More than Money with Gene Dickison
“Real Life Questions – Real World Answers”
“You’ve recently talked on your radio show about kids being forced to pay for their parents nursing home care. My brother and I talked to our mom and dad about this. Neither of them had ever heard of such a law.
Dad is 74 and mom is 72. They’re both in good health, they own their home, don’t have any debts, and pay their bills on their social security and dad’s pension.
What should my brother and I do to protect ourselves? ”
The Pennsylvania Filial Support Law is the issue. In recent years Pennsylvania courts have held adult children responsible for the care costs for their indigent parents. These court rulings have sent shock waves through many Pennsylvania families. Some even pitting brother against brother – or sister – in court.
There are no correct answers that fit every family. There are some steps you should explore. First, seek the counsel of an experienced elder law/estate attorney. Have your lawyer meet with your parents and review all their situation in detail. You and/or your brother should attend that meeting with them to insure everyone is hearing the same counsel.
Second, your parents (and again you and/or your brother if possible) should meet with an experienced financial advisor. An experienced advisor can walk you through the components of an effective Long--Term Care Plan. A LTC Plan will explore all your financial options including, but not limited to, long term care insurance. It may even be reasonable for you and your brother to join forces on such coverage.
Finally, you all – as a family – should select the actions and options that best fit you. There are no right or wrong answers. There are only the answers that give your family the best possible outcome.
Should you need guidance in this process, please contact us.
“The woman who prepares my taxes messed me up. I’m 71 and have not taken my RMD (required minimum distribution) of just over $17,000. I guess she misunderstood the rules and I simply didn’t know any better.
I still wouldn’t know except I came to your office and met with one of your advisors who walked me through this. I know the penalty is really bad, but your man seemed to think this might be fixable. I tried to explain why to my wife, but I’m not sure I understand the solutions myself?’
(This question was first answered in a recent newsletter, but we got many calls and emails telling a similar story of getting bad advice on RMDs. I thought it might serve our audience to give this information again. If you’re in a similar pickle with the IRS over your RMD please let us know and we’ll assist you with the proper paperwork.)
Well I’m certainly glad you made the trip into the Holy Lands – between Bethlehem and Nazareth – to visit our More than Money World Headquarters. I’m also glad ‘my man’ gave you good counsel and – hopefully – put your mind at ease.
Take a deep breath – and remember to let it out! You aren’t the first and certainly won’t be the last taxpayer who didn’t get this RMD thing correct the first time out – and the IRS knows it.
IRS Form 5329 is for reporting a missed RMD and providing the IRS with your explanation. You will likely need to file an amended return (1040X) to properly report your RMD and the appropriate tax.
All of this should be done for you by your tax preparer – at no charge. Her mistake.
Once she has fixed it – consider finding yourself a new tax preparer.
“We had a meeting at our church about estate planning. The gentleman spoke about two things that were news to me and my wife.
He said we could have the church get our RMDs right from our IRAs and we wouldn’t have to pay tax on them. He also said the church could take over our old life insurance policies and they would collect the benefits when we die and they don’t pay income tax. Are these true?
We are both 83. Our kids – and most of our grandkids – are grown and doing fine. We don’t need either the life insurance or the IRA income. This year will be our 42nd year in our church. We would love to help. It has meant so much to us both.”
You heard both of these ideas correctly.
Done properly, RMDs can be sent directly from your IRA custodian to your church and you will pay no income tax on those funds. Your church (and many other non-profits which qualify as well) will also pay no income tax. This action will become even more valuable in 2018 and beyond as the tax reform act of 2017 makes itemizing your charitable deductions less likely.
Gifting your ‘old’ life insurance policies is another effective way to assist your church in continuing its work after you have passed. The life insurance proceeds they receive will be out of your estate and not taxable to the church.
Be careful to work with an experience financial advisor and/or tax advisor to insure you follow the requirements of these actions correctly. And take some deep pleasure in knowing you will have made a wonderful impact for generations to come.
“My daughter and son-in-law have gotten themselves pretty deep in debt. Big car loans and credit cards are most of their problem.
I told them you recommended Dave Ramsey’s course and they went through the program at their church. They have already been doing the assignments for about four months and are excited about the progress they’ve already made. They’ve completed paid off one of their cards already.
They’ve asked me to help them. Not with money, but by meeting with them once a month to review their progress – kind of like a scorekeeper. The say it will help them stay on the program for the two and one-half years they figure it will take.
Do you think this is a good idea?”
I think it’s an outstanding idea.
Ramsey’s Financial Peace University has helped thousands of people break their addiction to debt. We recommend it often to get people back on track when they’ve made some bad financial choices, but sincerely want to get back on the right track.
To be fair, Dave Ramsey and I don’t agree on all financial topics. However, I have yet to find anyone serving the needs of those in debt better than Dave Ramsey.
You would be doing your kids a great service by acting as their ‘scorekeeper’. They clearly respect you and want to share their progress with you. Most people find it helps to have someone in your life that holds you accountable when you’re trying to reach any important goal – like getting out of debt. Just as important in my mind is that they did not ask for money (a sure sign that they didn’t ‘get the message’) they asked for help and support.
You will be a blessing in their lives.
“I am 72 and must take RMDs from my three IRAs. Two are invested in mutual funds and one in an annuity. Each sends me a letter toward the end of the year telling me to take my RMD and how much I have to take.
My mutual fund IRAs have done quite well, but I’ve had nothing but trouble with the annuity. The returns haven’t been good, the salesman won’t help, and the company gives me no service at all.
Why can’t I just take all my RMDs from the annuity and leave my mutual funds alone?”
Are you sitting down? You can.
The IRS doesn’t care from where the RMDs are taken. They only care that the total required amount comes out of some IRA – and that the required tax – if any – is paid.
You may even have a more pleasing option. If you tax bracket is low enough. Or if the amount you have in your annuity is modest, you may be able to wipe out the entire annuity in one withdrawal and be done with that company forever.
Be sure you look at your tax numbers carefully. Use a professional tax preparer (Enrolled Agent or CPA) to advise you. In either event, you’ll be on your way to a much happier RMD result.
More than Money Radio and Television
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Words are Powerful Tools for American Freedom
There are days when it just doesn’t pay to listen to the news. Ok, that may be most days. If we absorb even one-tenth of the barrage of negative reports broadcast it would be enough to drain the optimism from the most pie-eyed among us. Are we condemned to be attacked on all sides as people, as schools, as communities, states, and a nation? I think not.
In past letters I have encouraged us all to turn to prayer. There are reasons too many to list for us to turn up the volume of our prayers. One reason that has been coming to me time and time again of late is so that we may best insure that we are in alignment with the will of our God. And, if we find that alignment, what else might we find? How about the amazing advantage of having God himself on our team. Paul writes (Romans 8:31):
“If God is for us, who can ever be against us?”
If God is for us . . . it is up to us to ensure that God be for us by keeping aligned with all the loving abundance he wishes for us. Pray that our nation turns its face back toward the God who blessed it from its founding days.
Please allow us to serve you and those you love.
P.S. Thank you to everyone for your wonderful cards, notes, emails, gifts, thoughts, and prayers on my birthday. They are appreciated more than you could know. Some folks get queasy as their age number climbs, but I offer them – and you if it fits – this counsel: growing older is mandatory, but growing more mature is most certainly optional. According to my wife, I have chosen not to get much more mature than the average 16 year old. Sadly for her – I take that as a great compliment. I pray all of you stay immature and childlike for the whole of your lives.