- And good evening.

You've got More Than Money.

You've got Gene Dickison, your host, your personal financial advisor at your service.

Happy to share with you all of my 780 years of experience, for the next half an hour, they're all yours and welcome.

If you are a loyal viewer of More Than Money, you know exactly how this works.

We cover a lot of topics.

We go into great detail on things that are most important to you.

It's what makes us the most relevant financial show on television today, because we don't come in with a preset agenda.

We don't come in with a "let's teach our audience about" fill in the blanks.

We come in with the idea, the very simple idea that if we answer your questions, if we talk about the things that are most important to you, that will make us the most relevant show on television.

And according to the emails that you've sent us, apparently it's working quite well.

Lots of you are reaching out.

Lots of you are looking for guidance and assistance in one way or another, and we're happy to offer that to you.

So the email address you would use, Gene@AskMTM.com, works very, very well.

General topics, investments, retirement, of course, perhaps income tax questions, maybe contributions, Roth IRAs, 401Ks, how about estate planning?

Who should be the executor?

Who should be the guardian of your children?

Hmm.

Or it could be a business question.

These are all general topics, but the reality is that the bottom line for us is your bottom line.

What is most important to you, and how do all these factors kind of bring it together for the best benefit that we can offer to you?

So we put together questions, we put together answers, and hopefully, hopefully prayerfully, we get you from point A to point B with a little less stress, a little more peace of mind.

If it's at the top of your mind, our answers, hopefully, will give you peace of mind.

So without further ado, let's bring to our show our financial correspondent, Megan Smale.

And, Megan, where do we start this evening?

- Hi, Gene.

You mentioned being an executor in your intro.

That's a good segue for our first question.

It says, "I've known my best friend since we met in first grade.

"We're now 29.

"He got married two years ago and they just had a baby girl.

"He called me and asked me to be the executor on his will.

"I guess we really are growing up now.

"He said he trusted me to do the right thing "if the time should come.

"Of course I said yes, but to be honest, "I'm a little freaked out.

"I don't know what an executor does, and if I could "really do it, what can you tell me to calm me down "a little bit?

Thank you."

- Well, first of all, congratulations.

If you are a good enough friend that you have been asked to be the executor of a friend's will, that means you're a pretty good person.

They have a lot of respect for you.

They have a lot of confidence that you'll do the right thing.

So, yes, take a deep breath.

You've never been an executor before.

With any luck at all, with any luck at all, you never will be.

All of your friends, all of you will live to be ripe old ages and pass away peacefully and not have to worry about these things.

But if that isn't the case, if, as sadly happens on more often occasion than we wish, if you're a young friend with a young family has been called home and it is your responsibility to ensure that their best wishes, their hopes and dreams are carried out to the benefit of this young baby, God bless, you will do just fine.

And the reason I'm confident is because while you have never done it, maybe in your lifetime, by the time you get to be this age, with 780 years of experience, you may have done it once or twice.

We have helped folks in our practice go through this hundreds of times, and we have worked with the estate planning attorneys who have assisted literally thousands of folks, be executors for folks that they care about.

So the very first thing that will put your mind at rest is that you will not be alone.

You will not be groping in the dark to try to figure out what should happen next.

You will be assisted most primarily by an estate planning attorney that you trust.

A lot of folks are under the misimpression that whoever draws up the will, whichever attorney actually puts the document on paper, is the person you must go back to, to settle the estate.

Not true at all.

Not true at all.

So you, as the executor, will get to select the attorney that you will choose to work with.

In addition to the attorney, you may very well use a financial advisor.

You may very well have use of a tax professional.

But in any event, you're not alone.

You're not out there on an island with no assistance.

You've got plenty of help along the way.

And let's be blunt, you're going to need it.

You're going to need it.

There are certain pieces of this puzzle that are legal in nature you're simply not equipped to do alone.

There are certain things that are tax in nature.

You're simply not equipped to do those alone.

But as a team, it will become easy.

It is your responsibility to carry out your friend's instructions and wishes.

It is not your responsibility to make choices or decisions.

It is very much like being a cook following a recipe.

The documents are the recipe.

It is your job to follow the instructions to the letter, and again, with your team that will be quite, quite easy.

To be fair to both you and your friend, it's wonderful that he trusts you to this level.

The reality is that the real job in this situation isn't the executorship.

It's the guardianship.

And I take note, no offense, that the guardianship was not what we're discussing here, that your friend has selected someone or some other perhaps couple to be the guardian of this young girl, this young infant.

So.

Executor job.

Maybe a year, maybe not nearly.

Guardianship?

Maybe a decade, maybe much longer.

So the real job, the real challenging job, when asked by a friend in terms of estate planning with a young family is the guardian.

The executor, pretty straightforward, pretty easy, pretty limited in scope.

The guardianship, the exact opposite.

And oh, by the way, for those of you out there that are watching, thinking, "Huh, who would I pick as the guardian "for my children?"

If I had two, I don't know, two young boys, maybe four, maybe almost one, and I was trying to pick the right guardian, God forbid my wife and I are gone, the guideline you should use is, who will raise your children?

Who would raise those boys as close to the way you would raise them as possible?

Very, very challenging.

Very, very personal.

Only a decision that you should make.

And by the way, if you choose not to draw up that will, if you choose not to do the responsible thing, you choose not to grow up and something dreadful happens, guess who gets to pick all these things?

Guess who gets to choose where your children will live?

A judge.

A dreadful idea.

Don't let that happen to you.

Don't let that happen to the people that you love.

Megan, great start!

Goodness.

How do we proceed from here?

- Our next question says, "It doesn't take a genius "to see that inflation is up and going higher.

"I'm wondering what kind of investments should we be "looking into to protect us against this high inflation?

"Thank you for your help."

- Wow, quick question, lots of digging to be done.

So let's talk first about this individual's psychic abilities.

"It doesn't take a genius."

That's a bad start right there.

It assumes evidence not in fact, or facts not in evidence that anybody in this conversation is a genius, or isn't, "doesn't take a genius to see that "we've had high inflation."

That's in the past.

High inflation going forward is probable.

But if you talk to the Federal Reserve, they're assuring us that it will be short-lived.

They are assuring us that they have the tools at their behest.

They are capable of crunching this inflation rate down, pushing it lower to a much more acceptable level.

Acceptable is in the eye of the beholder.

If it is 9% not long ago and we're looking at 4%, some would say that's quite acceptable.

If we go back just a year or two previous to 9%, it was 1%.

That's really acceptable.

So if your definition of "not needing to be a genius," we see inflation in the 2-3% range kind of persistently for a period of time, I would agree.

I would tend to agree.

8%, 7%, 6%, I don't think so.

But let's be clear.

My psychotic ability is spelled... My "psychotic" ability?

Whew.

Talk about a Freudian slip.

My psychic ability is misspelled "psychotic."

Bottom line is, no one knows for sure.

But can you position your investments, at least to a degree, to be inflation protective?

The answer is sure.

There are investments in the bond arena, I bonds, inflation-responsive bonds.

They could be helpful.

TIPS, Treasury Indexed Inflation Protected Securities are also a possibility.

Floating rate bonds are certainly something that you might look at, in terms of those instruments where the rates can rise over time and perhaps be a bit more responsive to inflation.

Commodities have long been a very effective tool to combat inflation.

Commodities, for those of you for whom that was kind of an odd word, these are the investments you can touch, they're tangible.

It could be precious metals, gold, silver, platinum, palladium, could be copper, manufacturing metals, copper and tungsten, and the like.

It could be foodstuffs.

Sugar.

Cocoa.

Pork bellies.

I always thought that was a disgusting term until I found out it predominantly means bacon, and now it's one of my favorite terms.

So there are lots of things that are tangible, that is, inflation rises, those values tend to rise, and that can be a very effective tool in helping you combat inflation.

Real estate in general will rise with inflation, but it tends to lag inflation.

So values will rise, but they tend to rise over years, versus weeks or months.

But again, long-term high inflation, real estate can be a very valuable tool, and one more investment that lots of folks don't typically think about in terms of inflation responsive.

And that's the stock market.

It's the stock market in general, stocks are priced by looking at their revenue, in some cases, gross revenue, most cases, net revenue, sometimes referred to as "earnings per share".

Well, if inflation is raising prices, there is at least a very good opportunity, possibilities, probabilities that the net bottom line for the company, if revenues are rising, so will their profits, and therefore, so will their stock prices.

So lots of information there covering lots of different pieces of the puzzle.

Which one should you pick?

Bad question.

Which collection should you pick?

Far better question.

How will you allocate your funds across those selections?

An even better question, and one may be left for another email for another time.

So if you're looking for all of that kind of guidance, Gene@AskMTM.com tends to work rather well.

Megan, outstanding.

Where to from here?

- Our next question is also about safe investing.

It says, "My wife and I are both 61 and expect to retire "within five years.

"We both have 401Ks and I will receive a pension of about "$1,000 a month when I reach 65.

"Our Social Security and my pension will cover "our monthly expenses.

"A few months ago, I inherited just over $200,000 that is "currently in the bank, earning 0.0%, "as you often say on your show.

"This is money we certainly don't need now, "and may not need ever.

"We just don't want to lose the money.

"Would you please educate us on 2-3 investments we might "consider that would be very conservative first and maybe "give us a better than 0.0% return?

"Thank you so much."

- Well, thank you for paying close attention to the things that I do say on air.

0.0 is simply the net result that we expect when we put the money that we have in the bank.

It's a little better than 0.0, but not very much.

And there are those who are asking the question, "Why?

"Why do the banks pay so very little?"

And the answer is really very simple.

It's because they can.

The banks pay interest rates to attract your money so that they can then put that to good use.

Banks for banks, money is a raw material.

Money is a vehicle that they use to make more money.

They borrow it from you, borrowing and paying you interest.

Reposition it to someone else and charge them interest.

And the difference between what they pay and what they earn, that's their profit.

Gross profit, to be sure, but still profit.

So if we can pay you one half of 1% and turn around on a car loan and charge 6.5%, we've made a lot of money.

If we can put it into credit cards and make 16.5%, we've made a lot of money.

You see the point.

And currently, most of you are very content leaving your money in the bank.

It's a bit puzzling because there are some very, very good alternatives.

So let's talk about this individual, indeed.

$200,000 came to them very unexpectedly.

Inheritance, not the way that you want to get money, to lose a loved one, but the money is there.

Apparently, they live well within their means.

They expect that their Social Security and this modest pension will cover their expenses.

So this is money that's kind of... What's the right word?

Icing on the cake.

Icing on the cake.

So for them, rate of return isn't the highest priority.

Keeping the money, preserving the principle is.

So let's talk about a couple of things where you can preserve principle and make a reasonable rate of return.

The first would be a CD.

Now, you just heard me talk about banks paying almost nothing.

Not all banks.

We are, in our world, using a custodian, Charles Schwab.

They are a national bank, in essence, and they have access to CDs from banks, from coast to coast.

And the current rate's over 4% on a six-month CD.

FDIC-insured, very safe.

If you have $200,000, you're well below the 250 limit on the FDIC insurance for one account.

So you've got lots of protection, a very good rate of return, relatively speaking.

Well better than 0.0.

And a brief period in which you're making the commitment, you will have that in that position for six months and you'll have another bite at the apple.

If interest rates have risen, you can get a higher rate of return.

If they've dropped, you may look to an alternative investment to replace it, but a very solid conservative with a reasonable rate of return option for you to consider.

A second option to consider is a bit longer term, very safe, very conservative with a guaranteed rate of return, as well.

These are called fixed annuities.

Annuities for many, many years had very long maturities, seven, nine, 15-year maturities.

Putting money into an annuity for the longest time, for the longest stretch of my career was a very long-term commitment, that has changed.

And now, many high-quality companies are issuing fixed-rate, currently right around 5% returns, 5% guaranteed interest in short-term annuities.

So a three, four, or five-year term, 5% roughly, maybe a bit more here and there.

And even though it's not tax... I'm sorry, tax-free, it is tax-deferred.

So while the interest on your CD will be taxable the year that you collect it six months from now, the interest that you will receive on your fixed annuity will not be taxable not only not when it matures, but when you end up taking it out.

So three years from now you're saying, "I really like it, "I think I'll leave it there."

Four, five, six years, it will be tax deferred as long as you leave it inside either that annuity or an alternative annuity that you might choose in the future.

So you've got some higher rate of return and some tax deferral that you can work with there, as well.

And finally, on a kind of a more alternative basis, there are banks that are issuing what are referred to as structured notes.

These are guaranteed principal.

Principal-protected is how they are referred.

And so, I'll use an example, JPMorgan Chase, if you were to secure a structured note from JPMorgan Chase, you will have no risk to your principal guaranteed by that bank.

And you have an upside potential of anywhere from 7-9%, depending on how long you want to commit it.

You can customize that kind of to your heart's content from a 12-month, 14-month, 18-month, whatever fits your needs best.

And because you're not paid your interest, you're not paid your return until the end of that time frame, in essence, it's tax-deferred as well.

If you pick a 24-month structured note maturity, you will pay no income taxes until it matures two years from now, and you receive the profit, if any, that you have available there.

And just for a little bit of fun, just to extend the conversation, a little bit that might intrigue you, there are variations on that structured note what construct that says, "How about we give you a cash flow "while you're waiting for this note to mature, "and we'll still give you a lot of protection, "but not 100% protection.

"How about we give you 30% protection?

"If the market drops 25%, you lose zero.

"And along the way, we're going to pay you 6%."

Cash.

Actual yield, we'll do it over two years.

You put 100,000 in.

You get 6,000 this year, 6,000 next year guaranteed.

And it's invested in the S&P 500.

If it drops 20%, you lose nothing, 28%, you lose nothing.

31%, you lose one.

But you've made 12.

So you will need to be the judge of how conservative is conservative, and what's even more interesting for you.

$200,000?

That's a lot of money!

Could you possibly, certainly consider breaking it into pieces and having part of it in a CD, part of it in a single premium immediate annuity, and part of it perhaps in some form of structured note?

The answer is, sure you can, easily done.

A little bit of assistance, perhaps, on the part of a financial adviser, but not difficult at all.

And by the way, good for you.

You're being very, very wise.

You've inherited something unexpectedly, and now you want to make sure that you can hang on to that.

That priority of being conservative first and rate of return second in my book makes a great deal of sense.

Megan, hopefully, hopefully, I can make a great deal of sense for our next question.

- Well, hopefully it's also about CDs, so you're already warmed up as far as that goes.

It says, "Gene, I recently viewed one of your shows where "you discussed how to handle inheritance tax from "a jointly-owned $100,000 mother-daughter CD.

"I have two questions.

"First, I was under the impression that a joint account "legally treated each owner as a 100% owner, not 50/50, "as your example indicated.

Am I incorrect in this?

"Secondly, when the future heir was given joint ownership of the $100,000 CD, wouldn't she owe tax "on anything over $15,000, allowed gift exclusion from "50 or 100,000 at the time that it was granted?

"Thank you for your clarification and help.

- One of the nice things about mature people, mature people, which is our viewership, is that they have beliefs.

They think they understand something, but they're willing to be corrected.

And this gentleman was... gentleman, young lady, I'm not sure, was very courageous and said, "Here's my understanding, I think there may be an issue "here but I'm willing to be corrected," which is good, because in this case, there's a lot of correction going on here.

The inheritance tax issue is a very straightforward one.

The legal ownership during the lifetime of a joint account is a separate issue.

I will circle back to that.

So from an estate tax standpoint, mother has a $100,000 account, she adds her daughter to the account.

Now they are joint ownerships.

They are joint owners.

"They have joint ownership," he tried to say smoothly.

So each of them, for estate tax purposes, owns half of the account.

When mother passes away, half of the account is already the daughter's.

So the estate tax is only applied on the $50,000 that was technically mother's, because they owned it equally.

Was there a gift made when Mom added her daughter to the CD?

The answer is, absolutely yes!

The question, the assumption made in the email was there's got to be some tax there because that's way above the email mentions 15, it's been 16 for quite some time now, going to 17,000 a year that any taxpayer may gift to any other human being, any other human being and as many as they wish per calendar year.

And they don't even have to file a piece of paper.

You can make much larger gifts up to, are you sitting down?

$11 million in your lifetime.

Over and above your annual gifts!

You can still make the annual gifts, but if you wanted to make a one-time $11 million gift, there's still no tax.

There is a piece of paper, a gift tax return that has to be filed.

So was there a tax due when mom added the daughter to the CD?

No.

Is there a state tax on the entire amount because they were "both owners"?

No.

Legally, during Mom's lifetime, could the daughter, as a joint owner, take the entire amount out?

Yes.

And could Mom, as a joint owner, take the entire account out?

Yes.

And that's really where the confusion lies.

That's the interpretation you were given by the bank, by how these things work.

And so, was there a risk during Mom's lifetime?

Of course.

Of course.

But that wasn't the question.

That might be a question you might want to send along.

How do we handle that risk?

We've covered a lot of ground.

I hope you've heard at least a couple ideas in there that apply to you.

Maybe make your life a little easier, a little less stressful, a little more peace of mind.

But if for any reason, that idea is good, but not what I need, please send us your questions, Gene@AskMTM.com.

I have an entire team, a wonderful team that answers every single question directly back to the sender.

And even the hard ones, even the silly ones.

We answer every single question.

We can't answer every single one on air, of course, we don't have nearly enough time, but we love that you send us your questions and trust us to answer you.

Hopefully that's enough encouragement that you'll return to us as we come back to the studio next week with another edition of your favorite most relevant TV show, More Than Money.

Goodnight.