Contributing to Your Non Dependent Adult Child's HSA - WCI Podcast #379

This is the White Coat Investor Podcast where we help those who wear the white coat get a fair shake on Wall Street. We've been helping doctors and other high income professionals stop doing dumb things with their money since 2011. This is White Coat Investor podcast 379. Today's episode is brought to you by SoFi. Helping medical professionals like US bank borrow and invest to achieve financial wellness. SoFi offers up to 4.6% APY on their savings accounts as well as an investment platform, financial planning and student loan refinancing. Be sure in an exclusive rate discount for med professionals and $100 a month payments for residents. Check out all that SoFi offers at whitecoatinvestor.com SoFi loans originated by SoFi Bank NA NMLS 696891 Advisory Services by SoFi Wealth LLC. The brokerage product is offered by SoFi Securities LLC, Member FINRA SIPC. Nothing comes with risk, including risk of loss. Additional terms and conditions may apply. All right, welcome back to the podcast. I know it feels like you just listened to one a week ago, but we didn't record one a week ago. All right, we. We haven't recorded a podcast in fact in a month and mostly because we've been off having fun. I have had a heck of a streak the last four weeks. I was back very briefly between each of four trips and between two of them worked a single shift and then was off again having fun. But it's been a wonderful summer break for doing Roth conversions in early retirement. Consider submitting medical expenses, right? So actually put in medical expenses, take money out of your HSA and use the proceeds to fund those other financial goals. And I think that's a great tip. You preserve your triple tax advantage, right? You don't want to lower your HSA contribution. Just pull money out of there for your health care expenses either this year and past years. And now you can maybe have more money in a Roth account or something to pass to an heir tax free. So I thought that was great. If you're having any trouble maxing out those other tax protected accounts, maybe another source of income can be HSA withdrawals, Qualified HSA withdrawals. Okay, I got another email asking me if I would talk about my tape on the new Vanguard CEO. The new Vanguard CEO is a former BlackRock executive. I've never met him personally. His name is Salim Ramji. He's actually Vanguard's first ever external hire for the position. Vanguard's always promoted from within and so that's a little bit unique for them. Tim Buckley's stepping down and Salim Ramji is going to be the new dude. Well, I don't know him personally. I'm sure he's qualified. I think they'd look very carefully at him. I don't know necessarily what his focus is going to be, but he certainly has experience in running a large organization with lots of ETF money, which is really a lot of what Vanguard is these days. A whole lot of their money is in their exchange traded funds. And coming from blackrock, you ought to have some serious experience doing that. I don't view BlackRock as like a bad company. Right. They're a good company. One of the good guys out there and somebody that was doing well there is now coming to Vanguard and hopefully will do well there. So I don't think this is bad news. Like people panic all the time about change. I mean, how long do you want a CEO to stay at Vanguard? Like 50 years. It's just not going to happen. That's not how CEOs work. They're there for 5ish years, 10 years maybe. And then you go on to a new CEO. That's just the way careers work. People retire, they move on to something else, whatever. It's okay to have new CEO. You don't need to move your money away from Vanguard because they hired a new CEO for crying out loud. What else can I tell you about him? Well, he's got a degree in law from the University of Cambridge. He's got a Bachelor of Arts in Economics and Politics from the University of Toronto. So maybe a little more international focus we might see at Vanguard based on that. But I don't have anything bad to say about them. I wouldn't spend a lot of time worrying about Vanguard getting a new CEO. Might there be some changes over the years? Sure, absolutely. Wouldn't you expect there to be? But nothing that I'd particularly worry about. All right. We got some great stuff today off the speak pipe and I think you're going to love it. Let's talk about this one from Paul.

Hi, Dr. Bali.

Vanguard recently sold its 401k business to.

Ascensus, which has led me to decide to change to either Schwab or Fidelity.

For my solo 401k.

Apparently the more technical term for this.

Process is restatement of the 401k plan.

Could you talk a little bit about.

The process of restating a 401 to.

Change companies and mistakes to avoid. To help those of us who will be changing ours as Vanguard exits this space.

Thanks. Okay, I wrote a blog post about this event. This is true, right? Vanguard's getting out of the Solo 401k business, which is too bad because it really wasn't very long ago that they finally got good at doing this. You know, up until like a year ago or two years ago, you couldn't even roll over like a traditional IRA or a SEP IRA into your Vanguard Solo 401K. It was only a couple of years before that when they were making you use the higher cost investor shares instead of the Admiral shares. So it's not like The Vanguard Solo 401k has always been awesome. It always had a problem with it. More recently, I thought it was doing pretty good. I'm not thrilled about the change to a census. I wrote a blog post all about this change. It ran on May 8th of this year. You can go back and take a look at that. But you got a lot of options, right? You could just leave it a Vanguard and let the census start managing it and see how that goes. See if you like a census. See if you're over okay with the pricing and the service. Who knows, Maybe you'll get better service. Vanguard's never been known for their incredible service, right? So maybe it's a little better with the census. You can roll that into an employer 401k or 403. You can roll it into an IRA. You can move like you're talking about to Fidelity or Schwab. But you know what I think the best option for most people is, is probably to go to a customized plan, right? We got a list of people. If you go to whitecoatinvestor.com, you go down the recommended list. You'll see retirement plans and HSAs. If you go in there, there are a bunch of companies that will customize an individual solo 401k for you. And it's cool when you get it customized because you get better service and you get more features than you can get from the cookie cutter products available at Vanguard, Fidelity or Schwa. Right? You don't have to worry about whether they allow Roth contributions. You can get mega backdoor Roth contributions, which you can't get from any of those cookie cutter plans. You can put the investments you want in there. There's all these great benefits. They'll even help you with your 5500EZ. And don't forget, if you got 250k in a solo 401k, you must file that form by the end of July every year. If you don't, the penalties are Terrible. They're really egregious. Solo 401 over $250,000 equals form 5500EZ every year. It's not a hard form to fill out. There's a tutorial on the blog that'll walk you through the form. Don't forget to do it, though. It's really important. If you did forget, you can beg for mercy. And most people I've heard who've done this have actually received some mercy on it. But just fill it out once your solo 401 gets big enough. Fidelity's product, Schwab's product. They're okay, you know, they're not bad. I got lots of accounts at Fidelity. The white code investor. 401ks at Fidelity or HSAs at Fidelity. I don't think it's a bad place to be. My partnership 401ks at Schwab. I don't think it's a bad place to be. I'm putting orders into Fidelity and Schwab online all the time. I call them up rarely, like I do Vanguard. I don't have any problem with the service I'm getting from any of those organizations. If you think one of those 401 s meets all of your needs, go ahead and use it. But I think most people are probably better off with the customized 401k. It doesn't cost that much, right? It costs like a few hundred dollars set up and one or two hundred dollars a year, right? For something that hopefully you're putting in 50, $60,000 a year into, that's nothing, right? And you get a little bit better service and more features. Totally worth it. Especially if it allows you to do great big mega backdoor Roth contributions like a lot of white coat investors are looking for. But as far as the restatement, if you're going to a customized 401k, they can take care of all this for you. That's the beautiful thing about it. You've got somebody there. You say, hey, I'm a Vanguard. I don't like the ascensus change. I want to have a customized plan. Can you take care of all the details? Yeah, we got it, man. No problem. We've already done this 100 times this month, right. For a whole bunch of other people. So I don't think that's a big deal. If you want to go to Fidelity or Schwab. I don't think it's that big of a deal either. You just got to let them know, hey, this is a 401K. Was a Vanguard. I didn't want to go to Census. Can you assist me with restating this? So basically you're using the same for solo 401k plan number. If you were.001 before, you're still.001. The assets move over. If those assets are allowed in in the new plan, you can often move them over in kind. But even if you have to sell them, it's not a huge deal. You might miss a little time out of the market. But you can adjust for that elsewhere in your asset allocation. Right, by taking another account, especially a tax protected account, and maybe moving money there that's in cash or bonds into equities. While that money that was in the Solo 401 is sitting in cash during the transfer period, it might let you transfer it in kind as well. Just talk to them about that. Either way, you're probably only out of the market for two or three weeks and hopefully it doesn't go crazy up while you're out of the market. You might get lucky. It might go down while you're out of the market and give you a chance to sell high and buy low. Hope that's helpful. Paul. This is like an IRA rollover. So those are super intimidating to people until you've done them. Once you've done one or two, you're like, oh, this is nothing. It's just a form I fill out and everything happens in two or three weeks and move on with life. All right, this next speak pipe we decided to use because I think it's a real question. The person who submitted it used the, you know, online robotic voice to submit it. And I think once you hear the question, you'll understand why. But I thought it was a really interesting question to consider and to talk about. And assuming this is absolutely a true case, which I think it is, this is somebody who can really use a little bit of help. So let's take a listen.

Hi Dr. Dali. I am going to be arrested in the next few weeks. There is a chance for federal charges. I will lose my medical license in the state and there is a high chance I will not be able to get a new license in other states. I am wondering about future employment options for MDs after I get out. But I am also prepared to not have a chance in medicine or any high paying job afterwards. I was able to save and invest about 520k at the time of this writing. After a few years after residency spread between my brokerage account 403B and 457B. I have about 140k in home equity. The money in the 457B will be paid to me in a lump sum. 90 days after my resignation, I plan on dumping it in an S&P 500 index fund. My parents will graciously help me with legal fees. It is very reassuring to know that even if I am a felon, I will hopefully come out a millionaire, assuming my assets are not touched. Thank you for all of your help during the years.

All right, that's a unique one. I don't think we've had this on the podcast before. A challenging situation all around. Presumably based on what you're talking about, you've done something bad that's going to put you in jail for a few years and cause you to lose your medical license. I think the bigger problem than the lack of a medical license is the fact that you're going to have that felon label on you. And when you talk to a lot of felons, and I have over the years I work in the emergency department allows me to interact with a lot of people in different situations in life. It can be hard to get a job as a felon, any job. Right. Much less a high paying job. A job where there's a lot of trust. I think there's a pretty good chance you're not practicing medicine anymore. It's going to be a really hard pathway. It would be a really hard pathway even if you just dropped out of medicine for two or three or four or five, five years and it wasn't because you went to jail. It's just hard to come back into the field now. Are there companies out there that would love to have your expertise and might see this as a chance to get that expertise for cheap? I think there probably are. Are they going to be worried about the felon status? Absolutely, they are. And that's going to be the biggest thing you're going to have to address in your applications and in your interviews. And in all of that, you're going to have to apply more broadly to jobs. You're going to have to, you know, really work any network you may have. It's going to be challenging to get a job. The good news is if you're going to be in jail and I don't know how many years you're talking about, but you talked about your assets doubling, which suggests to me that, you know, we're talking about five, six, seven, eight years you might be in jail and obviously you don't know yet either. But if your assets double, well, at least you're a millionaire, right? There's a whole lot of Americans that retire with way less than a million dollars. 40% of retirees are living on nothing but Social Security. So that's awesome news. In fact, if you can just get a job after you get out that supports yourself, you know, that doesn't allow you to save for retirement, but supports you, that money can continue to double every seven to 10 years if you leave it invested reasonably aggressively, right? That's just the rule of 72. A lot of people call this Coast Fire. So let's say you came out of residency at 30, you worked until 35, you saved up half a million dollars, you went until you spent the next five years in prison. You know, you get out at 40. Well, if you don't start touching that money until 60, that gives you two more decades, right? So if that money's grown to 7 or $800,000, it doubles to 1.6, doubles to 3.2, right? That's coast Fire. Lots of docs are retiring on $3.2 million or less. And so good job saving, good job taking care of business, coming right out of training, obviously bad job and whatever's causing you to probably be arrested, I think you're probably also thinking worst case scenarios, right? Usually that's what our minds jump to. Maybe this won't be as bad as you think. Maybe you're only going to prison for a year, maybe you are only going to be on probation, maybe you're not actually going to lose your medical license. Who knows what's going to happen. I suspect you're thinking about worst case scenarios right now and maybe that's what you end up with. But chances are it won't be the worst case scenario and hopefully you still have lots of career options. Now any of that stuff out there that we've talked about on the podcast over the years for non clinical work, for MDs, reviewing insurance stuff or you know, big pharma has need of expertise of MDs, especially MDs that have practiced for a few years, right? That's what they really want. They don't want someone right out of med school, they don't want someone right out of residency. They want something that's somebody that came through med school, came through residency and has worked for a few years. Now you're valuable now you're super valuable. Those sorts of companies. It wouldn't surprise me at all if you're able to still get a high paying job. It might not be $800,000 a year, but if it could be a six figure job. Shoot, you're still doing way better than the vast majority of Americans. Hope that's helpful to you and stay in touch. Let us know how it went. I'm sure a lot of White Coat Investor podcast listeners would be curious to hear the rest of the story. Whether that's in a year or whether that's in five years. We wish you the best. Obviously, we think whatever you've done, you should pay your price to society, but we don't necessarily need to ruin everybody's life once they've paid that price. Okay, let's talk for a minute about DAFs and asset protection. I got an email was hoping if you could do a deeper dive into the following which I find most people I speak with regarding DAFs or donor advised funds aren't so sure about. First question, is it easy to transfer appreciated funds, say a total US Stock market fund, from one brokerage such as Vanguard, to another Schwab or Fidelity? Personally, we have our funds in Vanguard, but I don't love the idea of maintaining a $25,000 balance with Vanguard, but also don't know how much of a hassle it will be to transfer funds to other brokerages. I figure Vanguard to Vanguard Charitable would be the most convenient. I think that's probably true. The DAF we use is the Vanguard Charitable one. It is convenient, but I am told by people who have both Vanguard and Fidelity Charitable accounts that it is no big deal to donate assets from Vanguard to Fidelity Charitable. So I think you can work around this without too much hassle. Fidelity's got a $5,000 minimum to open that account and instead of having to make $500 minimum donations, you can $50 minimum donations at Fidelity. I think that's a great option. Another great option is probably Daffy. We had their CEO on the podcast a while back. If you'll remember, they've got pretty darn low fees as well and that could be another option. You might look into that, but it's no big deal to transfer funds now. Appreciated funds in a DAF don't matter, right? Once they're in the daf, if you want to move them to another daf, that's no big deal at all. That's just since each charities you're just making a charitable donation to another DAF that's super easy to do. Obviously that's usually cash, not securities, but it doesn't matter because there's no like capital gains you have to pay when you sell something in the daf. So it's no Big deal. Okay, second question. When the funds arrive at the DAF, can you keep them as is? Say you transferred 100 shares of VT Sachs, keeping it at that or do you have to choose what the DAF investment options are? You're going to have to choose what the DAF investment options are. If the one you're going to doesn't offer a total stock market fund, and I don't think that's the case with Fidelity or dafi, then you would have to use something different. And yes, any moves within DAFs are tax free and sheltered, like a 401k or 403. All right, the third question. When deciding to contribute to a charity, do they appreciate whatever asset you have in the daf or does the DAF typically liquidate it into cash and the charity receives cash? Cash. This is the convenient thing about having a donor advised fund. Right. You take your highly appreciated security, you give it to the daf, the DAF takes care of everything and the charities just get cash. Super convenient. Yeah. So the charity doesn't have to worry about that. You can donate appreciated securities directly to charities, but only the biggest ones are going to be able to handle it. You know, you're giving money to the United Way, they can probably handle it. You're giving it to some charity that was started last year by somebody in your hometown. It's probably not going to be able to take appreciated charities, but they'll take cash from your death. Okay. And another question about asset protection from the same writer is having all your major assets under your spouse's name. House, cars, investments other than retirement accounts and not your name. One way of approaching it. I know this puts you at risk if there was a divorce, but from strictly an asset protection perspective, would it work? Probably. It probably would work. Obviously it's not a good idea because you got like a 1 in 10,000 chance of losing personal assets to your to your patient, but like a 1 in 10 at best chance of losing assets to your spouse. So those numbers are very different. 10 and 10,000. One of them is 1,000 times more likely than the other one. So I think this probably would complicate a divorce settlement issue. And if you're really going to transfer assets over there and not mingle them, then I think you might have trouble getting them back in a divorce situation. But would it work? For the most part if it's just you being sued and it's pretty clear that is not your asset, they can't take it from you. But remember what this means all these Asset protection techniques, they are for use when you declare bankruptcy. Right. So you have to be cleaned out before these techniques really start doing much for you. Yeah. You can use them to try to encourage the other party to settle. Right. And unlikely event that you've got a judgment against you that's not reduced on appeal and not covered by insurance. But you got to go through the bankruptcy process if you're really going to use these assets. Right. Because you're going to declare bankruptcy. Your spouse gets to keep all their stuff, the boat and the car and the bank account and all that. But if your name's on the bank account, which you probably need. Right. You're going to lose those assets. Right. Because they're your assets. So I hope that's helpful to you. Obviously, if you're both sued, which does happen, somebody slips and falls on your property, if you're both sued, then you can lose those assets. There's another risk too. Right. Just your spouse can be sued. Let's say you decide to put the house in just your spouse's name and all the money in just your spouse's name. And then somebody in the car in your spouse's name. Well. And then your kid kills somebody with the car and there's a huge judgment against you. Well, it's your spouse's car and your spouse's assets. So they can get those assets by suing your spouse. Right. So it's not just you that can be sued. Something to think about. Hope that's helpful to you. All right, let's talk about this question from Wes.

Hi, Jim. Just listened to your episode on the donor advised funds and wanted to throw out one other option that I haven't heard mentioned on your podcast or on your website that other white coat investors out there might be interested in. I wanted to begin donating appreciated securities in place of my regular cash giving that I give to my church, which is the bulk of my charitable giving. I worked with my church for a while, but for whatever reason, they are not able to set up an account where they can directly receive securities. So that led me to search for a low cost and easy to use donor advised fund to accomplish my goal. I found charityvest.org, which again, I don't think I've heard you mention it's been very easy to use. There's zero fees if you leave the money in cash, which is what I do, although they do have investment options. But it's been easy to just donate a stock and then they liquidate it. I have it as cash in my account and then I can immediately donate it to whatever charity. No minimum balance. And again, a very easy to use dashboard. That's been a great solution for me. So if anybody else is interested, I recommend them checking out charityvest.org all right.

Sounds like an ad. But I guess if you're not associated with them, it's just an endorsement. So there you have it from one white coat investor to the rest of you. He's had a good experience with Charity Vest. There's actually a lot of Dafts out there, right? There's hundreds of DAFs out there. Don't all of you call in and leave a speak pipe message telling me about your favorite daft. I don't care which DAF you use. I don't even think we have. I don't even think we have a sponsor that does DAFs. You know, fidelity doesn't sponsor us. Vanguard doesn't sponsor us. Daffy doesn't sponsor us. So those are kind of my big three I usually mention. Maybe I ought to throw Charity Vest into that list. There's not a lot of money in getting sponsors that do DAFs. But you know, if there's a DAF out there that offers a nice low cost product with lots of great features and they want to sponsor us, let us know. You know where to find us. Okay, another email. This one also about that same episode about dafs. One more bit of info you may want to add to your donor advised fund Monologue. Is that what we call it now? What I'm doing here, I'm monologuing, is that if you go the QCD route, qualified charitable distributions, at least with Vanguard, you can't use a donor advised fund. Okay, that's true. You cannot do a QCD into a Daft, but you can use both, right? Let's say you're of RMD age 72 plus, although QCD age, this qualified charitable distribution from an IRA is 70.5, not 72. But usually most people are going to be 72% plus before they're doing these. You can't do it into a daf. It has to go directly to a charity. So you can't QCD into a daf, but you can use both. So you could do a QCD to a charity and you could also donate to a DAF and obviously take a deduction for that. You could also give from that DAF to a charity. Lots of options there. But if you want to go into take money out of an IRA and put it into a DAF you got to pull it out, pay the taxes on it, and then put it in to the DAF and get that charitable deduction, assuming you're itemizing your taxes in order to do that. All right, let's talk about another charitable question. This one's about donating real estate to charity. Hi, Dr. Dali. Question about donating real estate to charity. We have a plot of land that we're looking to donate, and I'm trying to figure out when I claim this.

On my charitable giving taxes, do I.

Note the cost basis of the property.

Or the current market value? For context, the current market value actually is substantial.

Way they can probably handle it. You're giving it to some charity that was started last year by somebody in your hometown. It's probably not going to be able to take appreciated charities, but they'll take cash from your death. Okay. And another question about asset protection from the same writer. Is having all your major assets under your spouse's name, house, cars, investments other than retirement accounts and not your name, one way of approaching it? I know this puts you at risk if there was a divorce, but from strictly an asset protection perspective, would it work? Probably. It probably would work. Obviously, it's not a good idea because you got like a 1 in 10,000 chance of losing personal assets to your to your patient, but like a 1 in 10 at best chance of losing assets to your spouse. So those numbers are very different. 10,000 and 10,000. One of them is 1,000 times more likely than the other one. So I think this probably would complicate a divorce settlement issue. And if you're really going to transfer assets over there and not mingle them, then I think you might have trouble getting them back in a divorce situation. But would it work? For the most part, if it's just you being sued and it's pretty clear that is not your asset, they can't take it from you. But remember what this means. All these asset protection techniques, they are for use when you declare bankruptcy. Right. So you have to be cleaned out before these techniques really start doing much for you. Yeah. You can use them to try to encourage the other party to settle. Right. In the unlikely event that you've got a judgment against you that's not reduced on appeal and not covered by insurance. But you got to go through the bankruptcy process if you're really going to use these assets. Right. Because you're going to declare bankruptcy, your spouse gets to keep all their stuff, you know, the boat and the car and the bank account and all that. But you know, if your name's on the bank account, which you probably need. Right. You're going to lose those assets. Right. Because they're your assets. So I hope that's helpful to you. Obviously, if you're both sued, which does happen, somebody slips and falls on your property. If you're both sued, then you can lose those assets. There's another risk too, right? Just your spouse can be sued. Let's say you decide to put the house in just your spouse's name and all the money in just your spouse's name. And then somebody in the car in your spouse's name. Well. And then your kid kills somebody with the car and there's a huge judgment against you. Well, it's your spouse's car and your spouse's assets. So they can get those assets by suing your spouse. Right. So it's not just you that can be sued. Something to think about. Hope that's helpful to you. All right, let's talk about this question from Wes.

Hi, Jim. I just listened to your episode on the Donor Advised Funds and wanted to throw out one other option that I haven't heard mentioned on your podcast or on your website that other white coat investors out there might be interested in. I wanted to begin donating appreciated securities in place of my regular cash giving that I give to my church, which is the bulk of my charitable giving. I worked with my church for a while, but for whatever reason, they are not able to set up an account where they can directly receive securities. So that led me to search for a low cost and easy to use donor advised fund to accomplish my goal. I found charityvest.org, which again, I don't think I've heard you mention it's been very easy to use. There's zero fees if you leave the money in cash, which is what I do. Although they do have investment options. But it's been easy to just donate a stock and then they liquidate it. I have it as cash in my account and then I can immediately donate it to whatever charity. No minimum balance. And again, a very easy to use dashboard. That's been a great solution for me. So if anybody else is interested, I recommend them checking out charityvest.org all right.

Sounds like an ad, but I guess if you're not associated with them, it's just an endorsement. So there you have it. From one white coat investor to the rest of you. He's had a good experience with Charity Vest. There's actually a lot of dafs out there, right? There's hundreds of daffs out there. Don't all of you call in and leave a speak pipe message telling me about your favorite Daft. I don't care which DAF you use. I don't even think we have. I don't even think we have a sponsor that does DAFs. You know, fidelity doesn't sponsor us. Vanguard doesn't sponsor us. Daffy doesn't sponsor us. So those are kind of my big three I usually mention. Maybe I ought to throw charity Vest into that list. There's not a lot of money in getting sponsors that do DAFs. But you know, if there's a DAF out there that offers a nice low cost product with lots of great features and they want to sponsor us, let us know. You know where to find us. Okay, Another email, this one also about that same episode about dafs. One more bit of info you may want to add to your donor advised fund Monologue. Is that what we call it now? What I'm doing here, I'm monologuing, is that if you go the QCD route, qualified charitable distributions, at least with Vanguard, you can't use a donor advised fund. Okay, that's true. You cannot do a QCD into a Daft, but you can use both, right? Let's say you're of RMD age, right? 72 plus, although QCD age, this qualified charitable distribution from an IRA is 70.5, not 72. But usually most people are going to be 72 plus before they're doing these. You can't do it into a daf. It has to go directly to a charity. So you can't QCD into a daf, but you can use both. So you could do a QCD to a charity and you could also donate to a DAF and obviously take a deduction for that. You could also give from that DAF to a charity. Lots of options there. But if you want to go into take money out of an IRA and put it into a daf, you got to pull it out, pay the taxes on it, and then put it into the DAF and get that charitable deduction. Assuming you're itemizing your taxes in order to do that. All right, let's talk about another charitable question. This one's about donating real estate to charity. Hi, Dr. Dali, question about donating real estate to charity. We have a plot of land that we're looking to donate and I'm trying to figure out when I claim this.

On my charitable giving taxes, do I.

Note the cost basis of the property or the current market value for Context.

The current market value actually is substantially less than the purchase price, hence the donation. Appreciate your help and all that you do.

Well, that's unfortunate. I'm sorry to hear the land depreciated while you owned it. The way these donations work, though, is the current value if you've owned it for at least a year. You know, if you owned it for less than a year, though, I'm not sure this applies to you. But if you owned it for less than a year, I believe it is the basis. But after a year, it's the current value. As a general rule, you don't donate stuff that's depreciated to charity. You sell it first, claim the loss on your taxes, then donate cash to the charity. The point of donating appreciated shares to charity is that nobody has to pay the capital gains taxes. You don't have to pay them, and the charity doesn't have to pay them. So that's the point of donating directly to a charity. But if you got a loss on it, you're better off selling the thing and then donating the cash to the charity. Of course, you'd have to claim that on your itemized deductions, your Schedule A each year, but you could use that capital loss on your Schedule D to help lower your taxes. So. Good question. I think once you understand exactly how that works, you're going to quit wanting to do this. But in the event you do want to donate real estate to a charity, this is for somebody else out there that actually has a gain on their real estate they've owned for at least a year. There are probably some DAFs out there that can help. I don't know if any of the ones I've mentioned so far in this episode, like Fidelity or Vanguard or DAFI can help with that, but I'll bet there are DAFs that specialize in this, probably for a substantial fee. Let's Google DAF that can accept real estate investment. Schwab Charitable pops up with a page called Donating Appreciated Non Cash Assets. Real Estate talks about the benefits of that. It doesn't mention whether they can handle it or not. The important thing is to, you know, when you move something into a daf, it needs to be appraised. Anything that's over a certain relatively low dollar amount, less than most properties are going to be worth, needs to be appraised for charitable giving. And you got to keep a copy of that in case you are audited. But I don't know if Schwab can actually handle that. They do say at the bottom of this article, the Charitable Strategies Group, years.

After residency spread between my brokerage account 403B and 457B. I have about 140k in home equity. The money in the 457B will be paid to me in a lump sum. 90 days after my resignation. I plan on dumping it in an S&P 500 index fund. My parents will graciously help me with legal fees. It is very reassuring to know that even if I am a felon, I will hopefully come out a millionaire assuming my assets are not touched. Thank you for all of your help during the years.

Schwab Charitable is a team of professionals with specialized knowledge about non cash asset contributions to charity. All right, that's a unique one. I don't think we've had this on the podcast before. A challenging situation all around. Presumably based on what you're talking about, you've done something bad that's going to put you in jail for a few years and cause you to lose your medical license. I think the bigger problem than the lack of a medical license is the fact that you're going to have that felon label on you. And when you talk to a lot of felons, and I have over the years I work in the emergency department stands ready to support you and your advisor. So maybe they can handle it. Maybe Schwab can handle it. You know, Vanguard or Fidelity, they may be able to handle it as well. If you already have a daf, call them up. If you don't ask, you know, and if they say they can't handle real estate, ask them if they know a daft that can. I'm positive there are DAFs out there that can help with this. The other thing, you can just check with the charity and see if they can handle it themselves. Right. They accept the donation, they sell it themselves and you know, and that's sub. Hartman allows me to interact with a lot of people in different situations in life. It can be hard to get a job as a fellow, any job. Right. Much less a high paying job. A job where there's a lot of trust. I think there's a pretty good chance you're not practicing medicine anymore. It's going to be a really hard pathway. It would be a really hard pathway even if you just dropped out of medicine for two or three or four or five years and it wasn't because you went to jail. It's something else you can do. Here's a thread from Bogleheads from about five years ago Somebody asking about it. Let's see if they name any specific DAFs. Fidelity, it says here, will accept primary residences in some circumstances. They don't name any other particular DAFs that can handle that sort of a transaction. I'm positive they're out there, though, so I just keep looking. Until you found one, it's just hard to come back into the field. Now, are there companies out there that would love to have your expertise and might see this as a chance to get that expertise for cheap? I. I think there probably are. Are they going to be worried about the felon status? Absolutely, they are. And that's going to be the biggest thing you're going to have to address in your applications and in your interviews. And in all of that, you're going to have to apply more broadly to jobs. You're going to have to really work any network you may have. Maybe just start calling up dafs and asking if they can handle real estate. All right, our quote of the day today comes going to be challenging to get a job. The good news is if you're going to be in jail, and I don't know how many years you're talking about, but you talked about your assets doubling, which suggests to me that we're talking about five, six, seven, eight years. You might be in jail and obviously you don't know yet either. But if your assets double, well, at least you're a millionaire. There's a whole lot of Americans that retire with way less than a million dollars. 40% of retirees are living on nothing but Social Security. So that's awesome news from Minaj Arora, who said the struggle for financial freedom is very unfair. Just look at the rewards, right? And I think he's talking about the rewards. When you struggle for financial freedom and achieve it, the rewards are out of proportion to the struggling that you do a little bit of. In fact, if you can just get a job after you get out that supports yourself, you know, that doesn't all struggling creates a lot of rewards. All right, here's another question. This allows you to save for retirement, but supports you that money can continue to double every seven to 10 years if you leave it invested reasonably aggressively, Right? That's just the rule of 72. A lot of people call this coast fire. So let's say you came out of residency at 30, you worked until 35, you saved up half a million dollars, you went until you spent the next five years in prison. Ones about HSAs for dependent adult children. Boy, people really like that. I got a lot of Easing, you know, you get out at 40, well if you don't start touching that money until 60, that gives you two more decades, right? So if that money's grown to 7 or $800,000, it doubles to 1.6, doubles to 3.2, right? That's coast fire. Lots of docs are retiring on $3.2 million or less. And so good job saving, good job taking care of business, coming right out of, you know, training, obviously bad job and whatever's causing you to probably be arrested. I think you're probably also thinking emails after I mentioned that on the podcast. Let's listen to this speak pipe and see if it's similar to the emails I got. I heard you mention on a previous podcast that you can now open an HSA account for your dependent children ages 19 to 26 if you have a high deductible health plan. Can you provide more details about this? Do you open it in their name? Worst case scenarios, right? Usually that's what our minds jump to. Maybe this won't be as bad with your HSA company, I assume I would fund it with post tax dollars, that is. You think maybe you're only going to prison for a year, maybe you are only going to be on probation, maybe you're not actually going to lose your medical license. Who knows what's going to happen. I suspect you're thinking about worst case scenarios, right? And maybe that's what you end up with. But chances are it won't be the worst case scenario and hopefully you still have lots of career options. Now any of that stuff out there that we've talked about on the podcast, any additional details would be appreciated. Thanks much. Okay, so let's go over this one more time. Worth of the years for you know, non clinical work for mds, you know, reviewing, talking about adult children that happen to be covered by your high deductible health plan and no other plan, but are not your dependents financially meaning you're providing less than insurance stuff or you know, big pharma has need of expertise of MDs, especially MDs that have practiced for a few years, right? That's what they really want. They don't want someone right out of med school, they don't want someone right out of residency. They want something that's somebody that came through med school, came through residency and has worked for a few years. Now you're valuable now. You're super valuable to those sorts of companies. It wouldn't surprise me at all if you're 50% of their support. They're eligible not just to open a health savings account, but to open a family health savings account, right with the we're able to still get a high paying job. It might not be $800,000 a year, but if it could be a six figure job, shoot, you're still doing way better than the vast majority of Americans. Hope that's helpful to you and stay in touch. Let us know how it went. I'm sure a lot of White Coat Investor podcast listeners would be curious to hear the rest of the story. Whether that's in a year or whether that's in five years. We wish you the best. Obviously we think whatever you've done, you should pay your price to society, but we don't necessarily need to ruin everybody. Twice as high contribution limit and obviously money's fungible. You could give them 83's life once they paid that price. Okay, let's talk for a minute about 300 bucks and they could put that 8,300 bucks into an HSA. It's their HSA though. They need to open it. They're an adult out about DAFs and asset protection. I got an email. You know you can't go opening financial accounts for adults willy nilly. They have to open them themselves. Is hoping if you could do a deeper dive into the following which I find most people I speak with regarding DAFs or donor advised funds aren't so sure about. This is why you should always establish all investing accounts for your children before they turn 18. Otherwise you got to talk them into doing it. First. Question is it easy to transfer appreciated funds, say a total US Stock? But in this case they have to open it as an adult because they can't have this before they're 18 market funds from one brokerage such as Vanguard to another Schwab or Fidelity. Personally, we have our funds in Vanguard, but I don't love the idea of maintaining a $25,000 balance with Vanguard but also don't know how much of a hassle it will be to transfer funds to other brokerages. I figure Vanguard to Vanguard Charitable would be the most convenient. I think that's probably true. The daft we use is the Vanguard Charitable one. It is convenient, but I am told by people who have both Vanguard and Fidelity Charitable accounts that it is no big deal to donate assets. They can't have it while they're your dependent. But it's pretty cool little loophole that you can do that. That's from Vanguard to Fidelity Charitable. So I think you can work around this without too much hassle Fidelity with. So they go and open an account, they put the money in, they get a deduction for it. It shows got a $5,000 minimum to open that account. And instead of having to make $500 minimum donations up on their taxes, not your taxes, where that money comes from. Well, as long as you standard the gift tax limits, you can do $50 minimum donations at Fidelity. I think that's a great option. Another great option is probably dafi. We had their CEO on the podcast a while back. If you'll remember, they've got pretty darn low fees as well. And from you, right, it doesn't have to be earned income that goes into an hsa. This isn't a retirement account. There's no earned income. And that could be another option. You might might look into that. But it's no big deal to transfer funds. Now. Appreciated funds in a DAF don't matter, right? Once they're in the daft environment, it can be somebody else's income. So another cool little thing about that, I've written a blaf. If you want to move them to another daf, that's no big deal at all. That's just since each charities, you're just making a charitable donation to another daf, that's super easy to do. Obviously that's usually cash, not securities, but it doesn't matter because there's no like capital gains you have to pay when you sell something in a daf. So it's no big deal. Okay, second question. When the funds arrive at the DAF, can you keep them as is? Say you transferred 100 shares of each blog post about this. I don't think it's published yet. Let me see if it's scheduled to be published. Tsax. Keeping it at that. Or do you have to choose what the DAF investment options are? You're going to have to choose what the DAF investment options are. No, I've just written it. I wrote it back in May. It looks like we'll get it out on the blog eventually. It's got all kinds of details details in it to give you the lowdown on how to do this. If the one you're going to doesn't offer a total stock market fund, and I don't think that's the case with Fidelity or dafi. Then you would have to use something different. Yes. Any moves within DAFs are tax free and sheltered, like a 401 or 403. All right, the third question, when there's no rush, right? You got till the end of the year, of course, to make your contribution. In fact, I think you can decide and contribute to a charity. Do they appreciate whatever asset you have in the DAF or does the DAF typically liquidated into cash and the charity receives cash? Cash. This is the convenient thing about having a donor advised fund. Right. You take your highly appreciated security, you give it to the daf, the DAF takes care of everything and the charities just get cash. Super convenient. Yeah. So the charity doesn't have to worry about that. You can donate and make contribution a little bit after the end of the year. I don't. I'll have to double check on that. But that post appreciated securities directly to charities but only the biggest ones are going to be able to handle it. You know, you're giving money to the United Way, they can probably handle it. You're giving it to some charity that was started last year by somebody in your hometown. It's probably not going to be able to take appreciated charities, but they'll take cash from your death. Okay is preliminarily titled give your kid a seven figure hsa. And truly if you contributed to them every year from 19 to 26 the HSA maximum and let it ride until they were 65. And another question about asset protection from the same writer is having all your major it probably would have a 7 figure HSA by the time they get there. Okay. As I mentioned at the assets under your spouse's name, house, cars, investments other than retirement accounts and not your name one way of approaching it. I know this puts you at risk if there was a divorce, but from strictly an asset protection perspective, would it work? Probably. It probably would work. Obviously it's not top of the podcast. SOFI is helping medical professionals like US bank borrow and invest to achieve financial wellness a good idea because you got like a 1 in 10,000 chance of losing personal assets to your patient, but like a 1 in 10 at best chance of losing assets to your spouse. So those numbers are very different. 10 and 10,000. One of them is 1,000 times more likely than the other one. So I think this probably would complicate a divorce settlement. Whether you're a resident or close to retirement, SOFI offers medical professionals exclusive rates and services to help you get issue. And if you're really going to transfer assets over there and not mingle them, then I think you might have trouble getting them back in a divorce situation. But would it work? For the most part if it's just you being sued and it's pretty clear that is not your asset, they can't take it from you. But remember what this their money, right? Visit their dedicated page to see all that SoFi has to offer@whitecoatinvestor.com SoFi one more time. That's whiteconeinvestor.com SoFi loans originated by SoFi Bank NA NMLS 696891 Advisory Services by SoFi Wealth LLC. The brokerage product is offered by SoFi Securities. All means all these asset protections protection techniques, they are for use when you declare bankruptcy, right? So you have to be cleaned out. Policy member FINRA and SIPC Investing comes with risk, including risk of loss. Additional terms and conditions may apply before these techniques really start doing much for you. Yeah, you can use them to try to encourage the other party to settle. Right. The unlikely event that you've got a judgment against you that's not reduced on appeal and not covered by insurance. But you gotta go through the bankruptcy process if you're really gonna use these assets. Right? Cause you're gonna declare bankruptcy. Your spouse gets to keep all their sly. All right. Don't forget podcast deal just for podcast listeners. Podcast 20 is stuff. You know, the boat and the car and the bank account and all that. But you know, if your name's on the bank account, which you probably need, right. You. You're going to lose those assets, right. Because they're your assets. So I hope that's helpful to the code. For anybody who would like to buy a white coat investor course like fire your financial advisor or see you obviously if you're both sued, which does happen, somebody slips and falls EFE 2024 or our no Hype real estate investing course, all 20% off on your property. You know, if you're both sued, then you can lose those assets. There's another risk too, right. Just your spouse to you through August 19th. If you use the code PODCAST20, it also applies to everything we sell can be sued. Let's say you decide to put the house in just your spouse's name and all the money in just your spouse's name. And then at the WCI store including white coat investor books. Thanks. For those of you who have left us somebody in the car in your spouse's name. Well, and then your kid kill somebody with the car and there's a huge judgment against you. Well, it's your spouse's car and your spouse's assets. So they can get those assets by suing your spouse. Right. So it's not just you that can be sued. Something to think about. Five star review. One Came in just this month or last month, I guess by the time you hear this from Rod, who said that's helpful to you. All right, let's talk about this question from Wesley.

Hi Jim. I just listened to your episode on the donor advised funds and wanted to throw out one other option that I haven't heard.

Really life changing. To have all this knowledge available to me is life changing. My life, financial and social will never be the same. Now that I have this knowledge, it will be a major player in my financial success. All of this inspired myself and a few others to start a finance.

You mentioned on your podcast or on your website that other white coat investors out there might be interested in. I wanted to begin donating appreciated securities in place of my regular interest group in medical school.

Got us published in academia and now I'm grant funded developing personal finance curricula.

Or cash giving that I give to my church, which is the bulk of my charitable giving. I worked with my church for a while, but for whatever reason, they are not able to set up an account where they can directly receive securities. So that led me to search for a low cost and easy to use.

Donor advice for my medical school. Thank you so very much. No, thank you for what you're doing for your fund.

To accomplish my goal, I found charityvest.org which again, I don't think I've heard you mention it's been very easy to use. There's zero fees if you leave the money in cash, which is what I do. Although they do have investment options. But it's been easy to just donate a stock and then they liquidate it.

For your other students, for your peers, for your colleagues. That is who deserves the five star review.

But we appreciate it as cash in my account and then I can immediately donate it to whatever charity. No minimum balance. And again, a very easy to use dashboard. That's been a great solution for me. So if anybody else is interested, you've given us one.

It does help us spread the word to other white coat investors. All right, it's time to wrap this up. I actually need to do an interview with Michael Kitces today. I'm super excited about this. When does the Michael Kitces interview?

I recommend them. Checking out charityvest.org all right, sounds like.

An ad, but I guess if you're not associated with them, it's just an endorsement. So there you have it from one white coat investor to the rest of you. You run Megan the next week. So next week we got Michael Kitces on the podcast. We're going to be talking about financial advice. He's had a good experience with charityvest. There's actually a lot of DAFs out there, right? There's hundreds of DAFs out there. Don't all of you call in and leave a speak pipe message telling me about your favorite daft. I don't care which daft you use. I don't need in the kind of state of the current financial advisory you know think we have. I don't even think we have a sponsor that does DAFs. You know, fidelity doesn't sponsor us, Vanguard doesn't sponsor us, DAFI doesn't sponsor us. So those are kind of my big three I usually mention. Maybe ought to throw charity vest into that list. There's not a lot of money in getting sponsors that do DAFs. But if there's a DAF out there that offers a nice low cost product with lots of profession, industry, whatever you want to call it and I think it's going to be a great interview so I'm going to record it. It's a great features and they want to sponsor us. Let us know you know where to find us. Okay. Another email. This one also about that same episode about dafs. One more bit of info you may want to add to your right now and you get to listen to it next week. Till then, keep your head up, shoulders back. You've got this. We'll see you next time on the White Coat Investor podcast. The hosts of the White Coat Investor are not licensed Account Donor Advised Fund Monologue. Is that what we call it now? What I'm doing here, I'm monologuing is that if you go the QCD route qualified charitable distributions. At least with Vanguard you can't use a donor advised fund. Okay, that's true. You cannot do a QCD into a da. Attorneys or financial advisors. This podcast is for your entertainment and information only. It's but you can use both, right? Let's say you're of RMD age should not be considered professional or personalized financial advice. You should consult the appropriate professional for specific 72 +. Although QCD age disqualified, charitable distribution from an Iraq is 70 and a half, not 72. But usually most people are going to be 72+ before they're doing these. You can't do it into a daf. It has to go directly to a charity. So you can't QCD into a daf, but you can use both. So you could do a QCD to achieve advice relating to your situation charity and you could also donate to a DAF and obviously take a deduction for that. You could also.