Put Your Money to Work

Today's version of MoneyWise Live is prerecorded, so our phone lines are not open. You work hard for your money. Isn't it about time your money worked hard for you?

Hi, I'm Rob West. You have to make a basic decision about your finances. Will money work for you or against you? The way you manage it can bring prosperity or drag you down into financial bondage. I'll talk about that first today. Then we have some great questions lined up for you.

But don't call in today because we're prerecorded. This is MoneyWise Live, biblical wisdom for your financial journey. Well, we often quote Proverbs 22, 7, the rich rules over the poor and the borrower is the slave of the lender.

Now, we all know that's true, but today I want to drill down a bit into exactly how money can make you a slave and how you can prevent that from happening. It's all about compound interest, which Einstein once called the eighth wonder of the world. And like many wonders, it seems there's still some mystery about compound interest.

A recent financial literacy survey found that individuals who fail to grasp this concept have higher transaction fees, run up more debt and pay higher interest rates on credit cards and other loans. Compound means that two things are added together, in this case, principal and interest. And here's how compound interest can either be a financial blessing or a curse. It works the same for both savings and debt. In very simple terms, compound interest means that your savings account or your debt will grow quickly. It's calculated on your principal amount plus your accumulated interest. So the total amount you pay or receive in the case of a savings account will change. It grows over time. Compound interest either accrues or pays interest on top of interest, and that's how it grows so fast.

It also makes it a double-edged sword. Compound interest works for you if you're saving money, but against you if you're borrowing. Let's use the example of a credit card. Say you have a $6,000 balance, and we'll use a compound interest rate of 17%, which actually may be a bit low these days. Now, assuming you're paying only the minimum amount each month, after five years, your $6,000 balance will grow to $9,000 because you've accumulated almost $3,000 in interest. After 10 years, your balance will be $15,500 because you've added an additional $6,500 in interest. At that point, you actually owe more in interest alone than you did with your original principal.

And it gets even scarier. After 15 years, your balance is a whopping $26,000. That's how compound interest works against you, and that's how the borrower becomes slave to the lender, especially in the case of today's rising interest rates. But compound interest works in your favor when you become the lender. That's what you're doing when you put money in a savings account. You're loaning money to the bank.

And just as rising interest rates hurt you as a borrower, they make your money work even harder for you when you save. Let's use the same amount we started with in our credit card example, $6,000, but flip it around. You put that amount in your savings account, earning 1.2% interest, which is even a bit low these days with online accounts. And you make no additional deposits or withdrawals. After five years, even at that low rate, you've earned almost $400 because of compound interest. Each month, your principal grows and you're paid even more interest on that higher amount. After 10 years, well, you've accumulated nearly $1,000 in interest. And after 15 years, you've earned almost $1,500 in interest. Okay, so I've thrown a lot of facts and figures at you, but the lesson here is easy to understand. You have to make a decision whether compound interest will work for you or against you.

Obviously, you want it to work for you. That means never carrying a balance on credit cards. Pay off the entire balance each month. Also, pay off other consumer loans as quickly as possible, making additional payments on the principal if you can. You also need to start saving. And the first place is with your emergency fund to eliminate the need to use credit. Start by saving $1,500. Keep going until you have one month's worth of expenses saved.

Eventually, you want three to six months' worth in your emergency fund. Keep that in a higher interest online account. They give you a better rate than brick and mortar banks. We happen to like Ally Bank, Marcus, and Capital One 360, to name a few.

They're very safe and carry FDIC insurance up to $250,000. Do those things and you'll put your money to work for you, not against you. And just watch. In no time, you'll see the power of compound interest working in your favor. All right, your calls are next, 800-525-7000. This is MoneyWise Live. We'll be right back. This is MoneyWise Live with Rob West. If you hear a phone number mentioned today, please ignore that number and don't call us because today's broadcast is a reprise edition. But we think the upcoming information will help you and make you a wise steward of what God's given you.

So please stay tuned. Each day we gather together to talk about handling God's money. Now, why would we dedicate time each day to talk about money? Well, it's not so we can enrich ourselves. It's so we can understand our significant role as stewards of God's resources.

You see, he's the owner of everything. That makes us the money manager of his resources with whatever is entrusted to us from whatever source. And as we approach our financial decisions and choices from that lens, well, it changes everything. In fact, every spending decision, in fact, becomes a spiritual decision. Now, that doesn't mean we can't enjoy it. In fact, 1 Timothy says we should enjoy what he's given to us. But it does mean that we need to live with contentment and we need to be on our knees saying, Lord, what lifestyle have you called me to?

How much is enough? I don't want to just follow the patterns of this world, which could allow us to try to redeem greed in the name of the American dream. That's not the goal. The goal is to find God's heart with his resources so we can be found faithful as a steward as we hold what he has loosely and we surrender to him, recognizing he's all about our hearts. He doesn't need our money.

He owns the cattle on a thousand hills. But here's the reality. The way we handle money is, I like to say, the training ground of the heart. It's one of the places where we can most tangibly see the evidence of what we're working out in our spiritual lives. Where do we place our trust? Do we have fear or faith in the future? Are we spending our resources allocating in a way that aligns with our values and our priorities?

And if not, what changes do we need to make? You know, so often we set goals taking cues from the world, maybe slipping into the comparison trap, looking at others and determining what our lifestyle needs to be, when in fact we should say, God, what's your heart for me? That doesn't mean we need to sell everything, although he may challenge us at times to do just that, or at least to give lavishly.

Well, we can't answer those questions until we're on our knees saying, Lord, what would you have me to do? So each day we gather together here to find God's heart as it relates to our money. But for very practical decisions like organizing your spending in light of these inflationary times, how do we do that? What does it look like to control the flow of money and give every dollar a name so that it's going ultimately where we want it to go? What about our savings? How much is enough for our savings in the short term, medium term and long term? What about our giving?

How does that fit in to the equation? And what about during challenging times? We'll certainly all have those along the way. How do we think about our giving in those times? And then what about debt? You know, borrowing is not a sin, but there are clear warnings throughout scripture about the use of debt, and we need to make sure that we're using in a way that's wise, including only borrowing, if at all possible, for appreciating assets, having spousal unity when we borrow, making sure that we're not denying God an opportunity to intervene. There's just a host of things I think to consider as we think about handling God's money. But if we take these unlimited financial choices and we reduce it to really four categories, that which we live on, that which we give, that which we owe, and that which we grow or save for the future, it begins to simplify our financial life. And then we can go back to God's word and say, okay, what does God's word say related to this particular area?

And how can I apply that to what I'm dealing with right now? Well, we'd love to help you do that. We'll head right to the phones. Mississippi, Francis, thank you for calling. Go right ahead. I have a question. I have a new great grandchild, four weeks old.

How can I invest some money for him without the parents or anyone be able to touch it? I'm serious. I understand. I don't mean to make light of it. I completely understand. But am I allowed to, how much am I allowed to give that child, even if it's per year, you know?

Yes. Well, a couple of thoughts, Francis. First of all, congratulations on that new great grandchild. I suspect you are delighted.

That's a blessing from the Lord. And I'm thrilled that you're already thinking about being able to set something aside that you can use to bless this grandchild at some point down the road. A couple of thoughts. First is defining the purpose of this money. And then second, the control of the money. You've already said that you want to be in control of it.

But let's go back to the purpose first. Do you want to earmark this money, let's say for particularly for college? Or do you want it to be more widely available? Widely available? Okay. No. Okay.

Not very good. All right. That's fine.

Yeah. So that takes out a 529 college savings plan, which is fine. If you were going to earmark it for college, I would have said that would have been the type of account to use.

But if not, let's look at an alternate approach. Another approach would be a custodial account where it's in your name, but it's for the benefit of the child and you're the custodian. And the only challenge with that type of account, Francis, is at the age of majority in the child state, it would become their asset. So typically at age 18, whatever has accumulated would automatically be theirs. And if they're making poor choices at that point, want to spend it on the sports car, they'd be able to do that.

Do you want it to automatically go to the child or do you want to be able to decide the time and the place to give the money out of the assets that have been accumulated? I want to be able to do that. Yes.

Say when, who will get it. Okay. Yeah.

Very good. So what I think the best thing to do would be to set up basically what would be a taxable account in your name and you would make it separate so you could make sure that the amount of money that goes in there is under your control and it's only given to the child at the time and place of your choosing. Now, you have the ability to give up to $16,000 a year without having to tell the IRS anything. That's an annual gift exclusion that you're able to make. If it goes over $16,000, that's okay. There's still no taxes due on that gift. You would just have to file IRS Form 709 to let the IRS know. And any amount over $16,000 a year that's given to the child would come off of your lifetime gift exclusion, which is $12 million. So you're probably not going to reach that threshold.

It's really just a reporting issue at that point. So really, what I would think about doing is opening a brokerage account in your name and start putting the money in, whether you want to do that systematically, a little bit every month or one time or both. And then I want you to think about how you want it invested, if at all. And that's really going to come down to the time horizon on this money. So if this is money you think you want to accumulate and allow it to grow over the next five years or more, then I would say let's think about investing it if you're comfortable with that. If you want the ability to give it to the child in less than five years, you probably don't want to invest it at that point.

Tell me what you think the right time horizon is for actually giving the money to the child. I really don't know. I haven't, you know, decided yet exactly which way to go. Yeah.

I mean, obviously it's a baby at this point, so it's probably not going to be anytime soon. Let's do this. You hold the line.

I'm going to take a quick break and on the other side we'll finish up and make some decisions about how you can move forward from here. Hey folks, let me remind you before we take our break that the MoneyWise app is available in your app store. Just search for MoneyWise biblical finance.

You'll find broadcast archives. You'll find our learn tab with the best content in biblical finance all in one place, podcasts, articles and videos. You'll also find our money management system where you can use our digital envelope system or just our tracking system.

Whatever you want to do, it's right there for the taking. MoneyWise app, search for MoneyWise biblical finance. We're going to pause. MoneyWise Live will return right after this. Stay with us.

We're delighted you've joined us today on MoneyWise Live, biblical wisdom for your financial decisions. We've got some great questions coming up, but here's the thing. We're away from the studio, so don't call in.

These questions were lined up in advance. Just before the break, we were talking to Frances. Frances has a new great grandchild. She'd like to start putting some money away for that child in her name so she has control over it, but where it's earmarked for that great grandchild in the future. And Frances, we determined we don't want to set it aside for college, so we want to put it in a taxable account. We don't want it to automatically become the child's asset at the age of majority, so we probably need to keep it in your name.

And then we said the time horizon, maybe five years or more, but maybe not. And so I think from that standpoint, I would probably just open, could be a high-yield savings account where you would just start, you know, parking money there. If you wanted to get it invested and you have at least a one-year time horizon, which given the age of the child, it sounds like you certainly do, you could use what are called I bonds. These are inflation bonds by the U.S. government. They have basically zero risk because they're backed by the U.S. government.

And they're paying right now 9.62 percent. And you can put in up to $10,000 a year. So you could go to treasurydirect.gov, open an account in your name. You can establish the child as the beneficiary on that account. So if you were to pass away, that automatically goes to the child. And then you would put the money, however much you want, into the I bonds and you'd get a great rate of return over the next year. And when those aren't paying as much as they are now, as inflation comes down a year or two from now, then you could move it into something else.

But that would at least give you a place to start putting this money, get it working for you, but where it's under your control and it would only automatically pass to the child at your death. How does that sound? Well, it sounds great.

I am getting on up there. So, you know, that's the only thing that makes me fearful. I do not want the baby's only four weeks old, but I do not want the parents to ever be able to touch it. Yeah. OK. Yeah. So that's the only thing. But I think that's a terrific idea.

I've already thought about that one. So, OK. Right. Yeah.

Very good. Well, I think the only thing there is, you know, you can establish in your will as well, you know, how you want this passed. And then the executor would make the decision, obviously, with a trust. You could have even more control over this money and when it passes and under what conditions. And it could, you know, never go through the parents hands the challenges with a trust. It's probably twelve or fifteen hundred dollars to set it up. And, you know, depending on how much you're looking to put away, you know, that may or may not that may be counterproductive just in terms of really eating into a lot of the money that you actually wanted to get to the child at some point.

Do you understand? Yeah. How much were you thinking of gifting to the child, let's say, you know, over the next 10 years? Well, maybe the maximum that they allow, you know, without getting into a tax. Well, you would never pay tax. It would just have to be reported. So do you think you may want to give as much as sixteen thousand this year and keep doing that?

Yeah. OK. Well, if you're planning on doing that, Francis, then it may make some sense given how specific you want to be about the controlling these assets even beyond your life. It may make some sense for you to, you know, put it into a trust.

I mean, obviously you can leave it directly to the child in a will and the parents won't be able to touch it. But a trust would actually allow a trustee to be named and that trustee can only distribute the assets, you know, based on the directives of the trust itself, which could be the child reaches a certain age, you know, any number of factors. So I might talk to an estate planning attorney. And if you need one, you could contact a certified kingdom adviser on our website at money wise dot org and ask for a referral to a godly estate planning attorney. But they could draft a trust for you for probably less than fifteen hundred dollars. And you could be very specific about how this money is handled, under what conditions it's passed to the child.

And then you would know as you contribute to it, sixteen thousand a year or more, that that money is only going to be released under the conditions, you know, that you have set, even if you pass away and that child is still a minor. Does that make sense? Yes. Okay. Very good. You've given me a lot of great things to think about and good. By the way, I've already prayed before he was born that he would be a fabulous, godly man and be saved at a young age.

That's the number one. So he's already been prayed for and keep being grateful. So thank you so much. I appreciate you all.

You're just fabulous. And you're the kindest, most thoughtful man. And I appreciate you. Well, Francis, I appreciate you as well. You are a wonderful, godly, great grandmother. This child is blessed to have you.

And it was my privilege to talk to you. God bless you. We'll take another break here in just a second. Before we do, a quick email. This one says, my boyfriend was let go from work last year.

Naomi writes to us with this. He has credit card debt and college debt. I'm debt free. I've been saving for buying a house. We may get married in the next year. Should I use the money I've been saving for a house to pay off his debt or should I just keep saving and let him pay it off as he goes?

And I would say, Naomi, absolutely not. You hold on to that money and keep saving. If the Lord should lead you all to marry, that's great. When you get married, at that point, two become one and you would join your finances. Until then, absolutely not. Sounds like you're being very wise with your money.

I want you to continue doing that. Reinforce that with him. And I want him to do the hard work to live within his income and get those debts paid off. I would direct him to christiancreditcounselors.org to get those interest rates down. But you all need to do a good bit of talking before you get engaged or certainly before you get married about kind of how you're going to handle your money as you combine it.

What lifestyles God called you to. You know, how was money handled growing up? Are you spenders or savers? And you all need to really put all of this under the Lordship of Christ, but don't combine anything or start paying off his debts until you all are married and then you look at it as your assets and liabilities together. But not until then. Thanks for your email. Well, folks, we're going to pause for a brief break when we come back much more on MoneyWise Live as we apply God's truth to your financial situation, whether it's your lifestyle, your giving, your debt, or your saving, we'll apply God's principles. Stay with us. We'll be right back. It's great to have you with us on MoneyWise Live today, but unfortunately today we're not live. We're prerecorded and therefore won't be taking your calls. However, we've lined up some calls in advance that we think you'll find helpful.

So stay tuned and enjoy the rest of the program. You know, the MoneyWise app could help with many of today's inflation fighters. It'll help you create a plan to pay your bills and pay off debt, automate your savings, and set many other money goals. The app lets you choose from three budgeting options, depending upon your management style, and it's available for both desktop and mobile.

All of this is conveniently located in one place. Plus, if you need biblical advice, and who doesn't, it's always available to you in the Learn tab of the app. You can post questions in our MoneyWise community and get responses from other stewards and our MoneyWise coaches. You'll also see in our Learn tab all the best content and biblical finance aggregated from across the country into one place so you can get the very best podcasts and articles and videos to be able to grow in your understanding of handling money God's way. So pick up the MoneyWise app today wherever you get your apps, just search for MoneyWise Biblical Finance.

That's in your app store MoneyWise Biblical Finance. If we want to go to talk about some practical ways to respond to the current financial realities, here's a couple of additional thoughts for you. First, don't panic.

Here's the reality, folks. You can't control the economy, so take charge of what you can control. Adjust your spending.

Add income if you can. Put off major purchases and absolutely, with interest rates rising in particular, avoid adding to your consumer debt. If monthly debt payments are high, I'd really love for you to talk to a consumer credit specialist about getting on a debt management program.

I've mentioned before that we recommend ChristianCreditCounselors.org. By all means, though, avoid debt consolidation loans because they really only treat the symptom. They're not going to address the cause for the overspending. I don't like replacing debt with new debt.

Let's stay with what you've got. Let's get those interest rates down and get that paid off once and for all, but let's correct the behaviors that led to the debt in the first place along the way. Thirdly, adjust your spending plan. You need to track your income and expenses carefully and realistically and make adjustments to take higher costs into account. We're certainly seeing it at the pump, although we've gotten a bit of a reprieve as of late, but food prices through the roof and so many other areas as well, and that's where, again, the MoneyWise app can really help with that.

If you have an emergency fund set aside, now could be the time to dip into that, but really, folks, only use this as a last resort, and I would commit to refunding your emergency account as soon as you possibly can. This next one is what I often see happen, and that is don't stop your giving. So often when we get into a tight financial spot, like we are right now with costs up, the average American family spending nearly in excess now of $500 a month, $6,000 a year more, we often will quickly eliminate our giving category.

Don't do that. A generous attitude really demonstrates that you recognize God's ownership of everything. Generosity is also an opportunity to lean on God's provision. Besides, there are certainly people out there worse off than you and I are, so why not take this opportunity to help the less fortunate and obviously continue to support the work of the local church.

And then finally, the Bible assures us that we can trust in the Lord. So that's my last and most important suggestion for navigating a tight financial time. Trust that God has a plan for you and your family. Go to the Lord with your concerns and needs.

Invite Him into your financial life. So often we miss that, and I believe He will provide what you need when you put your faith and hope in Him. It may not happen the way you envision. It may not happen in your timing.

The late Larry Burkett was fond of saying, God is never late but seldom early, and I've certainly experienced that as well. So hey, visit us at MoneyWise.org for more information about all of these topics. Plug into the MoneyWise community to get answers to your questions.

Download the MoneyWise app. We want to be here to help and encourage you in your financial journey and to do it with a biblical perspective at the core. All right, the calls are mounting and so we're going to head to the phones.

To Ohio we go. Stephanie, thanks for calling. Go right ahead. Just a little bit of advice. I want to do, I'll just preface this with, I want to do this out of the kindness of my heart, but I also don't want to be taken advantage of.

So I need a little bit of guidance. I am a registered nurse and I work at home. One day a week I go into the office, but I have had my grandmother, she's 98 years old. She is my father's. When my mom was pregnant for me, my dad was killed.

We've been blessed with a stepdad, well he's my dad, but anyways, we've had a wonderful family life. But as grandma has gotten older, I've always gone back and forth with her and she was living in a home and then subsequently went to an apartment and I would go and see her. She lived about an hour and a half away from me. I'd see her weekly, check on her, go get groceries, things like that, help take care of things.

I found out she was being taken advantage of, so I helped her with her bills so people would, I'm not her POA. She has two daughters, my aunt and that kind of puts me in a predicament because my dad's gone and I'm the granddaughter. But anyways, she moved up with me. The time was going to be divided, but it didn't turn out to be like that and so she is with me full time, which is great and I want to do that for her. I love having her here. She's in her right mind.

Other than slowing down because she's 98 and our bodies slow down, she does very well. My question is she was paying me $500 for being here with us for the month and I didn't do it for the money. However, she does have money in the bank account. She doesn't have a lot, but when my aunts would take her to visit, she would give them the same amount of money for maybe a two or three day stay. Unfortunately, after a year of time and knowing this and knowing that she had been taken advantage of before by them, I was starting to get resentful and I don't want to be like that.

I just, I don't. And so my question is in order to make it fair, I was trying to think of, you know, maybe how could I go about just saying, Hey, I, well, I've tried this, I've talked to her about it and she's open to this, but being fair about, um, you know, paying our bill and paying our bills and dividing them between, you know, my husband and I and her, and then, um, just for like a mortgage and, uh, living expenses here, not other things that we have to pay for. Um, and not taking money for taking care of her for, you know, cause I want to just be the granddaughter that, you know, I just, it's a blessing to me to have her here and love on her.

So, so I don't want to be paid for that, but even though I am a nurse, you know, I take care of a lot of things for her. So I mean, I just kind of want some physical, um, I don't know, advice, affirmation, what I should do. Yeah, very good. Let's do this. Stephanie, I hate to ask you to hold, but I've got to take a quick break, but when we come back, I'd love to give you my thoughts on this.

So delighted that you are caring for her in this way. You obviously have a heart for that. It's something the Lord is using you in, and I appreciate your desire to do it in a way that's right and, uh, and above board. So let's talk about how you can do that just around the corner. Folks, we're going to pause for a quick break again. We're not here today taking some time off, so don't call in, but more questions just around the corner.

This is MoneyWise Live, biblical wisdom for your financial decisions. I'm Rob West, and we'll be right back. Don't go anywhere. This is our final segment of a broadcast we previously recorded.

Thanks so much for being with us today, and we hope you'll stick around and enjoy the rest of today's program. Before the break, we were talking to Stephanie. She has recently moved her grandmother in with her. She is not the power of attorney, but she is a registered nurse and is providing some care.

She wants to do that just to bless her grandmother, who she loves dearly, and is really trying to think about how to navigate the financial side of offsetting some of the expenses that she's incurring, actual costs for her care in living in their home, but also just given the complexities of ants that are involved, and even in some cases in the past where she was taken advantage of, how does she navigate all of that. And Stephanie, I appreciate the background that you shared. A couple of questions. Number one is, do you feel like the money that was given to other parties that perhaps was not done in the right way, and maybe she was being taken advantage of, is that continuing or is that all in the past? No, it continues when she goes to stay with them, but it has been brought to light and maybe they'll realize that you don't do that. Yeah, I hope so. Right. So monitor that one.

Obviously, any of these issues that involve family members get pretty sticky and we want to try to preserve the relationship, and yet at some point you may need to step in and call it out even more appropriately just to make sure that it doesn't continue if in fact she is being taken advantage of. Were you going to say something else on that piece of it? No, no. All right. So I think we let that one go for now.

As to how you might think about the expenses that you would ask her to offset, you said she's been doing $500 a month, that's continuing I'm assuming, and do you feel like you want to ask for a bit more than that as you've gone in and calculated what the actual expenses are? Right, yes. But I just didn't want to make it more for like my care. You know, my care is I want to do it out of the goodness, you know, just do it because I want to do it. I totally get that.

Yeah, absolutely. So here's the way I would think about that, and this doesn't mean it's the right way, but it's just one thought, is I would think about, you know, what are the actual expenses that you are incurring as you care for her? Again, not your time as a nurse because you want to give her that as a gift, but the actual household expenses.

If you haven't moved in order to bring her in with you, then you would be covering your mortgage anyway for your family. So you may want to consider not including that, but as you go in and look at, you know, what are the utilities and, you know, what are the food costs and really do a thoughtful kind of analysis back of the envelope on what it actually takes for you all to care for her and, you know, provide for her in your home, I think that would be a great starting point to be able to say, you know, we've thought through this and here's what that actual cost is. And I'm sure she'd be delighted to see that. And then the key would be there to sit down and just really clearly communicate what that is.

What are your thoughts on that piece of it though? No, I think that that's kind of what I've really just been struggling with this and I prayed about it and it just kind of has come to a head and we had talked about that. And before I put anything down, you know, I told her maybe we could put this down in writing and she's very agreeable to it and she's just so appreciative to, you know, be here and she wants to be fair too. I mean, and she's very good about that. Yeah. And I think that's key. She has her own room with a bathroom, you know, so it's kind of like it is an assisted living thing for her because we had an extra. We just, you know, rearrange things. Yeah.

Well, I would think through the rationale. I'm sorry. Go ahead.

Help it. Well, I was just kind of concerned like if I had that road up and put on and her and I signed it with a note or with a notary, would that at least cover me? I mean, I don't want people thinking, you know, coming back.

I don't. There's a lot of craziness and I don't want people coming back and saying, I'm stealing money from her. But, you know, it obviously is like she lived at her apartment. She had to pay for that.

You know, I just want to cover myself. Sure. Yeah. No, I think, I mean, nobody could really fault you if they were being reasonable for what you're saying here, given the care that you're providing that you don't want to charge for. And given that you're basically just allocating actual costs, if that's the approach you take. And I think absolutely not only communicating that clearly, but documenting that in writing. So somebody says, well, you know, that's what you're saying.

But I don't know that that happened. I think spelling that out, the rationale behind it, what the agreed amount is, you all both signing on it. If you want to take the extra step of a notary, that I think certainly is a good thing to do and obviously date it.

And that would, you know, folks would know that she's in, you know, has a clear mind and can make these decisions at this point. I think the other step would just be, do you want to share that with other family members just so you say, hey, I want you to know what we're doing and why. Just so this is being done kind of in plain sight or given some of the history there, if you'd rather not, I think you're fully justified to do what you're doing.

And the key part of it is not necessarily sharing it with others, but it's really about documenting it. So I think you're on the right track. I'm affirming all of what you're thinking here.

And I think you're certainly pleasing the Lord in the way you're approaching this. So I say just continue on. The only other piece I would just throw out is at some point, especially given that she's living with you, it may make sense for you to be that POA. And you may want to talk to her about that. I realize that may ruffle some feathers, but that probably is the better option, just given the living arrangement. But you're going to have to make that call.

But apart from that, I like this plan, Stephanie. So we appreciate your call today. All right. Well, I cannot thank you enough for your ministry. And thank you. I just thank you for blessing me today. Well, delighted to do it. And thanks for serving your grandmother so well. God bless you. And to Arkansas, Lois, thanks for calling. Go right ahead.

Hello. My name is Lois and I wanted to ask about I have a will. I'm 82 years old. And my will, it says that my children, I have three grown children and they will inherit equally.

Yes. Well, I have also two of my children have children. One of them has a daughter and the other one has two daughters. And my son has no children.

He's not married and has no children. So I wanted, I have an IRA that's worth about 200,000. And the rest of it, the three grown children will wind up with, I have an insurance policy in which they will get 200,000 when I die. And they will be, they will share about 800,000.

So they will get 466,000 if it stays where it is. Anyway, they will be taken care of. I wanted to know the best way to provide for my grandchildren.

And my thought was, if it's legal, I don't know. That's why I'm calling you, is to either put their parents, my two daughters, and to be fair, I think I should put my son who has no children on the IRA divided into fourths and give each my children a fourth of it. And one will get a half of it, the one who has the two grandchildren. And then they, I want them to, because I don't, well, maybe I could put my grandchildren on there. I don't know.

But I don't think they would be able to handle it. I don't know. I wanted, one's only 14.

One is 33 and one's 45. Sure. Yeah. Let's talk about that for a second because you can name, if you specifically want to give the money from the IRA to the grandchildren and not the parents, because as you said, your children, their parents, your grandchildren's parents are already provided for with the other assets and that's being handled by your will. The IRA, as you, I think know, does allow you to name beneficiaries and divide the percentage the way you want among those beneficiaries. And that will pass directly to those beneficiaries outside of the probate process at your death. And so you could name those children, those grandchildren as the beneficiaries and whatever percentage breakdown you want. And then they would get that money in a custodial account and then it would become their money at the age of majority to use how they wish. The problem is if you don't do it that way, then it's going to go to the parents and the parents are going to have to decide how you want it handled or how they want to distribute it. And they could choose to do, frankly, whatever they want at that point. Well, I know they say you should never trust a human being, but I really trust them to for the best interest of their children, you know? Okay.

Yeah. So I think you would just have to make it known to them that your intention is for it to go to the grandchildren. You can also spell that out in your will as well. But the key I think is if you name those beneficiaries, it's going to go to whichever beneficiaries you name, and it's going to be their asset that they control. And it's going to pass outside of probate, meaning the will is not going to be enforced related to that particular account. And then you would just have to make your wishes known to your kids about your desire that that particular asset be passed down to their kids, your grandchildren. The other approach is to handle that all through your will.

So I think you could go either direction. It sounds like you have a lot of trust in them. And I think it's really just about communication and then aligning your wishes with the instruments, the will and the beneficiary designations for the IRA.

Okay, I know that if I give it to my daughters, I trust them, but then they're going to have to withdraw and give it to, you know, little by little, they wouldn't want to withdraw the whole amount because that taxes has to be paid when it's withdrawn, right? That's right. Yeah.

Yeah. As an inherited IRA, taxes are paid as it's taken out. And there's a couple of ways that that has to be calculated in terms of how quickly that money has to be distributed.

It will happen either usually over a 10 year period over or over life expectancy. But as it comes out, taxes would be paid. So you can name whichever beneficiaries you want. And I think the key here, Lois, is just to communicate really well with your kids ahead of time so they understand and aren't surprised by what they find at your death and then let them carry that out. Delighted to hear that you're thinking giving such thoughtful attention to all of this.

I know it pleases the Lord as we think about inheritance and doing that in a way that's wise. So God bless you, Lois. Thank you for calling today. We appreciate it.

Well, folks, that's going to do it for us today. So glad to have you along as we mind the scriptures and apply God's wisdom to your financial decisions and choices. You know, when we think about our role as steward, it's a high calling. We're money managers for the King of Kings.

Well, it doesn't get any bigger than that. So we want to be found faithful and we want to go back to his word so we understand how to go about that. Well, our team is essential to what we do here every day. So let me give them some thanks. Want to say thank you to Amy and to Courtney and to Melody and to Jim, the team serving us today, doing all the things that makes this show possible.

Money Wise Live is a partnership between Moody Radio and Money Wise Media. That's going to do it for us, but I hope you'll come back and join us next time. We'll do it all over again. In the meantime, may God bless you. Bye bye.