Help With the Big Picture

Summary

Podcast Summary: Jill on Money with Jill Schlesinger Episode: Help With the Big Picture
Release Date: March 10, 2025

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Introduction

In the episode titled "Help With the Big Picture," hosts Jill Schlesinger, CFP®, and Mark T. O'Connor delve into the complexities of managing significant financial changes, particularly focusing on inheritance and retirement planning. The episode features a compelling conversation with Elizabeth and John from Pennsylvania, who seek guidance on handling a substantial inherited IRA and optimizing their overall financial strategy in light of recent life events.

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Guest Introduction: Elizabeth and John

[04:10] Elizabeth and John join the show to discuss their current financial standing and the challenges they're facing after inheriting a significant IRA following Elizabeth's father's passing.

Elizabeth: "I inherited an IRA last year when my father passed away, and I'm a little on the fence about what to do with this. It needs to be dispersed over 10 years. I need you to look at all my numbers and help me figure out what to do with that." [04:18]

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Current Financial Overview

Elizabeth and John present a detailed snapshot of their financial situation:

• Income: Combined annual income of approximately $400,000. [05:08]
• Retirement Savings:
  • 401(k): $1.7 million
  • Traditional Roth IRA: Elizabeth has $62,000; her Roth IRA holds $361,000.
  • John's Traditional IRA: $736,000
  • John's Roth IRA: $114,000 [05:53]
• Non-Retirement Investments:
  • Vanguard S&P 500 Funds: $1.5 million
  • Energy Fund through Vanguard: $81,000
  • Real Estate Fund: $34,000
  • Bond Fund: $28,000
  • CD Maturing: $26,000 [06:37]
• Real Estate Holdings:
  • Elizabeth's House: Valued at $900,000 to $950,000, mortgage-free.
  • John's Property: Valued at approximately $175,000, also mortgage-free. [07:00]

Mark T. O'Connor: "You have such an incredible financial shape. It's important to let that sink in." [14:40]

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Inheritance Details

Elizabeth inherited both a Roth and a Traditional IRA totaling approximately $700,000 from her father. Additionally, she received $14 individual stocks valued at $558,000.

Elizabeth: "He was a very big [investor]. He liked to play in the stock market like I do. That's where I got this from." [10:23]

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Challenges and Concerns

• Health Scare: Elizabeth faced a significant health scare with a cancer diagnosis two years ago, prompting her to reconsider her retirement plans and financial priorities. [08:15]

• Investment Allocation: A heavy concentration in the S&P 500 fund raises concerns about overexposure to stocks, accounting for approximately 81% of their retirement portfolio. [07:31]

• Estate Planning: Ensuring that their wealth is managed effectively for their son's future is a key consideration. [26:23]

Mark T. O'Connor: "If you've gone through a health scare and you've been thinking about this, let's do it and let's... give yourself permission to do whatever you want to do." [25:41]

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Advice and Strategies Offered

1. Managing the Inherited IRA:

   • Dispersal Strategy: Utilize the 10-year window to systematically withdraw funds, minimizing tax impact by staying within favorable tax brackets.
   • Tax Considerations: Understand the stepped-up cost basis to potentially reduce capital gains taxes when selling inherited assets. [10:59]

2. Roth Conversions:

   • Gradual Conversion: Convert portions of their Traditional IRA and 401(k) into Roth accounts over time to manage taxable income effectively.
   • Tax Bracket Management: Aim to keep conversions within a manageable tax bracket to avoid excessive tax liabilities. [18:38]

3. Investment Diversification:

   • Rebalancing Portfolio: Reduce the heavy concentration in the S&P 500 fund by reallocating assets to create a more balanced investment portfolio.
   • Capital Gains Strategy: Consider selling appreciated assets to fund Roth conversions and manage tax obligations. [19:43]

4. Charitable Giving:

   • Donor-Advised Funds (DAFs): Establish a DAF to optimize charitable contributions, providing immediate tax benefits while retaining flexibility in giving. [21:10]
   • Scholarship Fund Integration: Enhance their existing scholarship fund through established charitable structures to maximize impact and tax efficiency. [22:48]

Mark T. O'Connor: "A donor advised fund is going to help you with a couple of different things... you get a tax deduction for 200 grand the day you do that." [21:16]

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Key Insights and Takeaways

• Holistic Financial Planning: Addressing both inherited wealth and existing assets requires a comprehensive strategy to ensure long-term financial stability and fulfillment of personal goals.

• Tax Efficiency: Strategic Roth conversions and charitable giving can significantly reduce tax liabilities and enhance the overall effectiveness of their financial plan.

• Emotional and Health Considerations: Personal health and life events can profoundly influence financial decisions, necessitating a flexible and responsive financial strategy.

• Professional Guidance: Collaborating with a trusted CPA and possibly a fiduciary financial planner is essential to navigate complex financial landscapes and optimize outcomes.

Elizabeth: "I kind of feel like if I had somebody trustworthy to maybe direct it, maybe I'd be happier." [25:24]

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Conclusion

Jill Schlesinger and Mark T. O'Connor provided Elizabeth and John with actionable advice tailored to their unique financial situation. Emphasizing the importance of strategic planning, tax management, and diversification, the hosts guided the couple through potential pathways to secure their financial future while honoring their philanthropic values. This episode underscores the significance of seeking professional guidance when navigating significant financial changes, ensuring that wealth management aligns with personal goals and life circumstances.

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Notable Quotes

• Elizabeth: "I inherited an IRA last year when my father passed away, and I'm a little on the fence about what to do with this." [04:18]

• Mark T. O'Connor: "You have such an incredible financial shape. Let it sink in." [14:40]

• Mark T. O'Connor: "If you've gone through a health scare and you've been thinking about this, let's do it and let's... give yourself permission to do whatever you want to do." [25:41]

• Mark T. O'Connor: "A donor advised fund is going to help you with a couple of different things... you get a tax deduction for 200 grand the day you do that." [21:16]

• Elizabeth: "I kind of feel like if I had somebody trustworthy to maybe direct it, maybe I'd be happier." [25:24]

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Final Thoughts

Elizabeth and John’s story is a testament to the complexities that come with managing substantial inheritance and preparing for retirement amid life’s unpredictabilities. The episode offers valuable lessons on proactive financial planning, the benefits of diversification, and the strategic use of charitable funds, providing listeners with insights applicable to their financial journeys.

Transcript

[Jill Schlesinger]

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[Mark T. O'Connor]

Sometimes I wish I had a personal sommelier to guide me through the world of wine, helping me discover bottles I'd never find on my own. And then I found Somsation, which might be even better. Psalmsation's expert team does exactly that. They seek out incredible wines from top independent producers that you won't find in stores. These aren't mass produced wines. They're made with care and precision, using pure ingredients and meticulous winemaking. Their sommeliers curate every bottle, ensuring you're not just drinking good wine, you're experiencing great wine. You can shop their online store, join a curated wine club, or take it up a notch with virtual or private tastings. Explore [e-mail] JillonMoney welcome to the Jill on Money Show. It's Monday, March 10th, and we are here trying to provide you with unconventional and entertaining insights on your money and also your life. And by the way, in that order. It's actually wrong. It's about your money because that Jill on Money. But it's about your life. And so when you're listening to this show, you might hear stories about other people's lives. They may seem really rich, they may seem really like, wow, how'd they get that much money? But the reality is everyone has a very interesting story to tell and whatever it is that's on your mind that you need a little guidance around. Mark and I are both certified financial planners and that means that we took some hard tests and for a long time, I was an actual practicing financial planner before I sold out to be the media person. You know what, Mark? I really would have sold out by just staying a financial planner. I would certainly be much richer than I am now. But I love this and I love my work and I love being able to answer your financial questions or your big life decisions. And if you want to get in touch with us, it's very easy to do. Mark has created this beautiful website called jillonmoney.com in the upper right hand corner, there's a contact us button. When you click it, a form will pop up. That is the form that turns into your email if you're shy, you don't want to come on the program. No biggie. Just give us a lot of information. If you would like to join us live, check the box. Mark will do everything else. While you're on the website, check out all of our content. It lives there, including our free weekly newsletter, links to my book, and also links to our other show called Money Watch, which we drop on Saturdays and Sundays. Don't forget that Money Watch show. I really want to try to get people who are kind of just starting off on their financial journeys. So if you know someone like that, tell them to get in touch with us. We'll put them on the Money Watch show. It'll be a lot of fun. Okay. Today we are talking to Elizabeth and John. They are on the line with us from Pennsylvania. Hello, Elizabeth and John. Who wants to go first? Let's go to Elizabeth first.

[Elizabeth]

Okay.

[Mark T. O'Connor]

How you doing?

[Elizabeth]

I'm doing great. Thanks for having us on.

[Mark T. O'Connor]

Of course. So what brings you to our airwaves?

[Elizabeth]

Well, I need someone to look at our big picture for where we're at right now. And I have some more specific questions as far as. I inherited an IRA last year when my father passed away, and I'm a little on the fence about what to do with this. It needs to be dispersed over 10 years. I understand that, but I need you to look at all my numbers and then try to help me figure out what to do with that.

[Mark T. O'Connor]

I mean, we're going to Vegas. That's what we're going to do with it. Stop with your.

[Jill Schlesinger]

You sound already nervous about it.

[Mark T. O'Connor]

And like, let's go have some fun for goodness. Okay. Let's do some basics. Elizabeth, how old are you?

[Elizabeth]

I'm 54.

[Mark T. O'Connor]

And John, how old are you?

[John]

55.

[Mark T. O'Connor]

Okay. Are you guys both working full time?

[Elizabeth]

Yes.

[Mark T. O'Connor]

Okay. How much do you guys earn together?

[Elizabeth]

About 400,000 a year.

[Mark T. O'Connor]

That's awesome. That's great. And do you have kids?

[Elizabeth]

Yes, one son. First year of college. We have him totally funded with 529. No problems there.

[Mark T. O'Connor]

Okay, how are you guys saving for retirement right now? Not forgetting about the inherited ira. What. What do you guys have?

[Elizabeth]

So we have quite a bit.

[Mark T. O'Connor]

I love quite a bit. It's my favorite amount.

[Elizabeth]

Together in a 401k, we have 1.7 million. We have. I have a traditional Roth that only has about 62,000.

[Mark T. O'Connor]

Hold it, hold it. You use two words together. Traditional Roth. You mean a Roth IRA.

[Elizabeth]

Traditional IRA.

[Mark T. O'Connor]

Okay. Traditional IRA. And that has how much? 60 something.

[Elizabeth]

62,000.

[Mark T. O'Connor]

Okay.

[Elizabeth]

And my Roth has 361,000 in it.

[Mark T. O'Connor]

Okay. John has $736,000 in his traditional IRA. And how much in his Roth?

[Elizabeth]

114,000.

[Mark T. O'Connor]

Awesome. That's a lot of money you guys have saved up. What about non retirement?

[Elizabeth]

Okay, so we have a Vanguard S and P funds, and that's 1.5 million.

[Mark T. O'Connor]

Whoa, whoa, whoa. You just have a million and a half bucks in that one fund?

[Elizabeth]

You got it?

[John]

Yes.

[Mark T. O'Connor]

Yeah, baby. Roll those dice. Okay. Sorry.

[Elizabeth]

Yeah. This is another one of my questions at the end.

[Mark T. O'Connor]

Okay.

[Elizabeth]

We also have an energy fund through Vanguard that's at 81,000.

[Mark T. O'Connor]

That's an odd thing to have, but okay.

[Elizabeth]

I like to play around.

[Mark T. O'Connor]

All right, you play. You play a hands. Hey, Mark, you see we're going to Vegas. Stay tuned.

[Elizabeth]

No, we're not. Okay, we have a real estate fund that's at 34,000. And I have a little bond fund which we just started last year because I'm worried about how much I have in stocks. My bond fund is 28,000 only.

[Mark T. O'Connor]

But everything's at Vanguard one big account. Yes.

[Elizabeth]

All of that. Yes. Got it. Yes. And we also have a CD that matured that I didn't do anything with yet. That's $26,000.

[Mark T. O'Connor]

Okay, and in your 1.7 million 401k and those traditional IRAs, are you equally as aggressive in those funds or do you have a bigger. Like a more balanced approach?

[Elizabeth]

Equally aggressive.

[Mark T. O'Connor]

Like, basically, if I looked at this two and a half million bucks, I'd be like, holy smokes. Of the two and a half million, like, 90% is in stock bucks.

[Elizabeth]

80%. I just looked at it. I figured it out. 81%, exactly.

[Mark T. O'Connor]

Okay. Got it. So this is a lot of money. How about a house? You have a house?

[Elizabeth]

Yep.

[John]

Yes.

[Elizabeth]

What's it worth?

[John]

It's probably worth about 900 to 950.

[Mark T. O'Connor]

Is there a mortgage outstanding?

[John]

No, no, not for her, at least.

[Mark T. O'Connor]

I had a feeling. Mark's giggling I asked that question. I know, it's so silly. I should have said. And I presume there's no mortgage outstanding. Okay, so kids taken care of, House is good, A bunch of money saved. You're in your 50s. Are you thinking about retirement at this point or not?

[Elizabeth]

I'm a little torn. So, yes, I am. And so we had a pretty big health scare two years ago with cancer. And it kind of reset my whole attitude with, where am I going? You know, everything is different now, and I want to make it to retirement.

[Mark T. O'Connor]

So.

[Elizabeth]

So I have been thinking about earlier retirement than initially I thought.

[Mark T. O'Connor]

So, Elizabeth and John, obviously you've got a ton of money saved up. Do you have a sense of how much you are spending and how much you'd like to be able to spend?

[Jill Schlesinger]

What's that?

[Mark T. O'Connor]

A number? What's the expenses that we're looking at?

[Elizabeth]

We're going to say 7,000.

[Mark T. O'Connor]

That's it.

[Elizabeth]

It's probably around 6,500. But yeah, 7,000. We live in a very low cost of living area.

[Mark T. O'Connor]

But don't you want to travel? What about all those trips? That's with travel. Holy smokes. Okay, how much money is in the inherited IRA from your father?

[Elizabeth]

Okay, I do have some other money I inherited.

[Mark T. O'Connor]

Oh, hold on. Let's do. Let me do the inherited IRA first, because that's in my retirement.

[John]

I think this is going to be a biggie.

[Mark T. O'Connor]

Yeah, really? Let's go.

[Elizabeth]

Well, it added to. Yeah. Okay. So the inherited. This is in Fidelity. So this spread stuff around.

[Mark T. O'Connor]

Okay.

[Elizabeth]

There is a Roth in fidelity, which is 50,500.

[Mark T. O'Connor]

Okay.

[Elizabeth]

And there's a traditional IRA for 649,000.

[Mark T. O'Connor]

And that's. Those are the two big pieces of. Is there any other asset that you inherited from dad besides these? Okay, what else?

[Elizabeth]

So I have kind of an S P at Fidelity for 639,000. I do have a very small inherited IRA that's at Schwab for $1900. And we have. So this is my issue. He was a very big. He liked to play in the stock market like I do. That's where I got this from. And I have a whole slew 14 individual stocks held at Schwab. And that's worth. Altogether they're $558,000.

[Mark T. O'Connor]

Okay. Just so a little clarity just on the tax situation on those stocks. So you inherited this account. So everyone listening. Remember, when someone passes away, you as the person who inherits the asset get what's called a stepped up cost basis. So if your father passed away a year ago, the cost basis of that 14 individual, you know that account. There's like two accounts that I'm very interested in. What's the cost basis on the s and P500, the 639, and also on those individual stocks. Do you have any idea about that, what the cost basis was?

[Elizabeth]

I do not.

[Mark T. O'Connor]

Okay, so here's what you're going to need to do. I'm not saying you should keep everything. I'm just saying before we actually think about selling things, what would be very helpful would be to have the date of death valuation of both. Right?

[Elizabeth]

I do have that. I do know about that, but yeah.

[Mark T. O'Connor]

Okay, so if you have that. Well, I'm interested in. Because the s and P500 is a fund that is an individual account that you inherited, right?

[Elizabeth]

Yes.

[Mark T. O'Connor]

Okay, so we need to know what's what, the date of death valuation of that. So if you have that and then also the individual stocks, those are the two things we want to know. It can't be that much. It's a year ago. So stocks. Right. We're up. But you know, if it was 580 and 500, it wouldn't surprise me, right? That you made that much money. Okay.

[Elizabeth]

Yeah.

[Mark T. O'Connor]

Okay. You don't spend any money. What else is going on that I should know about? Is that all the dad stuff? Is there a house that you had to sell or something like that?

[Elizabeth]

Nope, everything. That's all taken care of. So that's all the dad stuff. I do have a few other little things.

[Mark T. O'Connor]

Of course you do.

[Elizabeth]

So we have a few. Three individual stocks that we started quite a while ago, and together they're at 118,000. And we have a money market that's about 120,000. Our savings account is at 435,000.

[Mark T. O'Connor]

What? Why is it so much?

[John]

Well, that was inherited money.

[Mark T. O'Connor]

Oh, okay.

[Elizabeth]

Some. Some of it. Right. I know. And I have to do something with that. And we also have. Oh, you're checking. That's like 20,000. And between our. We both own a business. We each have a business. And right now I have about $200,000 in my work checking, and you have about a hundred in his. And then we both own our buildings, our business buildings. So that could get counted in.

[Mark T. O'Connor]

Oh, my God. All right. Would that be sold, in other words, if you were to. Can you sell your business that you're in? You can.

[Elizabeth]

I'm not counting on that in my profession. That used to be the norm. You would sell and most people would retire on that. I never counted on that. And the way my industry is going, that is unlikely to happen. I think eventually I will just walk away.

[Mark T. O'Connor]

And you. But you would have the building. Would you want to sell that building?

[Elizabeth]

Or.

[Mark T. O'Connor]

What's the building worth?

[John]

400.

[Elizabeth]

400. 400,000.

[Mark T. O'Connor]

And I'm sure there's no mortgage on it.

[Elizabeth]

No.

[Mark T. O'Connor]

What about your building, John?

[Elizabeth]

What.

[Mark T. O'Connor]

What is. What's that?

[John]

No, we. We own that free and clear as well.

[Mark T. O'Connor]

But how much is it worth?

[John]

Probably about 175.

[Mark T. O'Connor]

Now, John, the health scare happened to you too. So are you both considering, like, how. How you would think, like, would you both say we're done? Like we're kissing our 400 grand goodbye at the end of this day, this call.

[John]

We.

[Mark T. O'Connor]

We would.

[John]

We would do that, yes.

[Mark T. O'Connor]

Are you excited about that prospect, or does it scare the crap out of you?

[John]

I think it scares us.

[Elizabeth]

I feel like you need a purpose in life and that is a big part of what.

[Mark T. O'Connor]

Yeah, I mean, look, I'm not saying you're going to do nothing, but I think a health scare always, always gets your priorities just laid out in a different way. So it is not silly for me to just reiterate. You are in such incredible financial shape. Right. You know that? Hearing it.

[Elizabeth]

Yep, yep.

[Mark T. O'Connor]

Let it sink in. Okay. Mark, how long do they have to live before they plow through all their money? 180 years old. What would that be about?

[John]

Yeah, the only thing missing from this call is like, you know, two $70,000 a year pensions.

[Mark T. O'Connor]

No, but you guys don't have pen, right?

[John]

I have one pension that will. That will pay me only $580 a month.

[Mark T. O'Connor]

Yeah, all right, whatever. That's nice. It'll be coffee. That's great. Coffee. It'll be coffee supplement, maybe. Yeah. So when. Let's just say that you both retired right now. You understand that you have absolutely no problems. You have so much money forgetting even about the money that you inherited from your dad. Elizabeth, you know, you've saved so much money and you just don't spend a lot. Is the health scare the cancer diagnosis that you had? Would that suggest that it's something like, okay, I'm living with it. It's hanging over your head. Do you want to. Does it encourage you to be like, oh, I'm just going to take my Social Security as soon as I can? Or like, how are you thinking about it?

[Elizabeth]

So I looked at my Social Security numbers, and I think I Would probably take it early rather than wait till I'm 70, because, you know, nobody knows if they're going to be around. And I just feel like it's. If I take it at 62, it'd be $2,700. If I wait till 70, it's $4,900.

[Mark T. O'Connor]

Yeah, but it doesn't even matter to you.

[Elizabeth]

It doesn't either way.

[Mark T. O'Connor]

I know. And just to have the money in hand, I think that if you have a change in. Look, you hear us talk about this all the time. That if you have a life expectancy that's been curtailed, then taking it early is better. Is your idea right now that you know, you'll spend your money, you'll have a good time. What else do you want to do? Do you want to, like, set your kid up? Do you want to. Should we? Yeah.

[Elizabeth]

So this is. Well, I'm not totally setting him up. This is how we were brought up, and this is what I believe. I'll provide an education, and I will help you make your life, but I'm not making your life for you. Oh. And that is how we were raised. Make your. Make your own way. I'll provide an education. I'll provide everything possible for you, But I'm not just handing out money.

[Mark T. O'Connor]

Okay. How old is this kid? 18 or something? Or 19?

[Elizabeth]

Yeah, 19.

[Mark T. O'Connor]

So the inherited IRA, which has 650 grand, you do have that 10 years to get the money out, right?

[Elizabeth]

Right.

[Mark T. O'Connor]

You wouldn't want to do it while your household income is $400,000, I'll tell you that much. So one thing that I think makes a lot of sense would be to wait until you don't have that income. And, you know, why don't we just use the traditional IRA that you inherited and make that. Just get rid of it over 10 years and, you know, it'll go away. Just take out a bunch of money every year, pay the tax on it, whatever. It's going to be 100 grand or 120 grand. Whatever you want to do, you can do that. I mean, obviously, it almost works better if you have, like, zero income. So take as much out as you can and stay within a tax bracket. That makes sense. You have to take that and the Schwab ira. Just get rid of those, as you know. Okay. So that's priority one. We're going to use that to live on. That's kind of your seven grand a month. It won't be quite enough, but it'll be close. Okay. And then we have this issue of all of the money that you guys have that hasn't been taxed yet. So here's my question to you. Do you have an inclination that would kind of push you towards getting. Once you retire again, starting to convert your 401k, the 1.7 million, plus the almost $800,000 you guys have in your traditional IRAs, how do you feel about converting that to a Roth?

[Elizabeth]

Yep, I have thought about that. And just pay the tax and do that.

[Mark T. O'Connor]

Yep. I mean, you don't have to do it all at once, but you've got time here. Right. Because, remember, you don't have to pull money out of your traditional accounts until you turn 75. We. So to me, the first. Let's get rid of dad's inherited money. That is the first priority. Right now, you guys are in. You're probably in the, like, the 32, mostly 32% tax bracket about. Okay, so if you want it to stay in 32%, you could keep doing it that way. Or you could just say, all right, we'll take, you know, 100 grand a year out of dad's inherited IRA, and then we'll start converting a chunk of money from our traditional accounts to keep us in the 32% tax bracket. You know, and you could do it at the 24%. It'll take you longer, but you could do it. I have a feeling the problem for you guys is you have just have so much money that it's going to be hard for you to be in a very low tax bracket at any point. You're just not going to get there.

[John]

I don't know. I get the sense that they would benefit from working with somebody.

[Mark T. O'Connor]

I think maybe, but I want. But Elizabeth's a control freak, and she has a little habit, which she likes to, you know, have fun with. I think you could work with somebody. Do you have a CPA that you like?

[Elizabeth]

Yes, I do.

[Mark T. O'Connor]

Okay. So, you know, you could do this with the CPA and talk to the CPA and say to him or her, hey, you know what? We know we have this huge ticking time bomb called the money that we have in the traditional account that I inherited and the traditional accounts that, you know, we maintain. And you can say, what we really would like to do is work with you so that every year, as long as we can, we want to convert as much money from our traditional accounts into our Roth accounts. We'll use the cash on hand because you have 400 grand. So honestly, like, and plus 100, you have like a half a million Dollars in cash, just as is. That even does not include the sale of the buildings that you have. So, you know, I would convert. I have one more question for you just before we kind of continue with this pathway, which is, are you guys, would you consider yourselves charitable? Would you like to be charitable?

[Elizabeth]

Yes. And I actually, I have a scholarship set up fund for my high school.

[Mark T. O'Connor]

Oh, nice.

[Elizabeth]

It's small, but I would definitely. I'm charitable.

[Mark T. O'Connor]

Okay. Have you heard me or anyone talk about something called a donor advised fund?

[Elizabeth]

Yes.

[Mark T. O'Connor]

Okay. This is how I would use this. The scholarship fund, is that run through another organization? Is it a 501C3? Is it? It's not. So we need that to, we need that to happen because otherwise like you're setting up a scholarship, it's just going into the universe with like sort of you're not getting the benefit that you could get from it.

[Elizabeth]

Okay.

[Mark T. O'Connor]

Which is fine. It doesn't mean that you can't have that scholarship fund. But that should not be the bulk of your giving.

[Elizabeth]

Okay.

[Mark T. O'Connor]

Okay. A donor advised fund is going to help you with a couple of different things. One is the Vanguard S&P 500 fund that you have right now. The million and a half dollars. And this is something you can work on with the CPA after tax season. I would tell you they're not going to be happy to talk to you before then. That million and a half dollars, I'm not saying you should put all of it into a donor advised fund, but let's say that next year. So I don't know how long it'll really take you to say, I'm done working, but you should be done tomorrow. As far as I'm concerned. If you took 100, 200 grand, you could just take 200 grand a year for the next few years and gift that into a donor advised fund. You would gift shares of the Vanguard S&P 500. You could do this at Vanguard, by the way. They have donor advised funds through Vanguard. They'll help you set it up. They will do the accounting for you. You're going to say, I'm going to take this highly appreciated Vanguard S&P 500 fund. I'm going to put 200 grand into my donor advised fund. You're going to get a tax deduction for 200 grand the day you do that. The following year you could do the same thing. And now you could front load it. You could say, let me do this.

[Jill Schlesinger]

For a few years while you're doing.

[Mark T. O'Connor]

Your Roth conversions, by the way, because those Roth Conversions add to your tax liability. The Vanguard, the donor advised fund, will help you with your tax liability. Okay, now again, you could do this with a cpa. You could do this with a financial planner. You really can. But I'm just giving you the basic construct. You could put as much money into this donor advised fund as you want. You know, maybe you put in, you try to get, you know, the million and a half down to a million, and you're not taking any tax hit for doing that. In fact, you get a tax benefit, okay? So you don't have to sell the Vanguard S&P 500. They transfer the money in. The money is whatever goes in that is your charitable contribution into that fund. From that fund, you can make charitable gifts over time. You don't have to do it all at once. You can do it at any time you'd like. And you're gonna have a slug of money in there. And you could even invest the money inside of the donor advised fund. You don't do a lot of that, but, you know, you want to keep growing it. Not like in a huge way, but.

[Jill Schlesinger]

This takes a lot of your risk.

[Mark T. O'Connor]

Off the table of that Vanguard fund, right? Okay. Now, on the dad stuff, I mean, like, it sort of seems to me you have a plenty. You have a huge allocation to the S&P 500 fund, right? So that, to me, could be sold and reallocated and you're going to pay some small tax on it. Again, you should really work with someone just to help you understand your tax liability. So if, if, if your cost basis for the s and P500,639,000. Let's just say you inherited it and it was 580,000 and now it's 640. You'll have to pay capital gains on that differential. Okay? It's not a big deal. So you pay capital gains tax. Same thing with those 14 individual stocks, because those I think you probably own. I'm guessing unless you have some weird nostalgic thing, doesn't matter. Like, you might as well just use these assets to kind of round out your allocation so that you're no longer 80, 20, or 90, 10. You know, that we really would like to get you to be somewhat more balanced. And Mark's idea of working with a financial planner with a fiduciary financial planner would only be helpful in that they would take all of this together and build a strategy for you. And you have a lot of money, guys. It just depends, like, where you want to do, where you want to spend Your time. Because maybe this is something that you feel like, Elizabeth, you're like, I love doing this. Maybe this is like your retirement fun. Is it?

[Elizabeth]

No. Well, no. I mean, I just got so used to saving and doing all this on my own, and my dad was always just. He did it on his own and. But I kind of feel like if I had somebody trustworthy to maybe direct it, maybe I'd be happier.

[Mark T. O'Connor]

I guess the most important thing that I can say today is if you've gone through a health scare and you've been thinking about this, let's do it and let's. You know. And maybe what you're doing for the rest of this year is to sketch out to yourselves how you would manage this money. Maybe that's gonna be like, the way you transition. And then you're going to give yourself permission to do whatever you want to do. I would even say you could spend more than $8,000 a month. I really would. I know. You said seven. I moved it to eight. How. You know, and you're going to have to pay. The 7,000 doesn't include health insurance.

[Elizabeth]

Oh.

[Mark T. O'Connor]

Would you pay for your own health insurance?

[Elizabeth]

I do pay for my own health insurance. Yes. Yeah.

[Mark T. O'Connor]

Yeah. These guys. I can't. You're not going to spend all the money. And I guess the other piece of it is you only have one child. There is a lot of estate planning that you guys need to do around making sure that this money is tied up for him as well. Okay.

[Elizabeth]

Okay.

[Mark T. O'Connor]

I think I'm done with you guys. What else do you. Any other questions for us?

[Elizabeth]

My only other one is how to set everything up to make this easy for my son. But I think I do need to find somebody to help me with that, so.

[Mark T. O'Connor]

Huh? Yeah, Absolutely. All right, well, then we're done with you. You guys are going to get us some hate mail. But you know what? I feel like this is a good story and you're gonna give yourselves some peace of mind. Go ahead and do it and have fun. Okay? You promise? Have fun.

[Elizabeth]

I'll say this. I started out on a job at $30,000 a year. I've been working since I'm 16. I saved my whole life. So I get it. People will have hate against people who accumulated wealth, but it took a lot of doing to get to this point.

[Mark T. O'Connor]

Yeah. Everyone. Okay? So don't.

[Jill Schlesinger]

No judgment.

[Mark T. O'Connor]

I like. Listen. You know, my mother used to always say this, and she does say it still. You know, rich or poor, it's nice to have money. It does. It's better, doesn't, doesn't make cancer go away. But if you get to the other side of it, you can have a lot of fun and spend your money. We're going to Vegas, Mark. I can't wait. Okay, hang in there. We're going to get you some names of folks that you might want to talk to. So if you are at a the cusp of making a big decision like Elizabeth and John, get in touch with us. Just go to the website jillonmoney.com click the contact us button and of course let us know if you want to come on the air by checking the box. You can subscribe to us on the Odyssey app or wherever you find your favorite podcast.

[Jill Schlesinger]

Please leave us a rating and review.

[Mark T. O'Connor]

Wherever you listen and of course lift someone up. Change your work, change your wealth, change your life. Thanks for listening. Talk to you tomorrow.

[Jill Schlesinger]

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[Alex Asurin]

Hi, I'm Alex Asurin and I'm inviting you to listen to Asurin's official podcast, Culture Lounge. For the last 30 years, Asulin has created books at the center of culture and luxury, covering everything from wine and watches to fashion, travel and Formula One. Now we're inviting you into our world through a new and exciting medium. Join me on Cultural Lounge, where you will hear intimate conversations with icons like Erin Lauder, Linda Fargo, Mario Carbone, curators from Sotheby's, and the world's best sommelier, all gathered like old friends at a beautiful bar, discussing their deepest passions sharing stories and giving us their best advice. It's like eavesdropping on the most interesting conversation you could ever imagine. Culture Lounge is available wherever you get your podcast. Tune in now to be inspired and learn something new.