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How To Avoid Costly Mistakes When Transferring Wealth Pt.1 · The Wealth Cafe

• 0:15
  SPEAKER_00: Welcome back to the Wealth Cafe.
• 0:17
  SPEAKER_00: I'm Caroline Tannis, your host, lead financial advisor, and founder of Tannis Financial Group, and I'm so happy to have you here for today's episode.
• 0:25
  SPEAKER_00: Today, I want to start with a number, and just one number, and the one that I'm gonna give you with, I want you to sit with it for a second before we move on.
• 0:35
  SPEAKER_00: That number is$54 trillion.
• 0:39
  SPEAKER_00: Correct.
• 0:39
  SPEAKER_00: You heard that one right, and that is the amount of wealth that is expected to transfer from deceased husbands to their surviving wives between now and the year 2048.
• 0:50
  SPEAKER_00: $54 trillion, moving from one spouse and in most cases the husband to the other.
• 0:56
  SPEAKER_00: And 95% of those surviving spouses will be women.
• 1:00
  SPEAKER_00: Now, this is not just a distant future event.
• 1:03
  SPEAKER_00: This is happening right now.
• 1:05
  SPEAKER_00: Baby boomer women are inheriting significant wealth from their spouses every single day all around the country.
• 1:13
  SPEAKER_00: And in families just like yours.
• 1:15
  SPEAKER_00: And the majority of the women, despite being brilliant, accomplished, and financially capable women, are completely underprepared for this event.
• 1:23
  SPEAKER_00: This is not just because they don't care, and it's not because they aren't incredibly intelligent, but because for decades, in many households, the financial conversation has been one-sided.
• 1:34
  SPEAKER_00: The husband managed the investments, the husband had the advisor relationship, and the husband knew where the accounts were and what was in all of them.
• 1:44
  SPEAKER_00: And when the wealth suddenly transfers, during the most emotionally difficult moment of a woman's life, she is expected to just make some of the most consequential financial decisions of her lifetime, all alone and often within a matter of months of her spouse passing.
• 2:02
  SPEAKER_00: Today is going to be part one of a multi-part series on the great wealth transfer.
• 2:08
  SPEAKER_00: This episode is about the horizontal transfer, which is from spouse to spouse, and specifically what women need to understand, what they need to prepare for, and what they need to do before the transfer ever even happens.
• 2:22
  SPEAKER_00: Because the women who navigate this well are not the ones who were lucky, they are the ones who were prepared.
• 2:29
  SPEAKER_00: And that is exactly what today's episode is about.
• 2:33
  SPEAKER_00: Let me give you the full picture of what this transfer actually looks like, because the$54 trillion headline, that's only half of the story.
• 2:41
  SPEAKER_00: The other half, the part that almost nobody is talking about publicly, is the tax trap waiting on the other side of that transfer.
• 2:50
  SPEAKER_00: When a spouse dies, the surviving wife phases something that financial planners are now calling the survivor's penalty.
• 2:57
  SPEAKER_00: Here is exactly how that works.
• 2:59
  SPEAKER_00: While you are married, you file taxes as married filing joint.
• 3:03
  SPEAKER_00: Now the status gives you access to the most favorable tax brackets in the entire federal tax code.
• 3:09
  SPEAKER_00: The income thresholds are wider.
• 3:11
  SPEAKER_00: And in 2026, the standard deduction for married couples filing joint is$32,200.
• 3:17
  SPEAKER_00: For a single filer, it is$16,100.
• 3:21
  SPEAKER_00: The year your spouse dies, you can typically still file as married filing joint.
• 3:25
  SPEAKER_00: However, that's your last year that you're going to have those rates.
• 3:29
  SPEAKER_00: Year two, you now shift to single filer status, Q, the widow tax rate.
• 3:34
  SPEAKER_00: And suddenly the same income that taxed at one rate before and then the prior year, it is now taxed at a significantly higher rate.
• 3:41
  SPEAKER_00: It's not because you earn more, it's because the tax brackets for single filers are compressed.
• 3:47
  SPEAKER_00: Your Social Security income, your investment income, your required minimum distributions, all of it gets hit harder.
• 3:54
  SPEAKER_00: And this only compounds further.
• 3:56
  SPEAKER_00: Your Medicare premiums, there's IRMA surcharges, they are income-based.
• 4:01
  SPEAKER_00: And the income thresholds that trigger higher Medicare premiums are much lower for single filers than they are for married couples.
• 4:09
  SPEAKER_00: So not only do you pay more in income tax, you may also pay significantly more in Medicare in the years that follow the passing of your spouse.
• 4:17
  SPEAKER_00: This is what the survivors or the widow tax penalty is.
• 4:21
  SPEAKER_00: It is real, it is quantifiable, and it is almost entirely avoidable with the right planning and preparation before anything ever happens.
• 4:29
  SPEAKER_00: Beyond the tax picture, there is a second reality that hits widowed women more than most financial planning conversations are adequately preparing them for.
• 4:39
  SPEAKER_00: In many married households, particularly in that baby boomer generation, the husband has been the primary investment decision maker.
• 4:47
  SPEAKER_00: Not in all of them, but statistics show in general, that's what is happening.
• 4:51
  SPEAKER_00: He's having the advisor relationship.
• 4:53
  SPEAKER_00: He understood the portfolio structure and he knew which accounts were where and also what they were doing and what their purpose was for.
• 5:00
  SPEAKER_00: The surviving spouse may walk into a portfolio that she's never actively managed with an advisor that she's never personally built a relationship with at a moment when her grief is at its most acute and her bandwidth is at its lowest after everything that has gone on.
• 5:17
  SPEAKER_00: Research actually shows from the Cerule Associates, it tells us that 70% of widows actually switch financial advisors within one year of their spouse's death.
• 5:26
  SPEAKER_00: And I want to be clear, that's not a criticism of those women.
• 5:29
  SPEAKER_00: It is a signal to society.
• 5:31
  SPEAKER_00: It's a signal that the sign the existing relationship with the advisor, it was never built with her in mind.
• 5:37
  SPEAKER_00: They were a secondary participant and a conversation was designed primarily for her husband.
• 5:44
  SPEAKER_00: Now, the transition itself, understanding what she owns, what it does, how it's structured, and what the tax implications are, that all is going to change because this requires clarity and a bandwidth at exactly the moment that she has the least of both.
• 5:59
  SPEAKER_00: That is a setup for mistakes that don't have to happen with the proper planning.
• 6:04
  SPEAKER_00: And here is where I want to give you the most important reframe on this entire episode.
• 6:09
  SPEAKER_00: The time to prepare for inheriting wealth as a spouse, it's not after they pass, it is before.
• 6:15
  SPEAKER_00: And that conversation happens now.
• 6:18
  SPEAKER_00: I know that it feels uncomfortable sitting down with your husband, your spouse, and having to talk about what happens when he dies or when she dies, depending on who's listening.
• 6:28
  SPEAKER_00: And while they are alive and healthy, it can feel morbid for a lot of couples.
• 6:32
  SPEAKER_00: And I hear that objection all the time.
• 6:33
  SPEAKER_00: I understand it firsthand.
• 6:35
  SPEAKER_00: And I also know that women who work and get this done now are the ones that have the time to make clear, confident, well-informed financial decisions when the time actually comes, instead of panicked, uninformed ones that are made from a place of grief.
• 6:50
  SPEAKER_00: So what does that preparation actually look like?
• 6:52
  SPEAKER_00: And there are three major things.
• 6:54
  SPEAKER_00: First, is that both spouses need to understand all of the accounts, every investment account, every retirement account, even every life insurance policy or annuity, every real estate holding, where it is, what it does, and what specifically happens to it when the other spouse passes.
• 7:12
  SPEAKER_00: This is not just the husband's job to know.
• 7:14
  SPEAKER_00: Both spouses need to have this conversation.
• 7:17
  SPEAKER_00: They need to understand and know.
• 7:19
  SPEAKER_00: This is not a preference, it is a necessity.
• 7:22
  SPEAKER_00: Second, is that the survivor scenario needs to be modeled out in your financial plan.
• 7:27
  SPEAKER_00: You need to model out your retirement income projections, your tax strategy, your social security timing, and those should be modeled under both scenarios.
• 7:36
  SPEAKER_00: What does your financial picture look like if you live to 90 together?
• 7:40
  SPEAKER_00: And what happens if unfortunately one spouse passes first and the other one does live to 90 alone?
• 7:45
  SPEAKER_00: JP Morgan's 2026 Guide to Retirement specifically recommends that the survivor scenario modeling is a core component of a household retirement plan, and most couples have never done it.
• 7:57
  SPEAKER_00: If yours hasn't, this is a gap that's time to close.
• 8:00
  SPEAKER_00: Third is look at pension elections, and you need to account for the survivor.
• 8:04
  SPEAKER_00: If either of you has a defined benefit pension plan, the election made at retirement, either single life versus joint and survivor, this has enormous implications for what income continues after one of your spouses passes.
• 8:18
  SPEAKER_00: A single life annuity pays more per month, but that income's going to disappear entirely when the other pensioner dies.
• 8:25
  SPEAKER_00: A joint survivor option reduces that current income, but protects the surviving spouse.
• 8:31
  SPEAKER_00: Once made, that election is permanent and it deserves serious analysis, with both spouses in the room having that conversation before anyone signs any forms.
• 8:41
  SPEAKER_00: I want to share a story that I think brings everything covered in today's episode to life and makes it reality.
• 8:48
  SPEAKER_00: Details changed as always to protect client privacy, but the situation is one that I've seen in so many different forms and heard so many different variations of.
• 9:09
  SPEAKER_00: And don't be confused by this, Diane was an accomplished woman in her own right.
• 9:13
  SPEAKER_00: She had been a senior vice president at a major pharmaceutical company for over 20 years, but she had largely stepped back from the day-to-day financial decisions during their marriage because she was so incredibly busy with her career and their family.
• 9:28
  SPEAKER_00: She trusted him completely and he was very good at it.
• 9:31
  SPEAKER_00: But unfortunately, he passed away suddenly, and Diane found herself at 61 years old, sitting across from an advisor she had met maybe three times, who was holding a binder of statements, and she had never fully read them, and she was trying to make decisions that she had never been asked to make before.
• 9:47
  SPEAKER_00: The first thing that we discovered was the survivor penalty in real numbers.
• 9:53
  SPEAKER_00: Her husband had been taking withdrawals from taxable retirement accounts.
• 9:56
  SPEAKER_00: He had taken early Social Security and their combined income had put them in a 22% tax bracket as a married couple.
• 10:04
  SPEAKER_00: However, in year two, as a single filer, that same income picture pushed her back into a 24% bracket.
• 10:11
  SPEAKER_00: Her Medicare premiums increased, her tax bill went up meaningfully, not because her income increased, but because her filing status had changed.
• 10:20
  SPEAKER_00: The second thing that we discovered was nobody had ever modeled out for her a survivor scenario in their financial plan.
• 10:27
  SPEAKER_00: There were projections for both of them living to 90 and not a day more or a day less.
• 10:33
  SPEAKER_00: There was no model for what happened if he went first.
• 10:36
  SPEAKER_00: It's something that had simply never been done.
• 10:38
  SPEAKER_00: The third thing, and this one really stung for her, was his pension.
• 10:42
  SPEAKER_00: He had elected a single life annuity when he retired seven years earlier because the monthly payment was higher, and he thought that was good.
• 10:50
  SPEAKER_00: The income of$3,400 a month stopped the day he died.
• 10:54
  SPEAKER_00: Diane had not known that that election was even made.
• 10:57
  SPEAKER_00: It never had come up in conversations.
• 11:00
  SPEAKER_00: So what did we do?
• 11:01
  SPEAKER_00: We rebuilt her plan from the ground up.
• 11:03
  SPEAKER_00: We modeled her income, taxes, Medicare premiums, Social Security, and the timing that was going to look as a solo filer.
• 11:11
  SPEAKER_00: She got a clear, stable picture, but I think about that pension election often.
• 11:15
  SPEAKER_00: If we had been in the room together five years earlier, all three of us, that decision might have looked very different.
• 11:22
  SPEAKER_00: Diane's okay.
• 11:23
  SPEAKER_00: She's more than okay, but she did it harder than it needed to.
• 11:27
  SPEAKER_00: So today's episode is making sure that you are not part of this story and you have different options when the timing comes.
• 11:35
  SPEAKER_00: So what do you do from here?
• 11:37
  SPEAKER_00: There are three specific actions that I want you to take away from this episode.
• 11:41
  SPEAKER_00: Action one is schedule a joint financial review this year, not eventually, not down the road, both you and your spouse sitting down with your financial advisor together.
• 11:51
  SPEAKER_00: The purpose is not to talk about death, it is to make sure that you both understand everything you own and how it is structured.
• 11:58
  SPEAKER_00: You should bring a list of every account, know the beneficiaries, and know the survivor provisions on every single account.
• 12:06
  SPEAKER_00: When you walk out of that meeting, you should be working as a team with a shared picture of your financial life.
• 12:13
  SPEAKER_00: Action number two is ask your advisor specifically about the survivor scenario modeling.
• 12:19
  SPEAKER_00: Use that exact phrase with them in your next meeting.
• 12:21
  SPEAKER_00: And you can say something like: Have you ever modeled out retirement income and our picture under a survivor scenario?
• 12:28
  SPEAKER_00: What does my financial look like if I am the one living to 90 alone?
• 12:33
  SPEAKER_00: And if your financial advisor has never presented this analysis, it's time that you ask for it.
• 12:38
  SPEAKER_00: And it's a standard planning tool.
• 12:40
  SPEAKER_00: It shouldn't be an afterthought in your plan.
• 12:43
  SPEAKER_00: And if they can't produce it, well, that's also information worth having and considering getting a second look.
• 12:48
  SPEAKER_00: Action number three: if either of you has a pension election coming, do not take the decision lightly and doing it with a full analysis is key.
• 12:57
  SPEAKER_00: Now, the difference between a single life and a joint life survivor pension election, it can be hundreds of thousands of dollars a year over 20 years of retirement.
• 13:05
  SPEAKER_00: And it's not a decision to make in an HR office on a tight deadline.
• 13:09
  SPEAKER_00: It is one that should be modeled out very carefully with the full vision of both spouses' incomes coming into picture before you put pen to paper and sign off on that decision.
• 13:19
  SPEAKER_00: The wealth transfer, it's coming.
• 13:21
  SPEAKER_00: The women who are met with a plan and understand what they are inheriting and who have an advisor who knows them personally and have already modeled out the tax picture, these are the women that are going to be best prepared for it.
• 13:34
  SPEAKER_00: But the women who are surprised by it, they are going to struggle unnecessarily.
• 13:38
  SPEAKER_00: This episode is your invitation to be the first woman, not the second, in the situation I just presented.
• 13:45
  SPEAKER_00: As I mentioned earlier, this is part one of a multi-part series.
• 13:48
  SPEAKER_00: Part two is going to drop next week, and that is going to cover the transfer from parents to adult children.
• 13:53
  SPEAKER_00: And that is an equally important and overlooked conversation.
• 13:57
  SPEAKER_00: Make sure you hit the follow button right now or are subscribed to our channel to make sure you don't miss it.
• 14:02
  SPEAKER_00: And if you know somebody who could also benefit, we would love for you to share this episode and the series with them as well.
• 14:09
  SPEAKER_00: And if you sit down with your financial advisor to have these conversations, trust your gut, understand how they are answering your questions.
• 14:17
  SPEAKER_00: Do you feel comfortable working with them?
• 14:19
  SPEAKER_00: And if you are looking for a second opinion, you can head over to tannisfingroup.com/slash contact to apply for a second opinion and a complimentary intro call to model out what that scenario is actually going to look like so you can understand and be prepared when either spouse is in this situation.
• 14:35
  SPEAKER_00: Thanks for joining me on this episode of The Wealth Cafe.
• 14:38
  SPEAKER_00: And I look forward to seeing you again next week for part two of our series.