Hi.

Good evening.

You've got more than money.

You've.

Gene Dickison, your host, your personal financial advisor.

Happy to be with you.

Happy to serve you for the next half an hour.

I am at your service and pleased to be so.

If you're a loyal viewer, first of all, thank you very, very kind of you to spend part of your time consistently with us.

It's a fantastic thing indeed.

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Coast to coast and border to border.

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If you'd like to join us and be in charge, all you need to do is send us your questions by email.

Gene at ask mtm dot com works a very, very well.

We have an entire team of financial advisors that answer our questions back to everyone who sends their questions in.

So whether your question appears on a future show is a different issue and one that will unfold over time.

But whether you get good quality, precise and professional information, best to serve you.

That's a given.

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For those of you who have on occasion send us e-mails going, I you didn't answer my question.

Check your spam filter.

That's always a good start.

So again, before we get started, a little peek behind the scenes, in addition to the questions that we receive, gosh, daily from our broadcast, asking questions and and getting, requests for, for support or information, we also get a fair number of emails that simply have really wonderful things to say about our show.

That is very much appreciated.

I have threatened it's the right word.

I have threatened to have an entire show of just compliments to me.

And that makes no sense whatsoever, which has been pointed out to me by, folks who have, far wiser, approaches to our show, than I.

Now, the idea that on occasion I get, my apologies a bit snarky, if somebody asks a question I find offensive, or somebody suggest a course of action that's just totally against our value system.

Yeah.

Now, the idea that we might have a snark week.

And that's almost a certainty that's almost certain to happen in the near future.

So again, if you're a loyal viewer you might want to hang with this because it's been announced now and it's likely to happen.

If you're just joining us.

You might want to stick around regularly to see when that actually occurs, because, snark is, it has been suggested snark is some of what I do best.

But we shall see.

But again, for all of you send those very, very kind, emails.

I appreciate that very much.

It means a great deal to me and to my entire team.

We have a tremendous team of advisors answering questions, and it means the world to them as well.

So thank you very much.

Thank you very much.

Now, shall we start?

We answer questions.

Let's go to our first question.

Headline on the screen.

What's the best way to help our son?

I am a new viewer of your weekly show.

I find the shows very informative.

Excellent.

My wife and I are in the fortunate financial position of being able to help our son with the purchase of a home.

Excellent.

This assistance would be in the six figure range.

Way more than excellent.

I am, writing seeking your thoughts on two related matters.

Number one, I feel we can structure the assistance as a gift or a low interest loan.

In perhaps in a mortgage form.

I wonder if you could discuss the pros and cons.

We have money in taxable mutual funds.

Retirement accounts.

My.

I am retired, my wife next year, and Roth IRAs.

I would appreciate your thoughts on whether we should take, the money from one account or another.

Well, first of all, outstanding.

Helping kids, grandkids.

It's one of the best things that you can do, in my humble opinion, gives you great joy.

Undoubtedly, helps out, the next generation gives you the opportunity to see, the impact, the positive impact, the joyous impact of, funds that, in all likelihood, would have ended up in their hands anyway.

So rather be gone and miss out on all the fun.

Might as well participate in all the fun.

And, I endorse the idea.

Terrifically caution.

The question between gift and mortgage is, is a function of a couple of issues that are not financial.

As this emailer has stated.

They are in the rather envious position.

Outstanding.

Wonderful position that they are able to assist without any negative impacts to themselves.

So could it be a gift?

It absolutely could be.

Could it be a loan?

It absolutely could be.

The difference between those two approaches really isn't financial.

It's it's really more the impact that either you wish or is necessary, to be had on your son and his family.

If your son has, an excellent job, doing very well, works very hard.

Has, has, has all those wonderful attributes that we pray our kids have.

Then I have no qualms about making it a gift.

I have no qualms at all about just simply saying we love you.

Here it is.

God bless.

If, on the other hand, the reason for this this, necessity, for assistance, he hasn't done very well.

He's made some poor choices.

His, financial, instincts are not very good.

His financial skills are not very good.

And and we're kind of in a position.

Position where if we don't help, he can't buy a house, then I would absolutely make it a loan.

I don't know that I would make it a low interest loan.

And I think I would make a market loan.

Market interest rate loan.

Currently, gosh, in the 6% range at the at the moment of this taping, a 6% range.

That could absolutely be different as you're watching this show.

So check, to make sure that, current market rates are in your mind, but let's use 6% as an example.

Gosh, I think my first, mortgage a thousand years ago was at nine and a half.

I ended up with several in 12 and 14 and 16.

So six is a gift.

I understand in in relative terms, recent relative terms.

It doesn't feel that way when mortgage rates just 4 or 5 years ago got down as low as 1.996.

Seems pretty high.

But if it's intended to assist in developing discipline, if it's intended to assist in developing skills and good solid judgment on the part of your of your son, then yes, a mortgage is a very, very wise idea.

Very wise indeed.

And a mortgage, a proper mortgage.

In writing a properly done registered at the courthouse.

So that again, if your son has not demonstrated good financial skills in the past, you can at least bail, secure the asset, through the mortgage and and not end up, exacerbating whatever poor judgment he might, demonstrate.

None of that is suggested in the email.

I use that as a caution.

And I use that.

You asked for my my opinion gift or mortgage?

It does not depend on the finances you can afford to do either.

It depends on the impact that you wish to make on your son.

Now, where should the money come from?

Well, there's going to be a tax issue.

Likely.

There's going to be a tax issue independent of of the three types of accounts that we talked about.

Investment account, mutual funds, etc.. IRA or 401K and then the Roth.

Now some would say no, there’s no, tax impact on the roth there may very well be a tax impact on the Roth, even if it's just to remove a substantial block of money from an account that is tax free for the rest of your life and perhaps the rest of the life.

The life of your son.

So it could be decades and decades of tax free income.

That's a tax impact that I would be very reluctant to give up.

If you take it directly from your retirement plans, IRAs, 401ks, it is ordinary income.

It will be taxed on top of any other income you have, and it will likely be taxed at kind of the highest rate.

If you're taking it from your investment account.

It is likely particularly you mentioned mutual funds.

It is likely that the, taxation would be at a capital gains rate.

It is possible your capital gains rate will be lower than your actual income tax.

Ordinary income tax rate.

It is also possible your capital gains rate might even be zero.

You need to explore that very, very carefully.

My gut says that the taxable account is probably the best place to, to draw these funds from.

He tried to say, and if that is not the case, I would be a little surprised, but certainly examine all of those options, either using a tax software package, a financial advisor who can project these things out and just simply ask if I want 100 grand coming out of my taxable account, what will the impact be?

And the the projections will tell you tax wise and otherwise.

Or if I do it from my for one K or my Roth run those three, it'll take a whopping 15 minutes, five minutes apiece and you'll have your answer for you.

Good on you.

I'm very, very happy that you wish to help.

I am prayerful that you wish to help, because your son has done all the right things.

But if that is not the case, make sure that you follow up.

With a little more stringent approach.

Well done.

Well done.

You.

Shall we go next, or, should we just fuss around bit now?

Let's go next.

Mom's always worry about that.

Son's back to back.

I, I think no one would argue about that young lady.

Right.

So I'm 82.

I have around $900,000 in my IRA.

I'm a 22% tax bracket.

Now that's interesting.

I'll circle back to that.

My son is in the highest tax bracket and is, my IRA beneficiary.

Understandably so.

Should I start spending my IRA down so that less will be taxable for inheritance and consequently for distribution?

I'm a Pennsylvania resident.

I live nicely on my other income.

Interesting.

Well, nicely on her other income.

She's in the 22% bracket.

Her other income is substantial.

And good for you.

Excellent.

900,000 in the IRA.

If she were to pass, in the near term, the 900,000, of course, will be included in her estate in the state of Pennsylvania.

Direct descendants, in this case, the son.

Our tax at 4.5%.

As you are watching our show, make sure that you check the rates in your state.

If, for example, you're in the state of Florida, the answer is zero.

There's no income.

There's no, inheritance tax in Florida at all.

900,000 is well below the 12 million, 13 million that she's allowed to pass federal tax free.

So we're not totally we're certainly not going to let this be the deciding factor, either.

4.5% where she lives or whatever the tax is in the state in which you find yourself.

The fact that she's in the 22% bracket and her son's in the highest bracket, probably somewhere in the 12 to 15% higher, bracket is a very interesting, in my opinion, opportunity.

It's it's that gap that that differential, that delta between let's use simple numbers 35 and 20.

So if she were to take the entire 900 out we wouldn't recommend that.

But if she were $180,000, if he were to take that entire amount out, it's $315,000.

So that's a lot of money.

That's a lot of difference.

So spend it down is what she says in her in her question.

I don't believe she she means that she lives well on her other income.

It's not as if she's going to take the money out and just buy things willy nilly.

That that doesn't that is not suggested by her email converting from the current IRA into a Roth IRA is a very different question.

That's not spending it down.

It's converting it from taxable at his highest rate to, tax free at his highest rate when he should receive the money.

Now she's 82.

We hope he doesn't see a penny of this for 18 years as she enters the triple H club.

Happy, healthy, 100.

We've started it, borrowed the title, and we're anxiously, putting that out to the public.

Venue so that you embrace it as well.

We hope he doesn't see a penny for years.

Could she hopefully in very good health over a period of years three, 4 or 5, six, however many she's comfortable.

Convert this over into a Roth IRA.

The answer is yes.

Now, having said that, will she pay tax?

Of course.

Will she pay way less tax than he will?

Yes.

And in the state of Pennsylvania, she will do a second thing that will end up being beneficial.

Not dramatically so, but beneficial.

It will take her 900,000 less 20% round numbers on it and 80,000, down to 720.

Now in her estate, there won't be 900 at 4.5%.

There will be 720.

It's not a tremendous difference, 6 or $7000, but it's a real difference.

And it will save her son from needing to take dollars out of an account and paid at the highest rate.

Now, before she does anything takes out a penny.

And of course, she's subject to R&D rules.

She already has to take out some money at her rate.

That part is is what on adjustable.

We can't save her from that.

And that's okay.

But as she converts her money to the Roth, that will lower her IRA balance, that will also lower her required minimum distribution RMD and as a result, should pay less taxes year by year by year.

That's a very positive thing.

Indeed.

So we before again, as I started to say before she does any of this, please, please, please sit with a trusted, experienced either financial advisor who knows these issues very well and can check them out for you, or a tax advisor, a CPA at EAA, etc.. That's very, very, comfortable with projecting out these types of taxes and if at all possible, sounds like it should be, do exactly that, sitting side by side with your son, because as we look at projecting these things out and, and the impact on you, we also need to be looking at the impact on him.

So if the two of you ideally have a trusted, experienced tax advisor, financial advisor, tax attorney, an hour of time, invested will be very, very beneficial to the two of you and put you on a very, very solid path, to to making the choices that right now are.

I think I should into a very confident, I now have a plan, and I know how to execute it.

And that's exactly what you want.

Well done.

Well done indeed.

God bless us.

God bless.

Fantastic.

Shall we go next?

Take a sip while we're paying what she owes or not?

That sounds intriguing.

Very good.

One more page.

My apologies.

Fighting me all the way.

My daughter in law is almost 36 years old.

She went to two colleges.

She has student loans that she obtained herself.

She never got a degree from either college and is still paying off $160,000 in student loans.

Is there any way she can get this amount decreased?

You know, your daughter in law who is, a mature woman, made some choices that, this is where the snark and Gene comes out that a rational person probably would not have made.

I'm going to go to several colleges.

Are not going to get a degree, but I'm going to agree to owe $160,000.

Wow.

I'm going to go to two car car dealerships.

I'm going to look at a whole bunch of cars.

I'm going to take out car loans totaling 160,000, but I'm not even going to get a car.

It's that the analogy is not precise.

I get it, but but you get my point.

At what point in all of this, does the does she not recognize that she's making very poor financial choices now, speaking of very poor financial choices, something not asked in your email that I would be asking if I were the parent of a daughter in law in this situation, but I would be asking it of her spouse, my son, do you have a prenup?

And if you don't, why not?

And if you don't, how about considering a post?

NUP, I'll put a pin in that circle back to that here in a moment.

Now, is there any way for these funds to be reduced, whether these these loan balances to be reduced?

The answer is probably, now there are a number of legal ways, if she were to serve, particularly if there's certain categories of nonprofits I know in the medical field, there's a tremendous list.

I think in the educational field, there's a long list that if you work in that field for ten years, it's my understanding that the, student loans can be forgiven.

I don't know the details, but that's something you should certainly explore.

Number two, I don't know the details either of the the past administrations, student loan forgiveness, programs.

They were, it's my understanding, ruled by the Supreme Court to be, unconstitutional.

So that likely won't be of much benefit, but should be explored.

Number three.

Absolutely.

Going back to the educational institutions, that put her in this position, admittedly, she had a role in this.

We'll circle back to that.

Indeed.

But going back to those, educational institutions can especially considering that in today's world, today's environment, these institutions are under significant pressure from outside viewers saying, hey, in in lots of ways, you're not doing the right thing.

Bottom line for me would be, hey, you got me into this mess.

I was part of it.

Let's agree that maybe we were half and half responsible for all of this.

I owe you 80 now instead of 160.

It is absolutely worth the effort.

It is absolutely worth the effort, to.

If if they are resistant, to suggest that maybe this goes broader.

Maybe this is something she wants to sit down with a local news outlet, sit down, lay this out in front of the public.

Identify the educational institutions, kind of the position she's in.

And, see if that puts a bit of pressure on her.

Now, having said all of that, I'm not really clear.

As a parent, I'm endorsing any of that.

You've made some really poor financial choices.

Is it very possible that you'll be paying these loans off until you're retired?

Sure, sure.

Lots of folks are in that position, whether it's for student loans, bankruptcies, lawsuits, divorces.

There are a lot of folks that get themselves in very deep, financial.

What, circumstances.

And they dig out, and they dig out honorably.

You borrow the money.

Is is there a reason why someone else should pay that for you?

In my opinion, I have no trouble with the college is paying it for you because they have gotten an egregious amount of money for no real value.

So?

So I have no problem with that.

Do I have a problem with almost everything else in terms of you simply saying, oh, geez, now I've made bad choices, I should be let off the hook.

I don't think so.

My opinion, sir, do we have one more that we can, do before we wrap our show this evening, Appears that we do.

Emailer says I own a timeshare and was told by a colleague that I could get out of it by taking the deed to the courthouse.

And turning it into them.

They would contact the company, turn the deed back to them, and let them know I no longer wanted to be part of them.

I don't need a lawyer to assist in this process.

I would then be free of all future maintenance fees.

Is this true?

My other concern is about life insurance.

And talk about an odd combo.

I am a retired member of the teachers union.

They are offering a group rate.

The issue is that I am now in my mid 70s and I have three months, to say yes or no.

I've already sent the application to them.

I don't know of any other options or services.

Please help me.

I love your show.

You give great advice.

Well, thank you so very much.

Your kind words, are much appreciated.

Let's talk about the life insurance first.

I don't know why you would need life insurance.

Group life insurance that you're discussing here would be the highest cost, the highest premium, the highest out of pocket.

Typically, that a person could get because they're accepting basically anyone.

And if somebody has a health concern, they're going to sign up for it.

So as a result, their their claims are going to be off the charts.

So their premiums have to be very, very high so that they can cover their claims and turn a profit.

So I would be very, very cautious about, continuing with your application, unless you can demonstrate to a professional, a financial advisor, etc., that you need the life insurance.

So if you haven't already, make sure you talk to an attorney, a state attorney, or a financial advisor who has lots of experience on the estate side and determine, yes, I need this life insurance.

And what I expect the answer will be is no, I don't saved all that money.

Now.

Timeshares.

Oh, they have, many, many years ago, people saw them as as the great answer to the, the the two week vacation or the annual two week vacation.

They have turned out for many people to be a bit of a nightmare.

Now, 30, 40, 50 years later, they're still paying in ever increasing maintenance fees.

And it is not, very useful process.

It is my understanding we've done a bit of research that simply taking the deed down to the courthouse and going, I don't want it doesn't work, it doesn't work.

But what does does seem to work.

And I know there are tons of companies out there that are offering that, if you will pay them a lot of money, that they will, I'll get you out of your timeshare.

What does seem to work and we we have gotten a number of responses from our audience and from our client base that say, if you will contact the timeshare company, you have a 7080, 90% chance that they have a process in place to relieve you, to take that timeshare back and relieve you of future maintenance.

Generally speaking, very low cost, generally speaking, reasonably accommodating the larger, more well-known companies, of course, are in a better position to serve you.

But it's the first thing that you must do.

Don't do anything else until you've explored that option.

Interesting questions.

You folks have the most interesting lives.

It is a pleasure to serve you and get a chance to share a little bit of my experience.

780 years is a long time.

I've picked up an idea along the way here and there, so hopefully those ideas are serving you in a useful way.

If you have not yet taken advantage, then send me your emails.

Gene at ask mtm dot com and we'll make sure that one of our advisors gets back to you and gives you as much detail as we can.

There's no cost, there's no obligation.

If you don't want your question on a future show, just put that in your email.

We'll respect your privacy as well.

So if you've enjoyed the last half hour, thank you so very much.

It's kind of you to share your time with us and you are willing.

We'd like to see you next week when we return to this podium for another edition of More Than Money.

Good night.