This episode of the Faith and Finance podcast is brought to you in part by Christian Credit Counselors. If credit card debt is weighing on your heart and you're unsure where to begin, our trusted partner, Christian Credit Counselors, is here to help. Their debt management program can help you pay off your credit card debt up to 80% faster while ensuring you honor your financial commitments in full. Take the first step toward financial freedom today. Visit ChristianCreditCounselors.org or call 800-557-1985.
Have you ever wondered what happens to your debts when you're gone? Hi, I'm Rob West. The truth is, those obligations don't always disappear, and without a plan, your family could be left to untangle a painful financial mess. Today we'll look at how debt is handled after death and the simple steps you can take now to protect the people you love. And then it's on to your calls at 800-525-7000.
That's 800-525-7000. This is Faith in Finance, biblical wisdom for your financial journey. Losing someone you love is hard enough. Add the stress of creditors, paperwork, and unanswered questions, and it can become overwhelming. That's why it's so important to understand what happens to debt.
after death. And how a little planning today can spare your family unnecessary heartache and confusion tomorrow.
Now, of course, debts won't matter to you personally at that point, but they could matter a great deal to those you leave behind. Many people assume debts simply vanish. While that's true in some cases, most of the time, the reality is more complicated, and families can spend months sorting through paperwork and hard decisions if they're not prepared. Creating a clear plan now, one that includes organized records, updated beneficiaries, and a will or trust, can make all the difference. Take student loans, for example.
Federal loans, including plus loans parents take out for their kids, are discharged if the borrower dies. But private student loans often follow different rules.
Some lenders will forgive the debt, others seek repayment from the estate or a cosigner. If you're thinking about cosigning, make sure you understand what would happen if life takes an unexpected turn. Medical debt can also be tricky.
Some providers will write off smaller balances, but there's no requirement for them to do so. And in an age of rising healthcare costs, those balances can be significant. Without a plan, creditors can quickly drain assets your family may be counting on. Loved ones may even need to sell property to settle final bills. Most debts don't just disappear.
They'll either be covered by your estate or, in some cases, transferred to others. To understand how, it helps to know the two main types of debt: secured and unsecured. Secured debts are tied to an asset, such as a home or car. If you pass away with a mortgage, the heir who inherits the property also inherits the payments. The same is true for a car loan.
If your loved ones are unable to make the payments, the lender may foreclose or repossess the property. That can be devastating when a family is already grieving. Unsecured debts, such as credit cards, are different. Unless someone is a joint account holder, they won't inherit that debt. Authorized users, for instance, aren't responsible.
Instead, those debts are usually paid from your estate. Creditors by law get paid before heirs or charities. That's why some families are surprised to learn an unexpected inheritance is smaller or gone after debts are settled. There's good news.
Some assets are protected. Life insurance proceeds and retirement accounts with named beneficiaries bypass your estate entirely and go directly to your loved ones. Creditors can't touch them. But this only works if your beneficiary designations are accurate and up to date. An outdated form can unintentionally exclude a spouse or child, creating a financial and relational mess.
In community property states, Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. Marital assets and often marital debts are jointly owned. A surviving spouse could be held responsible for obligations they didn't directly take on. And let's circle back to co-signed loans. Whether it's a child's car loan or a friend's personal loan, co-signing makes you equally responsible.
If either party dies, the other remains on the hook. Many well-meaning parents and grandparents have been blindsided by this reality. Because the rules can vary so much, it's wise to meet with an estate attorney and review your situation. A one time consultation could save your loved ones months of confusion and heartache later. Of course, the best safeguard is to carry as little debt as possible.
Living with financial margin not only provides flexibility today, but also leaves a simpler, cleaner estate tomorrow. And along the way, you'll model something far more valuable than any inheritance: a life of faithful stewardship.
So review your accounts, update your beneficiaries, pay down debt, and meet with a professional if needed. All right, your calls are next. That number? 800-525-7000. That's 800-525-7000.
Or if you'd prefer to email your question, send it to us at askrob at faithfield.com. I'm Rob West, a quick break and back with much more after this. Stick around. FaithPhi is grateful for support from One Ascent. One Ascent believes that your values inspire why you invest and how they can inspire how you invest.
OneAcent's goal is to provide solutions designed for every need and invest in businesses that bless the people and places God has made. They want to help investors do well by doing good. To explore a new way of investing that aligns with your values. More information is available at onascent.com and by clicking analyze my investments. Are you feeling overwhelmed by credit card debt?
As followers of Christ, we are called to be good stewards of what God has given us. That's why our trusted partner, Christian Credit Counselors, is here to help. Their debt management program can help you pay off your debt 80% faster while honoring your commitments in full. Take the first step toward financial freedom today. Visit ChristianCreditCounselors.org or call 800-557-1985.
Great to have you with us today on Faith and Finance.
Well our lines are open. It's time for your phone calls today. Whatever's on your mind, something going on in your financial life, call right now. We've got room for you: 800-525-7,000. We can open the topics to whatever you have going on in your financial life.
Maybe it's getting out of credit card debt, perhaps it's giving wisely. Maybe you're wrestling with do I need a will or a trust, or maybe you've got an asset you're selling that's appreciated. You're wondering what tax will I owe, and could I give it away and be more strategic in how I can get money into God's kingdom? Whatever's on your mind today, including your investments, how do you navigate the volatility and the uncertainty in the markets, especially given some of what's going on in our economic backdrop with the prospect of sticky inflation, all of that kind of weighing on the markets in terms of where we might go from here? And I know that trickles down to ultimately how you're making decisions in your financial life and your investment portfolio.
So, whatever you've got today, go ahead and call right now. This is the time to get through. We'll begin taking those calls here in just a moment. That number. 800-525-7,000.
That's 800-525-7,000 with your financial questions today. Call right now. In the news today, homebuyers are backing out of deals at the fastest pace in two years, signaling that the housing market is still under stress. Experts say several factors are converging: record high home values. Borrowing costs that remain elevated.
And then, thirdly, economic uncertainty that makes buyers nervous about long-term commitments. More than 15% of pending home sales nationwide were canceled in July. That's about 58,000 transactions.
Now, that's the highest cancellation rate for any July since 2017. Cancellations were concentrated in parts of the Sun Belt. San Antonio led the country with nearly 23% of contracts falling through. Other high cancellation markets were Fort Lauderdale, where I'm from, Jacksonville, and where I am right here in Atlanta, 20%. It's not just cancellations, though.
Homes are sitting on the market longer. The typical July sale took 43 days to close. That's the slowest midsummer pace since 2015, so 10 years. Experts say these trends point to a broader shift in the market where buyers are starting to gain bargaining power. We haven't seen that in quite a while.
Still, sales remain stronger in parts of the Midwest and the Northeast where relative affordability is helping more deals reach the closing table. But Interesting signs, clearly, if you're a buyer, we are seeing that shift from a raging seller's market where sellers could basically command whatever price they wanted within reason. They were not allowing really a whole lot in the way of contingencies, you know, in these contracts. A lot of that is shifting because we've got more inventory, we've still got these higher borrowing costs as mortgage rates have been kind of stuck between six and a half and seven percent. We really haven't seen much relief there, and then just the overall cost of affordability, which is not only the debt service and the interest rate, but just these sky-high housing prices.
If you have, if you checked your uh house value on Zillow.com or one of the other free services, you might be surprised at how much your home has appreciated in the last, let's say, five years. But all of that weighing on the markets now, that's good news if you're out there looking to buy a house because that's going to give you more options. It's also going to Give you a little bit more negotiating power, which is always helpful when we're making a massive purchase like a home purchase.
So, some good news, some welcome relief for home buyers. And if you're in that situation, here's what's key, I think. First of all, make sure you use a real estate professional. Having somebody that can help you with the negotiation process, somebody who can help you work through those showings. The last thing you want is you having to manage strangers coming in and out of your home.
Having a professional who knows kind of the rules of the game, make sure that anybody who's coming is coming with another agent, or at least, you know, you've got somebody there to be there in the house while it's happening, who navigates these kinds of things all the time.
Somebody who can help you think through the marketing strategy so you get it out there in front of as many people as possible.
Somebody who can help you think through the right price point, do that initial comparable market analysis. And determine what is that right price point. Because if you're selling, we don't want to have that home sit on the market for an unnecessary period of time because you've overpriced it. At the same time, if you're buying, you want to know what's realistic in terms of what I should be offering. You know, these days, well, I I should say You know, when I was a kid and watched my mom buy and sell homes, often you would price the home high above what you expected to get, realizing that you would have to settle somewhere lower than that number.
You know, let's say you priced it at 300,000, you know, you're hoping to get 275 and they come in at 250 and you kind of negotiate into that 275,000. It has changed quite a bit. And here's my observation on kind of the strategy. You know, if you want to get, let's say, $325,000 for the home, you might price it at $299,900. Why is that?
Well, the key today is getting as many eyeballs on that property as possible. Because a lot of times, what people will do is they'll set an automated alert. To notify them of every property that hits a certain range, and so if they're willing to go up to 300,000, you know, that at 299.9, that home will hit their radar.
Now, they come see it, they fall in love with it. People are willing to pay over asking, or at least they have been for the last five to ten years, and that actually is pretty typical now. Whereas nobody would have ever thought of paying, you know, when I was a kid over the asking price, it was some number lower than that typically. But now, you know, people are very accustomed to a you know, a home listed for 325,000, 300,000, they end up paying 325. But the key is getting as many eyeballs on it as possible.
Get that foot traffic so that somebody really says, Yeah, this has the features I'm looking for, it has the location I want, and if they really want it, Often they are willing to pay a little bit more than that house was originally priced.
So, a bit of a different strategy. If you are a seller thinking about how to price your property, hopefully, that will give you some insights into thinking about getting the right price point on it so you get the most visibility. I think that's really the key. Let's dive in. We'll begin in Noblesville, Indiana.
Hi, Hank. Go ahead, sir. Yeah. I've got two kids that are in. college right now.
20 some years ago, my grandfather set up a 529 for each of them. He passed in twenty ten, and I had another daughter that was born in twenty ten. I'm curious, with the money that's left over when my two older kids graduate from college, if there's money left in their five twenty-nines, can that be applied to my younger daughters? It sure can. Yeah, what you would want to do is either do a plan-to-plan rollover to another child, or you could just do a beneficiary change.
And so, in your case, you may just want to do a beneficiary change and then you won't need to transfer any money. And it just allows another qualifying family member to use those funds, which includes brothers and sisters and a whole host of others.
So, you'll just want to get in touch with your 529 planned administrator and let them know that you want to do a beneficiary change to that other child, and you can go from there.
Okay. Then could we If that was all like combined, could I split that apart into three different accounts then again, so each child would have one for their future families? Yeah, so what you would do is you would open another account. And then you would be able at that point to transfer a portion to do a plan-to-plan rollover into another account with a different beneficiary on it. And that would be the way you'd do it if you want to split it up among other children.
All right, perfect. Thanks for your help. I appreciate it. All right, Hank. Thanks for your call today.
We appreciate you. A quick break and back with more after this. At FaithFi, we believe that money is a tool to advance God's kingdom. When you become a FaithPhy partner, you help more people discover the freedom of biblical stewardship and the joy of seeing God as their ultimate treasure. As a thank you, you'll get early access to our newest studies and devotionals, our quarterly Faithful Steward magazine, and the pro version of the FaithFi app.
Become a FaithFi partner with your gift of $35 a month or $400 a year at faith5.com/slash partner. Faith in Finance is thankful for support from The Good Investor, a book by Robin John. In his book, Robin shares his journey from an immigrant child struggling in school to co-founder and CEO of Eventide Asset Management, a faith-based investment firm. This Faith and Work memoir seeks to inspire readers to view their work and investments as opportunities to honor God and bring blessing to the world. More information is available at goodinvestor.com.
That's goodinvestor.com. Great to have you with us today on Faith and Finance.
We're taking your calls and questions today. 800-525-7000 is the number to call. Let's head to Texas. Mary, go ahead. Yes, sir.
My mother is 92 and recently suffered some health issues, so I've become her POA in handling her final. Finances. I have two. sisters One who's retired but has a lot of medical issues, and one who's self-employed and has struggled a lot since COVID.
So my mom was helping them out. on an as needed basis with their bills. To make things I feel easier. I was going to set up an automatic. payment for them each month.
of $1,500, which would keep it at the $19,000 gift. From my mom's account. Yes.
Okay. I am retired. I don't necessarily need the money, but I could use that money to help with my grandchildren's college. Expenses.
So do you think that's ethical if I also take that gift? Yeah. And so what is your mom what did she say with regard to her intention? Did she instruct you prior to all this to continue the payments to your sisters?
Well She just has always said that she wants, yes, me to help them out. uh when they when they were needed.
Okay. Yeah. And have you talked to them about the $1,500 a month? Yeah. Okay, and they're they're happy with that.
Yeah. Okay. Yeah. I mean, so I think the bottom line is your role as a POA is you're a fiduciary, meaning that you have to act in your mom's best interest, not your own. And so, you know, gifting rules, to your point, for 2025 is $19,000 a year.
If your mom has historically supported your sisters and would want you to help. And would want to help you as well, then I think adding yourself may align with her intent. But because you're the POA, it can look self-serving unless her desires are clearly documented, like either in her estate plan or in written instructions. And I think the key here is transparency.
So if your sisters know and agree that this is what mom wants, I think it removes suspicion later. And so I would say, you know, ideally, we'd have documented wishes in writing, either from a letter or a will or a trust or conversations witnessed by others. That would be the ideal state. I think keeping your siblings in the loop, because transparency now prevents conflict later. I would, you know, just say consider fairness, which is what you're doing.
If she's been, you know, giving equally to all children, then equal gifts, I think, reflect her intent. And then I would just always be checking her needs first because at 92 with health issues, you want to ensure she has enough for her own care before even setting this ongoing gifting. And so I think, you know, especially now with your elevated role as power of attorney, as a fiduciary, meaning you have to act in her best interest, you're going to want to ensure that, you know, these funds aren't depleted prematurely and then there's nothing left for her care, which puts you in a difficult spot. But give me your thoughts on all that.
Well, uh, she does have a sister. Substantial amount in the bank. I've not worried about that. She's in assisted living and has long-term care. paying for most of that as well.
Okay, great. And then is there an attorney who drafted all of this that you could interface with? She does have a will. I'm not sure about the attorney. I could look into that.
Yes, that's an idea. Thank you. I think that would be best just because getting, I mean, I'm not an attorney. And so getting legal counsel on this, I think, would put you in the best position just to make sure you're not kind of getting out beyond your fiduciary requirement as a POA. Even if you had to spend just a little bit of money to get that professional counsel, I think that would make sense.
But I think what you're going to find is as long as there's enough there and this reflects her wishes and it's equitable and there's transparency, then you're probably in a good situation. But I think having that backing of the legal counsel is ultimately the best position.
Okay, I appreciate that. Thank you so much. You're welcome. Thanks for your call today. 800-525-7000 is the number to call.
We're taking your calls and questions. Terry's in Texas. Go ahead. Yeah. I'm 71 years old, and I've started doing Roth conversions two years ago.
Yeah. But I. We opened up a Roth about five years ago. About actually, it's six years ago. I got a Roth that's six years old.
Ain't got much money in it, but I do have that. And I know that there's five-year rules, two or three of them and whatever. Because I've had that raw. open over five years, can I take money out of these conversions without having any time clock to worry about? Yeah, each conversion starts its own five-year clock, but once you're 59 and a half or older, that penalty does not apply.
The rule is irrelevant.
So, you know, you would be able to go ahead and pull the earnings and the original contributions without any issue.
Okay, more or less wonderful news. Thank you very much.
So basically, just to summarize that five-year rule on earnings, two conditions have to be met: has to be open for at least five years since the first contribution or conversion. And then you have to be 59 and a half or older. And it sounds like you are both of those. And if that's the case, then you should be in good shape to pull that out, no taxes whatsoever. Terry, thanks for your call today.
We appreciate you. We appreciate you being on the program today. All right, quickly to West Virginia. Rick, you've been waiting patiently. I've got just about a minute left.
How can I help, sir? Yes, Rob. I'm 63. I've got a 401k. In a previous company that I worked for, approximately 200,000.
And I've been really wanting to. Change it so that it's invested in a biblically sound company. And they're telling me that I can't do that. I can't do it because it was set up through the company I work for. And I was just wondering, do I need to pull that out and reinvest it in another direction until I know it's.
That turns going in there. Yeah, the good news there, Rick, is because it's a previous employer, you can absolutely roll it out to an IRA at Fidelity or Schwab or wherever you'd like to go. And then you've got unlimited investment options, including those faith-based options. You'll find a list of them on our website at faith5.com. Click on the show, and you'll see some great asset managers like Timothy and Eventide and One Ascent and others that really are building some incredible mutual funds and ETFs that are faith aligned.
So yeah, you would need to roll that out. You could also find a CKA that could help you with that and then roll it to their firm that they work with. But you've got unlimited options as soon as you get out of that 401k. Hey, God bless you, Rick. Thanks for calling today.
Folks, it is always a joy to be along with you. We're so grateful for your calls, your encouragement, your testimonies. And when you support our work here at Faith5 by going to faithfy.com and clicking give. Big thanks to my team today, Jim. Henry providing great research today.
Adam Suddeth was handling our engineering and production today, as well as our phone screener today, Pat Montague. On behalf of the entire team here at Faith Fi, I hope you have a great weekend. Come back and join us next time. We'll see you then. Bye-bye.
Faith in Finance is provided by FaithFi and listeners like you.
