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Financial Heart Check

MoneyWise / Rob West and Steve Moore
The Truth Network Radio
February 19, 2024 5:10 pm

Financial Heart Check

MoneyWise / Rob West and Steve Moore

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February 19, 2024 5:10 pm

You might look like you’re doing fine on the outside, but how’s your heart these days?  Perhaps it’s time for some introspection and some reassurance from God’s Word. On tpoday's Faith & Finance Live, host Rob West will talk about how we can do a financial heart check to make sure we’re living with the right attitudes when it comes to money and possessions. Then he’ll answer some calls and various financial questions. 

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The following program was prerecorded, so our phone lines are not open. First Samuel 16, 7 tells us that the Lord sees not as man sees. Man looks on the outward appearance, but the Lord looks on the heart.

Hi, I'm Rob West. You might look like you're doing fine on the outside, but how's your heart these days? Perhaps it's time for a heart check and some reassurance from God's Word.

And we have some great calls lined up, but we won't be taking your live calls today because we're prerecorded. This is Faith and Finance Live, biblical wisdom for your financial journey. Well when you were a child, I'm sure your parents had to help you with an attitude adjustment from time to time. Now as an adult, you're not under the discipline of your mom and dad, but you still may need the occasional attitude check, especially in the area of finances.

Here's what I mean. The Bible makes it clear that there are wrong attitudes and right attitudes when it comes to money and possessions. Your financial attitudes and actions are an outward indication of what's going on in your heart, your spiritual health. Jesus explains the problem to his disciples in Luke 7, 21-23, for it is from within, out of a person's heart, that evil thoughts come, sexual immorality, theft, murder, adultery, greed, malice, deceit, lewdness, envy, slander, arrogance, and folly. All these evils come from inside and defile a person.

Well, that's a pretty comprehensive list of evil. And what it tells us is that wrong attitudes about money also come from the heart. That includes things like greed, a selfish desire for more than you need, and envy, which is resentment about someone else having what you want.

Other serious heart issues spring from the sin of pride, where you consider yourself better than others because of what you have. Dishonesty, fear, and even bitterness are other money attitudes the Bible warns against. Satan tempts us into these attitudes to draw us away from God. If you're a Christian, choosing to give in to these sins makes you ineffective for God's kingdom.

But if you do struggle with attitudes of envy or pride, you're in good company. Even the Apostle Paul faced temptations like these. Here's what Paul wrote in Romans 7, 21-24.

Well then Paul solves the dilemma we all face. We've talked about the wrong attitudes about money and how they lead us astray. Right attitudes about money have the opposite effect. These include commitment to serving Christ, faithful stewardship, gratitude, and even a desire for wisdom. I could also add a long list of biblical virtues, including love, generosity, humility, and kindness, among others. Financial teacher Larry Burkett used to say these are spiritual values reflected through your finances because having the right heart attitude about money honors God.

Living with these virtues makes your financial life work better because you're putting God first and trusting Him to provide instead of leaning on your own understanding. Righteousness isn't a guarantee that things will be easy, or even that you'll experience material prosperity in this life. But what you'll have is peace and the opportunity to follow and serve Jesus. In John 10, 9, Jesus promised, I am the gate. Whoever enters through me will be saved.

They will come in and go out and find pasture. Psalm 37 also promises a hopeful future for those who choose righteousness in Christ over sin. Refrain from anger and turn from wrath.

Do not fret. It only leads to evil. For those who are evil will be destroyed, but those who hope in the Lord will inherit the land. And finally, Romans 8 10 emphasizes the key to living with godly attitudes.

But if Christ is in you, then even though your body is subject to death because of sin, the Spirit gives you life because of righteousness. So is it time for a financial attitude check? Remember, how much money you have doesn't really matter. It's your attitude about money and possessions that's important. Attitudes of pride, selfishness, greed, envy, and dishonesty are sin, leading to bad consequences, including fear, despair, frustration, and defeat. On the other hand, when you follow Christ, confessing your sins and pursuing godly heart attitudes, you will experience a closer walk with the Lord and the blessings of peace and hope.

If you're not sure how to change your attitudes, ask God for help. We can also help you here. Just visit our Faith By community at This is Faith and Finance Live, and even though we're not here today and can't take your live calls, there's much more ahead on the program, so please stay tuned. We're Faith and Finance Live, and we talk about our telephone number often because we usually are live, but today the program is prerecorded, so if you hear a mention of the phone number, please don't call us, but you can find us online at

Hey, before we head to the phones, here's a question. Can you handle an unexpected financial emergency of $1,000? A new survey from Bankrate shows that only 44% of Americans could meet that financial hurdle without borrowing, and even though that's a one-point improvement over last year's survey results, a majority of respondents still would go into debt to meet that crisis, and two-thirds of the 1,000 people surveyed said they'd worry about covering monthly expenses regularly if the primary breadwinner was laid off. Now, why aren't folks saving more?

Well, 63% blamed high inflation for their inability to put money in the bank. Here's what Bankrate is recommending, a three-step process to prepare for a financial crisis. First, calculate how much emergency savings you need. We often say here on this program, three to six months expenses is ideal, so that would mean knowing what you're spending on a monthly basis.

Now, here's the reality. So often, we don't know what we're spending, so maybe that's the starting point is you need to really dial into that. By the way, the FaithFi app can help with that as you connect to your bank and credit cards, download all your transactions, and then you can organize them, get a feel for what you're actually spending over a month's time.

The Track Only option, which is one of three approaches you can take, will just help you get it all in the system so you can see where it's going. That's going to be really important because, again, that goal for emergency savings, three to six times your expenses, not your income, your expenses. Alright, second, open an account specifically for emergency use. I recommend a separate savings account, an online bank savings account, linked it to your checking.

Why? Well, you're going to get a better interest rate there. You might get next to nothing in your brick and mortar bank.

With an online bank right now, you can get 4.6, even as high as 5% for high yield savings with FDIC insurance. Why not take advantage of that? Especially if you've got a near fully funded or a fully funded emergency fund, you could earn several hundred dollars or more in interest over a year's time. And then, thirdly, budget so you can start building up that emergency fund.

What does that mean? Well, the only way we can accomplish our goals is to live on less than we earn. That margin is essential to giving more, being able to save for your emergency fund or pay down debt. So, once we know what we're spending, we have that savings account in place, then we want to budget so we've got the margin and put that aside.

Now, here's the reality. Automating that savings into that savings account is really going to be key. That's going to allow you just to have it automatically come out.

You don't see it. You plan for it in the budget and it's gone right into that savings account and you'll be surprised. You'll build it up in no time.

So, hopefully that's helpful to you. Despite this discouraging report from Bankrate, you can get, well, don't be one of those statistics. Let's make sure we can cover the unexpected. All right, we're going to dive into some phone calls today. Let's begin in Tennessee.

Jackson is the city and Annette is the caller. Go right ahead. Yes, I retired October 1st. I have long-term partners, which when I work, the government paid part of it, but now since I retired, it would cost me $329.88.

I get $2900 a month in retirement and I don't have much savings. Is it worth keeping long-term? Yeah. What is the coverage, Annette? Are you familiar with what it would pay out and under what situation?

No, honestly, I'm not. I've had it for years, so I'm not sure. But do you think it's life insurance or do you think it's long-term care insurance?

It's long-term care, federal long-term care insurance. Okay, yeah. I think the key is, I mean, that's a pretty reasonable amount. I think the key is, number one, can you fit it in your budget? I realize things are tight and so you need to understand what is it going to provide for you.

Now, here's the reality. 70% of Americans will need long-term care for some period of time. On average, it's somewhere between 18 months and three years and it can be very expensive. I mean, if there's going to be something that erodes your assets in this season of life, it will most often be the need for long-term care. It could run you $5,000 a month for some in-home care or assisted living will continue to push it up. Full nursing care could run you $10,000 a month.

I mean, it can be very expensive. Now, if you deplete your assets, then you'd go into a Medicaid facility and get coverage that way. But if this policy could step in and provide you the coverage that you need to be able to provide the long-term care that is going to be essential for you, if that time comes, then it's worth it.

Again, if you can afford it. Now, what I would probably do in that is just have somebody look at this policy for you and understand what it is you're buying. Usually, under all of it, the starting point is what they call a daily benefit. So if you can't perform a certain number of what they call activities of daily living, bathing and transferring and several others, when you can't do a certain number of those, then these trigger and they start paying out after a waiting period. So you want to know how long is that waiting period. And then second, you're going to want to know what is that daily benefit. Maybe it's $150 a day that it pays out that you could use to cover long-term care expenses.

But you're going to want to know, number one, what is the waiting period? Number two, what is the daily benefit that it's going to pay you? Number three, is there any kind of inflation protection? So as the cost of health care rises, does the daily benefit that this policy will pay out rise with the rising cost of health care?

That's important to know. If not, this is you're losing purchasing power on the benefit every day because of inflation. And so I think these are some of the things you want to know and having a neutral third party, somebody who can analyze this policy for you and just make sure that it's going to give you what you need because that's a major expense. And as you said, you've got limited resources, so perhaps you can make this work in your budget, but you're going to want to know if you do that, you know, that it's ultimately going to pay what it is that you need. So what I would do just in conclusion here, and then I'll get your thoughts, is I'd reach out to a certified kingdom advisor there in Tennessee.

You can do that on our website,,, just click find a CKA and see if you can find one that specializes in insurance, specifically long-term care insurance who can analyze this policy for you and just let you know if you're getting, you know, a good deal with regard to the benefits that it will pay out. Does that make sense? Yes, it does. Okay, very good. And I will do that. Awesome. But I do think at the end of the day, I like the idea of you hanging on to this. You know, when you get over 65, these policies tend to get very expensive, so if it's one you've had for a while, it's probably more reasonable. Hopefully you'll find that it gives you competitive benefits, and if so, I think this is absolutely worth keeping to be able to cover this need should it arise down the road. May the Lord bless you, Annette.

Thanks for calling. Before we head to our break, you know, as I read Scripture, I see this big idea jumping off the page around contentment. You know, I think as we consider our role as stewards of God's money, we need to foster this attitude that the apostle Paul talked about, and that is contentment. Remember, he said that it's learned. I've learned to be content. He was in a time of plenty and in a time of need, and he learned to be content in either of those.

Contentment's a choice, and when we increase our contentment, well, then we can focus on what God has given us and not on what he's given others. I hope that's an encouragement to you today. Again, we're not here today. We're away from the studio, so don't call in, but just around the corner, we have some more questions to tackle. I know you're going to enjoy the calls we have coming up. Stay with us. We'll be right back. So glad to have you with us today on Faith and Finance Live.

Our team is away today, so don't call in, but we lined up some great questions in advance, and we'll be going to those here in just a moment. Let me also remind you that the advice that I give each day on this program is general in nature. We offer principles and ideas that apply at a high level. They are not personalized, so that's why you should always seek professional financial advice. And if you'd like to find a professional who shares your values, we of course here at Faith and Finance Live recommend the Certified Kingdom Advisor designation. These are men and women who've met high standards, and they've been trained to bring a biblical worldview of financial decision-making.

You can find one at Let's get back to the phones. We'll go to Texas. Denise, you'll be next on the program. Go ahead. Hi. I had spoke to you a couple months ago about a home that I had inherited from my family, and what my concern is is the taxes that I'm going to own it because I sold it a couple of months ago, and you had said since my husband and I didn't make more than $80,000 a year that we would not owe taxes on it, but yet my accountant told me that since it had been used as a VRBO for the last seven years that we would be paying about $45,000.

So I just need your take. Yeah. I mean, I would check back in with him, so the capital gains on a rental property or an investment property is subject to the long-term capital gains tax. Have you been paying taxes on the VRBO income you've been receiving? Is that the issue? Well, I don't know if that's the issue. I mean, I have been including that in my taxes every year, of course, but I haven't made very much money from the VRBO at all.

Yeah. So you sold it for how much over the market value as of the date that you inherited it? Do you know how much profit you have in it? Yes, I think the market value, and I inherited it back in 2015, was around $160,000, and it sold for $465,000, and the market value on it when I sold it was around $410,000, I think.

Yeah, very good. Well, I would certainly rely on the CPA's guidance here. You should have gotten the stepped-up basis to the current market value, and then typically with the long-term capital gains rates, if you make, for instance, this year, married filing jointly income less than $89,000, you don't owe any capital gains tax at all, but maybe there's some depreciation or something else that came in to bear here, just given how you use this property. So I would just circle back and just make sure you understand exactly what it is you're paying and why, given that you had the stepped-up basis, given that your income is less than $89,000, and that you've owned this for more than a year, and find out where that additional tax that he's telling you you have is coming from, whether it's from the income that you received or whether it's truly part of the capital gains, because that would be confusing to me if that's what it was, just given what you're describing.

Well, the whole thing is very confusing to me, so I just appreciate what you have to say about it. Is this somebody you've worked with for a while who's been working on your taxes and so forth? Yeah, so I think just maybe getting further explanation, there's obviously always more to the details that we can get into here in just a couple of minutes on the radio, so I'd probably go back and just say I'm confused as to why you're telling me there's a capital gains tax, just given my situation and have her explain if that's in fact what it is or whether that tax is coming from somewhere else.

At the end of the day, she's the tax professional, so you need to trust her counselor, get a second opinion, but I would certainly get further explanation, and Denise, once you find out kind of where this is coming from, I'd love for you to circle back and let us know what she's saying. That would be helpful to me. Thanks for checking in with us, Denise. We appreciate you listening and calling today. May the Lord bless you. Let's go to Texas.

Actually, we'll stay in Texas. Kathy, go ahead. Hi. This is my first time to call, and I was listening to you talk to that lady about long-term health care.

Yes, ma'am. And I just wanted to say my experience with my parents right now, they probably paid their long-term health care over 30 years at $600 a month, and I think it was, what, like $450,000 that they paid in, and we are struggling to get them to pay when they do. They've got to qualify. They've got to do this, you know, and it's just been really hard, and I'm, and I was, we were thinking that, you know, $600 a month, if you were to put that back in savings for 30 years, they could have paid the long-term health care of their self and still had money left over. Yeah, yeah. What do you, I mean, that's kind of my experience. I, you know, it makes me not want to get it.

Yeah, no, I totally get that, and I would be, you know, the first question would just be why so much? You know, when, what age did they get it? Why was that, the policy premium so high? I don't know. My dad would not talk to us about finances whatsoever. I know they had it a long time, and then before they needed it, he decided he couldn't afford it, and he was going to stop it, and they talked him into just cutting it in half because it was unlimited, and they cut it down to three years or two years in assisted living and then three years for a nursing home or something like that, but we just struggle with them doing anything, and I'm just like, why would anybody pay for this to go through this, and then you have to struggle to get them to pay? Yeah, yeah.

No, I certainly understand that, and I think there's a couple of questions here. Number one is, and you don't need to tell me the company, but you certainly would want to read reviews on the company, make sure they're not all created equal in terms of these insurance companies. It's kind of like your health insurance or your car insurance. You need to know who you're working with and make sure that it's not only a reputable company, but one that's going to be easy to work with. Number two is that premium.

You know, the average cost is for a female age 60 for 165,000 in coverage would be about 2,500 a year, 1,900 a year if you needed without inflation protection. So obviously they were spending a lot of money, and the question is for what benefit and what company, and I think you've got to know the answer to all of those. Let's talk a bit more off the air. Hey folks, we're going to pause now for a brief break, but we'll be back with much more on today's Faith and Finance Live. This is Faith and Finance Live with Rob West. Hey, if you hear a phone number mentioned today, please ignore that number and don't call us because today's broadcast was previously recorded, but we think the upcoming information will help you and make you a wise steward of what God's given you.

So please stay tuned. Hey, a couple of quick tips on long-term care insurance. As Kathy mentioned, you know, not all of these policies are created equal. I think one of the keys is it's got to fit into your budget. You know, if you can't sustain it for the long term, you're ultimately going to drop it. It's of no value to you. So you've got to be able to pay for it and cover the increases, which can't happen on individual policies, but it can happen in the aggregate and they do have premium increases.

So you need to be able to absorb that. I'd work with an independent agent. I would say somebody who really specializes in long-term care to know what's the right policy for you that you can afford.

It may not be the one that can cover everything, but at least it's going to provide some benefit to shoulder some of that load of the cost of long-term care, which as we've said is very expensive, but you're also going to want that independent agent specializing in long-term care to know which company is going to be the best one for you to go with. Ultimately, you've got to plan realistically. And I would say think simple other than what you might consider a souped up policy that has a lot of bells and whistles. Now, I like the idea of an inflation rider, but you don't need a lot of extras that drive up the cost. The key is get a basic policy with some inflation protection that's going to give you the coverage you need to help offset this major expense in this season of life.

But with anything, especially with something that has a price tag like long-term care insurance, we've got to do our homework. We've got to shop around and wise counsel is really key. All right, let's head back to the phones and let's go to Indiana. Hi, Joe. Go ahead. Hi, Rob. Thank you for taking my call.

Sure. I am. I retired in November 2022.

I'm 64 years old and I am trying to avoid taking social security. I am basically spending down my cash on hand, what you would call my emergency funds. Yes, sir. Spending it down and then replenishing it each year to have cash on hand by taking a distribution.

What do you think of that plan? Yeah. So you're spending down your cash on hand at what rate? How much are you pulling out of your cash?

I'm pulling about 30,000. Okay. Yeah. All right. And what's the balance on that account?

Okay. And that's all just in savings or is that invested? Invested.

It's invested. Okay. And is that a taxable account or like an IRA? IRA. Okay.

Very good. And then do you also have just some liquid savings that you can rely on or is a hundred percent of it in the, in the IRA? Well, because I spent it down last year and then I replenished it by taking a distribution this year to have 30,000 on hand. I got it. Yep. Yeah.

So every year you pull the 30 to replenish your spending account and then by the end of the year it's down to zero and then you pull another distribution, correct? Yes. Okay. Yeah.

Very good. And the goal here is to get to preferably, you know, full retirement age. And then at that point, how much would you be bringing in in social security?

About 3,100. Okay. Yeah. So that would about cover it. So at that point you could really no longer take any distributions apart from your required minimums, right? Exactly.

And that'd be at 66 and 10 months. Yeah. Got it. Okay. Yeah.

I like that plan a lot, Joe, and here's why. I mean, you're pulling a little bit more than I would generally recommend. I'd like to keep that number around where you're pulling 5% a year, but that's fine because the reality is, you know, if your investments are doing well, you're properly diversified, you should be probably making up, you know, most of that. And I realize this rally that we saw at the end of last year and that's continued somewhat into this year has still been fairly narrow.

Small cap stocks are still 20% off their highs. So you may be down, you know, over a one year period or not, but the bottom line is you're not pulling an inordinate amount. And we're really only talking about you continuing to do that for another two and a half years or so. Uh, and at that point that money's then just going to be free to continue to grow. I like the idea that you're doing that so that you don't have to take social security early because that 8% a year increase that's guaranteed, you're certainly not going to get that in the market and then you're locking in that higher payout on your social security benefits for the rest of your life. In fact, if your portfolio is doing well, you may want to continue to ride that out to age 70 because then you'll, you know, get an additional 8% per year for every year you wait over full retirement age. But I think the bottom line is you're doing great on this. Once you hit age 70, I would look at the qualified charitable distribution as a way to satisfy your required minimum.

When that comes by that time, it'll be 75. But that would allow you to do some giving without adding any taxable income through additional distributions. But I think in the meantime, this is a great plan that you've got here. Okay, speaking of giving, I am also taking a distribution.

I'm below the minimum distribution age, but I'm taking a distribution for my giving. Great. Okay. Yeah. So that's on top of the 30,000? Yeah.

Yeah. And then you're just paying tax on that. And then are you given enough a way to itemize that or are you just taking the standard deduction?

Oh, the charitable is to the church. So it's, I'm not paying tax on that portion. Okay. Well, you have to itemize though, because you can't do the qualified distribution until you're 70 and a half.

Okay. I was under the understanding that I could take a distribution direct. It's not a distribution to me, it goes directly to the church. Yeah, but that, so the only way to get money out of an IRA is through a qualified charitable distribution. And the minimum age for a QCD is 70 and a half. So that's still going to be considered a distribution because the qualified charitable distribution is not eligible until you reach 70 and a half.

So you probably want to check with your CPA on that. How long have you been doing that? I only did it last year. So, you know, I did not realize that. I thought that, and we're probably not going to itemize, so. Yeah. Okay.

Yeah. So just make sure that that's treated properly. They're probably going to need to, well, your CPA is just going to need to know that. Do you normally file your own taxes or do you have somebody help you with that? File my own. Okay.

Yeah. I would get with a CPA this year on that just and say, listen, we took this qualified charitable. I understand I'm not eligible to do that.

How do I unwind that so I don't get hit with penalties and interest and that kind of thing? But it's not going to be a big deal. Don't stress about that, Joe, that that will be, you can work that out, but actually that really is not available to you at this point. But other than that, this plan sounds great. You guys are doing awesome. I love the idea that you're waiting on the social security.

You're taking a great amount out from the account that should be sustainable. And I think you're right on track here. Thanks for calling in. Call anytime, Joe, with further questions. May the Lord bless you, sir. Well, folks, before we head to this break, let me remind you, if you haven't checked out, that's, I'd love for you to do that. You'll find the best content in biblical finance there for you to grow in your understanding of managing money God's way. You'll find our community and the money management system.

It's all there at Now, again, a reminder, we're not here today, but more of your questions that we lined up after the break. I'm Rob West and this is Faith and Finance Live, biblical wisdom for your financial journey, helping you apply God's wisdom to the practical decisions you're making today. We'll be right back. Delighted to have you with us today on Faith and Finance Live. We're not here today.

Our team is away from the studio. This is prerecorded, so don't call in, but we've got some great questions we lined up in advance. Before we go to the phones, let me remind you, Faith Fi and Faith and Finance Live is listener supported. If you'd like to be a financial partner, you can do that at Just click give.

Thanks in advance. Let's go right back to the phones. Back to Texas. Hi, Deborah.

How can we help? I have a question about something I've been thinking about because I'm kind of a conspiracy theorist and I think everything's going to crash. And I wanted to know what would my tax liability be if I paid off my son's house, not buy it from him for what it's worth, but just paid off the balance that he owes out of my investments at Edward Jones. I've not spoken to my Edward Jones guy because he will have hysterics if I tell him I want to take out like $150,000.

And I haven't mentioned it to my son either because I don't want to get his hopes up that I might do it and then I couldn't. So I'm the first to know about this plan, Deborah. Is that what you're telling me? That's what I'm telling you. Okay, I got it.

All right. So tell me what you're trying to accomplish. I understand you said you'd take money out of your, I guess it's an IRA and use it to pay off your son's home, not buy it from him. So that would be a gift.

What, what are you trying to accomplish? Well, I just don't want if the economy crashes, which my Edward Jones guys assures me that I will survive, but I don't, Oh, I don't believe them. I tell him all the time, I'm not going to keep this money there. Somebody who's going to take it. And my goal is to let my son own his home so that it cannot be repossessed or you know, his loan called in.

And then by that time we've, the economy has crashed and nobody has any money. I guess I'm just trying to be proactive. And then I would let him pay me rent. I mean, it wouldn't be letting him off the hook, like whatever he's paying for his house. Nope.

He could just pay that money to me, you know, to replenish what I've taken out. Yeah. Yeah. All right.

Yeah. I'm not a big fan of this just primarily because of number one, the tax implications and number two, just kind of the rationale behind it. And I'm not minimizing in any way the concerns you have about, you know, the future. What I would say is that God controls the future. Our trust needs to remain in him.

He is our provider, not the US government or your employer, anyone or anything else. And so I think we need to remember that Jesus has overcome the world. Now we will have trial and tribulation in this world. We live in a fallen world. We're waiting for Jesus to return to call us up and we'll live in a new heaven and a new earth at that point if we surrender our lives to him. In the meantime, I think we don't need to live and play out the what-if game because that leads down the road to fear, which ultimately I think is one of Satan's weapons that he uses to distract us. Now, doesn't mean we bury our heads in the sand either, so don't get me wrong, but I don't think we need to live in fear.

I think we need to live with faith and live in the reality of the abundance that God has provided to us. Now, if we get into the details of what you're describing here, essentially what you would have to do is you'd take a distribution from this tax-deferred account, which would mean now all of a sudden you'd have $150,000 in taxable income on top of whatever other income you earned for that year, so your tax bill is going to go through the roof. If you're not 59 and a half, you'd have a penalty on top of that.

If you are, you wouldn't. And then you'd have to essentially make a gift to your son to pay off the mortgage, and then essentially you could then have a—or you could loan him the money with a promissory note, and that would need to be in writing, and you'd have to spell out according to the IRS the terms of it, what is the payment, what interest rate are you charging him, and if it's below market interest rates, then that's considered a gift. You're going to have to report that to the IRS. He could take that loan, pay off his current mortgage, and now he's in debt to you, and you would have—what you really should do would be you'd file that lien against the property, and you're now holding that note, and then he has a scheduled repayment, except he's not making a repayment every month to the bank.

He's making it to the Bank of Deborah, and he would be paying you back every month. So it does get a little complicated. Is it possible? Yes. Is it smart from a tax standpoint?

No. And then I would say with regard to the economy collapsing, if that's really the justification for it, I would caution you against that. Again, not to minimize what you're thinking, but just to say, yes, we have some problems in this country. We have rising debt levels. We've got some demographics problems. We're not having enough babies, and there's several issues that are big that we need to address, and yet we're still the biggest and strongest economy in the world. What's happening here in America with regard to commerce and business and technology and all of the things? We're not going away anytime soon unless the Lord wants us to.

And if the economy were to collapse—let's play out your scenario—the banking system collapses, the dollar's worthless, does it really matter anyway whether or not you've paid off this house or not? Probably not. So let's just assume it's not going to collapse. We're going to do fine. We're going to make some changes and deal with the issues that we have. We're going to enjoy the prosperity that we have, which is God's hand of blessing on us, I think, because we were founded on biblical principles, even though I think in many ways we've gotten away from that.

So I guess at the end of the day, I'm probably going to take the position that your advisor will take if he finds out, or she, and that is to say, I don't think this sounds like a great idea from my perspective. Does that make sense, though? It does. But let me ask you this. If I took the money out of an investment account and then paid off a loan—or the way I'm looking at it is not really paying off a loan, but if I buy his house only for what he owes on it, isn't that like another investment taken out from an investment to do another investment for tax purposes? I see what you're saying.

So let me help you with that. Is the money in an IRA, an individual retirement account? Well, I've got, at Edward Jones, I've got money in an IRA, and then I've got like another seven or eight hundred thousand dollars in just, I guess, investments for, you know, in the stock market and— Okay, but what type of account is that seven hundred to eight hundred thousand? Is it in what's called a taxable account? You know, I'm not sure because I'm calling you off the cuff because I was on my way to the store and I heard it, so I can't really tell you what type of accounts these are in because I was just— Yeah, so if it's a taxable account, you could buy his property from him. Now you're the owner and then you could charge him rent to live in it. If you want to just pay off his mortgage, you don't want to become the owner, then you need to make a gift to him. Now, if you were wanting to do that through an IRA, you would want to buy his property outright.

The only way to do that is something called a self-directed IRA where you can take IRA money and buy a piece of property, but it's going to get complicated because this is not an arm's length transaction because it's a family member. So you're going to have to work with your advisor and your CPA to figure out how to structure this. At the end of the day though, Deborah, I just don't think it's worth the hassle of what you're trying to do. I mean, at any point, you could make a gift to him if things started to look to get ugly in this country. And again, I'm not predicting that's going to happen. I think any kind of debt crisis or major economic event in this country I think is still decades down the road. And Lord willing, that never comes because we make some course corrections on some of our spending and debt levels and a few other issues. But even if we don't, I still think it's way down the road.

And so the fact that you would prematurely make all of these significant moves that all have tax implications and make things very complicated, not to mention the fact that now you're in a lender-slave relationship with your son because now he's paying you back every month, which is just, I think, generally not a good idea. This is not something I would be excited about. Yeah. Okay. All right.

You know, that makes sense. So I will just let it go. Forget about it. All right. Well, you're welcome. I'm glad I was the first one you checked in with. I'm happy to be your sounding board at any point in the future, Deborah. So don't hesitate to give us a call back. May the Lord bless you. Let's actually, we're staying in Texas. This is the Texas show.

Hi, Chris, go ahead. I'm calling in with a couple of questions about how a 401ks and IRAs are treated in the estate probate process and then taxation to my heirs. The basic background, I'm retired. My wife's retired. I had two 401ks from previous employers. I kept one of the 401ks still have it because the administrative fees were very low and I'd like their investment options. And then I took the other 401k, wrote it over into a self-directed IRA.

And that's where we're at right now. My wife and I have mutual wills where if one of us dies, everything goes to the surviving spouse. And my question is, if I die first and everything passes to my wife, uh, what are the tax implications on how those that 401k and IRA will be handled through the probate process. And then after she receives them, uh, what are the tax implications to her? How much, how fast does she have to take money out or can she follow the same minimum required distribution schedule that I am, which was basically taking it out over 25 years, uh, according to the IRS, uh, guidelines. And then what happens if when she dies, it's going to my daughter as our sole heir, what are the tax implications for her? Same question. How fast does she have to take withdrawals?

Yeah. Well, bottom line is you'd name beneficiaries on the IRAs and 401ks. So they pass outside of probate. So that's very efficient with regard to the withdrawal schedule, uh, unless there's a required minimum surviving spouses can just treat it as their own. And so she'd be able to take it out, uh, you know, just based on her normal withdrawal schedule and subject to required minimums, uh, which everybody has. And then a non spousal IRA is generally taken out over a 10 year period, but you're going to want to check with your CPA on that.

But all of those distributions are taxable for your wife and your daughter. They're just treated differently with regard to the schedule. I hope that helps Chris. Thanks for calling.

Unfortunately, I'm out of time. Well, that's going to do it for us today. Faith and finance live is a partnership between Moody radio and faith five. Thank you to my amazing broadcast team. I couldn't do this without them. I hope you have a great rest of your day and we'll see you next time on faith and finance live.
Whisper: medium.en / 2024-02-19 19:14:12 / 2024-02-19 19:31:04 / 17

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