Good Evening.

You've got more than money.

And can I say.

May I be one of the first to say.

Happy New Year to you?

I wish we had some, some some, I don't know, sound happy?

Well, actually, that was my stomach.

I had time for just before you started, anyway.

Bottom line is, happy New Year.

I know it's New Year's Eve.

I wanted to be the first.

We're early enough in the day evening that you should still be okay.

We started early, so there might be a little tomfoolery shenanigans going on.

But bottom line is that we are here for you.

If you're a loyal viewer of more than money, none of this surprises you.

We always have little wrinkles here and there.

We take our work very seriously.

We give you very, very good information.

We don't take ourselves very seriously at all.

Isn't that wonderful?

To be able to grow up as a child and then never, ever not be a child.

It's the best.

And I wish that for all of you.

And I wish for 2025, that all of you're reconnect to that inner child and celebrate every chance that you get.

It will be fantastic if you're joining us for the very first time.

Interesting evening.

You've chosen New Year's Eve to join us for the very first time.

You will find that we are the most relevant financial show on television today.

No matter what station you may watch, no matter what network you may be tuned into, we are the most relevant financial show.

Coast to coast.

Border the border not necessarily because of my sheer brilliance, although that has been suggested I would celebrate that too.

I that's just me.

That.

Okay.

Just.

All right.

That sounded a little.

Oh, bottom line is, Yes, a little brilliance.

Mostly you, to be blunt.

All you you send us your emails, Gene at ask mtm dot com.

You send us some of the most interesting questions.

You you describe your lives, the impact money has little or no real value until it's put to good use and put to good use is kind of the theme of basically all of your questions.

It's amazing.

You lead incredibly interesting lives, and as a result, you've allowed us to create a very, very interesting, show all based on you, all based on what's most relevant to you.

So, we have our very own, financial correspondent.

Megan Smale.

There she is.

Ready at the waiting.

And, Gosh, let's, let's see if we can give an answer worth celebrating.

Sounds good.

Well, I think you're going to like this first question.

It says I watched you on television, in particular on Tuesday evenings.

I find your answering viewers questions very helpful.

I am retired and in my 80s, also a widower, and I have two daughters and one son that live in Pennsylvania.

I am in fairly good health.

I have an irrevocable trust for my home, which I did some years ago.

I still have a mortgage, I have some retirement funds invested with a trustworthy person and a small pension.

So far I think I am okay.

I do not have life insurance.

Both of my daughters are executors on my trust and both are 5050 on my retirement and investments with $30,000 left to my only granddaughter.

Three questions.

First, should I get life insurance?

Second, do I still need a will?

And lastly, how can I leave my granddaughter that amount without her having to pay inheritance tax or have it added to her small income and pay tax?

Then?

Is there a better way I can leave her this money, providing there is nothing left when I die?

Or my daughters can see that she gets the money when the house is sold.

But I want her to get this money.

Any kind of help, would be greatly appreciated.

Thank you.

Well, Megs was absolutely right.

I like this question a lot.

Granddaughters are special.

I happen to know personally.

Very special indeed.

This gentleman has the same opinion, wants to make sure his granddaughter gets a very specific amount of money.

And the question is how best to do that number of ways.

Let's start with life insurance.

Life insurance, as many of you know, is intended to produce a block of capital when you have departed, when the insured is no longer with us, is deceased, has been lost, etc., etc.

croaked, if you will, a specific sum of money.

So you might very well explore having a $30,000 life insurance contract that would be paid directly to your granddaughter.

If it's set up correctly, it would be out of your estate and it would be income tax free.

To her.

The concern I have is you start with I'm retired in my 80s.

So in your 80s life insurance might be pricey.

It might be challenging.

First of all, it might be challenging to acquire.

You must go through a physical and go through a it's referred as underwriting, all the background checks, etc.

assuming that that works, life insurance premiums are based on age and let's say 85 that might be kind of on the higher end.

So your premiums might be expensive, but maybe not.

And even if they are relatively expensive, it accomplishes exactly what you wish to do, which is to get a very precise amount of money.

And to be blunt, $30,000 in terms of life insurance is a relatively small number.

So your premiums, even though for your age they might be high for the amount of coverage, they might be very manageable, something you need to explore and determine.

But if that works, it will be estate tax free and income tax free.

Your granddaughter beautiful.

Taking care of now for the moment, let's assume that for whatever reason, life insurance isn't available to you.

I don't see that as a major issue.

You already have an irrevocable trust that currently holds your home, and your two daughters are beneficiaries 5050 of that irrevocable trust.

Irrevocable trust are not owned by you, so they're not part of your estate.

So your daughters will not pay inheritance tax on your home because it's held by that trust.

You might consider using that very same trust to make a deposit of $30,000 with the provision that that piece of that trust goes directly to your granddaughter.

You might also consider looking at your overall, asset picture.

You mentioned retirement plans and investments and carving out a piece of that investment picture, $30,000 into a segregated account with your granddaughter named either as beneficiary if it's an IRA or as a transfer on death designee if it's an investment account, it will be included in your estate.

It will be potentially taxable to your granddaughter.

That will be my apology will not be income taxable to your granddaughter because it's an inheritance, but it will be included in your estate if that concerns you.

You can always.

The term is gross up.

Add to the 30,000 enough to cover the inheritance tax.

So maybe you carve out $32,000 that she gets directly upon your passing.

Relatively easy to do.

All these things are relatively easy to do, but you need to do the exploration on the life insurance, on on the segregation of the accounts.

And in my opinion, I think you would be very well served by counseling with a trusted, experienced estate planning attorney, an attorney who has seen all of these things many, many times before and can assist you in making sure that exactly what you wish to have happen happens.

And of course, a life insurance expert who understands all the various companies.

There are dozens and dozens and dozens to be looked at.

And if you're working with a very effective life insurance consultant, he or she will have access to all of those.

So with one application, you could apply to maybe 100 life insurance companies with the hope that you get exactly the result that you are looking for.

Now, in my opinion, my humble opinion.

Happy New Year.

That's an excellent answer.

Apparently the crowd agrees.

Or again, Thai food.

Meg's where to next.

Our next question, says I was listening, for the first time to your radio show.

And sometime after the break, Gene said that the firm is largely out of bonds.

If I mischaracterized it, I apologize.

I'm a little hard of hearing.

This preceded a discussion of buffer ETFs and annuities.

I am retired and in 20% bonds with the rest in equities.

Wondering, is Gene saying that one can substitute buffered ETFs or annuities for bonds also besides their anemic returns?

What are his thoughts on a total bond fund index fund for someone who is well into retirement as 20% of portfolio with the rest in equities?

Best and great show.

That's very kind of you.

You say nice words.

That almost ensures that your question gets on our TV show.

Fantastic.

So for context, you were, whatever hard of hearing you may be, you were not on this particular day.

Indeed, we have at the More Than Money world headquarters largely walked away from the bond market, for, goodness, maybe two and a half, almost three years at this point, as interest rates continue to drop, bonds, were under pressure.

The bond performance of late has been modest to negative.

So for this individual who has 20% of his money currently in bonds, he may have experienced some not so pleasant, returns.

Are there, options?

Proxies is the correct word.

The answer is absolutely.

He mentioned two Buffett ETFs and annuities.

There are several others, that we can certainly talk about.

For example, if we're talking about, a simple swap, bonds for something, bonds like CDs of late still, short term CDs paying relatively higher rates.

4.5% or so.

A bit better than most bonds.

Not a bad proxy, a fixed annuity.

Currently, if you're willing to commit the money for five years or so, you're going to get about a 5% return, guaranteed.

No moving parts.

That's a reasonable bond proxy indeed.

Variable annuities.

Even though the word annuity is in, there are very different animals.

And the only way that they they would be a bond proxy is if you are willing, to see the value, the principal vary in exchange for a guaranteed income stream.

So if for some piece of this, a guaranteed income stream is really your desire, then a variable annuity could be appropriate.

But in most cases, from your description would not be a good bond proxy.

And finally we talk about buffered ETFs.

Buffered exchange traded funds.

Buffered says that the investment is protected against losses down to a certain number.

So in most cases the buffered ETFs use the S&P 500 as their index.

They offer protection.

Should you lose down to -9%, you would lose nothing.

They have another flavor that if you lose down to -15%, you lose nothing.

So market goes down five or 10 or 15.

You have lost zero because down 16 you lose one.

They cover the first 15.

In some cases they will go even much deeper, even ultimately down to are you sitting down?

It's New Year's Eve, you're probably are bending just a little, just so early.

Come on, some eggnog.

Bottom line is you can go down to 100% protection.

Now, you say, why wouldn't I do 100 instead of 15?

Because the potential for a return is inversely connected.

That's a fancy term inversely connected to the amount of protection that you have.

So if you have minus nine as your protection protected down to a minus nine loss, your gain your upper limit on the gain, your maximum gain might be 15%.

If you go to the opposite end of the spectrum, 100% protected.

Kind of like you would feel like a bond should be.

It isn't, but like a bond should be.

Your upper limit might be 6 or 7%.

Still a very admirable return.

So as bond proxies, there are a number of ways that you can, that you can certainly go a total bond, market fund, generally tries to maximize returns within that bond, universe.

There are some very good companies out there that do that.

If you have no concern, it doesn't give you agita.

Or some of the sound effects that you're hearing.

Typhoon affects you.

If it doesn't, then keep that 20% in that bond fund.

So embarrassing.

In that bond fund because it fits you.

If you are looking for higher rates of return with a little bit increased risk, then these proxies could fit you very well.

And again, a most excellent answer.

Megs, Says or asks, when your RMDs get you close or over the EMA threshold, doesn't that conversion strategy become more costly since you're paying extra taxes plus perhaps doubling your Medicare premiums?

Thanks.

Who is this?

Irma?

Is she at your party, by the way?

New Year's Eve.

Good for you.

Be responsible.

Collect the keys.

DD designated driver, all that kind of good stuff.

This is important stuff.

We have some fun.

Of course we tease, but we can't afford to lose any of you.

Our audience is too valuable.

And, considering some of our competitor networks, they're shrinking, shrinking, shrinking.

And we have a huge audience.

Coast to coast, border and border.

It's fantastic.

But we can't afford to lose any of you.

Certainly not to something as silly as, DUI.

Please, please, please, please be responsible.

You show great responsibility simply by watching our show, particularly on New Year's Eve.

That's exactly, exactly celebrating, our show.

That means.

That means the world to us.

You're very, very kind.

So as you're, trying to figure out who Irma is for folks who are not retired, folks who are not on, Medicare, it means nothing.

Irma is a test.

A litmus test, that Medicare applies to your income.

Once you're on Medicare to see if you are paying, you will pay the standard, premium rates for Medicare or higher rates.

Lots of folks are not even aware that there are higher rates.

They say, hey, you gotta pay X for part B, and it's 175 bucks.

It isn't, but it's roughly that number.

The reality is it may be as much as 5 or $600.

Wow.

For those of you who are shocked by that, I understand.

It is, it can be rather, a jar to your system.

So this individual question is asking about, a discussion that we've had over many, many shows about converting from your, IRA to a Roth IRA.

They have, kind of straight off the the path just a little bit by talking about RMDs, because RMDs are required, there's you're not going to get away from it, other than giving the money away to charity, which, if you are so inclined, solves the problem.

But if this problem is caused by RMDs, that's very rare.

It's very rare.

It's caused by RMDs.

That's a potential solution.

It's typically caused by converting a big block of an IRA into a Roth IRA that jumps up your taxable income.

It jumps up your Irma, it jumps up your Medicaid Medicare premiums.

And indeed, that's something that's got to be, accounted for before you do a conversion.

Not, shockingly, found out afterwards.

So work with a trusted, experienced tax advisor, work with a trusted, experienced financial advisor who understands and can calculate these numbers for you.

Many advisors, financial advisors, they're really not financial advisors.

They're investment advisors.

They know about stocks and bonds.

They don't really know about this stuff.

And they can't help very much.

But if you're working with a trusted, experienced financial advisor who does understand this or a tax advisor, they can tell you exactly what the impact will be.

Almost to the dollar before you do either a conversion or accept an RMD.

One little wrinkle just to keep in the back of your mind that whatever you do this year affects your your Medicare premiums two years ahead, so it won't affect it this year, won't affect the 2025, 2026.

All of a sudden they're going to go away.

Wait a second.

We have to make an adjustment.

And if it is a one time event, it will drop right back down automatically.

So make sure you are getting your questions answered before you either take that massive RMD or your conversion.

Darn good answer.

Darn good.

And that's my own opinion.

That is.

Apparently.

Apparently the crowd, as has found me less than impressive.

Because they're falling asleep.

Apparently.

That's.

Well, hey, eggnog will do that to you.

Yes, this is why we left the tree up.

Because it feels more like if you're drinking a lot of eggnog and the trees up, it almost feel like it's still Christmas.

Right?

It is till the till the very end of the year.

Precisely.

Right?

Yeah, I like that.

I like that we're next.

Our next question would like to help their church out.

This one says I have recently heard that I can use pretax funds from 401 K or IRA to make my annual contribution to my church and avoid paying taxes on the withdrawals.

I'm planning to pay about 35,000 to 40,000 before the end of the year.

I don't know if I need to give my advisor advance notice about this.

How does this work?

Thanks.

First of all, it works because you're incredibly generous.

That is a beautiful thing that you are doing.

Okay, so the concept is very straightforward.

If you take money out of an IRA, put it in your pocket and then write a check to your church or any other nonprofit, it doesn't really affect your taxes.

People go “Ah, it’s tax deductible”.

For most folks.

They are using the standard deduction.

Most 90% plus maybe 95% plus they're using the standard deduction.

And the standard deduction is fairly large approximately $30,000.

So that if you're let's say you're giving away $30,000 that's already included in your standard deduction.

It's not on top of, it's included in.

And in order for you to get any deduction whatsoever it has to be above 30,000.

So if you give away 35 you get a $5,000 deduction.

It's not nothing.

But it's it's not great.

Far better is a QCD qualified charitable distribution money goes directly from your IRA or your 41K.

My apologies, your IRA.

Only for one K's are not set up to do this IRA directly to the charity or charities of your choosing.

The gentlemen is is tithing before the end of the year likely going to his church?

So hello, IRA, in this case, end of the year.

Of course.

It's New Year's Eve.

We got this question a while back.

Thankfully, and this is already done because it's got to be done within the calendar year.

Hello IRA or hello financial advisor.

I like to do this.

There's some pieces of paper that have to be signed.

The IRA custodian will issue the check to the charity or charities directly.

It will not be sent to you.

It might be sent to you so you can hand it to them.

It will not be given to you or it will not be in your hands.

It will not be in your name.

It will go directly to the ABC church directly.

That's the qualified charitable distribution as a result, the standard deduction.

So 30,000 bucks still intact and 35 to 40 on top of it, in essence, is tax deductible because there is no income tax to this gentleman who is making this very generous contribution.

So you could be doing, it's I think the annual max is somewhere, right?

At 100,000 bucks if you are generous.

And in in heart and spirit and mechanics, you can direct your IRA custodian to send upwards of six figures a year to the charities of your choice and in essence, end up being, tax deductible.

So very, very useful indeed.

And do you let your financial advisor know the answer?

Sure.

And hopefully the mechanics that we've outlined make sense to you.

So for those of you who are already celebrating exactly.

And you're hearing this, wow, I want these deductions.

2025 will be here in about, four, four hours and ten minutes.

That's a guess.

And, you may not remember this show at that point, but you're watching it on, PBS, passport and, you know, go to More than money online.com.

And we have all the shows there.

And we'll remind you because in 2025 it's something you're probably going to want to do.

Megs, do we have a short one?

We do.

Our last question is wondering about, their house after retirement.

This one says I'm considering retiring soon.

I currently have a mortgage.

I will have two pensions and the proceeds from the sale of my home.

Wondering which would be more beneficial.

Beneficial to me?

Purchase a new home or should I rent a new home?

Thanks.

Well, not uncommon.

At the end of the year, New Year's Eve, particularly, maybe New Year's Day is when you make your resolutions and you start looking at your overall life and how things have unfolded and some of your goals and some of your dreams and some things you want to accomplish in the new year, maybe slimmed down just a bit.

That's that's always a healthy thing to do.

Make America Healthy Again is a, a message that we're hearing a lot.

I think it's fantastic.

Who could possibly object to making America all right?

People selling you bad stuff, I get that, but in general, as citizens, aren't we?

We want to be healthy.

So these are the kinds of things that might come up.

This gentleman's question is far bigger, has far bigger impact on him.

And he is saying, hey, do I rent or do I own?

There's two factors that I think, play into the decision making process.

Number one, age, if you are 85 or 90 and you want your life to be much simpler, and have much less, physical responsibilities for your living space, renting may be a very good idea.

It may be a very good idea.

Anything much younger than that.

And I have some real concerns because, with inflation, rents tend to go up.

And if your income in retirement isn't, growing with inflation isn't inflation adjusted, you're going to end up at a point where you may end up at a point where, your, your rent has gone up so high you can't afford to live there anymore, that that can be a real challenge.

And another factor in the decision making is, how you feel about your home.

If you're home is very, very important to you, then owning one makes great sense.

And if it, really isn't, it's just a base of operations.

I might I might ask you to consider a condo.

It's kind of a, a midpoint between owning and renting.

All you have to do is take care of the insides.

You can lock it, walk away for days, weeks, months.

Everything's fine.

You may end up finding that a condo would work out very, very well.

You should sit with an advisor, help you go through all these options.

Answer, way more questions than, the information you've given us on our, on our email.

But the question is fascinating.

And it does, address the much bigger picture of the rest of your life.

And that's something that requires serious consideration, serious evaluation.

A little bit of thought, a lot of prayer in order to make sure that it's the right decision for you.

Speaking of the right decision for you, we just have moments left in this edition of More Than Money.

I hope you're enjoying your New Year's Eve.

Indeed.

I hope you're relaxed and surrounded by friends and great joy and great optimism.

Great optimism for 2025, I confess.

Glass half full, glass half empty.

I am a glass overflowing guy.

So yes, optimism kind of comes naturally to me for lots of folks.

It does not.

I would ask you, embrace it.

Embrace it, feel positive, feel uplifted and look with a smile to your 2025 and beyond.

I think you will find that life goes a lot more smoothly, smoothly.

That way a little celebration never hurts.

Exactly.

Hopefully you've enjoyed a little bit of the silliness, and a lot of the information we brought to you this evening, and you'll want to return in the new year for another edition right here of more than money.