Talking Inheritance

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. The Puritan poet Ann Bradstreet once wrote, Wisdom without an inheritance is better than an inheritance without wisdom. Hi, I'm Rob West. As the baby boomer generation ages, it's estimated that they'll leave a tidal wave of wealth to their heirs, perhaps $68 trillion by 2030. But is the next generation ready for that wealth? We'll talk about it today, and 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. Well you can tell that Ann Bradstreet read her Bible back in the 17th century. She was no doubt inspired by Ecclesiastes 7, 11, and 12, which reads, Wisdom is good with an inheritance, an advantage to those who see the sun.

For the protection of wisdom is like the protection of money, and the advantage of knowledge is that wisdom preserves the life of him who has it. So while boomers make the greatest wealth transfer in history, research shows they're not preparing the next generation to manage that inheritance. The investment giant Edward Jones recently published a study on this issue. It found that half of all Americans, or 48%, plan to leave an inheritance. Half will leave money and property to their children only, and 36% will leave assets to their children and grandchildren.

That much is good, but the next set of numbers is troubling. The study also found that only 27% of Americans have talked about wealth transfer with their heirs-to-be, and another 35% actually said they don't plan to. That will leave millions of millennials and Gen Z-ers in the dark about the assets they'll inherit, many of them without the wisdom required to manage them. Experts say it's more important than ever for families to discuss wealth transfer and to seek professional guidance when necessary.

Other factors come into play as well. While generational wealth transfer as a whole will be the highest ever, some future heirs may not receive as much as they expect. That's mainly because people are living longer. Boomers may consume more of the assets they've saved up than previous generations.

That's due in large part to the ever-increasing cost of health care, which the elderly need more of. This is likely to affect how assets are passed along, and in fact, the same study found four different ways this may happen. The first is traditional giving. That's when parents simply pass along their assets to children, including cash, stocks and real estate. Children need to ensure their parents are utilizing a sufficient amount of their assets to ensure a healthy lifestyle. In contrast, parents must start talking to their adult kids about transferring those assets.

Another approach the study uncovered could be called giving while living. This is when the older generation helps the younger by paying for education, helping to purchase a home, and maybe even paying for vacations. The younger generation may wonder if there will be anything left to inherit and whether they'll have to support their parents financially in retirement.

Having an early conversation about assets can alleviate those concerns. Another form of wealth transfer you may see more of is the generational skip, which is exactly what it sounds like. Boomers may elect to give their assets directly to grandchildren to help with education, to start a business, or to set up investment accounts. Here at Faithfi, we get many calls from folks wanting advice on how to help their grandchildren get started in the world. The Edward Jones study found that one out of four respondents believes their grandchildren will be better stewards than their children.

Here it's critical to have a money conversation with the children who are skipped over to avoid damaged relationships. Finally, some Millennials and Gen Z'ers may find there's nothing left to inherit. Longer living spans may force the older generation to use up their assets, leaving little or nothing for the next generation. It's generally advised that retirees draw down only 4% a year to safeguard the principle of their investments, but for some, that may not be possible.

So what's the solution? Well, boomers need to start talking to their adult children about wealth transfer. They must pass along the wisdom they've gained over the years that enabled them to acquire and keep wealth. Family conferences are great for this. You can even bring a financial advisor to emcee the discussion. We recommend getting one with the Certified Kingdom Advisor designation.

One conference probably won't be enough because things change over time. The goal is to prepare your kids to be faithful stewards of whatever is left to them. They need to understand that God owns everything and they're expected to manage an inheritance wisely.

They're expected to provide for their families and cheerfully give back to God. If you need help with this, we recommend connecting with a Certified Kingdom Advisor, which you can do at faithfi.com. Just click Find a Professional. All right, your calls are next, 800-525-7000.

We'll be right back. Are you looking for a financial professional who aligns with your biblical values? Certified Kingdom Advisors are trusted financial, legal, or accounting professionals who have completed a rigorous certification program to ensure they provide biblically wise financial advice as part of their practice.

You can find a local CKA professional in your area by going to faithfi.com and clicking Find a CKA. We're grateful for support from Movement Mortgage, who provides residential home loans in all 50 states. Guided by a mission to love and value people and a goal to redefine the mortgage process, Movement seeks to help others achieve their financial goals. You can find out more at movement.com slash faith. Movement Mortgage LLC supports equal housing opportunity, NMLS number 39179.

For licensing information, please visit nmlsconsumeraccess.org. Well, I'm so glad you've joined us today on Faith and Finance. If it's time to take your phone calls today, we'd love to tackle whatever you're thinking about in your financial life. The number to call is 800-525-7000. We'll begin taking these calls in just a moment. We've got lines open. You can call right now, 800-525-7000.

Let's begin today in Tennessee. Hi, Mary. Go right ahead. Yeah. So I was calling about legacy planning and what I would need to do to set up a will. Okay. Yeah. So do you have a will currently, Mary? No, I've never actually even had one or thought about it. Okay.

Yeah, very good. So, you know, I think the will is probably one of the key estate planning documents that you need to put in place. You can do it online. In fact, there's a lot more advertising these days for various websites that will help you put a will together. And I would say that's better than nothing, but my preference would be that you would connect with a godly estate attorney.

If you don't have one, you could go to our website at faithfi.com and click find a professional and then any one of those certified kingdom advisors could refer you to a godly estate planning attorney. A will is basically going to be a legal document that describes how you would like your property and other assets to be distributed after your death. Now, if you have minor children at home, it's even more important because the other piece that will be taken care of through a will is you would name a guardian.

But if you don't have minor children at home, then its primary role is to outline the wishes that you have for the distribution of your assets. And what would happen at your death is that will that would be valid and often filed with the probate court would be the document that your personal representative would use in conjunction with the probate court there in your local county to settle your estate, which means just paying any outstanding obligations or debts. And then with what's left over, essentially passing on or distributing your assets to those that are named in your will. Now beyond your will, you will often have what are called beneficiaries that are designated on certain types of accounts.

So think about a life insurance policy. You would name a beneficiary. If you have a retirement account like a 401k or IRA, you would often name a beneficiary on that. And those whenever there is a beneficiary named, it's going to pass outside of your will and outside of the probate process. But anything that's not, that doesn't have a designated beneficiary, you have to have a will to outline your wishes. Otherwise the court is going to make that determination on your behalf.

So it's pretty important that you get a will in place should cost you somewhere between $200 and $500 shouldn't be that expensive, but I would recommend because it does vary by state and there's particular nuances in certain states that you have an attorney set that up for you. Does that make sense to you, Mary? Without internet access, how do I get a hold of somebody without having internet access? Let's do this. Stay on the line. We'll get your information and I'll have somebody from our team call you. And while you're on the line, they can do a zip code search for you.

Find a couple of CKs in your area and just give you the phone numbers over the phone. Does that sound alright? That's great. Thank you.

All right. Stay right there, Mary. Thanks for your call today.

To Arkansas. Hi, Barbara. Go ahead. Hi.

Thanks for taking my call. I'm retired and recently widowed and I own a home out in the country. I'm selling my home in the country to move into town and I have to buy a new home. My total net worth, I have the assets I can get hold of are right at $500,000 grand total, including the value of the home I'm going to sell. So I'm going to buy a new home, going to pay cash. My income is only $31,000 a year.

It's social security only. I'm wondering what you would advise when it comes to my home. I'm going to be a foster parent. So I'm really excited about that. Yes, the Lord is opening that door wide. So my home is going to be for foster kids and as well as myself.

So I'm trying to figure out what is reasonable and wise for me to invest in a home out of the $500,000 that I have. Yeah. No debt. Okay. Yeah, very good. Well, I'm delighted to hear this, Barbara, because a couple of things. Number one, I'm thrilled that you're going to foster. What an incredible blessing that's going to be and a ministry that you will have.

So I'm thrilled to hear that. And I'm glad that you're thinking about kind of the budget first and not the house first, because we certainly want to go in with a good idea of what you can spend. And then let's look at the homes. If you engage a realtor, you give that realtor your budget and then don't try to fit the budget to the house.

Let's start with the budget and then choose the house accordingly. So in terms of, you said you'll have the $31,000. If that's your only source of income, you really won't have to pay any taxes on that. So have you put a budget together? And are you going to be able, if you own your home outright, to live on that alone? Or will you need to draw something from whatever's left after the home is purchased? I will have to draw out of savings. Okay. Do you know how much that will be? Probably a good $500 a month if I'm careful. I'm thinking about going ahead and working part-time for a while, but I haven't done that yet. Yeah.

Okay. So I like that a lot. I mean, that would mean that if you had $175,000, there's a couple of ways to do this, but let's say you just invested it with somebody and you just pulled the income from it. Even at $170,000, that'd be $6,800 a year or about $550 a month, which would, I think, just about get you there.

You'd have a little bit of income or you'd pay some taxes on some of those gains and income in the portfolio if we were to invest it. But what I would say is that if you target that $170,000, then what that would mean is you could take out of your half a million about $330,000 and buy something. And then the idea would be that you'd take the $170,000 and invest it.

Now, the only missing piece here is we don't have any savings. I'd really love for you to have about six months worth of expenses. And so if you're running maybe $40,000 a year all in, that would be about $20,000 you'd want to put aside. So in my example, that would probably leave you about $300,000 for the purchase because you're going to have some expenses on that as well. So let's say we were to put $300,000 toward the house. You fully fund your emergency fund with a good $20,000 in high-yield savings. That's $10,000 left for expenses and other moving-related costs, and you were to invest $170,000, then that would give me some confidence that if you had an advisor that was managing it with that in mind, you should be able to pull that $500,000 a month and never deplete that money. Now, the ebbs and flows of the stock and bond market at any given month or quarter or even year, it might be up or down. But the goal would be that we take a long-term view on it, try to work part-time to pull as little as possible, but to the extent you needed to pull $500 a month, you should be able to do that. But give me your thoughts on that.

How does that sound? Boy, that sounds so exciting because I've been trying to keep it under $200,000, and I'm having a hard time finding a decent house in our market. We had a tornado last year, and the market is crazy. Housing prices are very high.

I get it. The average home in this country is $400,000 plus right now. So listen, anything you could do under $300,000 is all the better because that gives us more money for you to put to work, so if you could target $250,000, $275,000, I think that would be ideal.

So I'd find an advisor on our website, faithfi.com, click Find a Professional and talk through this and then hire a realtor to help you start looking for that home. Hey, God bless you, Barbara. Thanks for being on the program. We're going to take a quick break. Can we come back?

More of your questions? We've got room for a few more though, 800-525-7000 is the number to call. Again, that's 800-525-7000. I'm Rob West, and this is Faith and Finance.

We'll be right back. Are you a financial advisor or CPA seeking to build your practice on biblical wisdom? Not only does the certified Kingdom Advisor education provide you with deep biblical insights, the CKA designation sets you apart. Each year, almost 50,000 people search for a Christian financial advisor. Join our community and share your expertise with clients looking for someone who shares their faith and values.

Find more information at kingdomadvisors.com slash get certified. We are grateful for support from Sound Mind Investing in the Faith and Finance Program. If you have money in a retirement account or just a general investing account, you know the stock market can sometimes seem like a rollercoaster. But it is possible to enjoy both profit and peace of mind in investing no matter what's happening in the market. You can see a short video webinar on that topic at soundmindinvesting.org. Since 1990, Sound Mind Investing has sought to offer financial wisdom for living well.

SoundMindInvesting.org I'm so thankful to have you with us today on Faith and Finance. We're taking your calls and questions today. Let's head right back to the phones. Howard, you've been waiting very patiently, sir, there in Illinois. Go ahead. Hello, Rob. I just want to say thank you to you, to your wonderful staff, to all your supporters that make this show happen, especially our Savior and Lord Jesus Christ. Thank you so much.

Hey, Rob. I'm going to actually I'm going to be 64 tomorrow, but I was informed by my employers who are just wonderful people that they're phasing out my position. It sounds bad, but I do have a union pension that I receive.

I started taking that when I turned 60. But my question is this, is that I do need the additional income that Social Security would bring. If I was to sign up for Social Security and say have it start after August sometime, since I've already made over and beyond the allotment they allow to make, would I be receiving a check or how would that work? Would I still get a check? Or I've heard of some sort of a clawback law or something like that if you make over and beyond the amount.

If you could help me with that, I'd sure be grateful. It's a great question, Howard. And here's the way that works. And so they will not count the amount that you earned prior to starting to collect your benefit during that first year that you begin to earn it. So let's say you retire on August the 30th and whatever you made up until that point, let's say it was beyond the earnings limit, which for this year is $22,320. For the remaining months of this year, 2024, so that would be September, October, November and December, they will look at that on a monthly basis. So it'll be $1,860 a month. And so from that point forward, September 1st forward in my example, if you make over $1,860 for the month, then they're going to start to reduce your benefit by a dollar for every $2 you go over. And that's going to ride through the end of the year. And then once you get into 2025, then you're going to be subject to that standard annual limit for that first full year that you're earning benefits. Now, once you reach full retirement age, you can earn as much as you want. But we're just talking about for these months leading up to full retirement age and for that first year until you start a new calendar year where your earnings reset, it's going to be looked at on a monthly basis. Does that make sense? It makes 100% sense. And I want to thank you. And Rob, one other quick thing I'm really struggling with, I feel like I'm throwing up the Wi-Fi by taking sole security, but I don't know, I mean, maybe if you wouldn't mind saying a quick prayer over it because I am looking for wisdom on it.

I'm really, really struggling with this. So yeah. Yeah. So let me ask you on that, are you struggling just because you know you're going to lock in a reduction and you'd rather wait but you're forced into this with the job being phased out or something else? Well, it's partially that, but I mean, it's, you know, I've been working my whole life and to stop, I'm programmed that way.

That's one thing. And the other thing is, is I do got other offers, but it's out of state and I just can't leave my wife. You know, we're getting up there in years and you know, I'd be gone for five, six months at a time and whatnot, it's very difficult.

But anyway, yeah, it's not working anymore. I mean, I'll be with the church and stuff, but yeah, it's hard. Well, is there a possibility you could find somebody there, something there locally? I mean, what if we started praying and making it known to church that you're looking, you know, you're ready to be employed, you have certain skills, but it's got to be something right there in town. I mean, perhaps there is an option there for you to continue to keep working.

Yeah. And when the thing is, is that I would have to sign up for social security soon because I want those checks to start. Like I said, I'm blessed with the pension, but I want to, I want to keep the income coming in. But yeah, I mean, I'm open to, it's just been a fight.

It's been a real struggle. Yeah, yeah. Well, you do have the ability, you know, during that first year, you've got a one-time option that allows you to withdraw your benefits. Now, you'd have to pay it back. And so I realize you may or may not be able to do that, but you've got that option that you could essentially unwind it if the Lord provides something.

So that would be something to consider. Wonderful. Well, I appreciate that.

Absolutely. Good advice as always. Well, thank you. Let me pray for you. Father, we just lift Howard up to you. Thank you that he understands, Lord, you created us to be productive, to be workers, and whatever that looks like in this next season of life, Lord, would you make that clear to Howard and to his wife? And we're going to trust that you'd continue to provide that right place of employment where he can take the gifts and abilities that have been given to him by you. And we acknowledge that today, Lord.

Use them for your glory and in service to others and, Lord, even surprise him with just your unexpected provision and even possibly the opportunity to continue working seamlessly without even having to transition to Social Security. So we're going to trust you for that. We would ask you would provide something, Lord, that he might be able to continue to work and honor his desire not to have to be gone for extended time from his wife. So we're going to leave that in your hands, tell you we love you and trust you today.

We ask this in Jesus' name. Amen. Hey, God bless you, Howard. Thanks for your kind remarks about the program. I'm grateful.

Let's go to Hope Sound. Hi, Charles. Go ahead. Yes, sir.

I have a question. We had a will made for my wife and myself about 20 years ago in North Carolina and we moved to Florida. So do I need to change that for Florida or is it still good even though it was made in North Carolina? Yeah.

Florida law recognizes and enforces existing wills and living trusts executed in another state. So that's the good news. But there's still reason to go ahead and get that updated.

Number one, it's been a long time and you may want to tweak it a little bit. Number two is, you know, from state to state, there are different provisions. I mean, this, you know, these are not administered at the federal level. Wills are handled at the state level. And so, you know, there are different laws and different decisions that have been made by states with regard to community property and, you know, Florida laws provides for something called elective share for surviving spouses, the surviving spouses entitled to 30 percent of the assets in lieu of what the surviving spouse is otherwise entitled to under the estate plan and those kinds of things. So it's always a good idea when you have a life change, you want to make a change, you know, on your own accord or you move to another state just because of the differences in the laws of that state to go ahead and get that updated. So it's not like it's urgent and you're without a will.

It will be enforced, but it's a good idea to have it updated. So if you don't have an estate planning attorney because you're new to the area, what I do is reach out to a certified kingdom adviser there in Hope Sound or close by, ask for a referral. They'd all have a godly estate planning attorney that they work with. OK. All right. Thank you. You're welcome. And let me just say, Charles, this might be a good time for you to go ahead and add other things that you may not have thought of 20 years ago, like a health care surrogate and a living will and a durable power of attorney.

So maybe you can do a few things at once. But thanks for your call today, sir. All the best. Well, folks, that's going to do it for us today. Man, we've covered a lot of ground. Always grateful for your calls and the incredible questions and for your desire to be found faithful as a steward. That's our goal here. We want to help you see God as your ultimate treasure.

Money is a tool to accomplish his purposes and then help you make practical decisions and choices through the lens of a biblical worldview. I hope we did that and encouraged you along the way. Hey, on behalf of my team today, Robert Sutherland, Devin Patrick and Robert Youngblood couldn't do it without them. I'm Rob West. This has been Faith and Finance. We'll see you tomorrow. Bye bye. Faith and Finance is provided by Faith Buy and listeners like you.