What’s In Your Health Care Directive?

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Hi, I'm Rob West. Wills and trusts are important, but they only apply to your money and possessions, not you. First up today, I'll give you some reasons why you also need a healthcare directive. Then it's on to your calls at 800-525-7000.

That's 800-525-7000. This is faith and finance. Biblical wisdom for your financial decisions. Okay, so the term healthcare directive seems fairly self descriptive, but some folks may not be familiar with this legal document, at least by that name. It's also known as a living will, meaning it answers questions about you while you're still alive. Other names for it include medical directive and durable healthcare power of attorney. But it can get even more confusing because sometimes a medical power of attorney is a separate document from a healthcare directive. Well, no matter what you call it, a healthcare directive is a legal document that spells out your wishes for care during illness. If you're unable to make decisions or communicate your wishes when care is needed, it may cover a range of critical medical procedures such as resuscitation, dialysis and intubation. In that respect, there's also a financial element to a healthcare directive.

It can give precise direction on how your assets are managed to cover specified treatments. A healthcare directive can also specify your end of life decisions. Again, the purpose is to give guidance if you can no longer communicate with your caregivers and family.

Ultimately, it can provide instructions on how your remains should be handled after death. So it's a very important document that can be a real blessing to your family because it takes all of the guesswork out of end of life decisions. A healthcare directive should be an integral part of your estate planning.

Too often, family members disagree on whether various treatments should be continued or not. A healthcare directive spells out your exact wishes, so there's no confusion. Given how valuable a healthcare directive can be, it's surprising that only about one out of three of us actually have one drawn up. It's not an expensive process. Most state attorney general websites offer a legal form you can use. Processing one of those forms costs around $50. Or you can have an attorney draw one up for maybe $500 or less.

But even at that price, it's well worth it when you consider all the trouble it will save your family members. Well, let's go through the process and maybe it'll encourage you to draw up a healthcare directive if you haven't already. The first thing you need to do is choose your agent. This person is often a family member, but it doesn't have to be. Your agent will act on your behalf, speaking for you if you can't act yourself. For example, your agent will express your wishes on whether specified treatments should be started or continued.

Or if you should simply be made comfortable with hospice care during your final days. In most cases, the spouse is chosen as agent, followed by other family members if the spouse is unable to fulfill that role. But sometimes a friend is chosen as the agent, and that can work well too. Now that you've selected your agent, you need to specify your wishes for end of life treatment and what should happen with your remains afterward. Once it's down on paper, you need to go over it in detail with your chosen agent.

This is your chance to explain your decisions should the agent need to step in and advocate on your behalf. And the agent's role continues after your death to make sure your post-mortem wishes are carried out. That includes things like funeral arrangements, organ donation, burial or cremation. These things are often specified in a will, but they can also be covered in your healthcare directive and then overseen by your agent after your death.

Okay, now there's one thing left to do. The idea behind all of this is to eliminate confusion and family conflict in your final days. Springing a living will and an agent on unsuspecting family members would be counterproductive to that purpose. So it's important to communicate ahead of time with your family members about your healthcare directive and why you've made certain decisions. If your final wishes are made clear, it'll go a long way toward ensuring a smooth, conflict-free end of life process.

Now, I understand that estate planning in general and end of life decisions in particular are uncomfortable to think about and plan for, but once you do it, you'll have great peace about it because you're helping your loved ones cope with losing you. Alright, your calls are next. 800-525-7000. That number is 800-525-7000.

I'm Rob Weston. You're listening to Faith and Finance. Biblical wisdom for your financial decisions.

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This is Faith and Finance. I'm Rob Weston. We're taking your calls today. 800-525-7000. That's 800-525-7000. All right, let's begin in Hershey, PA. Hi, Ann. Go right ahead. Hi.

Thanks for taking my call. My question is about pension plans and TSAs, 403Bs. Earlier in my career, I worked for industry, and I had a 401K, and when I left that job, I rolled it into an account with Edward Jones. Now my employer is a nonprofit, so when I started, they had a pension plan and a TSA. Well, a couple years into my work career, the CEO changed it all to a 403B because he said you'd have more flexibility with your investments and a better return than the pension plan. So my question is, should I roll the TSA into the 403B? I'm not sure. Is a 403B an annuity? Yeah.

It's a great question. So anything that is tax-deferred would typically be able to be rolled into an IRA. So that would include 401K, 403B, a TSP, a Thrift Savings Plan, a TSA account, as well as a pension. As long as that money is going in pre-tax, you should then be able, after you separate from any employers, whether that's because you moved to another job or you retired entirely, you should be able to combine those into a pre-tax IRA.

Not the Roth, but the traditional IRA through what's called a rollover. And essentially what that allows you to do in this case, Ann, would be to consolidate any of those accounts that you had. A lot of people, because they're switching jobs and moving from one employer to the other, or because, as in your case, your employer made a change in the type of retirement plan that was offered, you can end up with multiple retirement accounts. And putting them all together in one place offers you a few advantages. One is just that it's simpler because now you're just overseeing and receiving statements and paperwork for one account instead of multiple accounts. The other benefit is just from an investment standpoint, you can ensure that the investment strategy is aligned with your age and risk tolerance, goals and objectives. A lot of times when you're trying to manage investments in multiple accounts, you may end up with over-concentration in one sector, duplication of investments, those types of things. And so it just really simplifies your investment strategy. And an advisor could manage all of it in one place.

And so whether it's at Edward Jones or wherever your advisor, you know, custody is the assets, they could then give oversight to those. Is that helpful, though? Yes. The other thing, I guess I was leery of putting all my eggs in one basket. Should I be consolidating all the accounts like at Edward Jones or whichever company I decide to go with? But that is recommended, to put it all in one account?

It is, yeah. And what are we talking about? I mean, what would you say roughly you have if you combined everything? Oh, well, the two TSA and that's probably 225,000. Okay.

And I probably have 150 at Edward Jones. Okay. Yeah.

And when you say TSA, you mean tax sheltered annuity? Is that what you're talking about? Yes.

Yeah. So that wouldn't be uncommon at all for you to consolidate that under one advisor's management. Now, obviously, that advisor, you know, you need to make sure you have a good rapport with that person. I think it's important that he or she understands your worldview and can apply biblical wisdom to the approach that they're taking with your money management, as well as the advice that they're giving you.

You want to make sure that, you know, the performance is there over time. And that, you know, you're able to communicate really well with that person. And, you know, they're communicating as often as you'd like.

I mean, those kinds of things. But assuming you have a really healthy relationship and it's working, then there's no reason why having one advisor managing all of that would be a problem at all. In fact, I think it is advisable. And, you know, the advisor can make sure that you're properly diversified among the investments. So you're not putting all of your eggs in one basket, but you are, you know, kind of putting everything under the management of one advisor. Now, typically, when we're dealing with ultra high net worth, they may have multiple advisors working.

But in a situation like this, I think it's very appropriate to have one advisor. Okay. All right. Well, thank you so much. All right. You're welcome. Thanks for your call today. Let's go right back to the phones.

Aurora, Illinois. Hi, Patricia. Thanks for your patience. Go ahead. It's a bonus, sir. Oh, no worries. A piece of God be with you, sir.

Thank you. I just have a quick question. I have like $8,000 in my personal savings account. I want to know where will be the place to invest it. Yeah.

To have it to grow. Very good. Patricia, let me just ask a couple of quick questions. First is, is this the extent of your savings or is this money that truly can be invested and you have other savings available? I can invest. Yes, sir. So you already have separate from this $8,000 what I would call your emergency fund of three to six months expenses? Yes, sir. Okay.

And the time horizon? I retired and so I have had a deferred comp kind of thing with my retirement. So I do have a few dollars in that account as well, but I wanted to invest something else other than in my deferred comp.

Yeah. The only thing I would say though, the only thing I would say is that I would prefer that you keep at least three and if you're retired as much as six months worth of expenses. And what I mean by that is total up all your bills for a month's time and I'd take that number, let's say it's $3,000 a month you're spending, times six, that's $18,000. I'd love for you to have as much as six months worth of expenses in a high yield savings account where you're not taking any risk, where if the unexpected comes and you needed to cover a major unexpected expense, you're not having to sell investments to get the money, which they could be down. You know, if we hit a recession later this year and the stock market's down 20% from its high where it is today and you needed some money for something unexpected, you'd be forced to sell those investments at a loss to have access to that money, which is why your emergency fund should stay in savings. So to get a little bit of return on it, I would move to an online savings account with an online bank and you can get right now 4.5% with FDIC insurance guaranteed, completely liquid and available, and yet you'll still earn a little bit of money.

You know, on $8,000 we're talking almost, well, a little more than $350 for the year. Now, it's not $1,000, but it's something and you've got the money available. Now, once you fund that emergency fund, if you say, no, Rob, I've got money beyond that that I want to make a profit on, then I would say, okay, let's make sure your time horizon is at least five, preferably 10 years in order to invest it.

And that way we can wait out the ebbs and flows in the market and have a better chance of a realistic rate of return. And then I would say, let's pick just a high quality mutual fund. Our friends at soundmindinvesting.org could help you make that investment selection. Mark Biller, who was just on the program today, is from Soundmind Investing and the team there is helping a lot of our listeners through the SMI newsletter. So I would either use it to fund your emergency fund, I'd do that first in an online savings account, and then if you have money left over, you could look at soundmindinvesting.org. Thanks for your call today, Patricia.

We'll be right back. We're grateful for support from Eventide Investments on the faith and finance program. Eventide's approach to values-based investing is grounded in the belief that humankind was created in the image of God with intrinsic dignity, value, and worth. Eventide calls this investing that makes the world rejoice. More information is available at eventideinvestments.com. That's eventideinvestments.com. You're listening to Faith and Finance, where we talk about how we handle God's resources.

How are you using God's resources? We're talking about it, and the lines are open to take your calls and questions. 800-525-7000 is the number to call. Let's go to Texas. Hi, Louis.

How can I help, sir? Well, Rob, I'm in kind of a decision dilemma right now. I'm 77 years of age. I bought into my property here in East Texas in 1990. I basically moved over here two years thereafter with a mobile home to get on the place. I wanted to build me a log cabin.

I'm kind of a frontiers type person. Now, the purchase of the land at that time was right at $800 an acre. I bought 40 of these acres.

The acres consist of half timber, 20 acres, and half pasture to raise stock on. I made payments to the guy who was a real estate developer. He financed it for me. I was making payments with him. Then I got the idea, why not just go ahead and get it paid off as soon as possible?

So I took a truck driving job in 1995. For six and a half years, real quick, six and a half years, I paid off this land. It cost $800 at that time of purchase. Now it's worth $10,000 an acre.

Let me ask you this, Louis. Is this about capital gains? Are you wondering how the capital gains is going to be handled on this? That's a major question. What can I expect at my age if I sell partial or all of it and my financial responsibility would be in capital gains? Yeah, very good. I don't mean to cut you short.

I just want to be able to get to a few other callers here that have been holding patiently. I would check with the CPA there in the area, but let me just say this. Generally speaking, the fact that you were in a mobile home does not disqualify you for the capital gains exclusion. So mobile homes, even some boats, houseboats, can potentially qualify as a principal resident as long as they have sufficient sleeping space and a bathroom and a kitchen on the premises.

But you do have to meet the requirement, which it sounds like you did, that you lived in that mobile home for two out of the last five years on the property. But if that's the case, then you would be able to exclude up to $250,000 in gains from the property. So it sounds like you paid around $32,000. Let's say you were to just sell it all outright and you were to get $400,000 for it. Obviously, you're going to have quite a bit of gain there, potentially as much as $360,000 or so. A quarter of a million of that could be set aside and not subject to capital gains tax purposes if you're single.

If you're married, filing jointly, you could get as much as a half a million dollars in profits before you'd pay any taxes. And then you'd have the long-term capital gains on whatever is left and the rates change each year. For 2024, you would either pay 0%, 15% or 20% and that's going to have to do with your income. And I believe it's anything over your adjusted gross income of $47,000 would put you in the 15% bracket.

So you probably are going to have the majority of this excluded. And then for a portion of it, you would likely, if your income is over $47,000, pay 15% on the rest. But I would go over in a situation like this all of the details with a tax professional. You don't want to get this one wrong and you want to make sure that you cover and set aside whatever tax liability is due. And that's why having somebody take a detailed look at this is going to be helpful.

So I'd connect with a certified Kingdom advisor in your area, ask for a referral to a CPA if you don't have one, and then that person can look at the situation and give you all of the specifics. Hopefully that helps you, Lewis. We appreciate your calling today and thanks for your kind remarks about the program, sir.

To Tennessee. Hi, Lori. Go ahead. Hi, Rob.

I really appreciate your thoughtful replies to the callers. I have a quick question about a FICO score. I got a notification from Experian via email that my rating had gone from excellent down to very good.

And the very good was seven ninety seven. And it kind of distressed me because I haven't I don't know why it would do that. And then I looked at the other two credit bureaus and like seven eighty four and then seven sixty three. And I don't know why. Should I be concerned or is there something I should do about that?

I don't think so. I mean, one of the challenges is when we live according to biblical principles, we get out of debt over time. And when you pay off an account, for instance, I just had an account that we just paid in full the other day. And it causes your score to drop just because it pulls one of the credit types out of the equation. It changes your credit mix. So your credit score is going to change over time.

Here's the thing. Anything over seven forty is going to qualify you for the very best rates and terms. Secondly, unless you're going out and buying a house or a car and you need to borrow some money, it doesn't really matter in this season of life what it is. So I would just say go another layer down and figure out what is it, because they'll tell you anytime your score changes, what's the primary issue driving it. And if it's something like you just paid off an account, don't worry about it. Now, if a late payment was reported or somebody opened an account fraudulently in your name, that's the kind of thing you want to know. Otherwise, I wouldn't be concerned.

Just pull a copy of your credit report at annualcreditreport.com at least four times a year and then pull those free FICO scores. Thanks for your call, Lori. Rita, I understand you want to get out of a timeshare. Is that right?

Exactly. 1998 bought a timeshare and it was dated to our two boys who will not want it or could manage it. And now that they're 20 in their 20s, we paid six thousand dollar maintenance fees. And then we went to this seminar where it was to exit out of timeshare. So now we sunk another.

We got rid of our points, transferred them to Choice Hotels, which you could do with the points for the timeshare. But then we gave this outfit twenty or ten thousand five hundred to get out of it. And that was on November 14th. And we're still waiting for them to get us out. Wow. And you gave them a lot of money, unfortunately. And I hate to tell you, this is just a lot of fraud and unmet promises in that space. That's why we don't recommend any of those exit companies.

I'd probably get some legal counsel to investigate the contract that you sign with this company and find out where that stands as my next step. Tug2.com is the timeshare users group. That might also be helpful to you. Unfortunately, I'm out of time. Thanks for your call today.

Well, that does it for us today. I'm Rob West. Thanks to our amazing production team and to you for listening. I hope you'll join us again next time right here on Faith and Finance. Faith and Finance is provided by Faith Buy and listeners like you.