When a candidate for President of the United States is so sick she’s got to leave the 9/11 memorial service halfway through, and then is unable to get into her vehicle under her own power, that’s a person who is clearly unwell.  Regardless of political stripes, we wish Hillary Clinton a speedy recovery.  But her illnesses – and the fact they’ve been so carefully hidden – begs the question:  What about YOU?  Have you prepared your spouse, your kids or whoever will inherit your portfolio all they need to know to understand and succeed with your assets?  And by the way – the potential of severe illness for Hillary has ramifications for your money, too.  Let’s take a hard look right now.  I’m Bryan Ellis.  This is Episode #227.

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Hello, SDI Nation!  Welcome to the podcast of record for savvy self-directed investors like you where we help you TAKE and KEEP control of your investments.

In the last episode, we talked about Bob, who recently passed away and left his 3 children with an IRA containing real estate.  It was a very valuable IRA, but Bob didn’t plan for the fact that that real estate would have to be divided when he passed away, and the predictable result was bad:  Serious legal strife among his 3 kids.

But the potential for conflict over dividing assets in an inherited IRA is only one challenge when beneficiaries inherit a self-directed retirement account.  The other challenge is brought into sharper focus by recent news of Hillary Clinton’s health challenges.  Now before we proceed, note that this isn’t a political analysis, but a financial one.

We know that Mrs. Clinton is suffering from a severe case of pneumonia and that she’s had a collection of other serious head injuries and illnesses in the past.  There’s also pervasive discussion in the medical community of the likelihood that she suffers from ongoing neurological problems.

Whether those things are true or a product of the political circus we’re all witnessing right now, one thing is true:  Mrs. Clinton – just like you and me – will die someday.  Now unlike me, and most of you as well, Mrs. Clinton and her husband are extremely wealthy, reportedly having a net worth in excess of $100 million.  I don’t know how or whether the Clintons invest their money, but this issue affects them just like it does me and you.

What’s the issue?  Preparing the next generation to handle the money and the assets.

If, God forbid, Hillary and Bill were hit by a train, would Chelsea know how to handle what they leave behind to her?

More importantly, will YOUR spouse or your children know how to handle the assets you leave behind?

It’s important for you to grasp this one central concept:  Your knowledge doesn’t transfer automatically.  Your motivations and plans don’t transfer automatically.  Not even your IRA or 401k transfer automatically.  In each case, you’ve got to DO SOMETHING to make sure that your assets – and the ability to properly manage them – ends up in the possession of your loved ones…

….and nobody can make that happen except for YOU.

Here are some of the things you need to make sure to do to prepare your beneficiaries for a successful succession into your financial assets, and as I go through this list, ask yourself:  Do your beneficiaries have this information for YOUR assets?  Here we go:

1. A clear, detailed list of assets, and the accounts in which they’re held.
2. A clear, detailed status report for your assets, including valuation (and how to update the valuation), any debt, any recurring or expected expenses, most likely unplanned expenses and any risk factors you see
3. Thorough financial records. Think in terms of preparation for an IRS audit, because that could happen after you’re gone, and you won’t be available to lend your knowledge
4. A detailed explanation of assets. For example:  What is the asset, exactly?  Is it a stock or bond or real estate or precious metal or… what exactly is it?  How can it be profitable?  How can it lose money?  Why did you choose to invest in it to begin with?  What were you hoping to accomplish?
5. A target for your assets. If you have specific financial benchmarks you’re hoping to achieve with your assets, after which you want to liquidate or take other action, detail these targets and intentions.
6. List of resources & relationships needed to manage your assets. For example:  If you are leaving real estate behind, you should make sure that you’ve documented the names and contact information of your property managers, insurance companies, lenders and any other service providers.  Document the names of the law firms, accounting firms and other professional services used on the property.  The goal here is for truly simple, seamless transition.
7. List of responsibilities of the assets. Again using a real estate example:  Each year, property taxes must be paid.  Insurance must be purchased.  The property must be rented to generate cash flow.  These are all examples, and there are more.  The point is this:  Don’t assume that your beneficiaries know any of this.  In fact, assume that they know NONE of it.  And don’t fail to document EVERYTHING, even if those responsibilities are presently handled by a management company or other professionals, because at the end of the day, those responsibilities are still responsibilities of the owner.

Give yourself a report card on succession planning for your portfolio right now.  Forget about whether end-of-life issues are a top-of-mind consideration for you presently, since none of us are guaranteed another day.  This is a here-and-now kind of thing… if your beneficiaries are actually important to you, that is.  And OF COURSE they are.

 

This is important stuff, folks.  If you didn’t get all of those, check out the list, which I’ve left for you in the description area below.

Think seriously about this stuff my friends.  Just think of all of the STUPID mistakes you can make on your first real estate deal… and that’s when you’re excited about being a real estate investor.  Odds are, your beneficiaries may not have your level of enthusiasm about it, so they could be even more prone to make costly mistakes, so do them a favor:  Make it easy by leaving CLEAR documentation.  There’s no other way!

And folks, before I go, I want to mention something to you:  I’ve found a GREAT way to fund 100% of the cost of most deals – particularly those in the $50,000 to $250,000 range… and the cost to you is no more than the equivalent of a very few points up front and ZERO INTEREST on the loan.  That’s right… ZERO interest!  That funding method is to work with my friends Ari and Mike at Fund & Grow.  Those guys are THE EXPERTS at establishing zero-interest lines of credit for their clients.  They don’t tell you how… they do it for you!  This is great stuff and I’ve seen it work time and time and time again, so check them out right now over at SDIRadio.com/credit.  Again, SDIRadio.com/credit.  You’ll be VERY glad you did!

That’s all for now, my friends, but I do wonder what you think about something:  What are YOU doing to prepare the next generation to inherit your assets?  What things in addition to those I’ve outlined do you think should be done?  Tell me!  Tell me now!

 

You can do that by leaving a comment on today’s show notes page over at SDIRadio.com/227.  And be sure to check out the first comment on that page, which is from me.  There I give you one more tip that I’m using, which is NOT in today’s episode… and then tell me what you think!  And hey… if you’ve enjoyed this show and want more, be sure to tell your friends about Self Directed Investor Radio.  And if you haven’t yet given us a 5-star rating on iTunes, I’ll be SO GRATEFUL if you’d do so.  It costs you nothing and has a HUGE impact on this show.  If you don’t know how to do that, just go to SDIRadio.com/howto where you can get full instructions.

My friends… a lot of GREAT things are in the very near future for this show.  Hang with me, and we’ll blow your mind.  And remember:

Invest wisely today, and live well forever!

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