QCD and Estate Planning

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This is the Truth Network. Welcome to Finishing Wealth, brought to you by CardinalGuide.com, with certified financial planner, Hans Scheil, best-selling author and financial planner helping families finish well for over 40 years. On Finishing Wealth, we'll examine both biblical and practical knowledge to assist families in finishing wealth, including discussions on managing social security, Medicare, IRAs, long-term care, life insurance, investments, and taxes. Now let's get started with Finishing Wealth. Finishing Wealth is a general discussion and education of the issues facing retirees.

CardinalGuide.com, Cardinal Advisors, and Hans Scheil CFP sell insurance. This show does not offer investment products or investment advice. Welcome to the show. I am not your normal host, but I'm honored to be in for Robbie, and I'm honored to be talking to one of my favorite people, the hero, our awesome man of wisdom, covering all kinds of things, financial and life and godliness, Hans Scheil.

Hans, God bless you, my friend. Thank you so much for allowing me to be in with you today. Yeah, and we need to keep Robbie in our prayers. He's got COVID.

Yes, we do. And that's why you're standing in. I'm excited about you standing in, and I'm expecting him to be back at full strength next week.

Yeah, and he should be. And I talked to him, and I'm sure you have too, and he sounded good. He's just, again, like everyone, being careful and getting pumped full of liquids, right, and getting some good rest.

And it's kind of fun because I'm usually listening to you guys on the Truth Network on the weekends, enjoying the show. So now I got some high ability to live up to, brother. I don't know how I'm going to get through this, man.

You're going to be fine. Well, I'm honored to be here with you. Hans, we've got a whole lot to cover. Just to give everyone listing a preview, this is where you need to be right now. And if you just happen upon this station, we're going to touch on things like Social Security, Medicare, long-term care, IRA, 401k, retirement income, estate planning. Hans, I just love the aspects of stewardship that you and Robbie talk about.

The way we, in our culture, we use the language a lot about how we're in charge and how, well, this is my money. Well, what should I do with my money? Or how should I invest my money? How should I spend my money? How should I save my money?

Who should I give my money to? Well, the spirit of this program in your heart and Robbie that comes out so often is it's his money, and this idea of stewardship. And what is this steward? And I love what Paul says in 1 Corinthians 4. He said, let a man so consider us as servants of Christ and stewards of the mysteries of God. Later on in this same chapter, Paul says, we are fools for Christ. So Hans, I have a little sermon that I've given and we've done in Wednesday at Word on this chapter. It's called Servants, Stewards, and Fools. And that's some cool billing for a Christian to live up to right there.

All three of the trifecta. But right in the middle of that is stewards. And basically a steward, and you all talk about it every week, is a manager.

So it's not so much as this is mine and this has got my mark on it and this is what I'm about and all this. It's about the boss. And the boss isn't Stew or Hans or Robbie. The boss is God almighty. And the fact that he has entrusted us with these resources, whatever he's entrusted you with, it's from him. So it's not so much Hans the amount as that powerful bond of trust between our maker and us that he's given us, to now we are to steward it wisely for a greater impact and a greater good.

And that's the very cause of God. So Hans, I mean, I kind of wanted to set things up using that verse and I knew that that would be a blessing to you. And by the way, he gives one requirement of a steward.

I love this. In chapter 4 of 1st Corinthians, Paul says, Moreover, it is required of stewards that they be found faithful. And that is such a powerful word, because that word, in that word, Hans, you have a whole lot there.

You have a whole lot. You know, faithful means that we are, it's a little bit like the the Marines slogan, Hans, you know, semper fidelis, ever faithful. And that's the requirement of a steward. I think, you know, maybe this was here before the Marines in 1st Corinthians going back, if we look at our chronology, and maybe this inspired that wonderful mantra.

And we're grateful for our Marines, Hans, we wouldn't be here doing a radio show together if it weren't for those guys and gals that fight on the front lines for us, amen? So that idea of a steward being faithful, Hans, and that's really been a mantra of yours, as you steward people through their stewardship and you work with folks that may not even have a faith component, but you sure are trying to steer them in the right direction. And I love these as guiding principles.

Tell me a little bit about your passion along these lines. Well, you know, I've gained a lot in it just through the four years we've been doing this show and my relationship with Robbie. Because, you know, Robbie is going to, isn't going to point you into the Bible, but you can't get pointed there by God when you're just hanging around with the guy and doing shows every week. And so I've been passionately reading the Bible daily and really looking for content on the show and really just for my own self, learning how to live my life.

And then I'm looking for, just like you drew a parallel or a place in the scripture that really tells us how to act when it comes to financial planning. And since this show is for seniors and I've really put my whole life, really I've been selling Medicare Supplement Insurance since 1976 when I was 18, going out and sitting down with people three times my age, four times my age, and explaining what they needed to do in the Medicare area. I have a lot of experience with this. And so when I started the show, I mean, God's been there all along guiding me and pointing me and drawing me to helping people write in this, you know, basically in their 60s. Some of them in their 50s, they're forward thinkers. And then we have a lot of people in their 70s that are doing makeup stuff.

They've never been to anybody like me, and they've never considered financial planning, retirement planning, forward-looking stuff. So when you ask, how does God play out in my work, in my ministry, in my show, a lot of that has just really come through my relationship with Robbie. And, you know, week by week, and many times when we get together to record the show, we're talking about a whole lot of other things besides just whatever we're talking about today. You know, I'll throw that in there. And what comes to my mind when you talk about stewardship, I'm going right to QCDs.

I mean, they're just, you know, number four issue, IRA, 401k, money you haven't paid taxes on, money that you're basically letting sit there many times and trying to avoid minimum distributions or wait for them. And when I say QCD, I'm wondering, do you even know what I'm talking about? Well, one exciting thing about being here in Robbie's place today is I get to learn what you're talking about firsthand. So please, please, yeah, give me a little color commentary on that.

And also for those that maybe are listening that also are curious about that and how important that is, especially right now. Yeah. Okay. So QCD stands for Qualified Charitable Distribution. Okay. And it's God placing in the tax law clear back in 2011, putting it in there that's saying that people that have IRA money or 401k money, which is a lot of people in the country, and it's saying that if you're required to do distributions out of your IRA, which used to happen at 70 and a half, but it now happens at 72 and after, is the law requires, and people that are approaching this age, they know about required minimum distributions.

They know they're coming or they've already been here and they've done them. And a lot of times they're angry about them because they're having to pay tax on that money they never paid tax on or some of it. And so what a qualified charitable distribution is, is if you're over 70 and a half and you have an IRA or a 401k or a hunk of money you haven't paid taxes on yet and you're now required to make a withdrawal, you can give that money straight to the church.

Okay. And don't try this at home. I mean, you need to get a professional because make one mistake and you're going to end up paying taxes on the money. But if you do this properly, the qualified charitable distribution allows people like your parents who were over that age and they have money and an IRA that they can give each.

The maximum is $100,000 in any given year directly. Now, I know a lot of people are saying, well, I don't have $100,000 to give away. Well, if you have $2,000 to give away, I mean, the church and God really doesn't matter the amount. What this really boils down to, a qualified charitable distribution allows you to donate your RMD by giving it directly to the church or the ministry or any other qualified charity, a 5013c, it will never show up on your tax return.

How does that grab you? That's really good. So it's a way to be a blessing to a much needed ministry without having to pay the taxes on money that's been sitting there.

But you have to be over 70 and a half and the maximum you can give per year is $100,000, is that right? Right. Okay.

Wow. But you want to make sure you do this. That's why I love Hans. Make sure you're talking to someone like Hans, folks, who is in this space who can make sure the T's are crossed and the I's are dotted because you don't want to get audited or you don't want to get a tax bill because you didn't file this properly or you didn't certify the paperwork.

So comportment is everything, having it properly handled and all that. Now, we are up against a break. This is finishing well. I'm Stu Everson in for Robby Dilmore, who's recuperating from COVID, but doing better. Appreciate your prayers for Robby. Our awesome hosts and fearless leader in this space is the host of Finishing Well, Hans Scheil, and he is going to come back and we're going to talk some more about this QCD, Qualified Charitable Distribution, estate planning, and some of these other very important areas of finances and finishing well. So stay tuned.

More Finishing Well right after this. Hans and I would love to take our show on the road to your church, Sunday school, Christian, or civic room. Here's a chance for you to advance the kingdom through financial resources by leveraging Hans' expertise in qualified charitable contributions, veterans aid and attendance, IRAs, Social Security, Medicare, and long-term care. Just go to cardinalguide.com and contact Hans to schedule a live recording of Finishing Well at your church, Sunday school, Christian, or civic group. Contact Hans at cardinalguide.com.

That's cardinalguide.com. This is Finishing Well with Hans Scheil, and I'm honored to be in the seat that's normally held by Robby Dilmore, who is recuperating. Keep praying for him.

He should be back next time. When we started the show, we talked about 1 Corinthians 4. We talked about the qualification of a steward of God's money is to be faithful.

Sadly, we have a lot of believers, a lot of churches and people in the faith community that maybe don't handle their resources as they should. That's why we need Hans Scheil. We need your wisdom and your awesome contribution to the body and to so many listeners that are going through all this.

But it also breaks my heart, Hans, because we want you to be president. We want you to be over the Fed. We want someone like you who has to make it work for your clients. If you don't make it work for your clients, then they fire you.

That's light. That's absolutely the way it works. It's capitalism, which is designed to give everyone a good opportunity. People come over, and I know you have a story going back generations, the Scheil family coming over to America, and who you are today isn't who you were 40, 50 years ago when you were getting going and bootstrapping it and stuff like that, and you've proven yourself in battle.

And sadly, we have a government that just prints more money. Our current government has all kinds of these socialistic, crazy, communistic Tennessee's, Hans. And I stay out of all that, Stu, simply because my people are old. I hate to call them all old, because I'm one of my people. I'm 63. We're old, and we have a lot of clients in their 70s and 80s, and we can't do anything about that.

Maybe we can pray about it, and we can discuss about it. But so my job is really to help you make the best of what you got, okay? And to work against all these, because you don't have any choice for these government programs. I mean, if you look through these seven issues that we talk about, every one of them is underpinned with a federal government program.

And people like to take potshots at all these things, and they're legitimate potshots. I just stay out of it, because unfortunately, when I have a 67-year-old client that's coming into me, and they say, this is what I got, I've got to make this work for them and their spouse for the rest of their life. And then we need to have something left over to give to the next generation, and we've got to work with all these government programs.

Yeah, no. That's so profound. It's so important. And I'm not, look, I'm not crying about taxes. You've got to pay taxes, and you've got to be, you know, God's put you in this where you are as a citizen, but at the same time, you don't want to give Hans more money to the government than you should. You want to be wise, like you talked about with your estate planning and with your different tax brackets, because, you know, you throw extra money to the government. I'm telling you, they mismanage pretty much every penny that comes in. And so that's why we've got to be managers, right, Hans? And that's why you're encouraging people to take ownership of what they have and to invest it wisely. And really, the whole theme of this Finishing Well, Your Program, is to plan properly.

Well, it is. And so we were talking earlier on the first part of the show about QCD, and then we were talking about bouncing around the seven issues, and do we want to move to another issue? And you set it up, is that, so estate planning, how does a QCD, qualified charitable distribution, that you make after 70 and a half out of your IRA, how does that affect estate planning? And I'm just going to tell you a situation that a lot of people are in, and you may have a lot of people listening, is they're not taking anything out of their IRA because they don't want to pay taxes.

And then they get to 72, and now they have to take money out of there called a required minimum distribution. And so we're able to say, okay, do it as a QCD. And then now the Lord's going to get the benefit of this, and you're not going to have to pay tax on it yourself.

And so people like that. But you're still minus the money, okay? I mean, you've just given it to the church, but you're minus the money. And so let's talk about estate planning. And how does that affect estate planning? Well, a lot of people just leave the money in their IRA because they don't want to pay taxes. And when I ask them, well, what's the money for? They say, oh, I'm going to give it to my kids. That money's for my kids, and I just want to let it build up as much as it can, take out the minimum.

And what they're handing their kids is a tax problem. Oh, wow. Break that apart for us. Yeah, break that down for us. Well, let's just say you've got $600,000 in your IRA 401k, and you're 69 years old, and you're sitting here doing a plan with me. And you really don't need to live off of that 600,000 because you've got other money, and you've got social security, and you've got things pretty well set up.

So you're just saying, I'm going for the minimum. I just want that to accumulate, accumulate, and accumulate. And so what I'm saying is, even put the QCD aside, you need to pull out money out of that IRA systematically. Not a huge amount in any given one year because that'll make a lot of tax. But you need to have a plan of having that thing drained by the time you're 85, 88, 92 and pass on. And what you need to be accumulating to give to your kids is money outside of an IRA. Because when you hand that over to them at your death, they don't have to pay taxes on them. Okay.

Okay, so it makes sense. So what would be an alternative to the IRA for bequeathing money to your kids that wouldn't be under a tax penalty? Well, just a brokerage account.

Okay. Or the real sweet thing would be a Roth IRA. So you can do such a thing as a Roth conversion, so you don't really distribute the money to yourself. You just distribute it out of the traditional IRA, the pre-tax IRA, and you move it over to a Roth IRA. You pay the taxes.

It's still in an IRA, but a Roth IRA is tax-free. Okay, very good. That's one solution.

I mean, there's a multitude of them that we could go over and over and over. But the whole point is with estate planning, you know, I want to hear this from the people, and I want to hear that they have children and they really care about who gets the money. Then you want to be giving money outside of an IRA. And a lot of people make this mistake, that they have all their money wealth accumulated in an IRA, then they pass away, and their kid's got a big tax problem.

So we have ways to deal with that. Wow. Now, I'm going to bring in another point with the QCD, is if you're tithing and you're giving to the church, let's just say $10,000 a year, anyhow, so you donate that much money, and you're doing that out of your already paid tax on money. You're just doing that out of your budget or however you're doing it. You're throwing 200 bucks a week in the plate, okay, and then you're just letting your IRA money sit. We can sit down and we can take that same $10,000 if you're over 70 and a half, and just do a QCD, and we can just send that $10,000 straight out of your IRA. And it's effectively like getting a total tax deduction on it.

I love it. And that pours into what we've been talking about this whole time, about good stewardship, of stewarding God's money. And then you're free with that income, or that gift, or that inheritance, to be a good steward of that, and to start that cycle again. And it could involve giving to a ministry. It could involve, you know, obviously supporting your church. And, you know, we want to encourage people to be givers, to be generous. God really loves a cheerful giver. But Hans, it also means thinking about, you know, how early would you recommend people start thinking about their estate planning?

I know we talked about 70 and a half, Hans Scheil finishing well. What would be ideal for people to start thinking about, especially the next generation, when your family, your forebears, pass on into heaven? Well, listen, you've been thinking about estate planning since you were in your 20s, and you got married, or if you didn't get married till your 30s, whenever you got married, you bought life insurance.

Okay? And that's estate planning. It's as if I die, you know, all my stuff's going to get distributed, but when you were young, you didn't have any stuff.

So, you know, it was a very necessary thing. So, now, people don't usually call it estate planning, but that's what it is. And so, I want to answer your question. You know, I started really doing my serious estate planning in my 50s. I mean, I did some light estate planning before that, but I really, my wife and I, we started, because by the 50s, we had some pretty much accumulated, and then our kids are becoming adults.

And you start seeing the future, and you start seeing legacy, and all that kind of thing. And, you know, for us, most of it is just passing on to the kids. And then our parents died while we were in our 50s.

And so, we received estate money, and really, the stewardship with that. So, the 50s is an answer to your question. But frankly, most people don't do that. And we talk to most of our customers in the 60s. I mean, people come to us when they're in their 60s.

And, you know, a lot of our marketing is directed that way, so that we bring them in. And what we draw them in with is Social Security decisions, and Medicare, those first two worries, and long-term care. Now, you should be looking at all three of these in your 50s. But most people don't. And a lot of people wait for Medicare to start studying until they're 64 and 10 months, or whatever, they're two months away. But that's fine.

And you're still ahead of most people. And then we're going to do a financial plan for you, or we're going to suggest it. And we're going to go over all seven of these things.

And these are pretty all-inclusive. I mean, if you go through these seven things, and, you know, and make good decisions, forward-looking decisions on all seven of these things, or issues, or worries, or whatever we want to call them, you're going to be in good shape for the rest of your life, you and your spouse. Yeah. I love it. I love the legacy piece. I love hearing your show every week. And it's an honor to sit in for Robbie today, and be a part of this conversation.

Hans Scheil is the awesome host of Finishing Well. And he covers all these prongs, namely the seven big ones, Social Security, Medicare, long-term care, the IRA, 401k, retirement planning, estate planning, and income tax. We've barely scratched the surface. But think ahead and thinking as stewards. God is, you're not an owner. You are a manager. God's entrusted you with all of this.

He's the big boss. So how can I honor him in my planning? One very good step in that direction is to engage and enlist the help of someone like Hans to help you through that process. Hans, what's the best way for folks to get in touch with you? I'd love for you to give a shout out for your website, and especially for folks to get your book and your awesome workbook that goes along with the book. Can you share that very important information with our listeners?

I mean, you go to cardinalguide.com. You're going to find all of this stuff and a way to it. You're also going to find access to my YouTube channel, which is Cardinal Advisors, and that's O-R-S. And on YouTube, we have videos of all this stuff, like 150 of them, which is pretty cool.

And they've gone viral. If you really want to get a hold of me, just call me at 919-535-8261, and you probably won't get me first, but you'll get one of my assistants, and they'll get you set up to talk to me. Maybe I'll be available, but I'll certainly call you back. And you also, I get a lot of emails from people at hauntsatcardinalguide.com. I just get a lot of emails. People ask me questions. They ask me how to get a hold of me. So, I'm pretty easy to find. You just Google Hans Schile or Cardinal Advisors or Cardinal Guide just in a Google search.

I'm a pretty easy guy to find. Fantastic. Well, it's been an honor to be in here with you and to sit in the seat that Robbie usually occupies, and he'll be back, Lord willing, next time as he's recovering from COVID.

Grateful for everyone for their prayers for him. Hans, what a treat. Guys, give Hans a call. Connect on the phone, 919-535-8261. The website's real easy, cardinalguide.com.

Email Hans at cardinalguide.com. What a great partner on the Truth Network. What a great friend. And Hans, it's an honor to talk to you firsthand, and thank you for putting up with you today, my friend.

No putting up about it. Thank you very much. I'm honored to be working with you. And thanks everyone for listening to Finishing Well.

Stay tuned next time right here for more Finishing Well with Hans Schile. Finishing Well is a general discussion and education of the issues facing retirees. CardinalGuide.com, Cardinal Advisors, and Hans Schile CFP sell insurance.

This show does not offer investment products or investment advice. We hope you enjoyed Finishing Well, brought to you by cardinalguide.com. Visit cardinalguide.com for free downloads of this show or previous shows on topics such as social security, Medicare, IRAs, long-term care, life insurance, investments, and taxes, as well as Hans' best-selling book, The Complete Cardinal Guide to Planning for and Living in Retirement, and The Workbook. Once again, for dozens of free resources, past shows, or to get Hans' book, go to cardinalguide.com. If you have a question, comment, or suggestion for future shows, click on the Finishing Well radio show on the website and send us a word. Once again, that's cardinalguide.com. CardinalGuide.com. This is the Truth Network.