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A strong marriage is a blessing, but it also takes intentional effort, especially in a blended family. Today I'll be joined by Ron Diele and Greg Pettis to discuss a valuable resource for second marriages. And then I'll take your calls at 800-525-7000. That's 800-525-7000. This is Faith in Finance, biblical wisdom for your financial journey.
Well, our guests are Ron Diehl and Greg Pettis, authors of the Smart Step Family Guide to Financial Planning. Ron, Greg, great to have you back with us today. Oh man, it's so exciting to be here. Thanks for having us. Good to be on.
Well, guys, your book, The Smart Step Family, is loaded with practical financial advice for blended families. I reference it on this broadcast often, but in particular, I want to focus on one area where you've come up with a way for couples in that situation as a blended family to promote peace and unity in their marriage. It's called the Togetherness Agreement. And I'd love for you to start there. What is it, and why is it so important?
Well, let's just start with the context for what we're talking about. Couples who form a relationship when they've had a previous life, if you will. Maybe one of them has brought children to the relationship. They are often in middle age or later in life. They have a history, a financial history.
They have debt. They have expense. They have all kinds of investments that perhaps they've been working on for years. And now we're merging. But we're not just merging money, we're merging relationship, we're merging children, we're merging parenting styles, we're merging some sort of loss, death or divorce has preceded this new marriage relationship.
All of that rolls into any conversation about money. I just don't think people realize how complicated that is. It's one thing to say, oh, you know, so you've got, what, three bank accounts, and I've got two bank accounts, and we've got all these investments. Let's just put all the money together.
Well, no, no, no, no. Immediately, it starts to be about, oh, trust. And it's about, well, I couldn't trust the former spouse because they took me for every dime I had.
So, how am I going to make sure that doesn't happen again? It's about provision for me and for my children. I've got an aging parent. How do I care for them? It is about all of those dynamics rolled up into a conversation about how many bank accounts you have.
And so when we sat down, Greg and I and our other co-author David sat down and said, We want to write a book. About financial planning in lended family situations. We have to take into consideration. All of these dynamics.
So we haven't just created something in the togetherness agreement. Greg will tell you a little about that. It's just a second. It's not just about money, it is about providing and loving well and caring and creating trust. in your relationship that goes the distance.
Exactly. It's about clarity on so many of these, like you said, emotionally charged issues. when we said I do, his kids, her kids, their kids, what did we mean? What were the details around our vision for an optimistic future together? And so we find that the Togetherness Agreement provides clarity.
to these emotionally charged issues. And in essence, as one couple said, We're writing the rules for our marriage with love and respect for both parties. And that's what's so key here: that we want to let love and respect lead, and yet there are very real practical issues that we have to navigate. And, Ron, to your point, money issues are heart issues, right?
So, money is symptomatic of a deeper underlying spiritual values-based conversation that does surface some really tough and yet exciting conversations. If we'll lean into them, the question is: we need a roadmap, or how do we get a roadmap to navigate that? You know, a lot of things about blended families, including marriage and navigating money, have to do with the pain of the past. And pain creates fear, right? My last spouse really hurt me.
I don't want to have that happen again, so I'm going to be guarded with you.
Well, you know, fear is not a good way to make decisions about anything. Spiritually, that doesn't work. You know, we don't want to approach God that way. We don't approach the people we love that way. And so we try to help people create this togetherness agreement so it eliminates fear, so that it is no longer a barrier to our oneness.
Well, I'm looking forward to continuing to unpack this. What does it actually look like? Is it a binding legal agreement? What goes into it? What about some of those touchy situations that will come up?
What about a business? We'll deal with this and much more. Ron Diehl and Greg Pettis with us today, authors of the Smart Stepfamily Guide to Financial Planning, just around the corner. 800-525-7000. We'll be right back.
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Visit ChristianCreditCounselors.org or call 800-557-1985. Thanks for joining us today on Faith and Finance. I'm Rob West, your host. This is where we apply God's wisdom to your financial decisions and choices. Joining me today are good friends Ron Diehl and Greg Pettis, authors of the Smart Step Family Guide to Financial Planning.
How do you navigate financial decisions with a blended family? And how do you even memorialize those decisions once you have those conversations? And how do you do it in a way that's respectful and loving?
Well, today we're talking about a great tool that Ron and Greg refer to in their book called a Togetherness Agreement, where it provides a roadmap for having these conversations and then memorializing them. And Greg, you actually advise folks to make this agreement, the Togetherness Agreement, a binding legal contract. How will that help? And well, the marriage itself is a binding legal contract. Yes, that's a great question.
We get it a lot. First of all, it provides specifics that are not clearly outlined in that general marriage binding contract. For example, I mean, as simple as how many accounts should we have Should we combine everything together all at once or have two or three accounts? Who gets the business? What does fair mean?
Is fair always equal? What are we going to do for our special needs child? What about the rights and roles of well, Grandchildren, step-grandchildren. Grandparents, step grandparents, any Party who has a loving interest. in our future can be a part of the Togetherness Agreement.
Hmm. It'll also help the team, your whole financial team, the financial advisor, the attorney, the CPA, all your agents. They need to have an overarching document that explains why did we decide to do this, why what were we thinking when we did that? And so forth. You know, as Greg was talking, I was thinking: yes, marriage is a legal-binding relationship.
And yet, do you want to leave the future to the legal system of your assets and your money? You know, we've talked before about if you are married to somebody and spend 25 years together and your spouse dies and leave you all the assets, and then you marry again in midlife, but don't make Specific documents dictating where you want your money to go after you pass away. If you pass away, Yes. And your second spouse marries somebody else? And then they die, all of a sudden, all your money goes to that person's kid, somebody you've never met.
Them and their children instead of your children. That's right. Unless, you know, that's called inheritance drift, right? It just sort of moves away from you. And nobody intended that.
It just sort of happened unless you've made provision for where you want your money to go after your death. And in this case, and in that case, I should say, your children are provided for, you're provided for, your aging brother, sister, parent, whatever, whatever you're invested in goes where you want it. To go. You don't want to just leave it to the legal system. You want to tell that system what to do with the things that you cherish.
That's so important and probably something that most folks haven't considered.
Well, perhaps, guys, a story, an example would help to illustrate the power of this tool, the Togetherness Agreement. In the book, you include a story about a couple, Anthony and Jenny. What was their situation and how did this tool help them? Greg's going to tell you in a minute a little bit about some of the specifics of what they came up with, but let me just set the stage. This goes back to how we started our conversation, the complexity that blended families often face.
So Anthony has children. He also owns a company that he's been invested in most of his life that he's been building. And he meets Jenny, and she's a CPA. She's pretty successful. She's 36 years of age.
She has children of her own, and she has an aging mother.
Okay, so on the surface, when couples say things like You know, I love you, you love me. We're going to be a happy family. And I assume that means you'll just care for my kids if something terrible happens to me, and I'll take care of your mother if something terrible happens to you. And the best of intentions don't necessarily work out that way just because you love one another. You really need to put it in writing.
You really need to think it through. You really need to talk it through. Because it could be that in the course of doing their togetherness agreement, Anthony has got an assumption that his oldest son gets his company. He's shown an interest in it. He's been invested in it.
He's interned there. He went to college with the intent of learning how to run a business, and he's going to come back and work with dad. And then, if dad ever retires, that's been in the works for years before Jenny ever showed up. Yes. But if he doesn't express that clearly and openly, Jenny may have some assumptions of her own about what happens.
If he were to pass away, what happens to the company? Maybe she's got kids that are interested in that business.
Okay, so who's going to be in charge with that next generation of leadership? See, that's the kind of sticky business, getting down into the weeds. A togetherness agreement helps you get proactive so that you have a dialogue and make those decisions before you ever have to deal with it. Greg, remind us what Anthony and Jenny, some of the things that they worked out. Yes.
So Anthony was a forty four year old, very successful construction company owner. And as you said, Ron, he had two boys that he had promised were going to get the company one day. Unbeknownst to Jenny, however, during their courtship and dating, he didn't disclose he had a gambling problem with some debt. had a low credit score, had a very controlling ex wife. et cetera.
Now on the other side, Anthony didn't know The Jenny. Had really spent a lot of her hard-earned money taking care of her mother, who was aging, as you mentioned. And she had promised her that, hey, Mom, one day you can come live with me. You know, I'll do whatever I can do to help you get through this. And So You know, during the courtship, these things just don't come out.
So often is the case. And so the first thing that the Togetherness Agreement did is it created an arena for disclosure. An atmosphere for Full transparency. which then created a mutual respect Jenny found out about Anthony's gambling problem, felt compassion, and they were entering him into a counseling. Session to get his credit score up.
Meanwhile, they were going to they agreed to have one joint budget account. but to keep two individual accounts until Anthony could raise his scores and get over this this gambling problem. They also agreed that though Jenny and her daughter would not receive. The company. Working with an attorney, they would create a trust and place some life insurance in the trust for Jenny and her daughter.
They also worked with their agent to create long-term care solutions for the mother. And to provide clarity about their future, which really relieved both of them of a lot of stress. and reaffirm their commitments to each other. In a way that they really couldn't go that deep without a togetherness agreement.
Now theirs was a legal document drafted by their attorney, but I wanted to make this point clear. Just having the discussion, just sitting down and even just jotting some things on a legal pad. or the back of a napkin. will create that first step of transparency In disclosure. That will then help.
navigate these these emotional issues. That's so helpful. Boy, we are about out of time, guys. We're going to have to have you back because there is so much more I want to talk about here. Ron, quickly, when should this be done?
You know, ideally today.
So if you're dating somebody, now's the time to start having that conversation. And if you're already married and you go, man, we've never really talked about this. I have a lot of assumptions. We've never checked in with one another.
Okay, then start today. And the book's designed to help you get a plan and start moving that direction. I love it. It's an absolutely essential tool for a blended family. Gentlemen, thanks for stopping by.
Thanks for having us. Thank you. Pick up a copy of the Smart Step Family Guide to Financial Planning wherever you buy books. All right, your calls are next. The number 800-525-7000.
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Let's go to Georgia Frank. How can I help? Hey Rob, thanks for taking my call. Sure. We had to take a substantial RMD, so we've got a good bit of cash.
And we're willing to share that with our children more than $19,000 each. How do we do that without tax ramification? Yeah, well first of all, if it's you and your wife, you can each do $19,000 for 2026 to any one individual. And you can do that to any as many recipients as you want.
So between the two of you, you could do 38,000. and that would still fall within that annual gift exclusion. But if you go over 38,000 between the two of you, you will need to report that to the IRS.
So basically, you would fill out IRS Form 709, you declare the amount that goes beyond the $19,000 each. And then that would start to chip away at your lifetime exclusion of $13 million.
So this is why most people never owe any gift tax whatsoever, because unless you plan to give away more than $13 million or the law changes, you're never going to have any gift tax. The question is just whether or not you need to report it. And that's where that 19,000 or 19,000 times two comes into play.
Okay.
So when we report that and we fill out the form, I think it's seven hundred nine or something like that, there's no gift tax required to be paid at that time. That's exactly right. What they're going to do is just take that and apply it to your lifetime exclusion. And until you get past that lifetime exclusion, which most people don't, there will be no gift tax.
Okay.
Thank you so much for your time. All right. Absolutely. Thanks for your call today. Let's head to Florida, Mark.
Go ahead. Hey, Ralph, how are you doing? Hi there. All right, God bless. My question is: God willing, I'll be Tuesday coming, I'll be 63.
I work full-time. And I was thinking of taking like our early social security businesses or platform. because I'm hearing that by twenty thirty three Social Security will be out of money. I don't know how true that is, but if possible, will I be penalized if I start like 63, 64 collecting Social Security? Yes, temporarily, but let's talk through each of the things you mentioned here because I think you're raising some great points that I think will help a lot of folks.
And first point you mentioned there, Mark, which you're right, there is talk of the Social Security Trust Fund running out somewhere around 2034, I think is the latest projection. But keep in mind, even if that goes to zero, just based on the ongoing tax revenues, they expect that they would be able to pay about 80% of benefits to each person that would be entitled to benefits in that year.
So just because the trust fund is gone doesn't mean benefits go to zero. It just means that there would be a reduction. They'd be able to pay 80% of benefits that were due.
Now, that would not be good, obviously. But here's the thing that I'm pretty confident in is that given how significant of an issue that is for taxpayers and for voters, Congress is going to deal with it. And we'll put measures in place between now and that point to shore up Social Security. I mean, this is just too much of a hot-button issue for voters for elected leaders to allow their constituents to face any kind of reduction whatsoever.
Now, you might ask, how are they going to do that? Because the demographics are working against us, meaning there's more retirees than there are workers to do it. And the way they're going to do it is they'll likely start pushing out the full retirement age or raising taxes or a combination of the two. But keep in mind, you know, anything that they do, even if they were to push out the full retirement age, somebody who's already collecting would probably not be subject to that.
So, I wouldn't be terribly concerned about this idea.
Well, I better take it now because it might not be there. I just think you need to look at what the implications are of you taking it early before you make that decision. Because, although I can't promise anything, I'm fairly confident there's going to be changes made, which would result in the trust fund being shored up, and therefore, Social Security would be in a position to pay 100% of benefits.
Now, the challenge with you taking it at 63 versus your full retirement age, which is 67 for most people today, would be you're looking at about a 25% reduction.
So, if your full retirement age benefit was $2,000, you'd be looking at a $1,500 a month check.
So, a 25% reduction in that, and that's permanent. That's locked in. And if you live a long time, I mean, your greatest risk in this season of life is longevity.
So, if you're healthy, you've got longevity in your family, you know, you live another 30 years, you know, that Social Security check could be pretty important.
So, this idea that you would wait while you're able, continue to work, and therefore you're covering your bills and you don't really quote unquote need the money, you might as well let that check continue to grow because that higher check is going to be really valuable to you down the road. Not to mention that the cost of living adjustments, the annual inflation increases that they give to all Social Security earners is going to be based on that higher amount by you waiting. If you lock it in at 1500, those cost of living adjustments are based on that starting point of 1500.
Now, let me mention one other piece here and then I'll get your questions and thoughts. You asked about reductions based on your earnings.
So, for 2026, if you are under full retirement age during the entire year of 2026, which you would be if you started at 63, Social Security is going to reduce your check for $1 is going to be taken away from your benefits for every $2 you earn above the limit, which this year is $24,480.
So every dollar you earn above twenty four eighty there or every two dollars you earn above that, they're going to take a dollar off your check.
Now and I apologize, this gets confusing, but let me throw one more piece at you. That one is temporary. And here's what I mean by that. That deduction that comes because you earned more than the limit will eventually be paid back to you after full retirement age. They're going to increase your check a little bit each month until you're fully repaid.
But the other reduction that I mentioned previously by you taking it at 63, that 25% reduction, that's permanent. That never gets paid back to you. It's just that this reduction that's purely based on you earning more than the limit, that will eventually come back to you down the road. I've given you a lot of information to process, so let me stop there. What questions do you have?
Yeah, well, I was just wondering because, like you just said, you did explain everything without going to understand because I was. Kind of worry, but not the Bible said not to worry, but it kind of makes you kind of worried because, like you said, with the economy as it is now, and then everything going on, like, I need to prepare now. But yeah, you pretty much answered and covered everything. I really appreciate it.
So I'm hoping I'm not hanging there and waiting until 66, 67. You know, God willing. Yeah, and that will ensure that you'll get your full benefit.
Now, if you get to that point and you're still working and enjoying the work that you're doing and you could wait all the way to 70, you can actually get an additional 8% a year added to that check for the rest of your life. And so that's something else to consider. But yeah, I think bottom line is: if you don't need the money right now and you're able to continue to work, I'd hold off as long as you can. Hey, Mark, thanks for being on the program, my friend. Lord bless you.
Well, folks, thanks for being along with us today. Big thanks to my team today. We're grateful for Sandy and Jim and Devin. Couldn't do it without them. Have a wonderful weekend, and we'll see you next week.
Lord bless you.
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