And good evening.

You've got More Than Money.

You've got Gene DICKERSON, your host, and your personal financial adviser.

Happy to be with you this evening.

And I think for the next half an hour or so, you'll be happy to be with us as well.

We'll explore all manner of financial topics brought to us by you, by our audience.

We accept your e-mails at Gene and ask MTV.com and we've got a fistful of e-mails to address this evening.

You have some very interesting lives I must confess.

We lay claim to being the most relevant financial show on television today.

I have no doubts that that is absolutely the case because nothing could be more relevant than to be able to relate immediately back to you those concerns, those questions, those observations that you most want addressed.

If it's at the top of your mind, we want to be able to give you an answer that can give you peace of mind.

That's the connection that really makes the secret sauce of More Than Money actually work.

You send us amazing questions.

We answer every single one.

And I say we because we have a wonderful team in our More Than Money world headquarters in the Holy Lands between Bethlehem and Nazareth.

And we answer every single question back to you, even the occasional question where we're all looking at it going, I don't get it, but we still answer them back.

We can't put all those on air of course, there's a limited amount of time, but we put as many as we possibly can and hopefully some topics will be of interest to you as well.

And if you've got a little wrinkle, you're saying, well, that that's kind of where I am, but mine is a little different, that's why you send us your e-mails so that we can answer those back to you.

We are blessed because we have our very own financial correspondent who's in charge of making sure that the e-mails are presented in the appropriate way and trying to keep me on track as best she is able.

So let's turn the camera back to Megan and see Megan, where do we start this evening?

- It's a difficult task, Jean, but I do my best.

This one says, I am 67 years old and retired.

My mother passed away recently, leading me to discover Pennsylvania's wonderful 4.5 inheritance tax.

I've been wondering if there are any actions recommended for me to ease the tax burden on my two mid 20 something children, also PA residents, when it is their turn to inherit from me.

I do not own real estate.

Let's say my assets are $1 million approximately.

I don't want to give the exact amount in case they are watching.

CDs, 12%.

Vanguard Traditional IRA 74%.

Vanguard Roth IRA 11% and Savings Accounts, etc.

3%.

I have seen various strategies about reducing the potential tax burden, such as converting some of the traditional IRA to a Roth IRA, gifting money or buying life insurance.

Do you have any thoughts or recommendations for me?

I really love watching your show and PS how come Jean is stuck at only 780 years of experience?

Why has this number not been increasing over the last few years?

I'm very puzzled.

- It is a mystery.

You're absolutely right.

This whole 780 years.

How did it come to be?

How is it possible?

Such a youthful man.

780 years.

Yeah, right now most of the audience is going, Where's the useful man?

His must be behind the scenes.

Bottom line is, hm, just a lot of fun.

Life's great mysteries.

And you're right, doesn't go up in 780 years for about 20 years.

So mull it over, but don't get caught up.

You're asking very interesting questions.

The issue, yes, 4.5% state of Pennsylvania.

It is annoying.

It's not as bad as it could be.

This is 4.5% for direct descendants.

If you go outside the line of lineage - what a phrase that is - if you're giving money to friends, for example, it's 15%.

So it could be, yeah, serious money.

And if we're talking about $1,000,000, nice round number.

We're talking about 45,000 bucks to kids.

If you go to your friends, 150 grand, it's a ton of money.

So the logical question is how do we adjust our situation so that the kids have the least amount of burden that is possible?

Well, yes, there are a number of creative strategies, advanced strategies, that you might employ.

Gifting is certainly one of those Roth conversions is certainly one of those.

One of the issues that you will find challenging in your specific case is how much money you have in retirement funds.

Giving retirement funds often means that you must take money out of a plan, pay tax, and then give it away.

That can be very, very expensive over the long term.

You are 67, incredibly young.

With any luck at all, 30, 40 more years on this planet.

So just willy nilly giving away money, you've got to know for an absolute fact that you are giving money you will never need again.

That's pretty tough to know when you're 67 years old.

That's very tough to know.

I'm being, I'm being polite, it's impossible to know.

So I'm not a big fan of making significant gifts, certainly significant enough to affect the estate taxes.

I'm not a big fan for someone that young making those kind of gifts.

The one exception is if there is an issue of health, if your health concerns are significant, if they are significant enough that they have affected your life expectancy, then making significant gifts might very well be exactly what you should do.

But for the average person, average life expectancy, at 67, I do not recommend making significant gifts.

Roth conversions, it's a possibility.

I would have to look more carefully at your tax return to make sure that you're not paying significant amount of taxes.

I'll use a simple example.

If you were to move $50,000 from your current IRA to a Roth IRA, you might owe as much as $10,000 in tax that immediate year.

That's painful.

Is that in your best interest?

In most cases, the answer is not going to be yes.

It's going to be you've got to pump your brakes on that one.

So where does all this advanced strategies really kind of lead us?

If you wish to leave your children, absolutely guaranteed, leave your children a substantial sum of money, estate tax free and income tax free, you will need the assistance of two professionals, probably three.

The third being your financial adviser to go through all the numbers first to make sure that we're on the right track.

The second is a estate professional to make sure we're setting up the right documents, including what is referred to as an ILIT.

ILIT, irrevocable life insurance trust.

And the third is an insurance adviser.

Life insurance adviser, not a life insurance salesman, we'll circle back to that and make sure that we're clear about what an insurance adviser is.

So let's pick a number.

Let's make it a million bucks.

I want to make sure that my 220 somethings, when they are at least as old as this gentleman is now, 40 years from now, each get half a million bucks tax free.

Fantastic.

How do we do that?

The attorney will set up a legal entity, an ILIT irrevocable life insurance trust.

That trust will secure through the life insurance adviser insurance coverage, life insurance coverage on this gentleman.

And it will be for the death benefit amount of $1,000,000, half a million apiece, roughly, and understanding that we will be taking distributions from the retirement plans on an annual basis, not Roth conversions, but premium conversions, taking money from either the Roth or the standard IRA and funding the premiums for the irrevocable life insurance trust policy.

Now, Dad can now go off and basically spend whatever he wishes, ss long as the income stream is sufficient to pay the premiums, he's in good shape.

The kids will get all that money, income tax and estate tax free.

And just to make sure that his peace of mind is complete, these programs can be set up on a limited pay basis.

So he might decide, you know what?

What if I end up spending all my money?

We can fund the policy with, say, ten equal premiums, ten premiums over ten years, over 15 years, 20 years, whatever fits his cash flow the best.

Now, I mentioned life insurance adviser versus salesman.

A life insurance salesman, they've been around forever.

They work for a company or a companies.

They make a commission on products that they sell and they are highly motivated to sell you a product.

It is not unusual for a life insurance salesman to earn a commission larger than the first year premium.

So you're writing a check for 10,000 and the salesman is making 12,000 in commissions.

Wow.

Lots of motivation to kind of take you down a certain path.

A life insurance advisor works for a company, a brokerage company, that offers dozens of different insurance companies, hundreds of different types of policies and is compensated equally across the board.

So it has no motivation whatsoever to take you one direction or another.

Working through a financial adviser and a life insurance adviser, you should be able to compare dozens of companies with one application and pick the one that best fits you.

Now, life insurance, as all of you most of you, I'm guessing, are aware, it's not a given.

You must qualify.

The process is called underwriting.

Your health must be good.

Your finances must be good.

Assuming that all that works, this could be a really significant boost to your financial plan.

We only know, we only know if all that is true by starting the exploration process, the underwriting process.

That should be no charge to you, should be pretty straightforward.

And once you've known, once you've completed underwriting and gotten your approval, you are available to pick from hundreds of different policies.

So lots of different verbiage there that may or may not be familiar to you.

If you're scratching your head a little bit and saying it sounds interesting, but I'm not sure exactly how all that kind of works, that's logical.

Sit with a trusted financial advisor, somebody who has experience using these advanced strategies, walk through the pieces - the good news, the bad news, the pros and cons, and then decide what's best for you.

Megan, fascinating question.

Very, very good.

Hopefully our next is equally interesting.

- I hope so.

This one says, Gene, I recently moved to the Bethlehem area and I've just started watching your TV show on PBS.

After watching an episode, I have two follow up questions.

One, you refer to possibly putting cash into CDs that could earn 6% or more.

How can I monitor the current rates and where can I purchase the CDs?

My second question is, if I understood this correctly, you referred to annuities from which one can withdraw and still retain the principal, ie eat your cake and have it too.

Can you explain this in more detail as well?

Thank you so much.

- Yeah, I'd be happy to and welcome to Bethlehem, I think you're going to find that the Lehigh Valley is a fabulous place to live.

Bethlehem in particular, absolutely beautiful.

So welcome.

I think you're starting off on a very solid foot by checking out PBS and More Than Money.

So obviously a very bright person.

Very bright indeed.

Now, 6% CDs.

We are mixing and matching two different types of investment vehicles.

So I want to make sure that I am as clear as I can possibly be.

Are there CDs available today that pay very substantial rates of interest?

The answer is yes.

If we go back two years, a one, two, three year CD might pay 1%, one in a quarter, very limited rates of return.

Currently, six month CDs are available at four and a half.

18 month CDs are available at five and higher.

I'm not aware of any current CDs, there may be some that go out ten years or 12 years, I would not recommend those, that are at 6%.

I'll circle back to where you heard 6% here in a moment.

But are there CDs available?

These are referred to as brokered CDs.

They are available through investment advisors, stockbrokers, etc, in the More Than Money world, we use Charles Schwab predominantly as our custodian for the client accounts that we maintain and we manage.

And they have access to hundreds of banks across all 50 states.

FDIC insured, some short term, some longer term.

And in recent review, six month at four and one half percent.

So if that floats your boat, does it meet your needs?

Then working with a trusted, experienced financial advisor would give you access to the brokered CD world.

And how do you stay on top of that?

You stay in touch with your financial advisor.

Pretty simple, pretty easy.

6%.

You've heard me talk about 6%, perhaps on PBS, perhaps elsewhere, the term structured notes was connected to the term the numerical term 6%, because a structured note is not a CD, it's not a certificate of deposit.

It is issued by a bank, but it is not guaranteed by FDIC.

It is guaranteed by the bank itself.

So we have discussed using very large banks, very financially secure banks, as the only banks you should consider for a structured note.

And yes, there are banks issuing structured notes for relatively short periods of time, 12 months, 18 months, 24 months, that are paying 6%.

There are pros and cons.

One of the things that you need to be concerned about is since the guarantee is coming only from the bank, we'll pick on the bank JP Morgan Chase, if hearing that name gives you confidence, then your guarantee is good.

If, on the other hand, you're dealing with a bank that maybe you've never heard of, maybe their financial strength isn't as robust as JP Morgan or other very large banks, you might hesitate and I would agree with you.

I would I would encourage everyone to be looking at structured notes only issued by the largest, strongest banks out there to get the most confidence.

But structured notes are available.

Different animals than CDs, of course.

A little more risk, of course.

You need to balance that out to see if that meets your financial goals.

And last and last... annuities have your cake and eat it, too?

Could it possibly be that this young man heard this correctly?

Yeah.

Yeah, absolutely.

There are annuity contracts that are available that are used particularly for folks in retirement who wish to have an income stream guaranteed for as long as they live, but they also have a wish to leave a legacy to either their family, their church, a nonprofit PBS.

And there are contracts that allow you to do exactly that.

I'll use a simple example.

Let's say you put $300,000 into one of these, have your cake and eat it, too.

That's not what they call it, of course, but for our purposes, pretty descriptive.

You put it into that contract, you would get a guaranteed income somewhere between 12 and 15,000 a year for as long as you live, independent of the cash value in the contract.

Cash value might go up and you make a little more money, but even if it goes down to a dollar, you still get your annual payment the very next year.

So if we reference back to our previous emailer at 67, secures a 300,000 annuity, receives 14,000 a year for the next 40 years, which is somewhere in the $560,000 range, as long as his contract has $1 left in it, his family, his two children that are no longer in their mid 20s will each receive 150 grand a total of the 300,000 he invested, invested in the contract.

So he gets a lifetime of income, hopefully tons and tons of it, many, many, many years, they get the original investment.

Pretty simple.

Pretty direct.

Having your cake and eating it, too.

Yeah, I hear you.

Sounds too good to be true.

It isn't for two reasons.

Number one, part of my responsibility as a financial adviser to all of you and to all of my clients is to do what we reference as due diligence, do my homework, do my investigation, employ whatever resources I have at my behest to assure my clients that what we are saying is true, that they can rely on it.

And number two, the annuity company gets paid.

You are securing for yourself a guaranteed income stream.

You are ensuring your income stream.

There's a small fee for that.

You are guaranteeing that your family will get the original investment.

That sounds a lot like life insurance.

It's a death benefit.

There's a fee for that.

So over the course of all those years, there will be a small but significant fee withdrawn from your annuity.

So your net return from your annuities, if your investment returns are 8%, you might net six and a half.

The fee might be one and a half.

Six and a half, if you can average that for many years, is still wonderful.

Likely, your family will end up with far more than your original investment.

But if something should go off the rails, if something should sadly not work out as we pray that it does, your family gets all that money and you get a lifetime of income guaranteed, because you paid for it.

Not too good to be true, but having your cake and eating it too.

Pretty tasty.

Pretty tasty.

Speaking of tasty, hungry?

No, just kidding.

Now, next question, Miss Meghan.

- I wasn't sure where that was going.

That was a little scary.

This one says, I inherited money from my mother this summer and I paid the 4.5% Pennsylvania inheritance tax.

That money is now in my bank account.

If I was hit by a bus tomorrow, would my three children, who are the beneficiaries of my bank account, pay another 4.5% on that same money?

I want to gift this money to my children, but they are reluctant to accept it, insisting I should spend it on myself.

I don't need this money or want for anything.

If it's going to be taxed again upon my death, then gifting seems the wiser choice.

I know the gift limits and reporting regs.

Thanks for any information you can give me on this.

- Kids - 0h!

- always giving you trouble.

Rotten kids.

They don't want their mom's money.

When was the last time you heard that?

That's pretty cool.

God bless them.

That's wonderful.

It might be short sighted of them.

It might be short-sighted of mom not to follow their instructions.

We need to really balance this out.

And the reality is that she should not let this tax issue kind of be the tail wagging the dog.

She should be making this financial choice, this financial decision, based on what's best for her.

Now, she is very adamant that she does not need this money.

There are ways for experienced financial advisers to confirm that or not.

There are techniques, strategies, conversations, calculations that can be done that can remove for demonstration purposes this money from mom's assets, her portfolio, her investments and project out how successful her retirement is expected to be on a percentage basis.

Is she 90% assured that her money will outlive her?

Is she 95%?

Is she 40%?

So before we get too far down the road of I really want to gift, I really want to gift, we've got to determine a couple of things.

Mom's age, of course.

The income that she needs on a monthly basis so that her bills are paid, she's happy, she's healthy.

What assets she currently has, what income she gets from Social Security and from pensions, perhaps, if she has them and other investments that she may have and that needs to be calculated out over her lifetime.

Whether it's a life expectancy, 85, 88, or whether it's much longer, because people are living much longer, all of that can be done.

About an hour.

About an hour.

Just a little bit of time invested to either to either confirm that she's got plenty of money, she doesn't need it, or to raise the issue of it's pretty good idea that you don't give it away, because you're probably going to end up needing it.

Once we've determined she doesn't need it.

She wants for nothing, her bills are paid, she's happy, she's healthy, she doesn't need it.

Now, the question of how truculent are the kids going to be?

Well, the answer is we can dial this up, or dial their comfort up, or dial their comfort back.

It depends.

A phrase you've heard so many times on our show.

One simple issue, answer, might be to split the difference.

Instead of giving the money to them, add their names to the accounts.

So let's use a simple number, 200,000 bucks.

You've got 200,000 you don't need.

You want to give it to your kids.

They say we don't want it.

You put their names on the accounts and now, in effect, you've given them half of it.

So the four and one half percent that you're worried about has now been cut in half.

Instead of 9000, it's 4500 bucks, if everything stays exactly as it is.

Not a bad first step.

In the ultimate, and it depends on your children, of course, sounds like they're wonderful, and it sounds like you've been an incredible mom and you wish to continue that way.

There are certainly accounts that can be set up so that they're in your children's names, but they're still available to you.

Perhaps in the future, should you need that.

And that's certainly a doable approach as well.

It will require, as you might expect, the cooperation of your children.

It may even be sensible to have a family meeting, bring your children around a conference room table with your financial adviser.

Let the advisor explain the pros and the cons of whatever options you're looking at.

Assuming, of course, that we've confirmed that you can afford to give away this money.

Have them hear it directly from a third party, not just Mom, who they adore and who they love, and they just want to protect, but hear it from somebody who's protecting mom in mom's best interests, but maybe seeing the bigger picture, and perhaps that will be a useful way to get them kind of off their current position and maybe see where mom benefits even more.

If it's out of mom's estate, but it's still close at hand and she knows she can pick up the phone and call her son or daughter and say, hey, some of that money I gave you, I'm going to need some of that back and know that it's coming back, that could work out just fine.

Speaking of working out just fine, I think the whole show worked out just fine.

Megan, thank you so much for your patience with me.

That was my growling stomach she heard earlier.

Bottom line is, I hope that you learned a lot.

If you picked up a couple ideas, whether it's investments or whether it's on the estate planning side, on the gifting side, how best to create strategies, whether it's a life insurance strategy or an investment strategy that gets you where you want to go, that's always the litmus test.

What's in your best interest?

Any quality financial advisor wants exactly that for you.

And of course, that's why we develop More Than Money and brought it to PBS, because we wanted quality financial advice on whatever topics are at the top of your mind - the concerns, the questions, the anxieties at the top of your mind that we can give you answers, strategies and hopefully solutions that give you peace of mind.

Send us your e-mails, Gene@askMTV.com.

You might hear your question asked next week when we return to the studio for our next edition of More Than Money.