What's most important to you when it comes to choosing your financial advisor? Someone who's aligned with your biblical values. How about someone who will take the time to explain your options? Certified Kingdom Advisors are professionals who meet high standards in competence and integrity and have been trained to offer biblical financial advice.
To find a Certified Kingdom Advisor in your area, visit faithfi.com and click Find a CKA. When a loved one goes home to be with the Lord, it's often a time of great confusion as well as grief. What needs to be done and when?
Hi, I'm Rob West. Usually making funeral arrangements can be difficult enough, but then there's an estate to settle and many find themselves unprepared. Today I'll give you the six financial steps to take when a loved one dies. 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 journey. Well before we get to the financial steps you should take when a spouse or other loved one passes, there's a very important spiritual step to take, prayer. You should invite God to be a part of all your financial affairs and decisions, but especially now as you begin the process of settling your loved one's estate. It's enough simply to pray for wisdom in this challenging time. James 1-5 teaches, If any of you lacks wisdom, let him ask God, who gives generously to all without reproach, and it will be given him. Romans 8-28 reveals just how much the Lord wants to guide and strengthen you. It reads, The Spirit helps us in our weakness. For we do not know what to pray for as we ought, but the Spirit himself intercedes for us with groanings too deep for words. After a time of prayer, you'll feel more confident and ready to take on the challenge of settling your loved one's estate.
So here are the six steps you'll need to take. First, get a copy of the death certificate. This is the legal record of your loved one's death.
It's usually prepared by a medical examiner and provided to you by the funeral home you're using for the burial. You may also obtain a copy at your county vital records office. It may take a few weeks to obtain the death certificate. If you haven't received one in that time, contact the funeral home or records office to check on it. You really need a copy of the death certificate to begin the other steps in this process.
And it's especially important if you are the executor of the estate because most of the actions you'll take require a copy of the death certificate. Okay, now that you have that document, you can take it and a copy of the will down to your county probate office and file a petition to begin the probate process. If you're the executor, you can then begin carrying out the deceased's last wishes as specified in the will. Ah, but what if there is no will?
Well, then things get a bit more complicated. You'll still take the death certificate to probate court and petition the court to begin the probate process. You can also request to be named administrator of the estate, but there's no guarantee the court will honor that request. The probate court will then decide, according to state law, how the deceased's estate will be divided up among the heirs. Things may get complicated at that point and you may want to have an estate attorney help you through the process of distributing the assets.
We recommend getting someone with the CKA designation and you can go to faithfi.com and just click find a CKA. Now in step three, you begin notifying the deceased's financial institutions and advisors, if any. If your loved one had a financial advisor, that person can be a huge help in determining what assets are involved. You can also check the current balances when you notify financial institutions of your loved one's death.
Here's where you may discover that some assets can pass directly to beneficiaries without going through probate. Check with administrators of retirement and standard brokerage accounts for transfer on death or TOD instructions. For banks, check for payable on death or POD instructions. You'll probably have to provide a copy of the death certificate to get the funds released. At this point you should also notify the three credit reporting agencies, Equifax, TransUnion and Experian of your loved one's passing. Again, you'll need the death certificate.
They will close those accounts, get copies of the reports and check to make sure everything is in order and that there are no fraudulent accounts or transactions. Step four is to contact the deceased's life insurance company or companies. You'll need the death certificate here to also cancel other types of insurance such as auto or disability that are no longer needed. Step five is to notify any affected government agencies.
Interestingly, the funeral director often notify social security of a deceased's death. Check to confirm that and also notify Medicare and the VA if necessary. Finally, step six is getting started on the deceased's final taxes.
Here's where you really should bring in a professional such as a CPA to help with this. I know that's a lot, but you can get through it one step at a time and remember to pray for guidance and know that you are never alone. All right, your calls are next, 800-525-7000. We'll be right back. If you enjoy this radio program, you're going to love all of the many different resources waiting for you at faithfi.com and the Faithfi app. You'll find powerful wisdom, free podcasts, articles, videos and more from leading voices such as Randy Alcorn, Howard Dayton, Ron Blue and our own Rob West.
Grow in wisdom and knowledge by connecting with a community of thousands of Christians striving to be good and faithful stewards at faithfi.com or by downloading the Faithfi app. We are grateful for support from Lightpoint Portfolios, which seeks out family and faith friendly investments for 401k and 403b plans, integrating faith values and fiduciary duty. Lightpoint Portfolios offers retirement plans for a variety of organizations such as businesses, nonprofits and churches, and we're grateful for their sponsorship of the Faith and Finance Program.
More information is available at lightpointportfolios.com. Welcome back to Faith and Finance. I'm Rob West. This is where we apply the wisdom from God's Word, the principles and passages we find in Scripture to this high calling you and I have of being stewards of God's resources. Well, we're stewards of time and talent and relationships and God's Word and our skills and abilities, but that also includes stewards of the financial resources that God entrusts to us because he owns it all and that makes us the caretakers or the managers of all that God has entrusted to us. So let's be wise and faithful in that, holding it loosely, saving appropriately, living with contentment and giving generously. We'd love to help you with that, with whatever you're thinking about today financially.
Perhaps there's something you've been wrestling with in your financial life as you live, give, owe, and grow your money. Well, we'd love to talk about it. The number to call is 800-525-7000. We've got a few lines open today, 800-525-7000. We'd love to hear from you right now.
Let's head to Florida today. Hi Judy, go right ahead. Hi, Rob. I love your show, I listen to it every day, and you do an amazing job of helping us people.
Well, that's very kind, Judy, thank you for that, I appreciate it. So what I wanted to know was, I'm 76 and my husband's 81, and like 19 years ago we gave our money to a financial advisor who was the financial advisor of friends of ours that lived in our gated community, but we never met him or anything. And I think maybe about 20 years ago I was only 56, and so we, I don't think, have made $3,000 in the 19 years that he's had our money. So I wanted to know, I heard about something like, I know you have the Christian financial advisor, so I wanted to know, should I contact them and see if they can take our money and do something with it, or I heard about some other kind of financial advisor that, and I can't remember the name, but they don't make any money unless you make money.
Do you know what I'm talking about? Well, so a couple of thoughts here, I mean, first of all, I'm surprised to hear about this portfolio. So how much did you invest with this advisor 19 years ago, roughly?
I think it was like maybe 91 or 93,000, and that's basically all we have. Okay. And have you been pulling money out of it along the way? No.
We haven't taken any money out at all. And in 19 years, basically what you put in is about what you have today. Yes.
Yeah. And do you know what it's been invested in? Was it stocks or bonds or both?
I think he like spread it around, but he put it in what he called like safe things because we were older. You know, if you're younger, you have time to wait for the market to come back up if you have, you know, stocks or whatever. And so maybe three years ago I called him because I do most of the financial stuff. I refinanced both of the houses we've had.
Our interest rate is 2.75 on our house now, but I called him with my husband and he said we wanted him to take like 25 to 30% of that money out and put it in something that was more... I'm not sure what the word is. Aggressive, maybe? Possibly. Yes. That's good. I'm sorry.
No, it's okay. So I'm like not sure what to do and I listen to you all the time so I think you're... Yeah. Well, I appreciate that.
Sure. Well, yeah. I mean, I'm a little surprised. I mean, I hate to play armchair quarterback here, but you know, over 19 years this money, if with you taking nothing out, there's no reason that it shouldn't be significantly higher. I mean, I realize it's probably not been in all stocks if he was trying to protect it. Maybe he was in more fixed income type investments, but even those have done well. I mean, the S&P 500, which is one of the broad market indexes of 500 large cap U.S. stocks, I mean, that's done over 7% a year annual, you know, on average 7.6% a year for the last 20 years. So you would add a pretty significant increase.
That's not 7% over 19 years, that's 7 per year on average. And so that is a little confusing to me and I'm not sure why, you know, he hasn't been coming to you along the way saying, hey, I know this is not growing. Let's do something different.
I mean, I know this is all you guys have. We want to be very conservative, but we also need it to be working for us, especially when you all were in your 50s. So again, I don't know the whole story, but just based on what you're telling me, there's a few things that don't add up. If you wanted to make a change, you certainly could do that. The thing you might run into is for some advisors, including certified kingdom advisors, $100,000 would be below their minimum. So many times they'll have a minimum account that they're able to serve and in some cases that might be quarter of a million or higher, but it would be worth asking some of those certified kingdom advisors in your area if this would be something they would be able to take on.
And you just go to our website, faithfi.com, that's faithfi.com and then click find a CKA and that stands for certified kingdom advisor. You could also check with our friends at soundmindinvesting.org, soundmindinvesting.org that was founded by our friend Austin Pryor who was very, very close with Larry Burkett and they do a wonderful job, godly men and women serving investors of all sizes, including those with assets below $100,000 and so that would be another option that you could consider. In terms of how advisors get paid, I mean typically in this space, and I recommend this, they get paid a percentage of the assets under management. So they don't get a raise unless your account grows, but they still get paid even if it's stagnant. So you typically wouldn't find a scenario where they only get compensated when your account grows. That's just not the way it works unless you're in some sort of aggressive strategy like a hedge fund, but that wouldn't apply here. So you're going to pay them a percentage of the money that they're managing, whether it stays the same, goes down, or goes up, but the only way they're going to make more money is if it grows, and if they lose you money, well their fee is going to be less because 1.5% or 1% of $80,000 is less than 1% of $90,000 or $100,000. Does all that make sense though?
Yes, yes it does. So I would, well I appreciate it. I would, Judy, reach out to a couple of CKAs in your area, again you could find one or two or three to interview at faithfi.com and then you could also check with soundmindinvesting.org and I think perhaps you could get into a situation where you have somebody who's being a little more proactive, giving you a chance to grow this money. For instance, bonds are going to do well in the next couple of years as interest rates come down once they start down. So getting this account positioned in a way to take advantage of that recovery in the bond market and also in the stock market to a lesser degree because you all are in your 70s, you know, is going to be really important. So finding that advisor now I think will serve you well. Okay. Well, I really appreciate your help and I hope that my question helped other people too.
I'm confident it did, Judy. God bless you as well. Tell your husband we said hello. Thank you for your kind remarks about the program and for being a faithful listener. We appreciate that.
May the Lord bless you. Hey, we're going to take a quick break. By the way, we do have room for your phone calls in our final segment. We've got some lines open. I'd love to hear from you today with whatever you're thinking about financially. Let's tackle it together. See if we can apply the wisdom from God's word. 800-525-7000. You can call that right now.
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. Are you struggling to fit your faith into your practice as a Christian financial advisor? The Certified Kingdom Advisor designation teaches you a step-by-step process to confidently deliver advice that aligns with Christian values. Discover the skills you need to help your clients make a kingdom impact. Get started today by enrolling in the CKA educational program at kingdomadvisors.com slash get certified. That's kingdomadvisors.com slash get certified. Welcome back to faith and finance.
I'm Rob West. Hey, we have some lines open right now. We'd love to hear from you with whatever your financial question is today, 800-525-7000. Again, 800-525-7000 is the number to call. By the way, you can call that number 24-7, so if you're busy right now, maybe you're at work or in the car and you don't have the ability to call in, just call and leave us a message and we'll schedule you for a future broadcast. But if you are available now and you have a question, our team is standing by, 800-525-7000. We hear from so many of you every week that are being impacted by the principles that we share on this program. As you apply God's wisdom, it doesn't mean you're going to be without financial challenges, but what it does mean is that we've taken an eternal perspective and applied it to whatever God has entrusted to us today.
He's going to use our financial journey in ways to grow us up and mature us in our faith if we allow him to, but the big idea is to live focused on the life that is to come, the eternal perspective, not focused on the temporal, the here and now, but focused on that which truly lasts and matters. All right, back to the phones today. Let's get to as many calls as we can between now and the end of the broadcast. We'll welcome Ray to the broadcast from Plantation. Go ahead. Yes, Mr. West. How are you doing today? I'm doing great.
Thanks for calling, Ray. Okay. My mother passed away a couple of months ago, so the inheritance now or the property and the things that she owned are going to my sister and I from a will actually that was done in 1980. Question is the taxes on inheritance. I was trying to read in the IRS code and of course I got lost pretty quick in there, but it seems there's a like a maximum cap that is not taxed. Is that true?
Yes. So the proceeds from an inheritance are usually taxed. Ultimately, what you need to do is probably talk to a CPA who can understand what you're actually receiving in the form of an annuity contract so you can understand that as that comes out, how that will ultimately be taxed. Whether you take it as a lump sum or if you take it out over time and a lot of that has to do with whether that is qualified or unqualified or non-qualified, basically did it go in pre-tax and if so, it would be like you inheriting an IRA. As you pull that money out, you would pay income tax on it. If it's a non-qualified annuity, then you would only pay income taxes on the interest that's earned inside the annuity. So it's ultimately just up to how that was set up and they would have to look at the paperwork to determine what the taxation would be. There's not any inheritance tax. The estate would pay tax if the estate was greater than $12 million currently, but you don't pay any taxes just by inheriting these assets, but if it's qualified money, meaning it went in pre-tax, whether it's an annuity or an IRA, then you would pay the tax on it as it comes out.
Does that make sense? Yes, it is going to be lump sum. They already notified me when I contacted them that it would be a lump sum distribution at this time as beneficiaries, my sister and I. Well, it's actually named in my name, but anyway, regardless, if we split this money so the annuity, then the question becomes, like you said, whether it was pre-tax money, which I don't think it was, but still the interest that my mother accumulated during her time of owning the annuity may be taxed. Yeah.
Yeah. So you're going to need to check on that because if you receive the money as a lump sum, meaning all at once, then you would pay the taxes immediately. If you take it over time, then the taxes are owed as it's cashed out as the money comes to you. So I would just check with your CPA.
You could provide the documentation on the annuity that you're inheriting and they can tell you exactly what you're dealing with and what you would need to be planning for in terms of the taxes. Okay. Yeah, it's definitely lump sum, but like you said, it's the issue of whether taxes have been paid on that money already by my mother. That's whether it's qualified or not, that's the terminology. That's right.
You're exactly right. The second question I have is one now that in my will, and I don't have any children, I've always named my mother and my sister, which now, of course, with my mother passing, my sister's my only beneficiary if I proceed her, if I die before her, which I don't mind for getting the money. My concern is whatever money she doesn't use that I give her when I sell my home and my financial situation, which thank God, it will be pretty good.
How do I protect that? Kind of like giving her the money, but then trying to ensure that the money she doesn't use would be passed on to conservative Christian charities. Could there be something in the will that says that she inherits my money, but she has to have a will that states that, would that be one way to address it? Yeah, you know, as general rule, I wouldn't try to control the money in that way. You know, I think you just need to decide how you want your assets distributed, and then who is the next steward, and are they not only chosen, but prepared. And you know, if you're using a basic will, you would pass whatever the Lord has entrusted to you at your death according to your wishes, and you could have a certain percentage or portion going to your sister. You could go ahead and determine where you want the rest of it to go in terms of ministry or charity. But there's only three places you can leave money, the government, your heirs, or to ministry or charity. So I would make that decision on the front end and not try to control the money that's going to her. I would just leave that up to her if you decide you want to leave a portion of it to her to make that decision as the steward of those resources.
Okay. And I found out another complexity that I have to address on a 457, which I had a government career on a 457. I found out something recently that you can't leave it to a 501c3, but you can only leave those two individuals. Yeah, I'm not aware of that. That's interesting. But if that's what they're telling you, that very well could be, typically with a retirement account or a financial investment account, let's say you can name a charity as a beneficiary if you may not be able to with a 457.
I wasn't aware of that. So I think in order, perhaps you just confirm that, and if that's the case, then basically what you would do is you could cover that in your estate through your will, and just have that 457 plan become a part of your estate, and then that would pass through probate according to the will to the designated recipients, including a charity at that point. Ray, we appreciate your call today. Thanks very much for checking in with us today. Folks, let me say thanks to my team today, Amy, Gabby, Dan, and Robert.
Couldn't do it without them. Have a great rest of your day, and come back and join us tomorrow. We'll see you then. Bye-bye. Faith by, and listeners like you.
