10 Ways To Avoid The Inheritor�s Dilemma

Cold Open: You Inherit $100

[0:00] DANO WEIR: Daren, there's a very famous board game about money. And one of the spaces that you land on in this game, you get these little cards that are about little happenings in your money life. And when you're a kid, you would be very excited to get income tax refund, collect $20. And then you'd be going around the board and one says, pay hospital $100. You go, oh no! Here's one you'll like. From sale of stock, you get $45. These are seeming like good things. That's a good one. Here's one that you used to get that you would think would be a good one. What's it say?

[0:43] DAREN BLONSKI CFP®: You inherit $100.

[0:46] DANO WEIR: Is that really a good thing? Sure.

[0:49] DAREN BLONSKI CFP®: Maybe. Financial confidence for your hip pocket. Money is really good energy. Thanks for checking out It's All Money.

Welcome To It's All Money: What Is The Inheritor's Dilemma?

[1:03] DANO WEIR: Welcome to It's All Money. We are live inside the Sonoma Wealth Advisors Conference Room in the city of Sonoma, just a block off the square. Who are we? My name is Dan O'Weir. I'm the Marketing Director for Sonoma Wealth, and I'm joined by our Managing Principal, Daren Blonski, CFP. And today we are talking about what sounds like a dream when it's years and years away. Someone in your family says, someday... This will all be yours, whatever that may be. But as someday becomes today, you start asking the question, what's the cost? And what is the inheritor's dilemma, Daren?

[1:43] DAREN BLONSKI CFP®: Well, it's something I've noticed over the years of helping people inherit money, that it isn't always a good thing. And there's actually some trade-offs to inheriting money. It feels great because you get this influx of cash that you can all of a sudden enable your life to do all these great things, right? But coming with that cash or those houses or those stocks, there's a lot of emotional strings that come with them.

[2:12] DANO WEIR: How many people in your career in financial services have you helped guide through an inheritance and through what is the loss of a loved one?

[2:21] DAREN BLONSKI CFP®: Countless. I mean... I guess every client in some way has gone through some type of loss of a loved one. And many of them have come into inheritances at some point. It might be a small inheritance, might be a large inheritance. Like the buddy you were telling me about, you know, everyone's got that experience on some level, even if it's you inherited your dad's watch.

[2:45] DANO WEIR: I literally had a buddy today call me and say, hey, man. I got a small inheritance. What do I do with it? And I said, you will not believe the podcast episode that first off I'm not licensed, buddy, but second off, you will not believe the podcast episode that I'm doing today. It's so funny. You would call about that. So, I want to talk about that, that those people, that group of people, those people who, if from the outside looking in, if it's never happened to you, it seems like it's a great thing. If you've ever been the inheritor of money, there is, there are things that you, the people who've done it have already experienced. And if it ever happens to you, you may experience this as well. So today's episode is a guide, 10 ways to avoid the inheritor's dilemma. I want to talk about the richest generation in the history of the United States Of America. Daren, you know what it is. They are the...

[3:37] DAREN BLONSKI CFP®: Baby boomers?

[3:37] DANO WEIR: Baby boomers.

[3:39] DAREN BLONSKI CFP®: I actually didn't know that fact, but I assume such.

The Largest Wealth Transfer In U.S. History

[3:44] DANO WEIR: They are. If you are 61 to 79 right now, This is stats coming from an article from the University Of Michigan Journal Of Economics. Thanks guys and gals. If you're 61 to 79 right now, as of the recording of this episode in November of 2025, you're in the baby boomer generation. People in that 18 year range only make up 19% of the population of America right now, but they hold 51% of the wealth. At a total of 78.55 trillion. That's three times our GDP. So 61 to 79 someday comes for all of us. That means that their kids, their inheritors in the next five, 10, we don't know how many years, that wealth is transferring. And so what are some of the things that that next generation may encounter? And that's what we're going to look at today.

[4:42] DAREN BLONSKI CFP®: That's right. I mean, it's really pretty Pretty incredible how much money is about ready to start moving hands. It already has started. We're on the very front end of it. But this huge balloon of money is being transitioned between generations. That's what we're about to experience. And there's a whole process to it, right? It's not just like getting a paycheck. There's all these other emotions that come along with inheriting money versus a paycheck that we're going to get into.

Why This Topic Is So Hard To Talk About

[5:10] DANO WEIR: And as someone who is a future inheritor, there's a hesitation because I think rightfully so. And if you feel this way, you're a good person. You shouldn't just be looking at someone in your family and going like, well, when I get the money, you know, that's a terrible way to look at somebody. And yet, if you don't look at some simple things ahead of time. If you aren't prepared, ready. For how that's going to happen, because it will happen, there are some pitfalls. So today's episode are 10 practical things you can do to avoid the inheritor's dilemma. And I've broken it up into three, you can call them groups, tranches, whatever you want to call it, three sets. The first group we're going to look at is the personal actions. And these are some of the things you should do, you know, when someone passes and you know that the inheritance is coming. The very first one is don't ignore your feelings.

[5:57] DAREN BLONSKI CFP®: So, well, let's go to that in a SEC, but let me back up for a SEC. Because I think we need to talk about why it doesn't get talked about, right? Sure. And there's this Taboo around money, right? Like we don't talk about money. We don't share people about our money and our culture. Like that's normal. The challenge with carrying that Taboo through the generations is that when we don't talk about it, then we miscommunicate. And what we're advocating here is for communication about money, right? Yes, it might be Taboo in life, but if you're getting to... Plan the end of your life and plan the transition of that wealth, creating conversations with your loved ones about it's really important because often in our space, we end up on the other side of that conversation. Whether someone comes into our office and say, hey, I inherited this money and I don't know what to do. Or we're in the conversation, I want to give this money to my kids. How should I give it to them? And very often I'll be like, well, let's start with a conversation and often the people are very resistant to that. Well, I don't want them to know. Well, yeah, but you're doing a disservice to everybody if you don't help them start thinking about their money that will be coming to them eventually. So then we go into the feeling part. To your point, the first set of this is don't ignore your feelings, right? Your feelings are— Well.

[7:13] DANO WEIR: Now I'm going to stop you. Because you think that the end of your life— is going to be like, someone's going to ring the bell and be like, okay, it's a week away. And then you're like, all right, I'm slowly slipping away. Now I'm going to do all this work that I was supposed to have already done ahead of time. And maybe that happens. Maybe it doesn't. I have seen in my life, sometimes when it goes, it's gone. And so if you've not done the work, when you're with your faculties, when you've not done the work, when there's nothing going on, the results can be drastically different. Would you agree?

[7:45] DAREN BLONSKI CFP®: Yeah, I mean, if you look at the way our minds work. Our financial acumen is the first aspect of our mental capacity to go but it's usually the last thing we're willing to relinquish so hard it's really hard to admit it really is right i mean it's the equivalent that you can think about i remember when i had to take my dad's keys from him and say dad you can't drive anymore man like this is not good but it's the same way like dad you can't balance your checkbook anymore man like we gotta get in there and start helping you with this stuff. It's not in good shape. When the financial faculties go, a lot of other things are still functioning well. So there's a tendency to not even deal with it. And then you go too far and then you can't do much with it. So it's really important that if you know that your financial faculties are likely the processing in your mind that is likely to dissipate first, you do those things so that when that time comes, you. That's if you have something degenerative, right? Which is not a great way to go. But if you have something degenerative, those financial faculties are going to dissipate pretty quick. So if you're clinging to managing your checkbook or whatever it is, think about what that step is when you can't do that anymore. It's really important.

Don't Ignore Your Feelings

[9:01] DANO WEIR: All right. So our first strategy here as part of our personal group is don't ignore your feelings. You, the inheritor, We're jumping back and forth in this conversation with the you. Sometimes we're talking about people who will be passing on the money. Therein lies the crux of the issue. Yeah, sometimes we're talking about the inheritor. So let's talk about the inheritor who has just lost someone in their life and now they are inheriting money. First up, don't ignore your feelings. Why?

[9:28] DAREN BLONSKI CFP®: Well, first off, I can tell you from personal experience, you don't always know what you feel when that moment hits. And that's actually the most and more important of the things to understand is when you lose a loved one, what you're feeling is a lot or nothing, which is a lot. It's just too much. So what I always recommend when someone passes is your feelings are a really important part of the grieving process, but the action is no action. It's do nothing. Not bury your head in the sand, protect the money and put it in a place, but don't make any big decisions. Don't make any big financial decisions. I say don't do anything big for a year because you won't likely be thinking straight if this person was really important to you that you lost for a year at least. You're going to be all screwed up in your head. And that's just the reality of it. And that's okay. The challenge with the grieving process is it's not linear. It just kind of pops up and comes up in weird moments. And you need to give yourself time to grieve because what you don't want to be doing is grieving with that money. Because that could be really detrimental to your financial future.

[10:34] DANO WEIR: I know you, and I know I can ask about this. So you mentioned, I know from personal experience, what is your personal experience with this?

Daren's Story: Losing His Dad And Brother

[10:45] DAREN BLONSKI CFP®: So I lost my dad from Parkinson's and Lewy body dementia. And then three weeks later, my brother died of alcoholism. And my brother and my dad were like my... They were like my best friends. So it was extremely, extremely difficult time. And on top of that, I was managing a lot of our complexities of my dad's estate and the family situations that I wouldn't have known how to navigate had I not been in this profession. So I know firsthand how messy it can be, even when you think it's all put together. And looking back on that time, I don't remember much of that time. Like my brain was just... Just boom. And the, the feelings were, there actually wasn't a lot of feeling initially because I think like emotionally you just shut down, right? Which is more to the case of like, don't do anything because what you're feeling isn't accurate of what is really going on. And everyone copes different. I went to action, started taking, doing things to, to take care of the things I need to take care of. But so, and I had spent a lot of time with my dad. Getting his estate dialed in and getting things fixed.

[11:57] DANO WEIR: And even then.

[11:58] DAREN BLONSKI CFP®: Even then there was tons of stuff. I mean, I kid you not, I still have a 10 by 25 storage unit full, chocked full of their stuff that I don't know what to do with.

[12:10] DANO WEIR: Right.

[12:11] DAREN BLONSKI CFP®: Like what do I do to throw away my dad's trophy from his 50 years at US Forest Service? Like, I guess, or my brother's comic books. Like what do I do with those? Every one of those things has decision points to it, right? They're pretty significant.

[12:30] DANO WEIR: And you mentioned that when it comes to the emotional piece, and we won't spend maybe as long on every single strategy, but maybe this, I think this might be the most important one. It does come in waves. It's nonlinear. It's asymmetric. And you will be at the gym having a Tuesday, getting a lift on, and it's just... It's a smell. It's someone's name. It's a song. It's nothing. And it's just, right? And you all get hit. It's very disorienting.

[12:59] DAREN BLONSKI CFP®: Yeah.

[13:00] DANO WEIR: And so you shouldn't ignore that.

[13:03] DAREN BLONSKI CFP®: No.

[13:03] DANO WEIR: And you definitely shouldn't be in that mental state when you're making financial decisions.

[13:08] DAREN BLONSKI CFP®: That's right. I mean, to your point, Dan, I was, on Saturday mornings, one of my favorite things to do is just sit there and read. And I was just sitting there reading. And I don't even know what triggered it, but all of a sudden I just had this overwhelming emotions around my dad and my brother. And I'm sitting there and I'm not a guy that cries a lot. I just don't, for whatever reason, I'm sitting there teared up in Starbucks reading about some economic principle. And you're like, what the heck, where did that come from? That was a sidewinder. And that's how it comes out. Right. And now I'm two and a half years out. Right. So it's been a long time. So just imagine the intensity initially, but like the way I dealt with the grief was shutting down, right? And so don't ignore your feelings. The idea is like pay attention to what's going on inside of you emotionally. And you shouldn't be making big decisions during that period of time.

Communicate With The Other Heirs Immediately

[13:59] DANO WEIR: Okay, so we've got don't ignore your feelings. Next, communicate with the other heirs immediately. So depending on your position within the family, depending on your position within the estate plan, whether you're the executor or whether you were the power of attorney or whatever it is. If there are other people in the family involved, then communicate with them. I mean, one, obviously the news that something's happened, I mean, which is natural. But then two, share with them what's going on, whatever that may be, so that you are not, you know, isolated or making decisions in a vacuum.

[14:38] DAREN BLONSKI CFP®: Yeah, and I think you have to be careful with this one. So I always say to clients, like, it doesn't matter how much you've communicated, you haven't done enough. Like even if you think you've done it, there's still going to be more iterations. It's not just the heirs of your estate if you're the client that you're communicating with. But often where we see more of the issues show up, it's from partners and spouses and how their money emotions show up, how their money ghosts show up in that relationship and how it's impact. So money ghosts is just a term I give to early on in life. Like my dad, for example, used to tell me like buying a new car is the dumbest thing you can do. You should always buy a used car because the minute you rolled off the lot, you lose 25% of it. Buy a used car so i bought one new car in my life and i felt guilty the entire time i owned i owed that car owned that car owed that car that car i did owe that way yeah so the entire time i owned that car i felt guilty and at 36 000 miles the fourth fuel injector collapsed into the cylinder and it was like and then i lemoned it back to the dealer and it was like this oh phew i know my bad decision from the beginning, right? But it was pretty wild to go through that and work through that for myself. Like, but I can afford a car, a new car, but I can't buy a new car.

[16:07] DANO WEIR: Because dad said so.

[16:08] DAREN BLONSKI CFP®: Because dad said don't buy new cars.

[16:09] DANO WEIR: That's your money goes.

[16:11] DAREN BLONSKI CFP®: That's my money goes. That's the thing that haunts me about money. Or, you know, there's all kinds. We all have different things. Or that's just the way it is when we grow up, which is fine. And the idea is to become aware of that, right? So what did mom and dad teach us about money? What did... What did we learn in our story of origin around money and what it is we see us a lot with the traditionalists that have moved on a lot now but we've done a lot of coaching over the years with the traditionalist generation that had aspects of the great depression in their origin yeah right so it was like I'm not throwing away that can of peas that's been expired for 10 years because you know we might need it someday that story origin we those are money ghosts that carry through us or or or the family that where the patriarch is always like taking the loan and the family member pays them because they're going to get the better interest rate those types of like mixed up family situations and this is how I'm going to do that with my kids right that type of just rolls downhill that's right that's right i was growing up my one of mine was my dad would take us to big five sporting goods in petaluma you remember of course still go and it's still great is it still there it's so still great okay so they they always have the discounted shoe table yes right and my dad be like okay you could pick out a shoe off the discounted shoe table and so my son Brighton the other day i remember that i had a buddy do you ever get him daniel rourke but he was in elementary school with me and so daniel rourke would always have the coolest Jordans and i had like the big five special discount la gear la gear whatever And I felt like always self-conscious about that. And so my son Brighton really loves shoes. So I'll take him to get shoes and buy him the Jordans. And he's like, dad, I just feel bad buying these shoes. I'm like, no, man. That's all I wanted growing up was to have the Jordans. So you're going to have the Jordans, you know? So I'm going to work really hard so you can have the Jordans. Right. Which is just weird because for my dad probably just didn't carry so practical. I was also thinking about another story about my dad where he, He had this red Toyota Tricel and it would leak in the back and cause it had rusted through. And we, we weren't poor, but we were, we were decently middle-class family. And instead of just repairing it, he went and got white caulking, housing caulking and caulked the joint with white. And he would just pull up and pick us up from school. And I was just like, and he was pretty high up in the forest service and pretty successful. So like he certainly could have afforded a car, but yet he didn't. And that's just who my dad was he was so frugal in the way he did stuff that frugality is carried through with me in some ways but i've had to wrestle with those money ghosts of like am i just being frugal here or is this just smart like what what is it and i think that's that's the point about don't ignore your feelings but it's also the the point about communicating with other heirs and like what is what is the the stories in our family in our culture around money and how we're going to relate to each other. And can we communicate in a way where we're open and fair? And, because no matter how much you communicate, you're going to rub up against emotions and feelings.

[19:24] DANO WEIR: And, and immediately at this point too, you're going to, it's a real good litmus test where you're going to get all manner of reactions. Everybody is going to be right on, on the nose for their character. She's going to act this way. He's going to react this way. And you're going to find out immediately if you already haven't, you know, where they're at and what, how this situation is going to go by, you know, notifying them what's going on and being prepared to manage all that if that's the situation.

[19:52] DAREN BLONSKI CFP®: I think what it does is it just magnifies the best and the worst in us. Yeah. Like, and if we've got those behaviors around money that are just a little bit off, it's going to magnify that. And it's also going to, if you're a person who tends to be more, giving and stuff, it's going to magnify that giving, which actually might be a bad thing, right? Cause I have had clients inherit this money and they're just giving it away left and right. Like, whoa, timeout, like your financial plan's fine with this money now. And I can get you through retirement. But now that you just gave another $100,000 away and you just took out another mortgage for your kid, like, I don't know that you're going to make it now. So it's the best and worst of us. It magnifies it.

Keep The Assets Separate, Not Commingled

[20:34] DANO WEIR: Right. Number three here from the personal group. And these are our first three things you want to, you want to do. Keep the assets. You've touched on this before, but I'll say it again explicitly. Keep the assets separate for now. No big decisions right now.

[20:48] DAREN BLONSKI CFP®: Yeah. So in there's community property law in California so when you get married so we're in California so it's different in every state but when you get married what what is theirs is yours and what yours is theirs what's theirs is yours and what's yours is theirs and vice versa either way you get it so let's call the whole thing off that's what there's yours and yours is there there you go so it's in marriage if you you create it supposed to be a joke in marriage Shh. It was a job. It's late in the day. So if you create it marriage, it's community property. So if you don't work out and you separate, it's half and half right down the middle. Pretty simple. Okay. Inheritances are different. Inheritances in community property state like California are sold in separate property. But if you take that inheritance and mix it with community property assets, so say for example, you and your partner have a bank account. And you inherit money and put it in your partner and use account, then it becomes community property.

[21:53] DANO WEIR: Okay, so this scenario, let's say you are the executor, you've got two brothers, and you're also married. And so the money is a million dollars, all liquid cash, let's just say. The money, the parent passes, you get the inheritance. And naturally you go, okay, I'm just going to put it in my bank account just to let it chill. And the minute that you do that bank account, which also has your wife's name on it.

[22:24] DAREN BLONSKI CFP®: It's community property.

[22:25] DANO WEIR: It's totally different than if you had it a separate account.

[22:27] DAREN BLONSKI CFP®: That's right. It's called commingling.

[22:30] DANO WEIR: Yeah.

[22:31] DAREN BLONSKI CFP®: So there's always this awkward conversation when clients come in and they're like, oh, I'm inheriting money. And, you know, the marriage and the relationship looks fine from the outside. I don't know. I don't pretend to know how people's relationships are. What I've learned over time is what it seems. It is not. And so I always have to like, kind of like, hey, I'm just going to disclose this so everybody knows I'm not making any judgment about your relationship. I don't know anything about your relationship. But in a community property state, what you create together gets split half if it doesn't work out. Inheritance is sole and separate property unless you commingle it. So be very thoughtful about you do it. And I've seen it happen, unfortunately, where it's like, Oh, we're fine. We're just going to mix it all together. And then, you know, a few years down the road, like, hey, turns out we don't get along anymore. It's commingled. There are some ways to claw it back potentially, but it's very messy. Possession's nine tenths. And very ugly.

[23:29] DANO WEIR: I mean, yeah, let's just keep it separate while we can, especially if you don't have to. Right. There's no reason to commingle it.

[23:35] DAREN BLONSKI CFP®: So you want to keep it separate and you want to make sure it's in a place that. Is not at risk until you can figure out what's going on. And there's lots of ways to do that, right? But the first minute you walk into the bank with half a million dollars in a check, you're going to get a call from a broker, financial advisor saying, I'd like to sell you an annuity. I'd like to, like, so.

[23:57] DANO WEIR: This money could be making money. Yeah, exactly. And so could I.

[24:00] DAREN BLONSKI CFP®: Yeah, exactly. So we always just say, like, put in a money market, put in a CD, don't do anything else. Everything needs to stay liquid. Let it sit there. At least it's making some interest yeah you're not making a lot but give yourself time to grieve give yourself time to feel the feelings you have and the emotions you have and make good decisions yeah yeah okay so we've we've processed this emotionally we've communicated with everybody hopefully we're in a nice copacetic situation we've.

[24:29] DANO WEIR: Kept it separate for now you're saying maybe even up to a year of just rest you've got a lot of affairs to wrap up Don't worry about the investment piece. The market will be there, we hope. You've come to a place where you go, okay, it's time to get to work. It's time to do our next group here, which is the planning group. And we are a financial advisor. And we would advise that in a situation like that, we think it's a good idea to work with a financial professional.

Why You Should Work With A Fiduciary

[25:03] DAREN BLONSKI CFP®: Yeah, like generally speaking, and we do think, and we're openly biased here, but we do think it's right to work with a fiduciary, someone that has to by law work in your best interest. If they have their broker's license, they don't always have to be a fiduciary to you.

[25:17] DANO WEIR: Briefly, what difference between broker and fiduciary is what?

[25:20] DAREN BLONSKI CFP®: Well, broker is someone who's compensated to sell financial products. And they're... Paid a commission to do that generally. They can also be fee based as a broker. Whereas a fiduciary, they can't hide behind, oh, well, this made sense for you. It just literally has to be in their best interest, the client.

[25:39] DANO WEIR: So fiduciary, you pay them a flat fee, sometimes a percentage of assets?

[25:44] DAREN BLONSKI CFP®: Usually.

[25:44] DANO WEIR: Broker, in many cases, if you're not also paying them a fee, which they do, when they're on the phone with you telling you that... X investment is a good idea. It's because when you say yes, they get a commission.

[25:56] DAREN BLONSKI CFP®: That's right.

[25:56] DANO WEIR: Okay. So work with a financial professional when you're starting to do your planning. How can a financial professional help someone who's inherited money?

[26:06] DAREN BLONSKI CFP®: A good financial professional is going to do first what we just spent the first half of this episode doing, which was talking about some of the behavioral issues, the emotional issues behind investing and help get to those and speak to those. Then they're going to help look at where the assets are, what the risks of those assets are, and then how to position them for a pause. I call it pause and reflect is how I look at it, right? The first step is pause and reflect on what's going on. And it's looking at things like what's your money, what are your money goes? What are the things that you have embodied in you as a person that are going to get away this new inheritance? How can you make sure you don't just... Frivolously spend it how can you make sure you don't frivolously protect it because that's actually what we see more often is inheritance to become they come sequestered they're different piece of money when they're all money to help you do your life but it's like oh that's dad's money i don't want to touch it and lose it so then you tend to actually be more too conservative with that money that's actually more often that i either see people that are too conserved or people just overspend and very few right in the middle.

[27:17] DANO WEIR: Feels like we've got three professionals that you might encounter at this time. Financial advisor.

[27:23] DAREN BLONSKI CFP®: Financial planner.

[27:24] DANO WEIR: Financial planner. Tax.

[27:27] DAREN BLONSKI CFP®: Cpa. Cpa.

[27:29] DANO WEIR: Or a lawyer.

[27:30] DAREN BLONSKI CFP®: And an attorney.

[27:30] DANO WEIR: And some combination of the three.

[27:32] DAREN BLONSKI CFP®: That's right.

[27:33] DANO WEIR: Would you recommend starting with one and having them be the quarterback or is it just kind of you should already have a network of those people you work with?

[27:40] DAREN BLONSKI CFP®: I think the first thing you do is you should understand the incentives of each of those people. Okay. So the financial advisors, generally, they're going to be compensated if you're working with a fiduciary on an hourly basis, or they're going to be getting some percentage of the account if they manage it for you. The lawyer is going to be getting paid generally an hourly fee, as is the CPA. And you can negotiate with a fiduciary to just pay an hourly fee for advice. So I think the first step is understanding incentive. If you show me the incentive, I'll show you the behavior. It's that simple, right? So understand incentive. Then generally people start with an attorney because that's where they're trying to process all the things. If there's an estate and the legal docs and all that, or they'll be in their parents' financial advisor's office and that advisor will then kind of guide them. But again, understand the incentives of that advisor, right? Because then you'll know why they're recommending what they are. And then usually the CPA or tax attorney, something further down the road.

Understand The Tax Implications

[28:49] DANO WEIR: Speaking of taxes, our next tip here is to understand the tax implications. And one thing that a lot of people don't think about is they think that assets are cash. And in some cases it is cash. But in other cases, you might be inheriting, not suggesting, just putting a name to it, $2 million in GM stock.

[29:09] DAREN BLONSKI CFP®: Yeah.

[29:09] DANO WEIR: And that doesn't come over to you as cash. It comes over to you as stock. So there are tax implications, cost basis, there's things to work through, and the financial advisor can help with that.

[29:22] DAREN BLONSKI CFP®: Yeah, I mean, here's a perfect example. There was an individual I talked to early on in my career. I remember talking to her, and she just lost her husband. And this is a good example of a money ghost, right? Husband, before he dies, says, don't ever sell this Coca-Cola stock. So when I started talking with her, she had a stock certificate, which is not a great way to hold a stock.

[29:44] DANO WEIR: Of Coca-Cola stock a piece of paper a piece of paper it's not digital it's not on any platform she has a literal piece of paper from the taft era yeah this is exactly i own 50 shares here's my literal 50 piece of paper exactly yeah so she owns this.

[30:00] DAREN BLONSKI CFP®: Husband's dying bed says, don't ever sell this. Well, this poor lady now stuck with this Coke stock because her husband died and told her never to sell it. Now, might've been a good decision. Might've been an awful decision. I have one client who brought in this stock certificate that her dad had left her and she had forgot she had it, put it in the top of a closet somewhere, goes to clean out a closet years later. This is my point about your mind is just not. There fully literally took 500 shares at the time it was worth a half a million dollars in a real estate company in New York when he passed when he passed and when she inherited it put the stock certificate up in there she finds it years later she brings it into me and says i have this is is it worth anything so we look up the stock certificate the company went bankrupt a few years back we're zero takes a big zero and a half a million bucks that's a painful lesson But that's the point. Like you do things that you just forget about. And so that's what we were saying about put it in a place that's organized and clean.

[31:07] DANO WEIR: Right.

[31:08] DAREN BLONSKI CFP®: Pro tip, if you get a stock certificate, turn it into book form. Book form's easy. It just makes it digital. It's easy to track. We know it belongs to you. It can never be questioned. When we get stock certificates, not only when we get stock certificates, is it a royal pain to do it.

[31:25] DANO WEIR: It's getting harder and harder to even get them.

[31:28] DAREN BLONSKI CFP®: Transferred right yeah because you need these things this medallion medallion the medallion only certain banks in town are going to give you the medallion stamp so to even say yes this is this person and this is their stock yeah it's very difficult and it takes a process and often stock certificates were bought in name so if say if you have a trust and you have this floating around stock certificate out there that stock certificate is not actually in the trust it was never. Put into the trust for whatever stupid reason.

[31:56] DANO WEIR: So now you've got a mismatch and now it like doesn't really belong to anyone.

[31:59] DAREN BLONSKI CFP®: Well, it belongs to the benefactors, but you have to file what's called a small estate affidavit. You have to go pay a lawyer a bunch of money to then put it in the trust and say it is who it is. It's supposed to go to.

[32:09] DANO WEIR: Mess.

[32:10] DAREN BLONSKI CFP®: Yeah, so stock certificates are like, just don't do it. Like put it in book form, open an account. There's no sense in it. Yeah. In doing it, it's a nightmare to process when you've passed. Anything that takes more than an hour now when you're alive to process paper-wise, it takes four hours when you're dead. So anything you can do to help now, it really pays off.

[32:35] DANO WEIR: So let's hit on this again. Understand the tax implications. What are some more tax implications that can hit someone when they're an inheritor?

[32:43] DAREN BLONSKI CFP®: That's where the communication between generations is, right? Because there's something called basis when you buy something for $10, but it's worth $20 now, you have a gain of $10. But you actually get a step up at death, right? So if I own the stock and I say, Dan, you're going to get the stock at death. When I die, the stock will be have a now basis of $20 and there won't be a tax implication of it. Whereas if I'm, oh, I'm dying, I better sell this stock. I pay that taxable gain. There's a lot of laws around IRAs and retirement accounts now. They've changed the laws and mess with them quite a bit in the last few years. I think Congress is getting ready. They're seeing this wealth transfer happen and they're like, how do we get in the pocket to this? Because this might help that debt thing we have. But they're always messing with those rules. So it's really important to have an advisor that knows what those rules are and knows how to navigate those rules with you.

Addressing Non-Cash Inheritances

[33:36] DANO WEIR: And that tax piece really can be a key part of our next tip, which is address non-cash inheritances. Maybe mom is going to pass the farm on to you, something we've talked about on this show before. But can you actually afford to have the farm passed to you because of the taxes?

[33:57] DAREN BLONSKI CFP®: Well, like in California a few years back, the real estate agents all got behind something called Prop 19, which is brilliant for real estate agents. No offense to our real estate agent friends, but the real estate lobby said, well, shoot. It used to be if you... If your mom passed, Dan, you would inherit her tax rate, but Prop 19 changed that. So if your mom passes, your tax rate steps up, which in fairness is maybe more fair to the next generation. Fortunately, the farm that was very affordable under your mom's tax rate is no longer affordable under your tax rate. So guess what you're going to do? You're going to sell the property because you can't afford the taxes. And Prop 19 really made it difficult for a lot of family farms. In the state of California. In Sonoma, it was a huge impact because there were a lot of properties in Sonoma that, you know, three brothers might inherit mom's house when she passes, and they could all afford the taxes for that house at mom's tax rate. But now that taxes have gone up exponentially and the house is now worth a heck of a lot more than when mom bought it. She bought it for a hundred, now it's worth 10 million. And these kids own taxes on whatever the valuation of that home is they're going to sell the house. Mom's house is getting sold. Because not one kid individually can necessarily afford the taxes. So no one's going to, the two brothers aren't going to sell it to the one brother. And then if they all pay the taxes and make it a VRBO, you can't do a VRBO in Sonoma. So it's just, you get rid of the house. So you want to think about. What is the tax implications of these non-cash inheritances? Where they should go to who they should go, how they should go, and what are all the different strategies? All that stuff that can be prevented somewhat if you think about it ahead of time. The issue is when people don't, they just put their head in the sand, like, I don't want to deal with it. I don't talk to my kids about money. It's weird. I'm uncomfortable with it, whatever. But then it really ends up messing over the kid because now brothers are sitting there looking at the house saying, mom's house is old. It's got avocado shaded. That might actually be coming back in with the orange upholstery seats. They might actually be coming back in now, but they don't want to pay taxes on that house because it's actually infested with termites. And so that happens all too often. So the plan, the communication is so, so important to preservation of peace and preservation of capital and assets.

[36:19] DANO WEIR: And just in this discussion, we've talked about two different step-ups that happen at death. And one is good and one is bad. If you inherit stock...

[36:31] DAREN BLONSKI CFP®: Well, it's sort of bad. I don't want to go that far.

[36:34] DANO WEIR: Well, but if you inherit stock from someone and the stock transfers directly from parent to you, you get a step up in basis such that you are not going to pay a capital gain. Good thing for you.

[36:46] DAREN BLONSKI CFP®: Right.

[36:46] DANO WEIR: If you inherit real estate, you get a step up in property taxes. And instead of the old property tax rate from 1965, you're paying the 2025 rate. Bad thing.

[36:56] DAREN BLONSKI CFP®: Well, but you also get to step up in the value too. So if mom bought the house for a hundred thousand, it's worth 10 million now, which actually happens in Sonoma. If you get to step up, you don't owe taxes on all that real estate appreciation either. So there is a positive to it. Like if you could afford to pay the tax on the $10 million piece of property or farm now, that's fine because well, now if you sell it, you don't pay any capitalist gains on that. So there's a...

[37:25] DANO WEIR: Benefit but it's a little more nuanced now and in addition to real estate there are other non-cash inheritances one of what you mentioned already which is that you have a storage unit full stuff so there's that aspect to be prepared for as an inheritor part of your inheritor's dilemma which is that you know you're going to have to go through some stuff and that might be the most painful part well and it's it's truly this and we'll talk about the oak bookcase in the storage unit.

[37:52] DAREN BLONSKI CFP®: Okay. So my grandpa, my great grandpa had an oak bookcase. It's just an oak bookcase. It's not even that nice of an oak bookcase. My grandpa had it. My great grandpa had it. My grandpa had it.

[38:06] DANO WEIR: Your great grandpa.

[38:08] DAREN BLONSKI CFP®: My great grandpa had it. It was my great grandpa's out of his library. And then my grandpa had it. And then my dad had it in his library. And now I have it in my storage unit. It's a heavy, solid piece of oak. But what do you do with it? Like there's this guilt, like if I just toss this thing, it's been in the family for four generations. It doesn't fit anything in my house. Wouldn't even look remotely nice in the vibe I'm going for. But what do I do with the bookcase? So it's sitting in the storage and I'm paying to store it right now because I haven't like emotionally just ripped the cord and said, forget it, I'm getting rid of the bookcase.

[38:39] DANO WEIR: Just imagine something you've bought in 100 years. Your great grandson is sitting there like, oh my God. What am I going to do with this Red Sox statue that Darren bought for his desk?

[38:54] DAREN BLONSKI CFP®: When he went to the game that one time. What did I do? That's exactly it. We actually, if you go to our Google reviews page, in one of our Google reviews, there's a picture of a ship that was my great-great-grandpa's. So my dad dies, and there's this ship that I looked at my entire life in my grandpa's house, and then it was in my dad's house. And it's this old Mayflower-looking ship. It's got dust everywhere. It's broken. Like a model? It's like, yeah, it's a big-size model, like a model ship. So after my dad does it, I'm like, what do I do with this thing? I put it in the storage shed. It's going to break again. Like, what do I do? So I bring it in, and I put it in the bathroom at our office here, our corporate office. I'm like, I'll just put it here. Set it there. One day, we're looking at our reviews, and a client had come in and taken a picture. Of the ship and put it in the Google review. And I was like, I'm not sure why I took a picture of that, but okay. But there is again, another case of like these things that just travel through us. And so I. Gift a parent can give is like let me get rid of my junk because the other issue is you don't know what's important and what's not important right you think it because it's in dad's office he really gives a snot about it but maybe it's just like oh this thing i just put there and i don't know what to do with right i would never want bright he inherited it yeah he inherited it and then i got to this place with my office at home where i was like had this and this and this and I looked around my office and I said, my office is a... More memorial for my brother and dad this is awful i don't want to feel this way i want a couple good things but i don't want to feel like I'm living in their offices so then there's that kind of like emotional wrestle you have right so non-cash stuff it's like clean it out man like don't leave it on it is a nightmare to clean up people's stuff yeah yeah last last strategy here within our planning group update your own estate plan as a result of the inheritance Yeah, absolutely. Right. Like we talked about community property law in California. We talked about protecting that update. You should always be updating your estate plan. Unfortunately, a lot of people like to do an estate plan. Say, oh, my estate plan is good. If you're not looking at that estate plan once a year, at least it's not good because things are changing constantly in your life. Account numbers, stock certificates, ownership of houses, get it all organized and pay attention to it.

Pay Off High-Interest Debt And Build Your Emergency Fund

[41:28] DANO WEIR: Yep. Okay. We've planned now. Now it's finally time to take some actions, right? Now it's finally time to do some of the things. And we would advocate some smart things to do first, depending on your financial situation, pay off high interest debt, and look at building or boosting your emergency fund. Why would you do those two things first?

[41:54] DAREN BLONSKI CFP®: Well, so first off, let me just caveat, like, we could never give advice. Unless we knew someone's financial situation, right? So here's some generic information that you could choose. But we, again, go back to talk with a professional. Paying off high interest debt, it's really simple. If you're paying high interest, whatever the money's invested in has to be earning more interest than what you're paying in debt, right? It's just about spreads. Banks make money on spreads, right? So do you want to be the bank or do you want to pay the bank for the spread? So if you're paying 5% in debt or 6% or 50% because it's whatever, some credit card, right? And you're making 3% in the money market or 4% in the money market, you're actually losing money.

[42:43] DANO WEIR: Right.

[42:44] DAREN BLONSKI CFP®: Right? And don't even get me started on inflation and what's happening to that money because of inflation. So you're really losing in a real return way. So high interest debt should be paid off. But here's the caveat. I was talking to a friend and they were asking me, they were like, well, we have all this debt we need to pay off. Should we take this money out of the house to pay off this debt? And I said, well, here's the thing. Where did this debt come from? And the person said, well, my partner has a gambling addiction. Okay. So what you're telling me is you're going to take equity out of the house and pay off the gambling addiction that your partner has, which will only reset the deck for what? More gambling. That's all it does. It's all it ever does. So if you're using the inheritance to pay something off and you haven't dealt with the emotional and the psychological issues that created that debt in the first place. Right. All you do is just bought yourself another year. And that's again, why I go back to pause and reflect and understanding what's going on because you're really just getting yourself in a trap. And all too often we see people inherit money, pay off all their debt. A year from now, they're back in debt. I'll never forget Jim. Jim passed away recently. Jim inherited a couple hundred grand and Jim inherits this money. I'm sitting in my office right out here in Sonoma. Also, I hear this big, you know, he pulls up in this motorcycle, in this massive, beautiful, purple hot rod that rides like this. Jim paid off all his debt and then bought himself a motorcycle. And maybe five years later, I asked, Jim, where's your motorcycle? Oh, it's parked out back. It's like a 60. Thousand dollar motorcycle it was sweet and i was just like And you think about those moments and like, I wish Jim would have listened, you know? And in a way, when we pay off our high interest debt, it's not the opportunity then to just get back in debt. And all too often, that's what happens because then you go buy some other junk that you need. And so what had happened is Jim wasn't financially sound. The inheritance made him financially sound, made him feel free to go buy and spend more money on junk. So paying off high interest debt is good. Be careful with just putting yourself back in a trap.

[45:38] DANO WEIR: Pay off high interest debt and be done.

[45:41] DAREN BLONSKI CFP®: Be done.

[45:42] DANO WEIR: And shortly thereafter, build or boost your emergency fund. A lot of people say three to six months of expenses, whatever that number is for you in a cash or near cash situation.

[45:54] DAREN BLONSKI CFP®: Yeah. In a CD type money market, we got to get a step back a little bit if we're talking about build so The idea is you want to pay down all your debt first. So you want a baseline emergency fund just to, so you don't keep going in debt. And then you want to pay off your debt and then build your emergency fund up so that you don't keep getting back in debt. Right. All too often people inherit money. They're living hand to mouth. And if you can get out of that cycle, your life will be much better and your children's life will be much better. And inheritance might be that one leg up, might be that one opportunity. That's why I say engage a financial professional because The reality is, is we all need help and we need help overcoming our money, bad money habits. And the best way you're going to do that is engage someone that deals with money all day long.

Set Your Own Financial Goals

[46:41] DANO WEIR: And once you've engaged with that financial professional, when once you've done those first two actions, set your own financial goals. What are financial goals? That's a very vanilla, boring term that gets thrown around. And I feel like nobody ever knows what that is. So tell me, Darren, I've just inherited some money. I'm sitting with you at your conference room table off the Sonoma Square, and I say, what are financial goals?

[47:10] DAREN BLONSKI CFP®: Have you ever asked yourself, Dan, what your number is?

[47:12] DANO WEIR: 707.

[47:16] DAREN BLONSKI CFP®: Not that number. Oh, okay. The I'm done number. The I can wake up in the morning and do whatever I want with my day.

[47:24] DANO WEIR: Six million.

[47:25] DAREN BLONSKI CFP®: Okay, so your number's six million. That's a financial goal. So if you're, if, if your number is 6 million and you're done, that's your financial goal, right? That's what you're after. So how are you going to get there? What are the pathways to getting there? That's what if I'm working on that.

[47:44] DANO WEIR: I've been working on that for 41 years. All right, go on.

[47:46] DAREN BLONSKI CFP®: So, so we're all working on that, right? But all too often people don't have the goal. They give up the goal. They don't even know what the goal is. They don't want to even plan. They don't want to think about the goal. Have a goal, like have intention, right? Like you might not hit it, but you might get halfway and that's great. And so financial goal is just something you aspire to, financial freedom, whatever it is, like we could talk all about like, well, my goal is to pay for my kids' education or my goal is to, you know, travel the world.

[48:16] DANO WEIR: Live in a paid for house. I want to, you know, whatever it is that is going to bring you that sense of like this.

[48:23] DAREN BLONSKI CFP®: Self-satisfaction, you know, and self-actualization. All those things. Having a goal is, I think, fundamentally important. We all operate off a lack of goals sometimes. And the more clear you can be about what you want out of life, the more clear life can be about giving it to you.

[48:40] DANO WEIR: And the rare opportunity of an inheritance is that, you know, typically when you set those financial goals, you don't have any means. And it's like, man, how am I going to do that? If depending on the size of the inheritance, all of a sudden you have the means. But you haven't worked out any of the methods. So working with a professional and being honest with yourself and trying to work out that stuff, doing that legwork can put you in a better position than just like, yeah, pay for it, yeah, pay for it, yeah, pay for it, yeah, pay for it. Because it's just, you can watch $2 million become $200,000, you know, in an instant. In Vegas or in any number of places that will happily take your money.

[49:30] DAREN BLONSKI CFP®: You bring up a lot of good points in what you just said in the psychology of money. One of the really important points you brought up, what we see most often with people is they treat their inheritance emotionally completely different than they treat the money they earned. So dad makes a lot of money. He gives you a bunch of money. A fear grips over you now because you don't know how to remake that money. We see this all the time with entrepreneurial kids, kids from entrepreneurial families. Dad, mom crushed it. They did really well, made all this money. Kid inherits money, doesn't have the money competence because they grew up with money. And now they don't know how to make more money because now they have all this money. So then what they do is they're too conservative with it. They're very careful with it. They're very guarded with it. It starts to control and derange their life. Like some of the most miserable people I've ever met are people who have inherited it. A ton of money. It is actually a curse to inherit money if you don't develop the competencies around money. And that's what an advisor is going to help you with, or someone, a financial professional, there's even money coaches you can hire that will just teach you about money. But have someone to support you in your corner because inheriting money, Mark my words, is a curse if you don't do it right. And that's the dilemma.

Enjoy It And Honor Who Gave It To You

[50:56] DANO WEIR: Let's get to the last one because this isn't all doom and gloom. This isn't all, I mean, it usually comes from a very sad thing in your life, but there are clearly positives to it too. And so the last one on the list is touching on what you're saying there about being too guarded. Enjoy it.

[51:18] DAREN BLONSKI CFP®: Yeah.

[51:19] DANO WEIR: And honor who gave it to you.

[51:21] DAREN BLONSKI CFP®: Yeah. So a couple of things. The people who are going to give money to kids and we know there's enough money, like we can. Pretty much tell now you made it you got enough we're gonna have extra we say go create memories with it go take all your family on a cruise like create something these people will never forget with you because guess what they're gonna spend it all on cruises anyway so you might as well be with them right well so you're saying for the the parent do that now before you pass it on don't wait don't wait till you're gone yeah yeah like a lot of times our job is giving people permission to spend their money like you're good go spend it get rid of it right like they're just gonna blow it but we also recommend that people honor the person who gave them money so take a bit of the money and do something to honor that person who has passed away buy them a bench in a park their favorite park plant the tree plant the tree do something put go go to the giants game put their name on the billboard that's right hire a blimp yeah do a flyover with their name i mean do something ridiculous you know something that something that makes a Mark something that they would remember something that would make them smile go to their favorite ice cream shop and buy for the entire shop yeah you know something like that yeah exactly and there's just something like important about that process to do in that that gratitude with the money that you're honoring that person that i think is just a really important element or variable when you inherit money is to to find a way to honor those people I think we've sufficiently discussed, dissected, and worked through the inheritor's dilemma. We have.

[53:01] DANO WEIR: What do you think? Useful?

Closing Thanks

[53:03] DAREN BLONSKI CFP®: You guys ready to inherit some money?

[53:09] DANO WEIR: Should anyone be so lucky? Some people aren't. You can learn more about us at sonomowealth.com. Take our free wealth analysis if what we're saying is resonating with you. If you like the approach, if you have wondered what to do with your own kids, or if your own parents are perhaps in that situation. We work with individuals and families in Northern California and across the United States. SonomaWealth. Com is where you get started. Thank you for checking out the show. If you're one of our Sonoma Wealth clients, we really appreciate the support. If you're new to our firm, make sure you subscribe wherever you are finding this show. So if you're finding the audio, subscribe on Apple Podcasts and Spotify. If it's on YouTube, make sure to subscribe. And thank you so much. We'll see you next time.

[53:56] DAREN BLONSKI CFP®: Take care.

Outro

[53:56] DANO WEIR: Thanks for watching and listening to It's All Money. We hope today's episode shared information to increase your financial confidence. Now is the time in the show for the voiceover with a bunch of words at the end. Listen close, though. You might find out something you didn't know. It's All Money is powered by Sonoma Wealth Advisors. Sonoma Wealth Advisors helps individuals and families in Northern California and across the country with building, managing, and sustaining wealth. Sonoma Wealth is a comprehensive, holistic finance solution offering financial planning, asset management, tax planning, 401k solutions, and appropriate insurance. Take our free wealth analysis now at SonomaWealth. Com. If you haven't already, like and subscribe to It's All Money on YouTube, Spotify, and Apple Podcasts. It's All Money features human hosts, musicians, editors, video crew, and voiceover talent. Video production by Forz Media in Roanoke Park, California. Online at forzmedia.com. Music by Neon Beach, Sparkle Rising on Soundstripe. Voice over by me, Dano. Thank you for listening to the very end. We appreciate diligent viewers and listeners. Fermata Advisors LLC is registered as an investment advisor with the SEC and only transacts business in states where it is properly registered or is excluded or exempted. From registration requirements. This content was produced by Fermata Advisors, LLC, DBA Sonoma Wealth Advisors, DBA Fermata 401K, DBA Fermata Tax. The opinions expressed by Fermata Advisors, LLC on this show are their own. Information presented on this program is believed to be factual and up to date, but we do not guarantee its accuracy and it should not be regarded as a complete analysis of the subjects discussed. Discussions and answers to questions do not involve the rendering of personalized investment advice, but are limited to the dissemination of general information. A professional advisor should be consulted before implementing any of the options presented. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and unless otherwise stated are not guaranteed. Information expressed does not take into account your specific situation or objectives and is not intended as recommendations appropriate for any individual. Viewers and listeners are encouraged to seek advice from a qualified tax, legal, or investment advisor to determine whether any information presented may be suitable for their specific situation. Past performance is not indicative of future performance.