The Laws of your Money with Ann-Margaret Episode 27

Episode Transcript

Speaker 1 (00:00):
The following is a paid podcast. iHeartRadio's hosting of this
podcast constitutes neither an endorsement of the products offered or
the ideas expressed. The following program is sponsored by New
York Priority Medical Care. Now it's time for the Laws
of Your Money, a weekly call in show with legal

(00:20):
tips to help you protect your money. Here's your host
and Margaret Caroza.

Speaker 2 (00:25):
Hello, and welcome to the Laws of your Money. This
is a program dedicated to protecting you from legal and
financial mayhem when it comes to personal finance. I believe
the single most important thing is protecting ourselves legally, because

(00:49):
what does it matter how brilliantly I invest or how
diligently I save if there is a greater than forty
percent chance of lou using assets to a long term illness,
an expensive divorce taxes. This can be capital gains taxes,

(01:09):
estate taxes, not to mention ordinary lawsuits.

Speaker 3 (01:15):
We all know that.

Speaker 2 (01:16):
We're living in a very litigious society, but it comes
as an unwelcome surprise that we are more likely to
be involved in a legal battle with a former loved
one than with a stranger. So it's critically important for
all of us to protect our selves and our finances

(01:40):
and our families legally, I am asset protection attorney and
Margaret Carosa joined today by two terrific guest co hosts.
The first is Anne Woolsey, a journalist and the founder
of Maverick River Media. Welcome to the program and thank you,

(02:03):
and Margaret and my guest co host joining me for
the second time on the Laws of Your Money is
my son representing the gen Z perspective on what we're
going to be talking about today. Welcome to the program,
Billy Duke.

Speaker 4 (02:21):
Thank you so much for having me Mom, and it's
great sitting next to you as well. I'm excited the
gen Z voice awesome.

Speaker 2 (02:29):
I hope you mean that. So everyone has read about
the great wealth Transfer. The oldest of the Baby Boomers
are passing away and they are bequeathing a record amount
of money to millennials and gen Z heirs. We estimate

(02:55):
that one hundred trillion dollars is changing hands generationally over
the next fifteen years, and an estimated thirty six trillion
of that will fall into the hands of jen Z folks. Normally,

(03:17):
on this show, we talk about protecting ourselves from external
wealth threats, liability, taxes, long term care. But I want
to focus today on internal threats to wealth. I am

(03:38):
a lifelong student of human behavior, especially when it comes
to finances. In my estate planning practice, I have been
blessed to have worked with over twenty five thousand people,
and I really study which careers, which behaviors allow people

(04:07):
to save and invest a lot of money, and I
watch the opposite. Some people, no matter how much they make,
they're broke or they are in debt. You know, it's
not uncommon in my office to have a neurologist making

(04:27):
seven hundred thousand dollars a year who is in the
red on a balance.

Speaker 3 (04:34):
Sheet because he's living.

Speaker 2 (04:36):
Beyond his means and he has to borrow money from
his blue collar elderly parents, a retired cop, a retired
nurse who are worth two million dollars right because they
bought a house fifty years ago that has quadrupled in
value and they've saved money.

Speaker 3 (04:57):
You know.

Speaker 2 (04:57):
So my point is all ways, that no amount of
money is inexhaustible, whether it is an inheritance, a settlement
on a lawsuit, a lottery win. I've had two clients
who have won the lottery and one client won it twice.

Speaker 3 (05:21):
Wow, isn't that crazy?

Speaker 5 (05:23):
Crazy?

Speaker 2 (05:24):
He is not someone who lost it all, but a
huge percentage of lottery winners lose it all because they
are just out of control financially before the big win.
So if we are a train wreck with two thousand dollars,
we're going to be a train wreck with twenty million dollars.

(05:46):
So let's talk about today some strategies for keeping more
of what comes into our hands. And I want to
start with a bank of a May study which recently
found that gen Z people are out of control financially.

(06:12):
What do you have to say about this, Billy? Do
you agree with it?

Speaker 5 (06:16):
Well?

Speaker 4 (06:16):
I think it's funny because on the one hand, gen
Z may be out of control with their spending, but
nobody who's listening knows my mother unless they know about
her extreme saving habits. This is the woman when we
were growing up. She would reuse paper towel. Okay, she
could hear the sound of the paper towel ripping from

(06:38):
across the house, So you might take it to an extreme,
but you know what, I do agree that gen Z
would do well to focus on how best to save.
And it's interesting we have data from into It which
says that fifty nine percent of Americans aged eighteen to
twenty five. That's my people site having enough money put

(06:59):
aside at a top priority. So this is definitely a
conversation that I think gen Z wants to engage in.

Speaker 2 (07:06):
And do you, I mean, yes, the paper towel. I
hate wasting things, but I just want for the record,
I don't reuse a dirty paper towel. But let's look
at the situation where we have just washed our hands.
Oh my goodness, Okay, so our hands are totally clean,

(07:29):
they happen to be wet. So if I dry my
hands on a paper towel, I will then take that
paper towel and let it dry somewhere so I can
use it to wipe up spills on the floor. I
don't think anyone listening to this would think that that's extreme.

Speaker 5 (07:48):
Well, and that's what makes you my mother? Okay, And you.

Speaker 2 (07:53):
Are the mother of a gen Z person, how do
you deal with saying no to and ask when you
know maybe all of his friends have A B and C.

Speaker 3 (08:14):
Do you find that it's difficult to say no?

Speaker 6 (08:18):
So I'm here, gen X, thank you representing one thing
that I think is really different, and I hear you
and Billy chatting, is that my parents didn't talk to
me about money. And my father was very, very successful,
bless him. He's passed now, but he was so successful.
But never a conversation about my bank account, my savings.

(08:42):
Ann and I have known each other for a long time.
I wish it was longer and I had been the saver.
But with my son, he's a bit of a pandemic
kid and he's a gamer, which during the pandemic was
a lovely blessing. He could play with his friends, but
I realized that that money could start flying out the door.
So I put him on a gaming budget. Wow, and

(09:05):
he was like, my friends are not a gaming budget.
But I said, you know, he needs to know. I said,
there's two rules. Twenty bucks a month, and you have
to ask me before you buy anything. And he is
now seventeen. That started when he was like ten, and
he still asks me. He comes in and says, Mom,
can I buy this? So he had to consciously be

(09:26):
aware of the money we were spending. And then he
just got his first job, so I'm having him put
twenty percent into savings in his own little account. He
has to calculate what is twenty and put it into savings,
and he's actively doing it and not spending the money.
So I just think talking to your children about it.
And one more thing. I'm not going to call out

(09:46):
any coffee company, but I see these kids spending eight
bucks on a coffee and I'm like, stop, you.

Speaker 3 (09:52):
Know, go.

Speaker 7 (09:56):
Deli coffee.

Speaker 6 (09:57):
But you know, I try to just tell him, like,
some things are worth it and some things aren't. Don't
drink your wealth at an eight dollars drink.

Speaker 3 (10:05):
We don't drink your wealth, and.

Speaker 7 (10:07):
Try to save what you can.

Speaker 6 (10:10):
So having the conversations right there, that's a difference in
the way I grew up, and I hope I can
teach him.

Speaker 2 (10:16):
Well, that's amazing, you know. I think saving is a
skill like anything else. It doesn't just come naturally to.

Speaker 3 (10:26):
A lot of people.

Speaker 2 (10:28):
You know, everyone who knows me knows that I was
totally out of control with credit cards in my twenties.
I had very nice clothes, but I thought that was
the highest and best purpose of money. And when there
wasn't money, there was still credit, so you can buy
whatever you want. And I distinctly remember being out with

(10:52):
girlfriends one night and the conversation came to one friend
who wasn't there, and someone mentioned that she had ten
thousand dollars saved in a bank account, and I remember thinking,
why is on earth does she have that money in

(11:13):
the bank when she could be buying such beautiful clothes. Oh,
that's so funny, you know, I thought it was just
so silly. But if we don't have these skills. And
I really commend you Anne for you know, setting up
these structures for your son, because at the end of

(11:34):
the day, I believe that our ability to say no
to ourselves in many areas of life, you know, not
allowing the thoughtless comment to come out of our mouths,
not having a second helping of dessert at a party,
or not spending more than we should. This is all

(11:59):
delayed gratification. And did anyone remember and the marshmallow experiment?

Speaker 3 (12:07):
Did you ever readout that?

Speaker 5 (12:09):
And that's made a resurgence in popularity?

Speaker 4 (12:11):
Yeah?

Speaker 7 (12:12):
Really, I just saw it in a movie. It was
just yes, remember that.

Speaker 2 (12:16):
So there were five toddlers and it was an experiment
and the researcher put two marshmallows in front of all
of them, left the room before leaving, said to them,
if you don't eat those two marshmallows, when I come back,
I'll give you two more. And some of the kids

(12:37):
were able to withstand the urge, and some of the
kids weren't. And the ones who were able to say
no to themselves or to say not now, they tracked
these kids later in life and they were hugely successful.
So I think, you know, that's something that we all

(13:00):
need to work out now. In my office, I work
with several gen z people who were, you know, entering
the workforce now, and I really feel like they are
a different breed in so many ways. And they all
come in with those you know, big fancy drinks. Yes,

(13:24):
these fancy eight dollars drinks, and some of them I
never see them in the same outfit. Twice now, A
couple of years ago, I did an experiment, and you
may remember this, Billy, I did.

Speaker 3 (13:38):
Not buy a stitch of clothing for two years.

Speaker 2 (13:43):
Right, I mean, who amongst us doesn't have more than
enough clothes to last the rest of their lives? And
it was very interesting, it was liberating, and I found
I was becoming more creative again, like back when you
were in college and didn't necessarily have the money to

(14:04):
buy whatever you want.

Speaker 3 (14:05):
And I think if we can use.

Speaker 2 (14:09):
What we have, repurpose what we have, repair as opposed
to replace, I think we would all be well advised
to learn a few simple sewing stitches right and absence sewing,
that you can still be creative. I had a black

(14:29):
sweater one day and I noticed it had a little
hole in it, and instead of taking the time to
sew it, I thought it would be quicker to take
a black sharpie and I colored my skin beneath the hole.
Sew you and it looked fine. But the kicker was

(14:49):
the next morning when I took a shower, I'd forgotten
all about it, and I thought I was dying when
I looked in the mirror and saw this big.

Speaker 3 (14:56):
Black spot on my arm.

Speaker 5 (14:57):
Oh my god.

Speaker 3 (14:59):
But we need to be creative.

Speaker 2 (15:02):
And do you have any money saving tips, Billy, Well.

Speaker 4 (15:08):
It's interesting because gen Z in particular right now, I
think really needs to focus on saving myself included. You know,
I'm a California resident, and we know from the California
Housing Department that individuals who make one hundred thousand dollars
are now considered low income in many California counties, and
that particularly applies to gen Z. And I really look

(15:31):
at some of the kitchen table lessons I got from
my mother growing up about saving, and it was interesting
because I feel like as a parent, you focused on
you know, we didn't ever go to Disney World, but
in place of that, every Saturday we were out at
nature preserves, we were biking, you, me, my brother, my father,

(15:55):
and so we still got you know, the family time.
We got the excite then of being together and doing activities,
but we still stretch the dollar. And I think for
gen Z, what what this is all going to come
down to is what did those kitchen table lessons look like?

(16:16):
You know, was good saving modeled in the home? Was
wild spending seen as something to avoid? Was the dollar
seen as an earned commodity and not as something just expendable.

Speaker 5 (16:28):
I think you did a pretty good job with that.

Speaker 3 (16:30):
Thank you, Billy.

Speaker 2 (16:30):
But I wonder and and I'd be interested in your
thoughts on this.

Speaker 3 (16:36):
Do you think as we move.

Speaker 2 (16:37):
Away from cash, that expenditures don't really resonate? You know,
I was in a drug store last night with my
younger son, and you know, he just put his phone
near somehow the cash register and we walked out with
our stuff. So it the acquisitions sort of just magically happen.

Speaker 6 (17:02):
And the other thing is not just when you're in
a store, but when you're home at night and you
can double click Apple Pay. I would say it's a
little like dieting, like don't buy anything after eight pm
because you're like, I need that beanbag that's ninety feet long, Like, no,
you don't.

Speaker 7 (17:20):
But I do think just it's not real.

Speaker 6 (17:23):
It's not real tangible money, so you have to be
aware of what that cost is and keep yourself on
a budget. I also simple things. I never order the
specials in restaurants. They're always more expensive. I try not
to even hear them because then I have no control
over my bill.

Speaker 4 (17:42):
Right.

Speaker 2 (17:45):
I think I embarrass everyone for different reasons.

Speaker 3 (17:49):
But whenever we go.

Speaker 2 (17:51):
Out to eat a I pay cash, right because I
don't want to see some credit card bill for a
meal that I ate six weeks ago.

Speaker 4 (18:01):
Now if I had a dime for every time my
dad pulls out a card and she says, no, no, no,
I don't want to see it on the bill.

Speaker 2 (18:07):
But the other thing I do when they describe this
lovely sounding special. I just ask very neutrally, and how
much is that?

Speaker 3 (18:18):
Right? You shouldn't be afraid to ask the server how
much that is?

Speaker 7 (18:23):
And they never tell you. And there's a reason.

Speaker 2 (18:25):
There's a reason. Absolutely. Okay, let's switch tracks a little bit,
and now I am talking to the baby boomers who
are listening. And as we prepare our estate planning for
the objects of our affection, our millennial and gen Z

(18:48):
children and grandchildren, how can we give them the best
chance of being successful with the money that they are inheriting.

Speaker 3 (19:02):
And I want to.

Speaker 2 (19:03):
Start with the single biggest mistake that I see out
there in the estate planning world, and that is naming
a minor directly as a beneficiary in your will, in
your trust, as a contingent beneficiary on life insurance or

(19:25):
a retirement plan. Yes, I know that this minor child
is your favorite person in the world, but a minor
cannot inherit assets directly and a court will become involved.
And this goes back to Jackie Coogan. I don't think

(19:47):
anyone remembers who that is, but you may know that
Jackie Coogan was a famous child actor in the nineteen
thirties and was perhaps the most famous person I think,
together with Shirley Temple during the Great Depression, and he

(20:08):
earned a ton of money at the time, and his
parents were a quote unquote managing it for him. And
when he reached adulthood he had nothing because the mother
spent it on fur coats and fancy cars. And every
state in the United States enacted so called Jackie Coogan legislation,

(20:33):
which says that when a minor receives money through work
or through an inheritance, the court must appoint.

Speaker 3 (20:44):
Someone to oversee this money.

Speaker 2 (20:47):
And in New York State we call these overseers guardian
ad ltem. And if you mention that phrase to a lawyer,
their eyes will light up. It's like a Scooby snack
that the judge hands out to their colleagues and cronies
and friends. And you get to oversee little Johnny's money

(21:11):
and you get a nice.

Speaker 3 (21:13):
Percentage of it every year.

Speaker 2 (21:15):
So anyone who has a youngster in their lives, you
need to.

Speaker 3 (21:21):
Create a little trust for them. Now.

Speaker 2 (21:25):
This trust can be a revocable trust and you don't
even have to put any money in it now. But
you create the trust, it will have its own tax
ID number and this little trust can be the named
beneficiary on your insurance policy, in your trust, in your will,

(21:48):
and that will keep the government out of your family finances.
The other thing that I would recommend that we do
within this trust is to not say that little Johnny
gets everything when he's twenty one.

Speaker 3 (22:07):
A that is way too young.

Speaker 2 (22:10):
There are studies that a twenty one year old does
not even have a fully developed frontal cortex and lacks
impulse control. And you know, I would be concerned about
a twenty one year old statistically, they are still in college,
and I don't want to interfere with college financial aid

(22:32):
that that child may be receiving. So I recommend that
everyone use the age of twenty five as the start.
And this is what I have in my estate planning.
No one gets anything until they're twenty five, and when
they're twenty five, they only get a third, and then

(22:54):
they get a second bite at the apple. Five years
later they would get half of what left of their share,
and then ten years later they.

Speaker 3 (23:04):
Would get the entire distribution.

Speaker 2 (23:07):
This guards against inexperienced decision making. You know, if the
young person made bad investments or had a bad relationship,
that they're not going to lose everything. You know, we
want to look at our loved ones. And I keep

(23:28):
coming back to the phrase that we need to change
the conversation from who is going to get my assets
to how are they going.

Speaker 3 (23:39):
To get the assets?

Speaker 2 (23:40):
If I have a loved one who has special needs,
a developmental disability, a psychiatric diagnosis, substance abuse, someone is
on the autism spectrum and they're eight years old and
we don't know, you know, what's going to be when
they reach adulthood. We want to customize the planning and

(24:05):
that is you know, the greatest gift that we can
give to youngsters. And I view a state planning and
it sounds silly, I guess, but it is our last
act as a parent. We want to set up these
children for success.

Speaker 5 (24:26):
Yeah, I completely agree.

Speaker 4 (24:27):
And you know what, I think that delayed gratification that
we were talking about, It makes total sense to delay
the age of twenty five also is smart just from
a a career standpoint. You know, we're talking about good
saving habits and the making sure young people know the
value of a dollar. And I think two years out

(24:47):
of college, which you're twenty five, or two or three
years out out of college, you've now also gotten the
chance to learn a little bit about the value of
a dollar. You've been in the workforce for two or
three years before you get the major financial influx, which
which I mean, speaking from personal experience, that would totally
I think skew my reality if I weren't prepared for it.

Speaker 3 (25:10):
Well, I don't know how major it's going to be.

Speaker 5 (25:13):
Billy okay here with my eight dollar lots exactly.

Speaker 3 (25:19):
Yeah.

Speaker 2 (25:19):
So, speaking of newly minted adults, if any of you
are going to high school graduations this month, I strongly
recommend that you bring up the topic or give your
newly minted adult who's eighteen years old advance directives. They

(25:43):
need to do a health care proxy because at the
age of eighteen, even though they don't look like it
or act like it, they are technically adults and Mommy
can no longer automatically make life and death decisions in
the event of hospitalization. So on my website, no one

(26:08):
should be none of my colleagues out there should be charging.

Speaker 3 (26:12):
For a health care proxy.

Speaker 2 (26:14):
Back in my misspent youth, as a state legislator, I
was a co sponsor of the healthcare proxy law in
New York state, and it's designed to be d I y.
You don't need a lawyer to do a healthcare proxy.
Go onto my website. There's an area with free forms

(26:35):
that you can and should be doing on your own
and stick one of them in the graduation card that
for the party that you're going to.

Speaker 5 (26:43):
Health unt.

Speaker 7 (26:47):
Important, though I still want that say in my son's life. Really,
that's a.

Speaker 4 (26:53):
Question about that you do a healthcare proxy, who do
I give that to? You know, I printed out for
my state's website, and do I give it to the
person who is the health billy.

Speaker 3 (27:02):
You don't print it out from the state website.

Speaker 4 (27:05):
You've printed from from my elder law attorney dot com.

Speaker 2 (27:08):
Yes, yes, my elder law attorney dot com. And yeah,
so you print it out, you fill it out. It
does not have to be notarized in New York. Simply
two witnesses other than the person that you've named as
your agent. You should be sure that you put your
agent's cell phone number on it. The only room for

(27:32):
error with a healthcare proxy is naming two agents at
the same time. So you can't name Mommy and Daddy together.
You have one primary, one backup, and the best thing
to do with the healthcare proxy is to take a
picture of it with your phone so you always have

(27:52):
it on you, and then text that picture to your
named agent, so they will all always have the healthcare
proxy on them. The other thing that we want our
youngsters to be protected from is a forty three percent
divorce rate. So when I leave my assets in my

(28:17):
trust in my will to marry Susie and Johnny, I
want to specify that I'm leaving it to them as.

Speaker 3 (28:26):
Their separate property. If one of my children.

Speaker 2 (28:31):
Has, you know, a history of bad relationships and they're
on their third marriage, I may want to say to
marry Susie and Johnny on the condition that they take
legal steps to keep inherited assets separate from what they
may choose to comingle with a spouse or partner. And

(28:55):
you know, to the last point on gen Z is
they are actually more likely to have prenups than any
other generational cohort.

Speaker 5 (29:08):
Yeah. I think it's kind of like a given for us.

Speaker 4 (29:10):
Yeah, yeah, absolutely, I certainly wouldn't get married without a prenup.

Speaker 2 (29:14):
I think, you know, they've seen their parents' divorce and yeah,
hopefully they're going to be smarter with their money. So
Anne and Billy, thank you so much for joining today's discussion,
and thank you all of you out there for listening.

Speaker 3 (29:30):
I hope that you visit me during the.

Speaker 2 (29:32):
Week at my lawyer Anne and my asset protection attorney
dot com.

Speaker 3 (29:38):
Have a great day everyone.

Speaker 1 (29:52):
The preceding program was sponsored by New York Priority Medical Care.
The preceeding was a paid podcast Iheartradios. Hosting of this
podcast constitutes neither an endorsement of the products offered or
the ideas expressed.