't understand. The building is worth 600? Don't you each, you each. You own what percent right now? 20%. Like, what's your percentage ownership? Right.

[Lisa]

That's the, that's the tricky part. I only own 8%.

[Mark]

When you joined as a partner, were you made aware of this, that you were going to have to pay out this guy?

[Lisa]

No. No.

[Mark]

So this is not in your partnership agreement. Like, hey, by the way, you're on the hook to buy me out, right?

[Lisa]

Right.

[Mark]

I'm going hard on this, Mark. Wait till you see me go like all full on Sicilian about this right now. Because I'm protective of my Lisa, because that's a lot of money.

[Lisa]

It is. It has been. Yes.

[Mark]

You and your remaining partner. Can you, can you give us an idea? Like, what is your relationship like?

[Lisa]

More like family.

[Mark]

Okay. And the guy who's retiring, also like family?

[Lisa]

Yes.

[Mark]

Doesn't seem like a very familiar relationship right now. Okay, what happens if you don't buy him out?

[Lisa]

We would have to relocate the business. We would probably have to sell.

[Mark]

Why? What is the. What is the other way. You own 8%, your current. Let's call it. Can you just give me, like, make up a name for the current partner, the person who you're going to own the business with?

[Lisa]

William.

[Mark]

William owns what percentage of the building?

[Lisa]

46.

[Mark]

Oh, you know what's funny? I add 46 and 8 and I get more than 50%. Okay, see, why do you have to move the business? In other words, is this dude who's retiring holding a gun to your head saying, I want out, or is he saying, like, I'd really like to be bought out?

[Lisa]

It's a. Yeah, I would say it's probably a little more forceful where he. He needs. He's had some issues, and he needs. He needs to be bought out. And so we did. We were able to buy the portion of the business side of it. But the real estate. The real estate is something where the business will still be okay. We could sell the land under it and just everyone takes their portion of it, but.

[Mark]

Or you could do nothing. That's. Lisa, is this something that you. That you really want to. Do. You really want to pursue this? This is what you want, or you feel like you're being forced into it?

[Lisa]

It's something that is good real estate. Where we. Where we are is a good investment. And so I'm. I'm not. I'm not upset about it. It's just the timing of it is abrupt. And so I feel like I. I just only have a short window of time to come up with a large amount of money.

[Mark]

All right, let's talk about what else is going on. And then.

[Lisa]

So I'm open to it.

[Mark]

Okay.

[Lisa]

I'm seeing that as an opportunity.

[Mark]

Right. Okay, I get that. And, you know, I understand all of this. Are you and William similar age? Like, is. Is William also in the 40s, or is William older than you?

[Lisa]

He's. He's about 10 years older than I.

[Mark]

Okay, so 50s, and then retiree Scrooge McTirey. What's. How old is he?

[Lisa]

69, maybe 60.

[Mark]

Okay, so he's much older. I get it now. Okay, let's see how. If you. Since you would like to do it, let's talk about how we can make this better for you guys. So, Lisa, how much do you earn.

[Lisa]

Right now between the two of us, as our household income?

[Jason]

Yeah, we. Last year we cleared 200,000 between the two of us.

[Mark]

So that included the distributions you had as well, which really made up your capital contributions. Or is that 200,000 of just like. That's our, you know, week to week payroll.

[Jason]

That's distributions as well.

[Mark]

200 all.

[Jason]

Yeah. Obviously the distributions will increase now that Lisa owns more of a percentage. She owns 50% of the. Before, she only owned 10, 20.

[Mark]

Okay, great. How's your cash flow on that? 200,000 a year with your two kitties?

[Jason]

Right now our expenses are about 8,500amonth. So we're pushing. Yeah, 100,000. So we're able to. We're able to save and invest a lot of that.

[Mark]

So how have you saved and invested? Let's start with retirement. How have you saved for retirement so far?

[Jason]

So we've got a few retirement accounts through Edward Jones. We've got, both of us have traditional 401ks as well as Roth that we, that we max out as well as we put in money into a joint account, a taxable brokerage account, about $750 a month into there, and we've got over 125,000 into that.

[Mark]

And in the 401ks, what's the value?

[Jason]

Our 401k value for Lisa's Roth is 48,000. My Roth is 75,000. Lisa's. She's got a SEP IRA of 26,000 that just got started two years ago. She's got that traditional of 48.

[Mark]

48 in. Wait, are you saying in the Roth. Because you said our Roths. You said Lisa, 48. You were 75. Those are Roths or those. Okay, and then the traditional is you got 26 in the SEP. And then do you use a traditional retirement account as well, Jason?

[Jason]

I do. I put. I put money into a 401k at work, and that's got 78,000 in it.

[Mark]

Okay, so 78. You have a pension. What's the pension amount?

[Jason]

What will that be at retirement age? It'll be 2,800amonth.

[Mark]

That's nice. Okay.

[Jason]

And that's in 10 years.

[Mark]

Okay, great. What about the kids? Are you saving for college?

[Jason]

We are. We have 529s for both of them that are, give or take, $50,000 apiece.

[Mark]

And are you putting money into those accounts on an ongoing basis?

[Jason]

We put in lump sums every now and then.

[Mark]

What else do I need to know?

[Jill Schlesinger]

How about your house?

[Mark]

What's your house worth?

[Jason]

Our house is worth about $950,000.

[Mark]

Yowza. And do you have a mortgage that's outstanding?

[Jason]

We do. Our mortgage is about 190. And the interest rate, it's 1.99.

[Mark]

Oh, gosh. Stay there forever on a 15.

[Jason]

It's on a 15 year mortgage.

[Mark]

That's okay. I, I forgive you. What about money in the bank?

[Jason]

Okay, we've got, we've got a high yield savings account at cap one for about 180,000.

[Mark]

Wow. Okay.

[Jason]

Checking account with 15,000 in it. We've got various taxable brokerages. I've got a robinhood account with 70,000.

[Mark]

Oh, what's in there?

[Jason]

A mixture of ETFs, VOOs in there? I've got some.

[Mark]

Is that different than your debt? So that's. That 70,000 is different than that joint brokerage account with 125,000, right?

[Jason]

That's correct. We've also got a couple inherited IRAs that were pulling money out of every year.

[Mark]

Okay, how much are the inherited IRAs worth?

[Jason]

We've got one IRA that's about 140,000. And we've got two annuities.

[Mark]

Are they annuitized or are they just as a cash value? In other words, are you getting money every month or are they just a lump sum that's in there?

[Jason]

Yeah, there's a lump sum. We haven't had any disbursements. We inherited those about five years ago.

[Mark]

So you're not subject to the 10 year rule for those or you are?

[Lisa]

I believe we are.

[Jason]

I believe we are. Yeah.

[Mark]

Okay. Okay.

[Jason]

We just haven't done anything with them.

[Mark]

So we have five years to go though. The clock is ticking on that.

[Jason]

Yes. So that was another question that we had for you is what should we do with those two annuities? One has 270,000 in it and the other one has 145.

[Mark]

All right, so we have money and the inherited IRAs. That has 100, 140. Same timeframe, like five years to go to get the money out or those. Have you been taking money out of those?

[Jason]

We've been taking money out, but it's been growing. So it stayed about the, the balance has stayed the same.

[Mark]

Okay. Is there any reason to believe that this year, this 2025, that what your income is going to be for this year? In other words, Lisa, do you think now at this point you're going to start making more and more and more money every year?

[Lisa]

That's, that's the goal. That's the goal.

[Mark]

Yeah.

[Lisa]

It's a, it's a market driven. So, you know, obviously we'll, we'll, we'll see. But.

[Mark]

Okay. Any other Assets we should know about. Any rental properties? Little cabin by the something or other that. By the ski slopes in Idaho.

[Jason]

We've got a couple bare land properties that are total value of about 500,000. And then we've got a little rental that we have about a hundred thousand dollar stake in that we. We partner with another.

[Mark]

The land. Is it earmarked for something specifically? No, you just bought it like a while ago. And your cost basis is really low.

[Lisa]

A very long time ago.

[Jason]

We cut it about 20 years.

[Lisa]

Yeah, right out of. Yeah, right out of college.

[Mark]

What's the cost basis on that bare land?

[Lisa]

Oh, just honestly, something like $35,000.

[Mark]

Stop it.

[Lisa]

Yes, that's why we are not selling that right now.

[Mark]

Don't worry.

[Lisa]

No, no, no. And it's, it's worth what, 350?

[Mark]

He just said 500.

[Jason]

Well, we've got two. Sorry.

[Mark]

Oh, gosh. Okay. 350 to 350. And then another one. You have two pieces of property. Yes. Okay, I got you. All right, so those are the, those are all the assets, Right?

[Jason]

We've got one. We've got a house in Oregon that we've inherited half of.

[Mark]

And is there anybody in that house?

[Jason]

No one's in the house. The house is paid off. And that's worth total about 550,000.

[Mark]

So what are we doing with that?

[Lisa]

We're. We're figuring out as siblings.

[Mark]

Oh, God. You got a lot of negotiations going on. Lisa.

[Lisa]

We're complicated right now, and that's why I know we value you understanding this and asking questions.

[Mark]

Okay. All right.

[Lisa]

So do I have. We have money. We just don't know.

[Mark]

Yeah, yeah, yeah. You've got plenty of money. Okay. How do you want this to just go away with your now former partner? Do you want to just make it go away? Because we can make it go away. You just tell me what you want to do. Do you feel like. Yes, I just want this to be done, well, twofold.

[Lisa]

I. I actually would like on the business real estate side for it to be a seed for me to. I want to invest into this parcel that my office is on.

[Mark]

Okay, that's fine. So you. That's a priority, right?

[Lisa]

It is.

[Mark]

The thing is, is the retiring partner. What's the time horizon like? Does this have to happen in one year? Like this year? It would be better for you if we could spread it out over two years, if that's possible. But if it's not, we can make it happen in one year. Like, how contentious do you want this to get?

[Lisa]

He would really like, for it to, he would like to walk away with a lump sum check in, in a, in a month, but in a month.

[Mark]

Okay.

[Lisa]

You know, like that. However, he said if I, if I need to spread it out, then that's fine, but I would owe him 5%.

[Mark]

Oh, my God, I almost said something so bad on this air that I have not said in a while. So, Mark, you can imagine what I was just thinking about. If that's the case. If he wants his money upfront, I think the best thing to do would be to do sort of a combination of taking some of the money out of the annuities. Okay. And some of the money out of your high yield checking. Because we know this annuity money has to come out within five years. Right. And what I think is important about that is both the annuity and the inherited ira. We've got five years to get it out, but it doesn't really seem like, you know, your tax situation is going to, you know, change too much. So what I'd like to be able to do is maybe I would take out money from like the hundred. These annuities. Did the person at Edward Jones sell those to your parents or whoever died?

[Jason]

They're not through Edward Jones, but yes.

[Mark]

So somebody, but somebody sold that to them, right?

[Jason]

Yes. They're a non qualified annuity.

[Mark]

Yeah. Okay, so what I would say is we have to get rid of that. We, to pull the money out within five years. So the, the easiest thing that I think to do would be to take enough money out of that annuity to keep you guys in the 24% bracket this year. So that would mean you said you may have 200,000. You guys, I presume you work with a, an accountant, is that corre.

[Lisa]

Correct?

[Mark]

Good. You're going to talk to the accountant about this after this tax season is over. You're going to say to them, look, we need to free up. We know we have to pull money out of the IRAs and the annuities, which we inherited, which is a lot of money, by the way, and we only have five years to get it out. And chances are your tax situation is going to be at least as bad, if not worse, going forward. You're going to keep making more money. So if this year you're going to make $200,000, we're going to try to pull out from the annuity this year. That $145,000 annuity that's still outstanding. I might cash that in, distribute it to you guys. That's 145 of the money you need now that's going to add to your tax liability. I get it. But that 145, plus whatever you need from the high yield checking is the check that you hand over to your retiring partner. We need to get this done. That's how I would handle it. The person that you are working with at Edward Jones, do you like this person? Do you not like this person? You have to be honest with me.

[Jason]

Well, we do like the person. It's a small town, but yeah, we, we didn't start with him until we, until we inherited all of this IRAs and the.

[Mark]

There's a lot of cleanup to be done in your financial lives. Sounds like you work really hard, you've got busy lives, you got kids. There needs to be an overriding strategy and I think the strategy needs to be we have a five year clock that is ticking on a bunch of money. Let's make that a priority. That we're going to take that money out every year for the next five years. We're going to spread it out and start taking the money out. Like the person who is helping you with this, we should have been taking money out for the past five years while you were still making less money. You know what I mean? Because then you're in a lower bracket. We are where we are. So we want to take out enough money to keep you in the 24% bracket for as long as possible. If you have a bonanza year, you're not going to be able to do it. You're going to have to just take the money out. But you have to take it out and you have to pay the tax on it. So that's the priority right now. So I think for today we know that if you take, you know, 145 out now and what's a state income tax in Idaho? Is there one?

[Jason]

Yeah, there's an income tax.

[Mark]

You know, if you can. Let's just say that out of the 145, you can clear 125. Take 125 out of your high yield checking account. And theirs is 250. Goodbye. Bye. Don't invite him to Christmas. Okay. Done with this dude. And then next year we need to continue to take money out of the annuity and the inherited IRAs. I would focus on the annuities first. Those are expensive, complicated products. You don't need them. Okay. Not good for you guys. Any money that grows in those annuities is growing and you have to pull it out and pay. You don't get capital gains treatment. It's ordinary income. So every time that grows, it's bad for you guys.

[Jason]

So every year when we do pull that money out of those annuities, every year after this, where do you recommend we put that?

[Mark]

So next. Very good. So next step, we got to clean up your stuff. You got too much stuff floating all over the place. So that Robinhood account and the joint brokerage, pick one place to do some business, have one joint account and hold all the assets that are taxable account. Pick a place. I'm happy if you pick Fidelity because it sounds like that's all you need. Or Vanguard or we have a Vanguard. So I would consolidate everything in Vanguard. Okay, so the joint brokerage, is that where the brokerage is held now?

[Jason]

Yes.

[Mark]

Okay, perfect. Move the Robinhood account into the joint brokerage account. Just move it into one account. Any other accounts you have, just try to consolidate in one place to take to manage it more effectively. Okay. So now as the money comes out of those annuities, as the money comes out of the inherited IRAs goes into your joint brokerage and you can fund your 529 because you don't, I mean, your kids are old already. 11 and 13, Lisa. They're 11 and 13, you know, so we got to put money into these accounts. So the money that comes out, let's just say that next year we, let's say we take out 145this year. Let's say next year you can take out 150,000 from the annuity. You pay the tax that's due, whatever's left. You got to put a chunk of money in these 529 accounts. You have to actually fund them and you have plenty of money to pay. But I would do brokerage, like essentially for every dollar that comes out, I would probably say you should put 50% in the brokerage account and then 25, 25 on the 529 accounts. Meaning if you pulled a, if you had 100,000 net, 50 grand in the brokerage, 25 grand into each of the 529 accounts. Okay, how's that sound?

[Lisa]

Sounds amazing.

[Mark]

Oh my God. She's feeling relief. Relief. Okay.

[Jason]

I wanted to say we, we do like our financial advisor, but we value your guys opinions and we love the show and we wanted to come on so we wanted a second opinion. So.

[Mark]

All right, so I'm, I'm not throwing the dude under the bus. I'm really not. I'm just saying that I just want consolidation more than anything else because it's much easier for you to manage your lives in one organization. It just, that's the way it goes. And we're gonna get rid of these inherited IRAs. We're gonna get rid of your annuities again. We have five years to do it. It's all very good, by the way. You have this, you know, just in terms of like where you guys are. You'll have this money coming out, you'll have a con. Continue to contribute to the brokerage account, you'll continue to contribute to the 529s. Those are like your priorities, right? You'll own your building, you'll own the business building. Then I think the next area of maybe focus should be, well, we have our house, we love our house, we're staying in our house. I think the next question is like, what are you doing with these two pieces of property? Is there some reason to sell or not sell? I'm not going to really focus on the partnership, on the rental property because it sounds like you're in it with someone else. But I think you've got three assets that are worth over together worth a million dollars, two pieces of land and that house in Oregon. And so at some point we know that you have, you know, this million dollars that is available, but it's unavailable to you if it's sitting there uninvested and not doing anything. So it may be that you say to yourselves, hey, you know what we're going to do? You know, one year we're going to sell one piece of the bare land. One year we're going to try to do like you shouldn't do it all at once because you're just going to get hammered tax wise. So maybe in the next, like after you get the money out of these inherited IRAs and the annuities and the inherited annuities, you start thinking about, what do we do next? You need to get a little bit more liquid. From a liquidity standpoint, it's pay us first, pay the kids second. Us first, kids second. Because remember, we're using this annuity money. We're buying a piece of property. So that adds to your illiquid investments. So then over time, I need you to sort of liquefy other stuff to make up for that because you're over indexed right now in real estate, right?

[Lisa]

Yes, yes.

[Mark]

Okay. But otherwise, I mean, you got a ton of money. It's just a question of managing this and this process. I can't emphasize enough that when you have all of these things floating around in one Story. It's really good to have a quarterback of your financial life with whom you can work. And if you're Edward Jones rep, is that person fantastic. But you guys should be having an overall game plan, which everyone's executing. You can't be expected to come up with a game plan and execute it. So maybe after this conversation, you see what the Ed Jones person thinks about this. He or she thinks, if you feel comfort, confident that they have your back and you want to keep working with them, fine. I'm just going to ask you one thing. I will be on bent knee and beg you, please do not purchase another insurance product from anybody. No annuity, no whole life, no nothing. Can you promise me that?

[Jason]

We promise.

[Mark]

Okay. Have you done your estate planning?

[Jason]

Yes, we have wills. We don't have a trust.

[Mark]

You don't need a trust yet. You don't need to trust yet. Not yet.

[Lisa]

Okay.

[Mark]

I mean, you could, but it's. It's fine. You know, this is. We have to a lot of things. Most of the stuff you have is going to pass by contract anyway. Make sure that your brokerage account, when you consolidate it at Vanguard, is a transfer on death account. But if it's a joint account, it just transfers between the two of you.

[Jason]

Okay.

[Mark]

You know, if one dies, it goes to the other. Okay. If you're like Lisa and Jason and there are some complicated weirdness going on in your family, in your business, in your life, hey, give us a holler. I like unpacking things. All you need to do is go to our website, jillonmoney.com, click the contact us button, and, of course, write us that note. Let us know if you would come on the air live with us. We love it when you come on live. Don't forget, you can sign up for the free weekly newsletter and you can subscribe to Jill on Money Live. That is a $45 charge for the next 12 months. You'll get access to quarterly live webinars, bonus audio and video content, and the entire, entire back catalog, including the recent Ed Slott webinar, a fan favorite. Okay. You can subscribe to us on the Odyssey app or wherever you find your favorite podcast. Also on the Odyssey app, you can subscribe to our sister program called Money Watch. So check that out. All right, Lift someone up. Change your work, change your wealth, change your life. Thanks for listening. We'll talk to you tomorrow.

[Jill Schlesinger]

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[Mark]

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