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Highlights from this episode include:

  • Why sudden wealth could ruin your life (3:35)
  • Why winning the lottery is the worst thing that can happen to most people(4:28)
  • What to do with a lump sum of money so you don’t burn through it like a pro athlete (7:15)
  • The shocking reason that paying down debt can leave you broke (9:14)
  • How to protect yourself from being blindsided by bankruptcy with the right team of professionals (11:06)
  • How your family can help prevent Uncle Sam from stealing your inheritance(14:40)
Read Full Transcript

Do you hate the thought of working past 55 or 60? Do you hate not being able to live the life you deserve today? Do you hate not knowing what your financial future looks like? It's time to stop doing what you hate, here's your host, Mr. Harold Green.

(00:20): Hello everyone. This is Harold Green here of Brightree financial group, and it is time to stop doing what you hate. Hopefully you are having a great day. I am doing fine at an early day today and I was dragging a little bit until I started recording the show. And then I'm, I'm feeling more energized. I'm billing, enthusiastic. I am excited to be sharing the show with you guys today. Today. It is a very important show. One that people probably have thought of this topic, but they just really never, or they don't think it can happen to them. So the title of today's show is what to do or how to handle inheritance money or large sums of money. And before I get into the show, I got to share with you guys a funny dream I had not too long ago, and I think it was last year as a matter of fact, and in the dream, someone dropped off a bag of money at my house and inside the bag was $50 million.

(01:32): That's right. $50 million at first, I just kind of like sat there. And then I, you know, I, I told my wife, Hey honey, you know, we just inherited it. I don't know where it came from. I don't even know if this is our money or not, or, or drug deal gone bad or like, whatever, but we just got $50 million. And so her first reaction was to, I think it was like to, you know, kind of disguise the bag and then drive around with it wherever we went. So, you know, and have somebody watching the bag or I thought about like digging a hole and then putting the money in the hole and hiding it, you know, and not telling anybody I was, I was super, I guess, I don't know the word, but I was very nervous when, you know, people came to the house to do stuff and it was, it was just a really weird dream that I had.

(02:24): And so I began to think, you know, like if somehow, if I came into $50 million, you know, what would life be like for me? And, you know, as I sat there and I'm a big goals guy, a big forward thinking type of person. And to be honest with you guys, it wouldn't change anything that I do really. I mean, I would, you know, keep living the same way I live now. I probably wouldn't buy a bigger place. I keep my condo. I might do some upgrades in it. I may change out my vehicle to get something that I would love. But outside of that, my other goals are still in place. You know, my giving goals, the goals that I have in regards to the community and then setting up different charities and things like that, you know, maybe paying for some education for family members and things of that nature.

(03:06): Definitely wouldn't go off paying off everyone's house and having a huge party. As a matter of fact, nobody would probably even know I wouldn't go upgrade my wardrobe. I would keep wearing the same clothes. Like I always do. I don't think anything would be different for me because I live my life in such a way that humongous success could happen to me at a moment's notice. And so I want to talk to you guys a little bit about how to handle, well, that's just dropped in your lap. Maybe it's an inheritance. Maybe it's a lottery ticket or something like that. Maybe a business that just took off and became successful automatically, or you work with me and then I turn your retirement or your assets. And I double them in, you know, three or four years based on what we do. I'm not saying I'm going to do that, but I just want to talk to you a little bit.

(03:48): And one of the things is I love interesting steps. I love funny stuff. And one of the things I always think about is lottery. I watched that show HGTV, my lottery, dream home, you know, those kinds of things are very interesting. And so I'm just going to read something to you guys by this guy, Ryan Hart, I haven't validated this information or corroborated it with any other factor source, but I want to talk to you guys like, so let's say what if this is true? And it goes into like, what percentage of lottery winners go bankrupt? So the national endowment for financial education denies that 70% of lottery winners end up bankrupt within five years after receiving a large financial windfall. And they said, that's incorrect by what is it? I think time, fortune magazine and many others. So lottery winners are more likely to declare bankruptcy within three to five years than the average American that's.

(04:39): That's fast, nearly one third of lottery winners eventually declare bankruptcy. And that's a crazy stat. Here's some more 55% of those who played lottery games at least want them once a month have incomes of 55,000 or more, 44% of lottery players nationwide have incomes of 55,000, 20% of lottery players account for 71% of the income and Americans spend an average of $206 a year on lottery tickets. That is not a lot, but it all adds up. Now it goes into talking about half of Americans say they have bought a state lottery ticket within the last year, 60 to 80% of adults over 80, but here's, here's a, here's a big one for me. I think it was 64% of lottery. Winners are over the age of 50. So although a lot of young people do buy lottery tickets. The majority of the winners, 64% somehow are over the age of 50.

(05:36): And you know, my stepdad pop, Sam loves playing the lottery. I told him, I said, if you ever hit the lottery big, you better make sure you give me a call. And it's just like going out to Vegas and making a lot of money. However, if that happens to you, I just wanted to share with you guys real quick, some tips that are going to save your life. And here's another thing. If you have this kind of in place already, then you are actually setting the stage to becoming much more successful. Because again, as you begin to think, and as you begin to play things forward, you have the makings of success in place. You have the blueprint, you have the groundwork laid. And so therefore I think your chances are going to be a little bit better of becoming successful. So it kind of depends on how much money you're going to inherit.

(06:25): Okay. It depends on how much money you're going to inherit. So let's say you get a check for a hundred thousand dollars from an auntie or an uncle that passed away, or, you know, you're, you're at all on the title to the house and they sell it and split it two or three ways. And your chunk is about a hundred thousand, depending on your situation. You know, if you already have set aside money for retirement, if you already have an investment account or things of that nature, there's not a lot you have to do with that. So I would say maybe spend three or $4,000, take yourself a nice vacation, but do me a favor, take the rest and throw it into your investment account and don't pay down debt or anything like that. And here's where I'm going with this. A lot of times when people get lumped sums of money, the first thing they want to do is either spend it or pay off debt or give it away.

(07:14): And it goes back into talking about how these people who played the lottery and became successful, ended up losing their money within three to five years. I mean, that's a lot of money. Look at some of these NFL players, how they ended up going broke. I mean, you guys heard this story, these NBA players, how they ended up going broke, like, how did you spend through 30, 40, $50 million? Well, a lot of times they were popping bottles, you know, or at the club or buying this person a house, or they had those huge entourage or they want to give back to their community. They want to help their boys, you know, and all the people that were there for them. And so I hear a lot of this stuff, but the truth is, is they didn't have good fiduciary advisors who would stop them from getting their own way.

(07:54): And then sometimes even if they did, they would just override these guys and just do whatever they want because it's their money. And that's one of the things I always tell my clients. I said, you know what? I don't care how much money you have. Number one, it's your money. It's not mine. But number two, you hired me. You know, you sought me out. You wanted me to put together a plan for you. And so sometimes it can get a little sticky. I don't want to step on anybody's toes, but at the same time, as I was sharing with a client the other day, shout out to Mitch, no Gucci. If you're out there listening, Mitch, email me what his game plan was for, you know, certain funds and things like that. And, you know, I quickly shot back. You know, this is what the plan is.

(08:32): I'm not trying to sell mean or anything like that. Life happens, but you got to stick to the plan and the Mitch takes everything in stride. And so he texted back, Hey, thanks. I appreciate that. That's why we have you on our team. You know, sometimes we come up with our own ideas, but we will always kind of divert to your plan. And so I was very thankful and happy about that. So again, it's, it's the client's money. I'm never going to tell them what to do with it. But again, if you do get a lump sum, one of the things you don't want to do is start paying off debt. You don't want to kill the goose. That's giving out the golden eggs. And I tell clients that all the time, you burn money by paying down debt. And they'll say, well, yeah, I mean, I paid my house down, but again, your mortgage payment is still the same.

(09:13): It's not going to change. You're better off. If you take that cash, invest it and then use the interest from the investment to help pay the mortgage down. Eventually it will be gone. But again, you know, if you're buying great stocks with that portfolio, you're getting them now versus sticking it in the house, which is going to grow at about maybe one or 2% a year. If that, so again, a hundred thousand dollars or less, that's my advice to you. You know, that's, that's what I would encourage you to do now is get into a little bit more than that 200,000 to maybe about a million. And this instance, you definitely want to start to put together a good team. You definitely want to have an estate planning attorney on your team and as a fiduciary advisor and a CFP. And so you probably already working with a tax professional, you know, when you, when you inherit that kind of money, hopefully the taxes have already been paid and you don't have to worry about paying the taxes on that.

(10:08): But if the taxes haven't been paid, you definitely want to go out there and hire a good CPA to help sort the situation. Also a good estate planning attorney, a fiduciary advisor slash certified financial planner, and then a good CPA or a good tax professional who, who would be good at running numbers and crunching numbers and different things like that. And so with that being said, your fiduciary buyers that are CFE, you can create a CFP, can create a financial plan for you. They can communicate that financial planning with the estate planning attorney, because at that point you definitely want to set up a trust and then you want to start putting assets in that trust and funding the trust, and then beginning to understand how that works. And because the trust is an entity that it basically protects you from the outsiders of getting sued and different things like that.

(10:52): So anytime you come into a large sum of money, there's always situations that can be waiting for you, that you just never thought about. And I know the rule of thumb. If you do inherit a lot of money, make sure you don't tell anybody, try to keep that a secret, even with close friends. I mean, you want to keep this, like on the hush hush, hush, hush download download, you really don't want anybody knowing about it, you know, outside of your therapist or, or your attorney or something like that. So that's my advice or $200,000 to a million. Now let's go into a million dollars and above. And I've seen cases where people have inherited some large chunks of money, whether it be in buildings or whatever, it might be 3 million, 4 million, 5 million, 6 million inheriting, large assets and so on and so forth. And so when you inherit those types of assets, normally whoever you inherited them from, if they have that kind of money, they probably had a good estate planning attorney.

(11:48): They probably had a good CFP. They probably had a good CPA. And also on the team, you definitely want to make sure you hire that insurance advisor, because you definitely want to make sure you have the right amounts of, you know, or what I call liability insurance or a great umbrella policy that protects you from basically you get into an accident and some attorney finds out, Hey, this guy has assets and they start digging around. And next thing you know, you're being sued for all kinds of stuff left and right. So you definitely want to make sure you have a great insurance advisor and you have the right amounts of coverage. And normally your fiduciary or CFP would have someone that they work with as well. Who understands that depending on the type of network that their current clientele have. And that's a, that's a very important thing.

(12:36): Also, you may want to look at hiring a CIP, a charitable advisor and philanthropy, and I have one of those designations. And basically what it is is you get to set up different types of charities or whatnot. It could be charity. It could be some sort of type of other type of giving tool where now you begin to take a portion of your assets and you put them into your, your foundation or your charity to begin doing some good work. And again, with that type of money, if it comes to you and it's a different story, but if it comes to you and buildings, you definitely going to have to understand how to handle that and, and how to manage those funds. That's a very important thing to take a look. Okay. The last one I want to talk about is if you are a business owner, sometimes you can have a business that takes off overnight.

(13:21): And I think the same thing kind of applies. You definitely want to make sure you have the right team of people around you so that you don't treat your business like your personal piggy bank. I've seen cases where businesses have gone under because the business owner, all of a sudden became successful. They didn't know the purpose for their wealth. And they began to spend their money. Like it was water writing checks out of their business, not putting aside, not paying their taxes. And many people have been ruined because they didn't follow the proper protocol of inheriting or coming into large sums of money relatively quickly. So if you're out there and you've inherited some money here or there, or you know that you're going to inherit money. One of the things I talked to my clients about is I don't like surprises. And, and this was, this one is a little touchy because sometimes you don't want to look money hungry to your family.

(14:13): Like your mom and dad, you know, they have assets they're going to distribute, but at the same time, I think it's very important that if you guys can have a dialogue or you can talk to their advisors and find out if there's any potential tax bites coming down the road. And that's one of the things I do with my clients. I tell them, look, when you pass away, you're probably going to be worth based on what we have right now, maybe 10 to $15 million. If that money is in the form of an investment account, that's a non IRA. Then there's things we can do with that. But if the money yeah is in the form of an IRA, a 401k or some sort of government sponsored program, the taxes are ramping up in there as the investment gains grow. And if we don't find a way to liquidate that, then you're going to be leaving behind a ticking time bomb to your kids.

(14:58): Of course, they can take it over a period of time. But if you plan and you strategize, the question is, is how much do you want going to the IRS? And how much do you want going to the kids? Every time they say, I want a hundred percent going to my kids and I want 0% going to the IRS. Well, you're going to have to have a great estate planning program put together along with the appropriate amounts of life insurance policies that are, that gets passed on tax-free so that the kids can use the life insurance proceeds to pay the taxes and clean up the IRAs and different things like that. And so that's a conversation I have with my wealthier clients that are going to be worth a lot when they pass away. And that's making sure you have the right plan in place.

(15:45): So again, if you inherited a hundred thousand dollars or less, not a lot of fanfare with that, take a nice trip, but the rest in an investment account, you inherit to 200,000 to a million. You want to start to get the right people on the team, the estate planning attorney, the fiduciary, CFP, CPA, anything above that you want to start to add in the insurance advisor chartered event, that advisor and philanthropy, or a team of professionals who handle large charities and organizations to begin distributing your wealth to the community and you want to do good. Okay. Anytime you inherit money, you want to make sure you do good and you don't do harm. There's a lot of people with dealings and billions of dollars out there that are doing more harm than good with their resources. And I just wanted to bring a different kind of conversation to you guys today with, you know, starting off with my crazy dream about inheriting or somebody dropping off a bag of money with 50 million.

(16:36): That would be great. But again, never count yourself out. You definitely want to start to lay the groundwork and the foundation for becoming successful. And if you haven't done any of that yet, and you do have a large sum of funds, are you going to inherit a large sum of funds? You definitely want to get in contact with me, go to my website, retire now, retire wild.com. Download the rapid retired brochure. Take a look at that, fill out the game changer form, submit that. And I'll be in touch with you to help you get from where you are today, to where you want to be. And if you're doing something you hate to help you stop doing what you hate. All right, until next time, one, two, three, let's get it.

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