Good evening, you've got more than money.

You've got Jeanne Dickinson, your host, your personal financial advisor for the next half an hour, I'm at your service and happy to be doing exactly that, serving you in as many ways as we possibly can predominantly by answering your email questions that you send to us.

We'll talk about that more here in a second.

But I want to thank our guests that we also have on regular occasion here on more than money, we've had some wonderful, wonderful people.

And Hannah, most recently, and Ashley was very fascinating guests, and so many more.

If you missed those, make sure you check out our PBS website we have our shows are posted there are more than money website more than money.

online.com has all our shows there as well.

There are some fascinating folks that you might want to touch base with.

And most of them have very encouraging stories in in a world during a time, this time where we have so many things to be concerned about.

So it seems no more than ever before.

There have been lots worse times than today.

But lots of folks are concerned, lots of folks are looking for some way to bridge to a more joyful life.

Spring is coming.

That's a really good time to bridge to a more joyful life.

Lots more sunshine, lots more daylight these days.

So I hope you see these little things that you can be encouraged by and bring your what personal approach to life a little more positive, a little more hopeful, perhaps with a little more gratitude.

Lots of reasons to be concerned lots of reasons to be joyful and thankful.

So one of the reasons I am thankful is because you send us your emails Jean at Ask MTM comm we can't answer every one on air.

But we do answer every single one.

Right back to you.

And on many occasions, we bring our very own Megan, our financial correspondent to the fore, and we answer your questions.

Let's start with a first question Megan.

Hi, Jean.

Our first question says we have interest in considering a reverse mortgage in the near future.

My wife and I are each 85 years young and have been happily married for 64 years.

We are partially disabled and live alone with substantial help from paid aides.

Our current mortgage free home is in Delaware.

And we have lived here for 55 continuous years, the present value of the property is between 425 and 450,000.

In addition to the mansion property, we maintain a joint portfolio of approximately $400,000.

With that, as an introduction, we need your help in understanding the plus and minus mechanics of a reverse mortgage, we enjoy your PBS program and have supported their great work for many years.

First of all, it's very kind that's very, very, very kind of you indeed to support PBS.

Second of all, congratulations goodness, for 55 years in the same house, married for 64 years, fantastic, the kind of stories that we love to hear the fact that you're exploring perfect word, exploring reverse mortgages is exactly how you should start.

Reverse Mortgages, indeed, had pros and cons.

They are simply not a tool that everyone should consider.

But they may be a tool that you should consider.

So let's think out loud for a moment, you have about 400,000 a little more equity in your home at your age that would give you access to about 60% of that as a reverse mortgage, either lump sum or as a line of credit, that would give you 200 225,000 That you could employ in any way that you wish, including assisting you and paying for the aids that you receive in your home.

Staying in your own home is generally the healthiest, most desirable way to fulfill your life.

Hopefully, that will assist you in doing exactly that.

The income from the reverse mortgage another positive tax free.

It is a mortgage that's the proceeds from a loan.

So you're going to pay no taxes on any dollars that you may spend.

That's really beneficial, particularly as it won't increase your tax bracket or maybe impact your Medicare premiums.

So to speak.

A couple very good two or three very good attributes about reverse mortgages.

What might be a concern CERN reverse mortgages have fees associated with them.

And generally, those are packed right up front.

So whether the fees are three, four, or $5,000, depending on the plan, the initial balance that you owe back to the reverse mortgage company is that block of fees.

So anytime a reverse mortgage is in place for a very short period of time, it becomes a negative, it becomes a a large expense for a very modest gain.

If you expect your your reverse mortgage to be in effect for a number of years, then likely that will offset those upfront fees.

But it's something to look at very, very carefully.

The other con potentially would be if one of your children or grandchildren are planning on moving into your home, when the two of you have passed, that could create a problem because you are borrowing against the equity in the home.

And that that loan must be repaid when you leave the home, either having passed or moving out to go into a care facility or simply moving that you decide to relocate.

So that's a concern that you've got to look at rather carefully.

But in general, reverse mortgages, lots of details that you've got to make sure that you're comfortable with the educational piece of it is the great place to start just as you are doing.

And with a little bit of background, a little bit of counseling and some careful consideration, you'll be able to determine that yes, the reverse mortgage is perfect for you.

Or No it isn't.

Either answer is perfectly acceptable, as long as it fits you.

Megan, that was a great way to start our show.

What is our next question?

Our next question is another great one.

It does have a lot of dollar amounts.

So I will say that for Jean and everyone listening if you want to follow along a little easier.

They said first of all, I love your show, I just wished I had discovered it earlier.

I am single and 67.

Unfortunately, my job position was eliminated in September of 2020.

Since that time, while I've searched for similar work, I have relied upon my regular savings and cobbling part time jobs together to meet my day to day expenses, and able to secure a new position.

And as my regular savings are dwindling, I have resigned myself to the fact that I need to draw on my retirement savings.

Here are the details.

I have two 401k plans totaling $440,000, a traditional IRA 600 or $62,000, and a small pension $31,000.

I recently submitted my application for Social Security benefits to begin early next year.

The estimated monthly benefit is approximately $3,000.

My two main monthly expenses are a mortgage $99,000, or to 2500 a month, and a federal student loan $60,000 or $515 per month.

I was a single parent and the and the latter is a result of my returning to graduate school in my late 40s.

and obtaining a professional degree in my Social Security application.

Oh sorry, if my Social Security application is approved, it is not enough to cover my expenses, even with my income from my part time work.

Would you please offer the next steps that I should consider?

Thank you very much.

Very, very interesting.

This young lady has a lot going on, and a lot of questions.

And I wish I could answer all of her questions definitively.

But this is instructive for all of you listening, the key missing ingredient?

How much does she need on a monthly basis coming into her checkbook so that she can pay her monthly expenses?

She noted that she has 3000 a month in expenses related to her home and related to her education.

That is these are fixed expenses.

We have no idea what her additional expenses are.

Can she live rather modestly?

Does she have 1500 $2,000 a month?

Or is it going to be significantly higher?

We simply don't know.

In most cases planning these retirement strategies, making the right choices for an individual is very dependent, if not completely dependent on how much do you need each month to be happy, healthy, have your bills paid and be secure.

That's a piece of the information that we don't have but we can make some guidance is based on our experience.

So if indeed her Social Security simply covers her debt service.

We suspect that a mortgage rate that high mortgage payment at that high, her mortgage will evaporate at some point in the relatively near future.

So I'm picking a number out of thin air, I'm going out four years to say, at 71, she will have no mortgage payment, and that will increase her cash flow dramatically $30,000 a year.

At some point, I'm hopeful the the student loans will be gone as well, that may be further down the road.

In the interim, yes, moving some of your retirement savings into cash flow is an appropriate thing to do the rough guideline that that many advisors use in terms of how much you can spend from your retirement plans, and not risk, at least not substantially risk running out of money is about 4% per year, she has a just under $550,000 4% would give her about $22,000 a year, just under $2,000 a month.

So added to her Social Security that brings her total income from those sources up to $5,000.

If that meets her needs, if that meets her expenses, were pretty much done here.

part time work would then be icing on the cake.

Wonderful.

And there's tons of companies out there that would be very excited to hire an experienced 67 year old with their maturity and the fact that companies are struggling to find quality employees.

So the part time work becomes icing on the cake.

If indeed her expenses are higher than 5000, then we have two issues that we've got to look at a number one, increasing the part time work to perhaps full time work for as far into the future as is necessary.

And to related to our very first question from tonight's show.

A reverse mortgage, the reverse mortgage might very well depending on the value of her home, might very well wipe out her current mortgage, she you can use a reverse mortgage to eliminate the balance on a current mortgage that you're paying month by month.

And by eliminating that mortgage she would eliminate her monthly mortgage payment that would increase her cash flow dramatically and instantaneously.

So we have a couple different options there.

The the way this young lady should proceed, determine her monthly budget rather precisely evaluate her realistic job, what probabilities possibilities, and then explore as we said in our first answer, explore a reverse mortgage and see where that might fit into her picture.

I know we didn't answer that question precisely, but I hope we helped frame how that answer will be developed as we add more information to her situation.

Hopefully that gives you a couple ideas for your situation as well.

Megan good questions.

Indeed.

Do we have number three?

Yes, this next one is actually an article and it's very relevant and I think hits close to home for at least our MTM family.

It says a coalition of 11 CPA and tax professional trade groups today as to the Internal Revenue system to discontinue collections and other compliance actions until the service can address its backlog of tax filings and customer service issues.

Specifically, the coalition called on the IRS to discontinue automated compliance actions until the IRS is prepared to devote necessary resources for a proper and timely resolution of its challenges.

The this group sent a letter to the Assistant Secretary for tax policy at the Treasury Department as well as the IRS commissioner.

The NTA found the IRS is backlog of unprocessed returns has hit the 8.5 million mark.

Additionally, the IRS is only answering 9% of all calls and only 3% of calls regarding individual income tax returns, which prevents taxpayers from resolving these straightforward issues.

What is your response?

Jean?

It couldn't come at a better time.

The IRS and Megan's absolutely right in our more than money world headquarters.

We address these issues with our clients.

For folks who are audience members have concerns about their tax situation.

And our tax team prepares well over 1000 returns a year.

So we have direct contact with the IRS on an ongoing and continuous basis.

The frustration is off the charts.

97% of the calls to the IRS go unanswered.

unanswered.

The average on hold time is well in excess of an hour.

Some would say it's an excess of two hours.

So if you are are fortunate.

How do we even use that word?

fortunate enough to have your call answered?

It doesn't mean that you're not going to sit on hold for hours.

And to make matters as worse as they can possibly be.

I'm not sure that was grammatically correct.

But you'll work with me at negative as bad as they could possibly be.

You sat on hold, you got you hit the lottery.

You were one out of the 3% of the cause that were answered.

You waited on hold for two hours.

You got an answer from an IRS representative, the IRS and the tax courts have ruled you can not rely on that answer.

If they tell you black, it could be white, if they tell you up, it could be down, and they have no legal responsibility for having given you the wrong information.

It is a tragedy.

It is a travesty.

And bottom line for many people, they are in a purgatory a tax purgatory.

We recently had a client who had a tax bill substantial about 18 months ago $260,000 paid the bill sent the check in registered mail return receipt, which is in the file.

The IRS has already sent two letters, saying you didn't pay your taxes.

So now you owe 10s of 1000s more in penalties and interest.

When finally, one of our advisors was able to get through to the IRS explain the situation and say but the tax was paid.

The agent said it was not.

We have receipt that you received our check.

And they without missing a beat said we didn't open the envelope.

And we don't have resources to open the envelopes.

Eight and a half million people have submitted tax returns that are on processed meaning they if they do a refund, they haven't gotten it.

If there was a question, it's unanswered eight and a half million on process leading into what is going to be a larger tax season than ever before.

The IRS needs to step up.

The IRS needs to meet its responsibilities.

The IRS needs to devote the resources necessary to assist taxpayers in doing what they're trying to do, which is responsibly and credibly report their income taxes.

And until they're in a position to do that, to continue these enforcement claims.

See these auto debit letters.

These computer generated we don't care.

We don't know.

We don't care letters.

It's irresponsible.

And in my opinion, it's immoral.

And if it's not illegal, at the very least, it's unethical.

So if you are frustrated with the IRS, we have some local Washington DC reps. Of course, State Senator Pat Toomey, and others, of course, reach out to as many of them as you possibly can, and join this coalition of tax professionals.

And let the IRS know that it's simply unacceptable to abuse the American taxpayer when they themselves have no intention, apparently, of doing their own job.

Goodness, Megan, probably not a great idea to get me all torqued up right in the middle of the show.

But let's see if we can turn the corner maybe shift gears a little bit.

What's our next question it makes for good TV when you get all passionate.

This next question says I purchased my current home in 1987.

Now in a revocable living trust using deferred capital gains from two previous home sales allowed by the rollover rule of the deferred gain on a sale of home rule.

I have two questions.

If I sell my home now, I understand I would have to account for all capital gains from 1987.

Plus the deferred gains from previous homes and could not use the current home sale gain exclusion rule.

Is that correct?

Second question.

If I live out my days here, when the executor of the trust sells my home, how does the new stepped up basis of the home affect the capital gains, including the deferred gains from the previous homes?

Thank you for your answer.

Don't thank me yet, oh, goodness, for those of you that are watching that are saying, well, my head's spinning.

It's because this reference this question references to different sets of rules that govern how you the proceeds from the sale of a personal residence are taxed.

The rules that were in effect up until 1987.

The rules that have been in effect since and this individual has some very interesting questions, and has made at least two false assumptions.

So let's make sure that we're very very clear when referencing the capital gains that were deferred prior to 1987.

I don't think that we need to go into any great detail those rules no longer apply.

So when the emailer says, we assume that the current exclusion is not useful in this case, she's wrong, he's wrong, my apologies he or she is wrong.

The current rules will determine what is taxable in the sale of this residence.

The current rules will determine what exclusions are available for the sale of this home.

And the current rules will determine what the ultimate tax or not no tax will be calculated.

So let's paint a picture using numbers as demonstrations, obviously, not in the email.

But as a demonstration, if we go back many many years, and the home was $25,000 as the original and all the gains since then have been deferred, and it is now worth $500,000.

In bedded there is about a $475,000 gain.

If that home is sold by a single individual 250,000 of that gain is excluded, and capital gains taxes will be paid on $225,000.

And that will be something on the order of $45,000 or less, depending on the taxpayers actual tax bracket.

The second question is a much more accommodating answer.

Certainly one that may give you a bit more hope.

At the passing of the homeowner, the stepped up basis takes the cost basis.

However, it may have been calculated 25,000 plus or minus over many, many years deferred deferred deferred, and it brings it up to the fair market value on the date that the decedent passed.

So again, if the property is worth 500,000, the homeowner passes, the inheriting the beneficiaries who inherit the home will receive the home as if they paid 500,000 for it, they can then subsequently sell it for approximately the same value 500.

And because their cost basis and their sale price are virtually identical, they will have no taxable income, there will be no tax.

So of all these different what ifs and calculations, the one that's simplest, cleanest and results in Absolutely.

The minimal tax zero would be to allow this home to be passed to the next generation and allow them to sell it at Nogi.

Fascinating question.

lots of moving parts.

I hope I helped a little bit.

Megan, do we have another?

We do this question says will asks Do you have any fiduciary advisors in your MTM headquarters?

Goodness, this is a very, very important question.

Brief, seemingly simple.

And in some cases, in some ways, it really is.

But But in many cases, it will be surprising the answer will be surprising to many people as they unpack this term fiduciary, not a term that's used often in polite company.

Kidding.

It's a legal term that simply says that as an A fiduciary.

If I am representing a client, I am not only ethically bound, not owner bound not only bound by honor, but I am legally bound, legally bound to act in the best interests of my client.

I must by law, put my client's best interest above my very own.

So let me give you a simple example of how that might unfold.

If I'm not a fiduciary, from not a fiduciary, and a client comes to me and says I have $100,000 to invest, I can seek out the investment platform that will pay me the highest commission that is available, whether it's in the best interest of the client or not, whether it's the best option for the client or not as long as it's own, that the litmus test is appropriate, as long as it's not egregiously or illegally inappropriate.

If it's appropriate enough, I can have an investment of 100,000 earn me an 810 12 15% Commission.

TRANSLATION I can spend an hour or two with a client and end up with 1012 $15,000 in my pocket for a couple hours of salesmanship a fiduciary on the other Hand is quite the opposite of fiduciary must take the time number one to understand the client's situation needs, desires and goals completely, must explore all the available options, including those options that will end up with the advisor, the fiduciary advisor, not participating at all, earning nothing.

As long as the end result is that the client, the clients best interests are served, the fiduciary has met his or her responsibilities under the law.

Some folks say wait, wait, Jean, that doesn't make sense.

You mean that there are advisors who are forced, required by regulators to recommend to their clients that they not do business with them at all?

The answer is that's absolutely correct.

And be paid zero.

That's absolutely correct.

However, the reality is that for most clients, there is a very, very solid foundation that a fiduciary can work from, to be tremendously beneficial to their clients, and still be properly compensated appropriately compensated, and still put their clients best interests, number one, as the number one priority of their relationship.

So as I started, it seemed like such a simple, such a quick and easy question.

And it was the answer, not so much.

So one of the first things that you must do, if you're seeking a financial advisor, is to make sure that they will not only answer the question, Are you a fiduciary?

And it has to be answered in the affirmative.

But they'll also put it in writing.

Because sadly, many non fiduciary as many for for my career, we would call them salespeople.

Sometimes they're a little loose with their terminology.

And I'll be blunt.

I think there's a fair number of them that don't understand the fiduciary rule, and may not give you the answer that you absolutely needed to have answered.

So that was, in my opinion, of really, really valuable question.

So that as you go forward, and you're talking to advisors, you're on the right path.

Speaking of on the right path, we've covered a ton of ground here.

I hope that you learned a great deal.

I hope that if you have questions you send those to me, Jean and ask MTM comm GE and E at Ask MTM comm.

We'll answer every single question right back to you.

It's been an absolute pleasure to spend part of my evening with you.

I hope you'll return right back here next time as we present more than money