Simplifying Inherited Accounts

Summary

Podcast Summary: "Simplifying Inherited Accounts"

Podcast Information

• Title: Jill on Money with Jill Schlesinger
• Host/Author: Audacy
• Description: Host Jill Schlesinger, CFP®, addresses uncomfortable and controversial money and investing topics without financial jargon. Each week, Jill takes listener calls and interviews guests to uncover surprising insights and provide actionable information for effective money management.
• Episode: Simplifying Inherited Accounts
• Release Date: April 1, 2025

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Introduction to the Episode

In the April 1, 2025, episode of Jill on Money with Jill Schlesinger, host Jill Schlesinger delves into the intricacies of managing inherited accounts. The episode focuses on providing listeners with clear, actionable advice on handling inherited assets, ensuring financial stability, and making informed decisions post-inheritance.

Segment 1: Hosts' Opening Remarks and Listener Engagement

The episode begins with Mark, Jill’s co-host, welcoming listeners and expressing his personal aversion to April Fool’s Day, setting a relatable and down-to-earth tone. He emphasizes the show’s commitment to addressing listeners' financial anxieties and encourages audience participation.

Mark (02:13):
"What we're into is hearing from you and learning about what's going on in your life and how the life events are touching your finances."

He invites listeners to reach out with their financial concerns, ensuring them that the show is a safe space for discussing money-related anxieties.

Segment 2: Introducing the Caller - Bill from Florida

The primary focus of the episode is a call from Bill, a listener from Florida, seeking advice on managing inherited accounts following his father's passing.

Jill Schlesinger (04:23):
"So, Mark, do you want to sing it with me?"

This light-hearted exchange underscores the friendly and supportive environment the hosts create for their audience.

Segment 3: Analyzing Bill's Financial Situation

The hosts conduct a thorough analysis of Bill's financial landscape:

• Age and Income:

  • Bill is 66 years and eight months old, recently began receiving full Social Security benefits amounting to approximately $3,400 per month.

• Assets:

  • John Hancock IRA: $590,000
  • Savings: $43,000
  • Inherited Assets:
    • Fidelity Brokerage Account: $162,000
    • 401(k) Savings Plan: $131,000
    • Proceeds from House: $180,000
  • Total Inheritance: $340,000

• Liabilities:

  • Owns a home valued at $700,000 with a renovation loan of $66,000 at 3% interest.

• Annual Expenses:

  • Basic Living Costs: $36,000
  • Additional Costs (repairs, medical, etc.): Totaling about $50,000 annually.

Mark meticulously breaks down Bill’s financials to understand his current position and the implications of his inheritance.

Segment 4: Exploring Financial Management Options

Mark presents three primary options for Bill to consider in managing his inherited accounts:

Option 1: Do It Yourself (DIY)

Bill can continue managing his finances independently, leveraging his existing accounts. This approach requires disciplined asset allocation and decumulation strategies but allows him to retain full control without incurring additional costs.

Mark (08:14):
"If you want help, you can get somebody to do this. Another idea to consider... you could try to consolidate everything at Fidelity."

Option 2: Consolidate with Fidelity

Consolidating accounts under a single financial institution like Fidelity can simplify management. By rolling his John Hancock IRA into Fidelity and utilizing Fidelity’s advisory services, Bill can streamline his investments and ensure coordinated management of his inherited assets.

Mark (09:30):
"If I were going to do this in your situation is I would say to them, I no longer want to be at John Hancock. I want to roll that money into Fidelity. I want my whole relationship at Fidelity."

This option involves potential fees (approximately 1-1.5%) but offers professional oversight and integrated financial planning.

Option 3: Hire a Financial Planner

Engaging a financial planner provides personalized guidance and comprehensive management of Bill’s entire financial portfolio. For a fee of around 1-1.25%, a planner can offer tailored strategies for asset allocation, decumulation, and future financial planning, ensuring Bill’s financial decisions align with his long-term goals.

Mark (09:15):
"Another idea to consider... the other choice is full blown. I'm going to pay one percent or one and a quarter percent to have a financial planner do this with me."

Segment 5: Additional Insights and Recommendations

Mark offers further recommendations to optimize Bill’s financial situation:

• Qualified Charitable Distribution (QCD): Encourages Bill to consider making charitable donations directly from his IRA after age 70½, which can provide tax benefits while supporting causes he cares about.

Mark (12:37):
"Maybe what you do is... take money directly from that IRA and send that to charity. And that's called a qualified charitable distribution."

• Estate Planning: Reinforces the importance of having up-to-date estate documents to ensure his assets are distributed according to his wishes.

Caller (13:03):
"They're all done. And yes."

Segment 6: Conclusion and Closing Remarks

The episode concludes with the hosts reaffirming their support for Bill and encouraging listeners to take proactive steps in managing their finances. They reiterate the importance of consolidating accounts for simplicity and efficiency and highlight the value of professional financial advice when needed.

Mark (13:07):
"Bill, we love you."

Jill and Mark wrap up by reminding listeners to reach out with their financial questions and to subscribe for more insights on managing money effectively.

Notable Quotes with Timestamps

• Mark (02:13):
  "What we're into is hearing from you and learning about what's going on in your life and how the life events are touching your finances."

• Mark (08:14):
  "If you want help, you can get somebody to do this. Another idea to consider... you could try to consolidate everything at Fidelity."

• Mark (09:15):
  "Another idea to consider... the other choice is full blown. I'm going to pay one percent or one and a quarter percent to have a financial planner do this with me."

• Mark (12:37):
  "Maybe what you do is... take money directly from that IRA and send that to charity. And that's called a qualified charitable distribution."

• Mark (13:07):
  "Bill, we love you."

Key Takeaways

1. Assessing Financial Position: Understanding one's complete financial landscape, including assets, liabilities, and income sources, is crucial when managing inherited accounts.

2. Management Options: Individuals can choose to manage their inherited assets independently, consolidate them under a single financial institution for streamlined management, or hire a financial planner for personalized guidance.

3. Strategic Planning: Utilizing tools like Qualified Charitable Distributions can offer tax benefits while aligning with personal values.

4. Estate Documentation: Keeping estate documents current ensures that assets are distributed according to personal wishes, providing peace of mind.

5. Professional Advice: Engaging with financial professionals can enhance financial strategies, especially when managing significant inheritances.

Conclusion

This episode of Jill on Money with Jill Schlesinger provides invaluable insights into managing inherited accounts. Through the real-life example of Bill, listeners gain a comprehensive understanding of the options available for handling inherited assets, emphasizing the importance of informed decision-making and strategic financial planning. Whether choosing to manage finances independently, consolidating accounts, or seeking professional advice, the episode equips listeners with the knowledge necessary to navigate the complexities of inherited finances effectively.

Transcript

[Jill Schlesinger]

Hey, gang, if you're freaking out about markets and you want to do something productive, how about looking at an area that you can actually control, like your personal financial life? And one of the essential cornerstones of financial planning is making sure that you have adequate protection with life insurance. You've heard me talk about policy genius before, but with policygenius, you can find life insurance policies that start at just $292 per year for for $1 million of coverage. Some options are 100% online and let you avoid unnecessary medical exams. Policygenius compares quotes from America's top insurers side by side for free with no hidden fees. And they've got a licensed support team that helps you get what you need fast so that you can get on with your life. Secure your families tomorrow, so you have peace of mind today. Head to policygenius.com to get your free life insurance quotes and see how much you could save. That's policygenius.com and now a word from our sponsors at Betterment. When investing your money starts to feel like a second job, Betterment steps in with a little work life balance. They're an automated investing and savings app, which means they do the work when they build and manage your portfolio. You build and manage your weekend plans. While they make it easy to invest for what matters, you just get to enjoy what matters. Their automated tools simplify the complex and put your money to work optimizing day after day and again and again.

[Mark]

So.

[Jill Schlesinger]

So go ahead. Take your time to rest and recharge. Because while your money doesn't need a work life balance, you do make your money hustle with Betterment. Get [e-mail] that's B E T T E R M e n t.com Investing involves risk performance not guaranteed.

[Mark]

Welcome to the Jill on Money show. It's Tuesday, April 1st. No April fools things. I hated April Fool's Day when I was a kid. It's kind of right up there with Halloween for me. I don't get it. I don't like it. I guess I don't have any sort of that. I don't know. I don't like to be scared. I don't really like candy, and I don't really like any of the sort of shenanigans around April Fools. Mark April Fools. A yay or a nay for you?

[Bill]

No, that's a big nay.

[Mark]

I know, right? We're so very boring in that respect. Also, I hate surprise parties. Another thing, I don't even like other people's surprise parties. I mean, certainly not for myself, but I don't even like them in general because I find them to be, like, exhausting. And I don't think it's so much fun to be surprised. Okay, so what we are into is hearing from you and learning about what's going on in your life and how the life events are touching your finances. So if you've got a question for us, something that is happening, maybe you're nervous about something. You know, I have to say that lately I felt a little bit like a shrinking. But, you know, the good kind, the kind that just tells you what to do. But I want to just try to make sure that people feel like they have a place to go if they're feeling some anxiety about their financial lives or about the environment. And maybe you're hearing rumors about things and you want to cut through and see how certain things impact you. If that's you, do not suffer. Please get in touch with us. Go to jillonmoney.com, click the contact us button, write us a note. And if you would like to join us live, check the box. Mark will do everything else. Don't forget to sign up for the free weekly newsletter while you are on the website and check out all the content that lives there, including the Jill on Money Live service. Hey, Mark, how are our subscriptions doing to Jill on Money Live? Since we raised the fee, they're still coming in.

[Bill]

I don't. It's hard to tell sometimes if they're new or they're just renewals from the previous year, but they're rolling in.

[Jill Schlesinger]

I love it.

[Mark]

Okay, well, it's costing you 45 bucks for the next 12 months. What you are getting is actually a bo. Like, it's even a better deal right now in some respects because there's so much more. Mark is adding all of this old video content that we have. Mark's uploading a little bit at a time. It's great. So check it out. Jill on Money Live, access to quarterly live webinars, bonus audio and video content, the entire back catalog of all the stuff we've done, all that will cost you 45 bucks for the next 12 months. So I think a very good deal. All right. Right now let's talk to Bill, who I've already sung to already before we even came on the air. He is Florida. And Bill, besides our mutual love of the fifth dimension, what can I do for you today?

[Caller]

Well, I, I have a. Some retirement savings and my father passed away last year.

[Mark]

Oh.

[Caller]

At rip old age of 93. Oh, and my brother and sister and I inherited, you know, everything that he had, including assets from the house. So I was wondering, is it time to have it managed by, you know, someone that can do a better job than I?

[Jill Schlesinger]

What?

[Mark]

You're probably doing a great job. Let's find out. Okay, so, Bill, how old are you right now?

[Caller]

Just hit the full Social Security. Age? 66 and eight months.

[Mark]

Okay.

[Caller]

Expecting my first check in two weeks if everything works out.

[Mark]

Oh, great. And what will that Social Security income be?

[Caller]

It will be 3432amonth.

[Mark]

All right. I'm going to say 3400amonth. Okay. Do you receive a pension?

[Caller]

No, I don't.

[Mark]

Okay. What are other sources of income that you have right now, Bill?

[Caller]

No other sources of income.

[Mark]

Okay, so how about money you have socked away? Let's do before the inheritance? So what do you. What do you have socked away for yourself right now?

[Caller]

Okay, so in a John Hancock Ira, I have 590,000.

[Mark]

What else you got?

[Caller]

The rest is savings. $43,000 in savings.

[Mark]

How much?

[Caller]

43,000.

[Mark]

Okay. I thought. I literally thought you said 430,000, so I was very excited for you. Okay, 43,000 in savings? Yep. What else?

[Caller]

That's it. And then the inherited.

[Mark]

And what about where you're living? Do you rent or do you own?

[Caller]

I own. Yeah.

[Mark]

What's it worth?

[Caller]

700,000.

[Mark]

Any mortgage?

[Caller]

No. I have a renovation loan for about 66,000.

[Mark]

Is that still. You have that still?

[Caller]

I do, yes. 3%.

[Mark]

3%. That's good. Okay. What's it cost you to live your life?

[Caller]

The basic cost is 36,000 a year.

[Mark]

Okay.

[Caller]

And when home repairs and car repairs and medical get thrown in about 50.

[Mark]

So, like, 50 is probably the right number, right?

[Caller]

It's the right number.

[Mark]

Okay, Got it. So what did you do prior. Excuse me, to your Social Security? Did you just pull money out of savings to pay your bills? What were you doing?

[Caller]

I did, yes.

[Mark]

Okay, got it. And now tell us about what the. What it means to have this inheritance. What is coming to you?

[Caller]

Okay. And it already has come to me. I've got a Fidelity brokerage account worth 162,000.

[Mark]

Okay.

[Caller]

And then a 401k savings plan worth $131,000.

[Mark]

Okay. So that has to come out within 10 years.

[Caller]

Yes, both of those. But.

[Mark]

Oh, wait, the Fidelity, too.

[Caller]

Oh, no. Okay, I'm sorry.

[Mark]

The 401k and the savings plan. The two. And that totals 131,000. So we have 10 years to get that out, right?

[Caller]

Correct.

[Mark]

Okay, good.

[Caller]

And then proceeds from the house, my part of it was 180,000.

[Mark]

So we have the 180. And the 162 is going to be just a new. Basically, that's your brokerage account money, Right. You inherit the brokerage account. That's just sort of the new money. So this 340 grand is out there as it's already been taxed, it's got to step up in the cost basis. That's good. Who put you in the Hancock account?

[Caller]

It was my employer. That was a.

[Mark]

So this was a retirement plan through work, and you rolled it into an IRA rollover, right?

[Caller]

Correct.

[Mark]

Got it.

[Jill Schlesinger]

So now the.

[Mark]

So you're doing everything yourself at this point, right?

[Caller]

Correct.

[Mark]

And is it daunting?

[Caller]

It's not daunting, but I think I'd like to see it work better for me.

[Mark]

Okay. There's a couple of different options for you. You can go higher. You know, I don't. You have. First of all, the inheritance really is a huge game changer for you in terms of, you know, just being able to plan in the future that you have this money now. Bill, are you married? Single, Partnered?

[Caller]

Single. No children.

[Mark]

No kids. So, you know, really, because it's you. And you're getting your Social Security now, you know, you'll start that up. This is all just kind of great in terms of you should have a lot of security now if you don't want to do it yourself. There are, I think, two distinct options. One is you can hire a financial planner. Now, you don't really need super duper planning because obviously now that you have this chunk of money from your father's estate, which is essentially popped another four, like half a million dollars in your lap.

[Caller]

Right?

[Mark]

You know, this is. Now you got a million, $1.1 million. There's not a problem. You're not going to mess this up. You don't spend a lot of money. You can spend your 50 grand a year. That's fine. Okay? Now if you want help, you can get somebody to do this. Another idea to consider, because you'll have to pay someone 1%, maybe 1 1/2% to manage this money. The other idea is you could try to consolidate everything at Fidelity. Okay? You can talk to, like at the Fidelity, because you have that inherited brokerage account, you can say to them, hey, you know what I want to do? I want to work with an advisor at Fidelity, and they don't have to do super duper planning. But what you're seeking is Help with managing the money and managing the money that's going to have to come out of your dad's old retirement account. All right, within those 10 years. And I would also, if I were going to do this in your situation is I would say to them, I no longer want to be at John Hancock. I want to roll that money into Fidelity. I want my whole relationship at Fidelity. I would absolutely consolidate if that were the case. So choice one is you do it yourself. Even if you were to do it yourself, I would probably say pick someplace to do your business. Roll everything to that one organization. Use some index funds in each of these accounts. Start taking money out of that 401k, your inherited 401k. So you make sure you get it out over the next 10 years. And by the time you have to do your retirement distributions anyway, your own, your required minimum distributions, that that happens probably on the tail end of your finishing with the 401, the inherited 401k, if that's all too much, then the next level is, well, I can talk to Fidelity. I can show them everything that I've just talked to Jill and Mark about. And you can say to them, I'd like to consolidate my whole, my entire relationship here at Fidelity. I want the use of an advisor. I want someone to help me with the fund selection. You don't have to kill it. You can just have like a nice, boring, balanced portfolio. Not too many funds really like give them direction. I like simplicity, simplistic approach to investing because it works. And then you say, and I'd like to, you know, make sure that I'm being efficient in getting the money out of the old 401k and preparing to take the distributions from my own IRA when I turn 75. And then the other choice is full blown. I'm going to pay up. I'm going to pay one percent or one and a quarter percent to have a financial planner do this with, with me. So those are the three choices. It sounds to me like you're sort of, you know, somewhere between two and three. And it really depends like where you want to be. I certainly think there's a zillion kinds of, you know, you can get customized financial planning, but in some respects, unless you need someone to hold your hand in a more pronounced way, you don't have big financial planning needs. You have more kind of asset allocation and decumulation needs. Like you're not planning for someone else surviving you. You're not planning to like give all your money away. I mean, you can give Money away anyway, anytime you want. In fact, are you charitable?

[Caller]

Somewhat, yes.

[Mark]

Okay. Because maybe what you do is, you know, once you turn 70 and a half, if you would like, one idea is to take money directly from that IRA and send that to charity. And that's called a qualified charitable distribution. That might be something to consider also in the future. But you're in really good shape, Bill. I'm sending you on your way. Make sure you do your estate documents. You got to leave your money to somebody. Okay.

[Caller]

They're. They are all done. And yes.

[Mark]

Amazing.

[Jill Schlesinger]

Bill, we love you.

[Mark]

So, Mark, do you want to sing it with me?

[Jill Schlesinger]

If you see if we were in.

[Mark]

The old studio and I'd make you pull up music, I think we're.

[Bill]

I know, I know.

[Mark]

It's so good.

[Bill]

My faders.

[Mark]

Yeah. Yeah, I'd love that, Bill. I love you so. I always will. Okay, that's it. That's it for Jill singing. Hey, if you want me to stop singing, just go to jillonmoney.com and click the contact us button and you can just say, stop singing. Or maybe you'd like to throw a Broadway show tune out that I could sing for you on your behalf. Just let us know if we can help you out with some of your financial concerns issues. Questions again, just Jill on my. Click the contact Us button, write us the note. Let us know if you want to join us on the air live. And of course, you can subscribe to this program as well as our sister broadcast called Money Watch. On the Odyssey app or wherever you find your favorite podcast, please leave a rating and review Wherever you listen. Do something nice for someone else today. Change your work, change your wealth, change your life. Thanks for listening. We'll talk to you tomorrow. Foreign.

[Jill Schlesinger]

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