Good evening and welcome to More Than Money.

You've got Gene Dickison, your host, your personal financial adviser for the next half an hour, giving you all of the benefit, of my, some would say 780, years of experience at your service and giving you as much information as we can in that time.

and a little bit of inspiration along the way.

I assure you, you will find no entertainment value in this show whatsoever.

If you do, I apologize.

Oh, goodness.

Just enjoy it.

Enjoy as much of this crazy world as you possibly can.

Spring has sprung.

Things are really turning green.

It is time to put a smile on our faces and start to reenergize our lives.

Hopefully most of you are either on your way to a vaccine or you have completed your vaccine regimen and things are starting to move around a little bit and that's got to help as well.

Our country is opening up and that's a fabulous thing for us to see it unfold.

Goodness, yes, it's been well over a year.

That's a long time.

But it's way faster than anyone ever believed it would be possible.

And as millions more folks get vaccinated on a day-by-day basis, I hope you are part of that effort to make all of us safer, healthier and reopen our country.

There's no question these are challenging times, but a little bit of courage, a little bit of creativity and, certainly, along the way a little bit of courtesy go a very, very long way.

As you may have heard me say in the past, if you're a loyal viewer of our More Than Money efforts, we are here to serve you.

Our entire show tonight, by the way, will be questions that you have sent us by e-mail.

If you have a question that you've not yet sent, you send it directly to me, Gene@askmtm.com.

Gene@askmtm.com.

Comes directly to me.

You might see your question on a future show.

We always respect your privacy, of course, but I guarantee you, even if your e-mail is not part of a future show, we answer every single e-mail directly to you.

So questions that you may have about investments, about retirement, about income taxes, about 401(k) plans, estate planning, wills trusts, Social Security and Medicare.

Send those to me.

We are happy to help.

We have accumulated.

We have assembled.

We have crafted a rather impressive team of experts that we draw upon to get you the information that you need.

And I guarantee you, if you send me an e-mail that stumps me and my team, you're going to be pretty special because that doesn't happen very often.

Let me give you an example of exactly how this works.

We go to our first e-mail.

Well, that's a fascinating question.

So let's talk first about a reverse mortgage.

For most of you, a common term, something that you've heard in the past.

For some of you, not common at all.

You're not sure what that actually addresses.

So a reverse mortgage is a mortgage, first and foremost.

So when you think reverse mortgage, first think mortgage.

You're borrowing money.

You're using your home as a collateral.

And at some point that money's got to be repaid.

Under a reverse mortgage scenario, there's this little bit of a wrinkle, rather interesting wrinkle.

You don't have to make monthly payments.

Wow, that's pretty cool.

So let's assume for a second you've got a $300,000 house and you like to borrow $150,000 on a reverse mortgage.

Once that's in place, your next monthly payment is... ..zero.

There's no required monthly payments.

Now, there are requirements that you have to qualify for a reverse mortgage, you have to be at least 62 to qualify for the HECM, the home equity conversion mortgage.

It's an FHA program.

And there are other requirements, but rather straightforward.

But you can borrow your equity in your home, a great deal of it, and have no payments whatsoever.

Now, as we're about to answer this question and disappoint the e-mailer, sadly... ..the key, one of the key requirements is this be your personal residence.

So, are you able to take the value of a reverse mortgage, buy a home and then rent it out?

The answer is no, because it would no longer be your private residence, your personal residence.

And one of the characteristics of a reverse mortgage is that when you leave the home, either voluntarily - hey, we're selling, we're going south, we're going to relocate to South Carolina, someplace down there nice - then the mortgage must be paid off, likely by the sale of the home.

Or, if you are leaving the home... ..involuntarily... ..could be that you need care elsewhere, it could be that you have finished your time here and you have been called home - then again, the mortgage is due and the property is typically sold.

So lots of detail there, lots of context around reverse mortgages, but actually a fairly simple answer.

Can I buy a house and rent it out using a reverse mortgage?

No.

Let's go to our next question.

You're very, very kind indeed.

And you're very wise, you are planning for very important issues early in your life.

I can't tell you the hundreds, no, thousands of folks that I have met in my very long career that never got around to planning for the children that they already had, and, in many cases, they had already raised.

They never had a plan in place that actually would have protected their spouse in the event that they were taken early.

They never had an attorney prepare the appropriate documents.

They never discussed life insurance.

And in some cases, they got very lucky and everything worked out just fine.

And in some cases, they didn't.

And folks who passed very young left behind, sadly, financial challenges that never should have been there.

So let's talk about the basics.

In a will, you need fundamentally three different jobs to be filled.

The executor, the custodian.

or guardian, and the trustee.

Let's talk about all three of those.

These are the decisions you should make before you head off to the attorney's office.

The executor.

This is the person that you will nominate, that you will request, that you will name as getting the job done, settling the estate, making sure all the legal requirements, the IRS requirements are taken care of and that the money gets where it's supposed to go.

You've got to pick somebody that you've got confidence in can get the job done.

It's not glamorous.

They don't have a lot of decision making ability, but they have a lot of responsibility to get the job done exactly as your will has laid it out.

Their job, by the way, if it's done properly, is likely completed in somewhere between four and nine months, so it's a relatively short term assignment.

As opposed to your guardian.

The guardian is the person that you would name who would be responsible for raising your son, and the guidance that I give folks, and I've been using it for years and it seems to work well, is this.

You want to choose someone who will raise your son as close to the way you would raise him as humanly possible.

Obviously, if we lose you, your wife will raise your son.

If we lose her, you will raise your son.

What we're discussing here is the two of you are taken prematurely, in a common incident, most likely.

The guardian is the person who's responsible for raising your son, a young man who's just a couple of months old, and, as a result, this job is 18 years.

Don't think about it in that way.

It's likely decades, 30, 40, 50 years, because if they raise your son, raising never ends.

So it's got to be someone that you think very carefully about.

Number three is the money aspect.

Could the guardian also be in charge of the money?

The answer is yes, but it's not the best.

The best is to have an executor, a guardian and a trustee, the person in charge of the money, all the individuals separate and distinct.

it removes a lot of potential problems.

It eliminates a lot of potential conflicts of interest, and in general provides for the opportunity for multiple people with multiple skills to be able to help out.

Someone who's going to be the guardian of a newborn should not be 85 years old.

I think that's pretty obvious.

Someone who's going to be a trustee maybe for 15 or 20 years should also not only not be 85, but maybe 65 is not the right number.

Maybe more like 45 or 50.

Experienced in the way of the world, but also not so far along that they might... ..they might expire before the trust does.

So, executor.

Short term, Very precise.

Guardian.

Long term and full of heart.

Trustee.

Long term as well, and really has to have a little bit of life experience.

Now, before you get to the attorney, just to make it as hard as we possibly can, you should actually have two people named for each of those jobs - a primary, the first choice, and a contingent, just in case.

In case the first choice, for whatever reason, cannot actually handle that scenario.

So, that's the preparation.

It will take some real discussion.

You and your wife may have very different ideas about who might fill those roles.

Now's the time to have that discussion.

You don't want to be sitting in front of an attorney billing you at $1 billion an hour and having conversations that take an hour or two or three and still not come to a conclusion.

These are very personal choices.

These are ones that you've got to make very thoughtfully, with a lot of consideration.

Take your time.

Do that one on one.

And then make your appointment with the attorney.

Life insurance.

Fortunately, if I'm reading between the lines correctly and you are both young and healthy, term life insurance can be had very large amounts of coverage for very small dollars of premium.

Term life insurance has become a remarkable industry where you are - what's the word?

- eligible to take advantage of what could be millions of dollars of benefit for either your wife or yourself for very, very small premiums.

You do have to qualify.

It's called an underwriting process.

And you do have to carefully consider how much you might need.

If you're looking to have your wife stay home with your son, should you not be with us and you're making 68,000 a year, she's going to need a life insurance policy likely in the million to a million, five range.

But if you're young and healthy, you will be shocked to find out how very affordable that type of policy, that size policy may very well be.

I wish you great luck.

It's a shame your son wasn't born on my birthday.

We have very special gifts that we give to children born on Gene's birthday.

It's a celebratory kind of thing.

Maybe baby number two, maybe you'll get luckier.

Gene@askmtm is the direction you send me e-mails if you have questions about anything in your financial life or beyond.

The name of the show is More Than Money.

So send those to me, Gene@askmtm.com, just as our next e-mailer has done.

My daughter received an IRA from her aunt.

Let's describe this situation as one of two scenarios.

Either the adviser made a mistake, and a rather serious one.

Or there was a misunderstanding, because any adviser, any adviser that has been a financial adviser longer than, oh, I don't know, 15 or 20 minutes, knows that putting an IRA that somebody has inherited into their own IRA is, as we say, verboten.

Don't do it.

Forbidden.

A really bad idea.

And very painful financially from a tax standpoint.

So let's assume for a moment the adviser has been doing this longer than 20 minutes and was misunderstood or didn't communicate clearly what your daughter should do.

Let's describe what she should do.

An inherited IRA, as of the current IRS rules, has to be kept separate and distinct from any other IRAs.

So she cannot put it into her own.

If she did, by the way, it would immediately become 100% taxable.

Not the result, I'm certain, that you or she would want.

So let's pick a number and say it's $25,000.

If she follows the adviser's instructions, as you understood them, 25,000 is taxable immediately.

This is a problem.

And by the way, it has to come out of the IRA.

It just is a bloody mess.

So, IRA has to be separate and distinct.

It will be referred to as an inherited IRA.

And your daughter then will have to take the money out over a ten year period, very often, using, again, 25,000 as the example...

If we use ten years as a good number, that would have us taking about $2,500 a year out of the inherited IRA.

She might very well then be able to contribute that to her own IRA.

The money coming out of the inherited IRA will show up on her tax return as taxable.

The money going into her IRA will show up on her tax return as a tax deduction.

One washes the other and there's no tax.

So if my numbers, my demonstration numbers - I picked them out of thin air - are remotely accurate, she may very well be able to put a plan together that takes this inherited IRA and over the course of time moves it into her own IRA and pay no income tax.

Wouldn't that be a lovely result?

If you're not sure about your current financial adviser, make sure - make sure - you get a second opinion.

Make sure that you're talking to another adviser or two so that you are considering whether or not the person gave you bad intel or whether it was just miscommunication.

Either way, that could be problematic going forward.

You want to work with an adviser that's giving you proper information, of course, but also is communicating in a way that you find easily understood and comfortable and, done correctly, enjoyable.

So if the current adviser's not quite meeting your needs, make sure that you make a shift, do some investigation, maybe get a referral.

Make sure, of course, that anybody that you would consider, make sure they have a show that airs on PBS Tuesday nights at 7.30.

I made that up.

I'm just having fun with you!

Gene@askmtm.com.

We're going to take a break one second.

I'm going to go to this e-mail, but before we do...

I had a phone conversation this morning with a very dear friend who lost his son just a few weeks back.

His son was 51 years old.

Tragedy, of course, leaving behind a widow and two teenagers, 15-year-old son and a 13-year-old daughter.

And the reason I want to stop right now and share this with you, not an e-mail, not a theoretical, but a real scenario close to us, close to somebody that we love...

This gentleman at 51 knew his days were numbered.

And yet he didn't prepare his wife.

His wife has very little working knowledge of their financial situation, even down to what bills are paid and when they are due and how they're paid.

Are they paid automatically?

Are they online or are they paid by check?

She has little or no working knowledge.

Made all the more difficult... ..by the same technology that you and I carry around in our pockets all day long.

The strength, the... ..what, the practical application, practical usability of your phone is, you can control tremendous numbers of things right from any number of apps right on your phone.

You can control the thermostat in your house.

You can make automatic bill payments from your bank account.

You can make automatic deposits to your bank account.

You can do... You can control the sprinkler system in your in your lawn.

The lights in your living room can come on with an app from 1,000 miles away.

You can do all of that.

But if you leave behind a spouse... ..who does not have access to all of that because they don't have all the passwords necessary to access those apps, or even all of the knowledge of what apps are being used, then you have put your spouse in a very, very difficult situation.

You have put your spouse at a very, in some cases, unresolvable challenge of, how are we to even know what a challenge, what issues to address?

Because we simply don't know what he did or didn't do on his phones.

As it was related to me.

we already have discovered some.

But so many more left undiscovered.

And as soon as the sprinklers come on, that's another one that we don't know about.

And one that we need to be concerned about and one that needs to be addressed.

Now, I bring this up for two reasons.

Number one, my heart breaks for this young woman and her children.

My heart breaks for my friend and his wife, who we love dearly, who have lost their son.

But the situation that is now being faced is common, common to so many of you.

I'm guessing 95% plus of you who are watching this evening have some form of comfort with the technology that does exactly the things I'm talking about, have employed some, or many, perhaps even many more of these types of apps.

And yet my guess is you haven't shared any of that with the people that you love, the people that you will leave behind, the people that will need to know.

Planning an estate, for millennia, was as simple as pie.

That's the land I own.

That's the chair I own.

That's the horse I own.

Oh, by the way, I owe the butcher 25 bucks.

Pretty simple.

Everything was right there to be seen, particularly in a small town, right there to be seen.

Everybody knew what you owned.

Everybody knew who you owed money to.

And when you passed, it was very easily accommodated.

Now, goodness, if you haven't shared the passwords to your online banking, how are we to know?

What about all those amazing pictures that you've taken?

The family treasures that, decades, for hundreds of years perhaps, they were all in albums, they were all stacked up.

Everybody knew exactly where they are.

Now they're in the cloud.

And are they gone forever?

They don't need to be, but it opens up an entire Pandora's box of issues that have to be addressed on the technology side, the intellectual side of your estate.

and how that needs to be addressed.

I want you to start tonight.

Start tonight, communicating with the people that you love about your internet assets, about your internet capital, so that they're not left in a similar scenario, and left to fend for themselves.

That's not what you want.

Obviously, it's not what's best for them.

Take care.

Gene@askmtm.com.

Well, very wise of you to ask.

I'm not sure if your son's asking or you're asking on his behalf.

I'm hopeful that your son's also a regular viewer of More Than Money and enjoys learning about all those kinds of things as well.

This is kind of similar to the young lady that inherited the IRA, as well, but with a little bit of wrinkle.

You're talking about a retirement plan.

If this money is taken out in pieces...

He's working part time.

I'm picking a number and saying he makes $4,000 a year.

If that is the case, he can put 4,000 of this 19 into an IRA this year.

100% deductible if he wishes - I wouldn't recommend it.

I would recommend a Roth IRA - no deduction, but also no income taxes when he retires 50 years from now.

Goodness, compounding tax free, spent 50 years from now tax free, this money is going to grow dramatically.

So if it is $4,000 - let's say he's in college for another couple of years - he can move four plus four plus four - he'll have 12,000 out.

And when he gets his first full time job, he can then move the balance in, $6,000 or $7,000, and have all of it working for him in a retirement plan.

If in his current employment they have a 401(k), it's even easier.

But that's another e-mail for another show.

Let's go to this e-mail.

This obviously is an e-mail from 2020 when RMDs were waived for that year, and the question is, could they still send money directly to their church if they are not required by the IRS to take out any money at all?

The answer is, interestingly enough.

yeah.

As a matter of fact, if you're sending money directly to either your church or any other non-profit or any, what, assemblage of non-profits - it doesn't have to be one - you could pick your church, you could pick Laughing At My Nightmare, you could pick Folds of Honor, or all three - and if you direct the money to go from your IRA custodian directly to these non-profits, not only do you not pay any income tax on that - and of course the non-profits don't either - but you will in essence be expanding your standard deduction.

Right now, the standard deduction for a married couple is approximately $25,000, $26,000 a year.

Typically, charitable gifts are included under that number.

So if you gave it directly a 44,000 or $5,000 check, it doesn't really help you.

By sending it directly from your IRA, and you're allowed to do up to 100,000 bucks a year.

so it's not going to be terribly difficult to arrange to have your needs met from a charitable standpoint - and if it is, that's fantastic.

but I think you're going to be just fine...

If it goes 25,000 directly from the IRA over to the non-profits, you have your standard deduction of 25,000.

That's non-taxable.

And you now have 25,000 that is also non-taxable.

Not only does it not get taxed to your income tax return, it doesn't affect your Medicare premium either.

And for those of you who are retired or are currently on Medicare, you know exactly what I'm talking about.

Folks, we've covered a lot of ground tonight.

I hope you learned a great deal.

I hope it inspires you to ask your own questions, get very specific about things that you need in your life - retirement, income taxes, estate planning, business, whatever that may be.

Send those questions directly to me.

Gene@askmtm.com.

Gene@askmtm.com.

I can't promise you that your e-mail will appear on a future show.

I can promise you every e-mail is answered directly.

We'll get you the information you need.

I want to thank you for spending part of your evening with us.

It's always a joy for me to be with you, and I hope that you'll join us next week when we return on More Than Money.