What Happens to Your Money When You Die? | Your Rich Bff Vivian Tu

23:30But so you mentioned, when did you like you mentioned that everyone needs this, like right now, create one at 18, 21, when you're in college, like at what point when you start having making any money of your own. At what point do people need to get on it?

23:45Vivian Tu:I think it's really up to the individual. What I will say, the most common time that people start to think about this is around the major life milestones. So that's marriage, purchasing a property, having a child, or also a divorce, or there is somebody else in their life that passes. Yeah. The hope is that you'll never need any of this. And how much does something like this cost? If you have a really complicated financial situation and you use a human lawyer, this could be thousands of dollars. But I'd actually dare to say that most of us are pretty average, right? Like, yeah, most people are not in the tens, hundreds of millions, billion dollar area code.

24:31Vivian Tu:They are more likely just to be two regular people who make a living, who want to be mindful with their money and want to protect the next generation or their families. And if that's the case, there are now some really great online resources and tools that can help you draft what you need based off of some decently boilerplate templates. Because if the situation is like, you know, we both have traditional W-2 jobs, we have one kid, like you think you're the first two people with two W-2 jobs and one kid didn't need to do this. You're not. Use the boilerplate. It's not a problem. And if you're still uncomfortable with that, some of these services also offer like, hey, we'll get you to 95 percent and then you speak with a human lawyer to verify all of it.

25:15Vivian Tu:Once you feel good, then we'll finalize. OK. And that's closer to hundreds of dollars. OK. OK. Got it. Let's like pivot to the succession type families, OK, because it's so fascinating. I'm like these families with like generational wealth or even like people hear the word trust fund and they're like, oh, it's reserved for rich kids. No. So I'll start there. Trust fund, not just reserved for rich kids. Trust funds, not just reserved for rich kids. Trust funds are basically a way for you to, again, dictate what you want. So there is someone who's the grantor and then someone who's the benefactor, the beneficiary.

25:51Vivian Tu:And so if you're my kid and I set up a trust for you, I'm going to be able to say, OK, well, if I go and Mary Helen gets this, she can only use this starting at 18 for college expenses, purchase of a vehicle or purchase of a property. Hmm. Then it's like, oh, another tranche of this will be unlocked at age 30. She will then be able to use this for private school education for a future grandchild or, you know, X, Y, Z to buy a property X, Y, Z for this or for medical expenses. OK. But I basically give you enough rope so that you can make a little bow, but not enough rope to hang yourself. Right.

26:37Vivian Tu:Right. Right. I don't want you to get in so much trouble because imagine you're 21. I'm your mom and I pass away and you just unlocked five million dollars. You're going to blow that money. Right. You're buying a Bugatti. Of course. Like, yeah, 21 year old me. I have not one good decision. Yeah. And so I just think it's a great way for families who want to take care, like truly love. Yes. Their families to take care of that makes sense. When you say the word trust, is it a bank account? Is it something that's wrapped around an investment account? Is it how do people open one? They work with a lawyer.

27:12Vivian Tu:A lawyer. To open up the trust. And there's tons of different types. There are spousal trusts. There are Medicaid trusts. So as you're getting older, if you want to essentially put all of your assets and your income into two separate trusts, people who are super rich can qualify for Medicaid because there's a five-year look-back window. But if you get your money into those trusts prior to the five years, it looks like you got nothing. Wow. So one of the many. Trust can be used for all different reasons. Am I saying it's ethical? No. Right. But I'm telling you they do it. And I'm telling you it is it is fully legal.

27:45It's not ethical, but legal. Legal. A lot of things. Yeah. In the finance world, I feel like not ethical, but legal.

27:51Vivian Tu:And it's kind of like a if you know, you know. Right. And if you can afford that type of guidance, you will know. But why should only they get to know? A hundred percent. I think it's trust and will. One of those. Do you guys, is that on our solid? Trust and will is in our marketplace. Because we think it's so important that regular people. Yes. Who don't have the generational wealth or the rich uncle who can explain it to them still get this information because it could literally save you so much money. Moving on to inheritance. Let's do it. Which is like super juicy and fun. So can you actually control your family from the grave?

28:26Absolutely. How so?

28:28Vivian Tu:Through this estate plan. We're telling people like what they get, when they can use it, when like what they can use it for, how they can use it. I guess you just explained it in the trust, like these these gates. What's the wildest condition you've heard be put in an inheritance? Shaq's estate plan for his kids, they don't get a cut of their inheritance unless they have two degrees. So they have to get a bachelor's and then higher education. Smart guy. Yeah. The former owner of the Denver Broncos basically said that his I think he had a couple kids. He was like, nobody gets to inherit the Denver Broncos unless you get a like a sports business management degree of some sort.

29:14Vivian Tu:And so quite niche. Yeah. But kind of smart. I want the Denver Broncos to say. Yeah, exactly. So, you know, I think these kinds of like gating items are really important. But the most popular one, actually, that a lot of people use is future prenups. So actually in my estate plan, you know, eventually I don't have any kids now, but I will be putting a clause that no inheritance, no nothing for the kiddos unless they have a prenup with their future spouse. Wow. Call me the bad guy. Smart. No, it's so important. But like some evil ex-wife is not about to steal the money. No way. Evil ex-husband is not about to take the money that dad and I worked so hard to make for you.

29:58The inheritance stuff is so fascinating. Circling back to the trusts and everything, just as you're planning to build a family, what is going to be the first account that you open for your little one? Oh, there's just out of here. There's so many. There's so many. It's like Trump accounts, obviously, is a freebie.

30:16Vivian Tu:Listen, I don't think it's one. I think it's multiple. I think, you know, right now, kids who are currently being born, I think people should take full advantage of the Trump accounts. A hundred percent. Because part of it is some kids right now, depending on the dates, are getting free deposit of money. Who doesn't have free money? Yeah. And then also over time, parents can contribute to it. What I will say, I think the Trump accounts, the issue I take with them is they're actually quite complicated. You can't just take money out. Like you can only access a certain amount by like, I think the age is 18 and it's only half and you have to use it for like one of these things.

30:51Vivian Tu:Right. A little bit trickier than it looks on the surface. I think for me, immediately, because of what I do for work and who I am and like what my kid will likely be born into, I'll probably open up a custodial Roth IRA. So the baby, the baby marketing or the baby remodeling that they're going to do because everybody got to work. Yeah, of course. Any sort of income they make will put into a custodial Roth IRA for them. Allow that to start growing, you know, as soon as they have earned income. Yeah. I think it is almost certain, at least I hope, that they get a higher education of some sort. Even, you know, these days, like you need any sort of like technical training, culinary school, beauty school, whatever.

31:35Vivian Tu:So a five to nine and to pay for some of those really expensive of private schools. We'll be putting money into a 529 for them, which is for educational costs. And I would also say I'm going to make them an authorized user day one of their life on my credit card because this helps for them to leech off of my good credit score. I have a very good credit score. So does my husband. And essentially, by making them an authorized user for 18 years, they are going to go into college with a near perfect credit score. And because of that, they are not going to have the same problems that a lot of young people do when they need to sign for their first apartment or buy their first car or do whatever.

32:20Vivian Tu:They are going to get the best terms possible when they do all that. That is brilliant. I didn't know you could add an infant as an authorized user. Some credit cards are like you can't do it until they're 12 or 13. but many of them allow you to do it. No age restriction. So use those to do no age restriction. That is so smart. OK, because, yeah, I feel like I don't know. Maybe it's the age they am. Everyone's getting married and starting to have kids. And there's so many accounts out there. We're in that age. It's scary. There's so many options out there. And I feel like above all else, just opening something for your child.

32:50I mean, nothing was open for me. No, same. I still love you, mom and dad. But I'm definitely going to be doing that if I ever have kids. And now to your point, we have this wealth of knowledge. Talk about it with your other friends who are having kids. Like, what are you opening? What are you opening?

33:05Vivian Tu:And by the way, can we have a conversation around? Yeah, a comment I get kind of frequently, which kind of icks me out is like they're like, well, my mom and dad didn't do this thing for me. So I don't do it for my kids. They need to grow up and like learn life on there. I'm like, are you joking? I am going to give my kid every possible cheat code to have an easier life than me, because let me be clear, even though I grew up in a very loving home, a lot of things would have been easier if my family had been generationally wealthy. Right. A lot of things. Of course. Like, I am so lucky that I was able to get into the colleges I got into because I did not have a college counselor.

33:44Vivian Tu:I had the guidance counselor at the school who was also advising 330 other seniors. and like I wrote those applications on my own. Right. And so like if I can have a college counselor for my kid or if I can have a tutor that makes them smarter and helps them get ahead, I'm going to do that. Yes. And so it's strange to me when people are like, if I don't have that advantage, my kid can't have that advantage. I didn't have a lot of things. My kid is going to travel the world in a way that I did not get to. And they are going to be able to have certain experiences in certain sports that I don't know how to play.

34:20Vivian Tu:Like my husband golfs and I cannot tell you the number of career benefits that man has received. I'm sure. Not because he was sitting in the right office at the right time, but because he's a scratch golfer and somebody on, you know, his team was like, oh, I need you to come be on the, you know, the whatever, like for my country club so that you can help me win. And like, because of that. Yeah. He has gotten extra face time with the right people. And I'm like, I don't know how to do that. So like, I hope my kid can play golf and play tennis and play the sports that are likely going to provide them access in a way that I didn't have.

34:58Of course. You kind of see that on Wall Street or I saw it on Wall Street a little bit, too. It's like, well, we had to like be in 25 hours a day and it's like, you know, not sleep. So you should, too. And I'm like, don't you want and similar to your point, don't we want the next generation of leaders to be cultured and be able to do more than we did. Like, who knows what the world will look like? Who knows if there will be college in the same way when our kids grow up to go to college? But like, if nothing else, they're going to have money to be able to access, you know, the education that they need.

35:29I could ask you a million things under the sun. And I really wanted to hone in on the endowment stuff because like no one, no one talks about it. So what happens if you without a will. Is it same as a prenup? Like the state decides what happens?

35:41Vivian Tu:Exactly. Your estate goes into probate. So you go through the court system and you better hope it works out right. But like if you have siblings, y 'all ready to duke it out? If there is a family home, y 'all ready to fight over how you're going to split that? Like, I think that is such a disservice. Oh my gosh. Imagine you have children and they are good friends. What if they are no longer friends after that. You've just torn your whole family apart because you couldn't bother to put together a piece of paper. To confront it. Yeah, exactly. It's so weird thinking about a will at such a young age.

36:17When I was incorporating Mary and Pip, my lawyers were like, all right, so like what happens if something happens to you? Yeah. And I'm like, oh shit, like nothing's going to happen to me. And they're like, we have to do it. Yeah. And I know you've talked a lot about your prenup with your husband. And like what one thing I respect so much is you're like, my business is my business, his business is his business. We have shared income, et cetera. How do you decide interpersonally what happens? Because you have multiple businesses. Rich BFF now asked Dolly, I assume, are they all under the same umbrella?

36:45They're two separate entities. Okay. So, but yes,

36:48Vivian Tu:there had to be like essentially like ownership agreements, operating agreements that were fully separate. And it's not easy. It's hard. But I think I, you know, made the right move because like I didn't marry a fucking loser. Exactly. He's always like, it's your gig. I'm here to support you. I'm here to like, you know, be an advisor and help free of charge. But like, that's why I'm so cool with the fact that like, you know, all of the income coming in we have is 50 50. Like he took such great care of us as like our teeny tiny little fake family before we were married. Like he was making four times what I was making at one point in our careers.

37:31Vivian Tu:And he never made me feel bad about it. He never held it over my head. He never said, well, this is my money. Like he's never done that. Right. And because of that, I think I just feel like we built this life together. And so it's very, very clear. But like, if I go, he doesn't get my everything. That was my question that I was skating around. Clearly, I was like, so what happens? Like, what is your will? Where does your assets go? No. So obviously he'll get some, but I'm still leaving some to my parents who are both still alive. Thank goodness. They're both healthy. I'm really happy. You know, I think there are some other key philanthropic endeavors that we have actually allocated money towards.

38:19and you know when our family expands I think we'll redo it if you're wondering when should I it's like every life change every like check in with the well and the estate because we actually

38:32Vivian Tu:did the estate plan or at least part of it prior to being married because we actually bought our home when we were boyfriend girlfriend wow okay both names on it I didn't even have a ring on my finger like we were not engaged. This was just my boyfriend. This was a stranger, like a random man. Because you had that roach story that you always talk about, which I crack up at. OK, my quick roach story is in my early 20s, I moved into the best apartment ever. It was so beautiful. It was going to be my little cute Soho sex in the city dream cockroach infestation. Classic New York. Of course. And my roommate and I paid eight grand to break our lease.

39:10Vivian Tu:evil property manager. I don't want to be sued, so I won't tell you who it is, but they're disgusting and I hate them and they're vile. But I moved into my husband's apartment then. He was living with a roommate and I had to come fully clean. I was like, this is what I make. I have no money to pay you for rent. I'm so broke. I have to spend all this money to break my lease. That's it. Right. And he was like, OK, like, thank you for sharing. I never expected you to pay any rent. And since we're having this conversation, like this is what I make. I just got this big bonus. It was, you know, he had he was a year older than me.

39:44Vivian Tu:So he had gotten his first big bonus from working as a banker on Wall Street. And so he was like, it ain't tricking if you got it. Like, I have the money. You're good. And he's always just been so generous with his love, his time and his money. And so I think now that I am the breadwinner, I want to make sure that he feels like it's fully ours, not mine or his. It's that like if you ever feel any type of shame from your partner, then it's probably going to get horrible feeling. The worst. We get enough of it from society. Everybody else. The one place you could have a sanctuary should be with your partner.

40:18Vivian Tu:That's what I always say is like no haters at home. Like life's already hard enough. Like that should be your teammate. I like that. Not your adversary. No haters at home. I love that. What are some of the biggest completely legal tax strategies that the rich people do that's accessible to middle class people, but they might not take advantage of yet. Yeah. Rich people fully maxing out every single tax advantage retirement account humanly possible available to them. It's the easiest way. Easiest way. Whether it's a 401k, Roth IRA, IRA, whether it's your self-employed IRA, a solo 401k, like whether you are a W-2 or 1099, there is a way that you can put a bunch of money away and either shield it from taxes today or taxes in the future, fully legal.

41:06Vivian Tu:Government wants you to do it because guess what? If you don't save for your own retirement, who has to bail you out? The government. And guess what? We're running out of money to bail people out for their retirement. And so it's going to become a dwindling pot. And because of that, if you're relying on somebody else to fund your retirement, you might be in for a severe downgrade in life quality. and I don't want to rely on that. I'm going to sell fund. If you're going to put money in the market, like why not take tax advantages? I think people hear retirement account and they're like, I don't know how to do that.

41:38It's an investment account. If you invest in similar things, low cost ETFs, you just don't get, you either get shielded from taxes today or in the future. So I love that. It's like such a simple answer, but so many people look over it. You want to shield from taxes today and tomorrow?

41:55Vivian Tu:Yes, obviously. Tell me more. people don't realize this because of the title. It's kind of a misnomer, a health savings account. So forget about this. If you have a high deductible health plan, you can get something called an HSA, not to be confused with an FSA, which is a flexible spending account. OK, a health savings account is something that you can put money towards and your employer can put money towards. And in my case, when I was at BuzzFeed, I would put a certain amount in and BuzzFeed would match a part of that. It is money that you put in that is tax free. You then can spend it on health costs in the future.

42:35Vivian Tu:Wow. Tax free. And then if you don't spend all the money, you it essentially works just like a 401k and you'll pay ordinary income taxes on it when you take it out in retirement age. And health care expenses includes like CVS. Yes, but here's the thing. What I actually encourage people to do is not to spend it right now because HSA dollars can be invested. And thus, when you have those dollars in the future, think about it. What is the number one cost eventually for most old people? Medical care. You need help. You need home help. You need any sort of those health care services, that ain't cheap.

43:15Vivian Tu:So if you have these dollars saved up, you're going to be able to, one, spend very efficiently, but you have that buffer, too, for those big, big expenses. Wow. Oh, my gosh. So max out retirement accounts and get an HSA. Yeah, you got love, love. OK, last two outros that I ask all of my guests. Yes. What are you investing in today? Stock, theme, anything. OK, so. Or your business. Oh, yeah. OK, so. I think I have to say this, being a really unsexy, very boring, plain Jane investor is the way to go. And like it is for the most people. Investing in target date retirement funds, index funds, sector funds, international index funds, like really allows you to focus on not stock picking and instead areas of our global economy that you feel strongly about.

44:11Vivian Tu:And so I think that is a great way to go. I am investing in Ask Dolly. Love. You can check it out. A-S-K-D-O-L-L-Y. Stands for short for dollar. Short for dollar. Exactly. So cute. It was a huge investment. I actually put over a million dollars of my own money into this. I did not raise any funding. Bootstrapped. Bootstrapped it myself because I really wanted to make sure that I could build it my way. Of course. Unfortunately, I'm quite stubborn. Yeah. No, I love that. I remember when we talked when I was like just starting Mary and Pip, you were like, don't raise money, bootstrap. I was like, I wish I could do that.

44:44But one day I'll bootstrap.

44:46Vivian Tu:But that's incredible. Like, I just think that is something that I'm truly betting so much on because I believe in it. And then I also think that a theme that I'm investing in or just believing in and investing my time in is, I think, women. Yeah. We're getting so much smarter. We are getting more educated. We have less debt across every category except for student loans because we're getting more educated. Single women own more homes in all 50 states than single men. And Fidelity has done studies and actually looked at real portfolios and we're outperforming our male peers in investments. Women are better investors than men.

45:28I love when people agree. I mean, the data proves it. It's true. Yeah. So a theme investing in women. That's incredible. What is your growing interest? Ooh. Yeah. And this one is non-investment related. Just any, like we had someone, their growing interest was like the Tudor family and dynasty and they were just like looking into or like a show you've been watching that you're obsessed with or anything or fashion or whatever.

45:53Vivian Tu:Okay, okay, okay. I would say my growing interest is actually, this is so embarrassing. I'm completely redoing my like wardrobe because I unfortunately still have clothes from college I'm 32 that's humiliating um and I think for a very long time I felt like fashion and beauty was a little frivolous and I turned my nose up at the girls who spent a lot of time in the morning getting ready or I'm like oh I'm cool and I'm a pick me because I am low maintenance and I'm a cool girl. It's not. I'm not better than any other girl. I'm actually worse. I love women. And I think the thing about this is there has actually been data that shows when you look nice, you get paid more.

46:46Vivian Tu:And as soon as I read that data, I was like, ah, shoot, I got to lock it. Yeah. And so I think it's my growing interest is like, how do I present myself in a way that I can look the way that I feel. I want to look just as smart, just as confident and just as capable. And maybe that means I need to, you know, buy some new clothes. Yeah, exactly. You look amazing today. I'm literally going to copy this exact outfit. It's gorgeous. Thank you. Shout out Philip Lim, API designer, love. Obsessed. And the shoes are like a collab. Yes. CPPO and LaRude. Brazilian shoe company. Wow. Well, that is definitely a growing interest of mine too.

47:25I really want to like stylists are so expensive, but. We got to go shopping this weekend. We should go shopping. Oh my God. There's some really good archival like thrifts. Like I don't like buying designer firsthand, but when I buy it secondhand, I'm like, it's worth it. You know what I mean? So I'll definitely send you a list of that. Well, thank you so much, Vivian. This was so insightful. Where else can they find you? You can find me all over the internet as Your Rich BFF.

47:52Vivian Tu:And you can get either of my books, Rich AF or Well Endowed, wherever books are sold. They're both amazing. I've read them both. Thank you so much for coming. Let's go shopping. Let's do it. Thanks for having me. Of course. This week, take the first step in your own estate plan, whether it's just starting a simple will or researching what you need to do to get one. And if you like this show, don't forget to hit that follow button and leave a review. every follow and review helps support the show. All right, y 'all see you next week.