- And good evening.

You've got More Than Money, you've got Gene Dickison, your host, and for the next half an hour, your personal financial adviser.

And there's lots to advise on, lots going on always, of course, in this crazy world of ours, but also, of course, in your world, your specific world.

So we're going to help as much as we possibly can.

It is a crazy world.

There's so much going on that you just got to shake your head and figure that the world's lost its collective mind.

But that doesn't mean we have to.

That doesn't mean that we have to be caught up in all of that craziness.

So when faced with these kinds of challenges, make sure you demonstrate some courage, some creativity, and maybe most of all demonstrate some courtesy, particularly the folks that you may not agree with.

But our show tonight is to agree with as many ideas as we can to help you move from point A to wherever point B might be in your financial life to make it just a bit more approachable, a bit more successful, maybe approach those goals with a bit more confidence.

If you learn a lot from this evening show, that's our objective.

And if you have questions that you would like to have addressed, perhaps on a future show or absolutely with no question about it directly to you, all you have to do is send us emails, gene@askmtm.com.

You know what that stands for.

Ask More Than Money, gene@askmtm.com, and we'll be answering every single one of your questions.

And maybe if you're lucky and if you wish, we'll answer one of your questions in a future show kind of like this.

Let's go right to the first question.

Well, goodness gracious.

First of all, congratulations to your mom in being not only in a strong financial position, but she's frugal.

She spends less than she makes from only her income, Social Security and pensions.

So bottom line is, goodness, if she doesn't need this money and it appears she does not, the detailed budget was the real key.

Knowing what someone spends, knowing what they're what requirements are, is the most important issue in making future decisions around what can be given away, what must be retained or somewhere in the middle.

So for her, it does appear that this money that she inherited can be legally, appropriately, comfortably, confidently given to her grandchildren.

If your mom's watching this evening, I think.

I think we're going to make her very, very happy lady, indeed.

The rule that you have quoted, the $15,000 a year rule has been around a long time and it does come into play when we're talking about making gifts.

But it's not the only rule that comes into play.

There are two gifting sets of gifting rules.

The first are annual gifts, and indeed roughly $15,000 a year per person.

She has five grandchildren that would allow her to gift away 75,000 of the 500.

We have a long way to go, but there's a second rule.

It's a lifetime gift limitation.

And currently, are you sitting down?

It's just over $11 million.

So your mom could, if she wishes, make those $100,000 per grandchild gifts immediately and pay no income tax, no gift tax, they pay no income tax.

They pay no gift tax.

It's a rather wonderful answer to what started out to be maybe a little bit of a sticking point on a question.

Bottom line is your mom can do exactly what she wants to do.

There will be one extra piece of paper filed with her tax return.

That's it.

Most professional tax preparers won't even charge her for the extra piece of paper.

It's a beautiful thing that your mom is planning on doing.

I'm happy to be the messenger to tell her that, excuse me, from the income tax standpoint, from a gifting standpoint, from a legal standpoint, from an IRS standpoint, she's on very solid ground indeed.

We wish her the best.

We wish the entire family the best.

Should we get another question?

Of course.

Let's see... That's a lot of money!

In this case, I'm reading that guaranteed monthly income... Well, we're going to try we're going to try.

The two of you have complementary objectives.

Obviously, you want to have the opportunity to draw a pension income of some fashion, a retirement income, let's call it that, so that we don't confuse that with the offer that the pension company has made or the pension fund has made to your wife.

Now, thinking out loud for a second, your wife's interest in a guaranteed income for life.

Perfectly understandable, perfectly understandable.

Your wife's concern about the insanity of the world, perfectly understandable.

The word "guarantee" has such a strong attraction that in many cases the opposition to what you're being offered, saying to your wife, "Hey, I don't think we ought to take "that pension," can be met with some real resistance, mostly driven by fear.

So, logic... "Hey, honey, don't you understand?

"Our kids are going to be left out in the in the cold," may not be enough.

It's it's difficult to logically explain away an opposition to an issue that's that's fear based or emotionally based.

Now, having said that, I think you may be happy to find there may be a way to meet in the middle.

To meet both of your objectives, maybe.

Now the key will be cash flow.

How much of this 600,000 that you and your wife need to make bills, be happy, be healthy and be confident in retirement?

If it's an extremely large number, you may need to look at the pension fund because you're absolutely right.

If the two of you accept one monthly payment, and are both taken out by the bus, the pension fund keeps 600,000 bucks.

As a result, they can afford to pay you a little higher rate of return than than perhaps your local bank might be able to.

Well, considering today's interest rates, definitely more than your local bank would be able to.

And so on its face, it appears to be a generous offer, so to speak.

The reality is that there are platforms, investment platforms that will allow you to create, in essence, a private pension.

You can take the $600,000, roll it into her own IRA, and then she can select to use some or all of it to create a a guaranteed lifetime income.

She can create a guaranteed lifetime income that's good for her lifetime and for your lifetime.

Pretty interesting idea.

Depending on the company that you might use, you might look at a 4 or 5% a year guaranteed lifetime income.

Four, $24,000.

Five, $30,000 a year.

If you want to maximize that, you might even go as high as seven, which in this case would give $42,000 of guaranteed lifetime income.

And you maintain control over the $600,000.

As a result if, heaven forbid, the two of you accept that private pension platform, pull one monthly check of $3,500, are called home to "the great reward", your children, your three children will receive their share of $600,000.

In the future, many years from now, that 600 might be lower, it might be higher, but it's never zero.

You will always have a lifetime income, your children will always have a inheritance, as a matter of fact, there are investment platforms that will guarantee that you can spend you and your wife all of the 600,000.

And when the second of you has passed, your children still have $600,000.

Rather remarkable, rather interesting.

Maybe maybe enough that it meets the two of you in the middle and gets you both what you wish from her retirement.

Obviously, you've got some homework to do, you've got to know exactly what your monthly expenses are, you've got to know exactly what your Social Security benefits might be, what pension you might be receiving, and any other factors that come into play in terms of cash flow.

Because if a private platform, a private pension platform, gives you the cash flow you need and still maintains your 600,000, I think you and your wife are going to be very, very happy indeed.

If you have a question for us, send it to me, gene@askmtm.com.

You might see it on a future show, just as we're looking at our next question.

That would be our More Than Money radio show... That's fantastic!

Not bad.

What?

He's not yet a year old... Well, that's very, very kind of you.

So first of all, congratulations, new baby.

Fantastic, in March.

All right.

It didn't hit right on the 11th, but you got close and maybe, you know, better luck next time, I get that.

So let's talk first about the life insurance that might actually be the easiest piece to discuss.

And then we'll fill in with the estate planning attorney meeting that you're that you will encounter.

From a life insurance standpoint, There's no question in my mind that the type of life insurance that the two of you two of you should be looking at is term life insurance, term life insurance.

Some people call it pure life insurance.

It does not build up cash value.

The premiums generally are much lower than "whole life insurance".

In general, you can buy much more death benefit, which is what you need for much lower cost than you could in almost any other type of insurance plan.

Now, I mentioned the two of you because even though in many cases life insurance agents have been trained that you insure the economic benefit, in your case, you earn 68,000 a year.

They have been trained you should have roughly ten times your annual salary in term life.

I'm sorry, in life insurance of some type, in my opinion, term life.

I think that's wrong.

I'll come back to that in a second, and they may look at your wife's role and say, "She's a stay-at-home mom.

She doesn't... "If if something happens, we don't lose any income."

That is in the top three of the stupidest things I have ever heard.

I hear it a lot.

And every time I hear it, fingernails on a blackboard, because I would invite any one of those life insurance agents to go and replace your wife as a stay-at-home mom.

I'm thinking after three days they're heading for the hills.

They have had their fill.

They can't handle it because the amount of of sheer work that's involved, nearly 24 hours a day for a new mom taking care of a baby and taking care of a husband and taking care of a home, is tremendous.

If you had to replace your wife at this moment, God forbid, the cost would rock you!

So from where I sit minimum, I would like to see $1 million of life insurance on you.

Minimum, I would like to see a half a million of life insurance on her to reflect your various roles if possible.

And I think you're going to find it will be possible.

If you're working with a insurance agent, insurance brokerage that represents many different companies, I think you're going to find that 1.5 million on you and $1 million on her will be remarkably inexpensive.

People hear those kinds of dollar amounts and they think, "Oh, this is going to cost five "or $10,000 a year."

Would not surprise me if it cost you $1,000 a year.

For both.

So, make sure you explore that.

You're young, you're in good health, You need the coverage now.

You may or may not need it in the future.

We'll worry about that when we get there.

Now, the estate planning attorney.

You have three major roles that you're going to be asked to fill in terms of the documents that your attorney will prepare for you.

The first is the executor or executrix, sometimes is referenced as a a woman filling that role.

Second is the guardian.

Who would be in charge of caring, physically caring for your son God forbid the two of you are not with us?

And lastly, the trustee.

Who would be in charge of the money that would ultimately benefit your son, God forbid, again, that you're not with us?

Now, keeping in mind if one of you passes, none of this need be of a concern because the surviving spouse, of course, will continue to care for your son.

With life insurance and other assets, they should be in a good position to be able to do so.

It's if the two of you are gone.

Now, we've got some real issues.

So in your documentation, the attorney, he or she will very well say to you, "Who do you want as your executor?"

You would say, "I want my wife."

Your wife would say, "My husband."

Ah, but they're going to say, "What happens if you're both "gone in a common incident?"

Well, now we've got to come up with a what's referred to as a contingent executor, someone who would fill that role if neither of you could.

From the standpoint of the guardianship, it really doesn't work that way because as a guardian, as as a parent, you are automatically the guardian if only one of you passes away.

But if both of you are gone, indeed, you need to name a guardian.

How?

Who?

Very challenging question for a lot of folks.

For other folks, it's easy.

"It's my brother, my sister.

"They live right across the street.

It's perfect."

For most folks, it's not that perfect.

My guidance is that you select a guardian that will raise your son as close to the way you would raise them as possible.

It typically, using that guideline, eliminates grandparents.

Sorry.

Grandparents love your son.

No question about it.

Do they adore him, adore him?!

They're grandparents.

Will they raise your son with the same discipline, the same structure?

The answer is no.

And they can't possibly.

Now, if it's the only answer, fine.

But if there's a better answer, you need to look to that.

Some folks say, "Well, my sister is the perfect person.

"She lives in Austin, Texas."

I happen to have been to Austin.

It's a beautiful town.

But what a dreadful thing to do to a child.

Not only have they lost their parents, but they lose their home.

They lose their school, they lose their friends.

They have to move two thirds of the way across the country.

That's generally not a great idea.

So you have to name a guardian and no surprise, a contingent guardian.

So you've got some homework to do there as well.

And then finally, a trustee, some attorneys will counsel you that you should name a bank as the trustee.

I'm not a big fan.

That's my own personal choice.

I think someone personal, someone that you trust.

Now, in this case, it might very well be one of your parents because as a trustee of the money, they will always have their grandchild's best interest at heart.

And trustees, again, you need to name a primary and a contingent.

If you're concerned about the trustee being able to handle it, someone you you care about and someone that you know will care about your your son, but you think they might need some financial assistance, you can absolutely name co-trustees.

You could name your brother, for example, in trustee, in co-trustees with a bank.

We often use national banks.

Charles Schwab, for example, as a national bank.

So you could have your brother, Jimmy, and Charles Schwab as co-trustees.

The bank does all of the heavy lifting in terms of the account and legalities and tax reporting.

And your brother makes all the personal decisions about how money is spent along the way until it's finally handed off to your son.

I know I covered a lot of ground there.

I know it may seem like it's it's confusing, but the most important piece of advice I think I can give you is to make sure you're working with an estate planning attorney that you trust and is experienced.

Many attorneys will say, "Of course we do wills."

Soon as they say, "Of course we do wills," then I shake my head and we have to look somewhere else because estate planning is far more than wills.

In your case, perfect example as a young one, if, God forbid, we lose you, your son inherits lots of money.

He's a baby.

We have to have a trust.

If they're not even mentioning medical powers of attorney, if they're not, or medical directives from powers of attorney, if they're not mentioning a full package, then they really don't do enough estate planning to be experienced.

You want somebody who's experienced and someone you trust.

If you have an attorney like that on your side, you're going to do very, very well indeed.

Now, again, I constantly remind you, if you have questions that you would like to have answered by your financial adviser and potentially see them on a future show, send them to me, gene@askmtm.com Let's go to another call.

Well, what an interesting question, lots of folks are unaware that Social Security benefits come in many flavors, primary benefits for the taxpayer who has paid into the system, spousal benefits for someone who's married to a taxpayer who has paid into the system and in this case, survivor benefits.

And they each come with different regulations, different requirements, different opportunities.

In this case, this young lady is saying at 60, can she take Social Security?

Some of you are saying "No, youngest age is 62."

And that would be incorrect.

Youngest age to begin taking reduced benefits for yourself is 62.

Youngest age to take widowed benefit or widower benefit is 60.

So her question is, can she take the benefit that she would receive from her deceased husband's Social Security account now and allow her own Social Security benefit to rise and take it some time later, 62 or later, and the longer she waits, the higher it grows?

The answer in a simple answer is yes, she can absolutely do that.

Is it in her best interest?

Tougher question.

It is very important that you explore the numbers before you make a decision.

There was a time when you could accept Social Security benefits and then say, "You know what, "I've changed my mind.

"I'm going to send all the money back and start over."

That has been severely restricted.

So make sure that you're making the decision that's confident for you.

You can counsel online with Social Security counselors.

You can make phone calls.

Right now, the vast majority of the Social Security offices are not open for folks to drop by.

And if you find yourself in a pickle and you're just not getting the information you need, reach out to me, gene@askmtm.com.

We have a Social Security expert on our team, Mr Mark Bacak.

He can help you as well.

Do we have time for one more?

Ah, here we go!

This is a perfect question as I'm looking at our time.

A perfect question for the end of our show because it is set up correctly.

529 plans, most of you know them as educational plans or college plans, are intended to be owned by one person.

Husbands and wives are often involved in this transaction as this gentleman and his wife are.

So the scenario that they use is not joint ownership, but primary and contingent.

So heaven forbid something should happen to him, she is automatically the owner.

That is exactly what would happen if she were the joint owner.

So in this case, you're getting exactly what you want, which is, heaven forbid something happens to you, she gets it.

Bottom line is that you don't need to do a thing.

You don't need to make any changes.

Now, one thing I will just note for you, it's not asked in this question.

Your three grandchildren, you have a high probability that at least one of them is going to reach college age and say, "I'm not interested.

"I want to start my own business."

"I want to go to work."

"I want to go in the military."

"I want to do something else."

"I don't want to go to college!"

And in that case, remember, you still have complete control.

You can reassign that money to someone else, another grandchild perhaps.

You can keep that money cooking until that person, that young man or young lady that has decided not go to college has their own family and then transfer it to your, how about this?

Great-grandchild.

So don't despair.

You've got lots of flexibility and lots of options.

Although we only answered two questions about the 529 plans, many of you out there, I'm sure, have others.

Send those to me.

We'll be happy to help.

Just a minute or so left in this edition of More Than Money.

So, first of all, I want to thank you for spending part of your evening with us.

Always a pleasure to be with you.

I hope you learned a great deal with the questions that your neighbors have answered us.

And maybe one of those was even your question.

So we hope that you learned a lot.

As you go forward, these questions either sent to me, gene@askmtm.com, or not, may form a pattern that you need some real in-depth work.

Make sure that you seek out a trusted financial advisor.

Make sure that you're asking questions.

Make sure that you're getting educated, because in the world of investments, the world of estate planning, the world of retirement planning, 401k's, IRAs, 403b's, etc, the confusion opportunity is off the chart.

Don't allow yourself to be confused.

Make sure that you remember we are always your resource.

So, as your resource, we'll see you next time on More Than Money.