Podcast Episode - Ask Suze & KT Anything: Am I Responsible For My Ex’s Debt?

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On this episode of Ask Suze & KT Anything, Suze answers your questions about debt, gaining access to a deceased loved one’s accounts, T-Bills, starting out saving money and more!

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Podcast Transcript:

00:00:33

Suze: February 2, 2023.

00:00:36

KT: Where's the time going, Suze?

00:00:38

Suze: You always ask that question you always do anyway. Welcome everybody to the women and money podcast as well as everybody smart enough to listen.

00:00:47

KT: This is ask KT and Suze...

00:00:51

Suze: Anything anything. And if you want to ask us anything just send in your question to ask Suze podcast, that's S. U. Z. E. podcast at gmail dot com. Listen to me, a lot of you are sending in really really really really really long questions again... isn't gonna happen. Thousands of you are writing in

00:01:16

Suze: and so if you want a question answered it has to be short, really short. Or just not gonna happen anyway. I'm excited. You know why

00:01:27

KT: Why?

00:01:28

Suze: Right well I'm not exactly excited that the 49ners seriously got obliterated

00:01:35

Suze: right on last sunday but I am excited that the Kansas City Chiefs won. I like that.

00:01:41

KT: Because your boyfriend is Mahomes.

00:01:43

Suze: Mahomes, I call him, what do I call him?

00:01:45

Suze: That cat's meow. Anyway. So but also Alliant Credit union has raised their interest rates to 2.95%.

00:01:59

KT: Almost 3%. That's incredible.

00:02:01

Suze: On the ultimate opportunity savings account. I love that a lot. Also I just want to tell everybody that many of you have been worried that you're not going to be able to participate

00:02:14

Suze: in the three and six month C. D. s that we're going to be offering in about one month from now, through Alliant Credit Union. However you will be able to because why Alliant  has decided

00:02:28

Suze: that everybody will be able to either purchase these you know in your Ultimate Opportunity savings account and even if you don't have one whatever account...

00:02:39

KT: You happen to have just to be a member, It's just that simple.

00:02:43

Suze: Just that simple like KT said and you go to my alliant dot com. M Y A L. L. I A N. T dot com to become a member.

00:02:57

Suze: There you go. You got questions for me today.

00:03:00

KT: I do. Are you ready?

00:03:03

Suze: I'm ready. You looked a little sad. Are you sad today?

00:03:06

KT: Oh no no I'm not sad but I wanted to just tell the listeners that when I looked through all of these emails I think it's important sometimes to balance out

00:03:16

KT: the tragedies with the happy ones or the questions that are very simple and the questions that are very complicated. So this complicated. No it's a sad one. It's not at all complicated for you but it's a very sad email for, you know for Pat who sent this in and I want to share it. I I really felt my heart went out to you, Pat

00:03:40

KT: And Suze, you're gonna hopefully help her and anyone else that may ever experience something this tragic. Hi Suze and KT. I wish this was a happy email but it is not your podcast was a must before tragedy hit my life last October 16, 2022.

00:04:03

KT: My only child ended his life on that day.

00:04:08

KT: I feel as if I have died that same day with him now I am struggling with getting my son's very few possessions in order. He was 21 at the time. He lived with me all his life, never married nor children. He did not leave a note or anything in writing.

00:04:29

KT: He didn't have a will or any other document where it would state his wishes. He didn't even add anyone as a beneficiary to his checking account, investments or life insurance policy. This was all through his job by the way and again, he probably didn't know about that. All I knew he possessed was a checking account and two brokerage accounts, Fidelity and Robin Hood

00:04:57

KT: and his 2006 car that was paid for

00:05:01

KT: a survivor's financial advisor through his former employer told me I could run his credit report to find out if maybe he had other accounts open. I can't do that. Experian  asks for proof that I am authorized to act on his behalf. Such as a copy of a legal document with the court seal indicating I am the executor of the estate. And how do I get that?

00:05:31

KT: I am so lost. I just want to put an end to all of this. I want closure, Suze. His dad and I were able to receive the life insurance benefit after I filed all the needed documents with the insurance provider. But for these other accounts they're making it so complicated.

00:05:52

KT: She said, Suze I just don't have the brains or the stamina to do this. What advice can you give me? What should I do?

00:06:01

KT: So let's start with the first thing Suze that anyone dealing with a death a sudden death needs to do.

00:06:09

Suze: Well what makes one's life easier in this situation. Pat, I'm so sorry, I'm sorry I'm sorry for your loss. You know what can I say? Other than that there's really nothing that will heal your heart from this one for a while. If ever.

00:06:27

Suze: Let me just see if I can take a larger view point on this. Which is what makes this process whenever it happens at any stage of life easier is when

00:06:42

Suze: a few things have happened. Either the person has created a will saying where everything is to go who's to be the executor and things like that. Or a living revocable trust. You all know that I love the must have documents and I think that's something that all of you should have. However in this particular situation, whenever you have an account like a 401(k),  

00:07:08

Suze: all you have to do is always designate a beneficiary and then it will go directly to that person. If you have a bank account

00:07:18

Suze: then you can do the same thing. It could be a transfer on death account or a pay on death account. So you've named somebody. So it never has to go through probate, same thing with life insurance. Life insurance should always have a beneficiary named. When you don't have a beneficiary named as in this case Pat. Then everything is dictated by what's called intestate succession.

00:07:48

Suze: So when somebody dies without a will and they have assets that that do not have a designated who, it's to go to pay on death or transfer on death name.

00:08:00

Suze: Then you are governed by the intestate laws of the state that you live in.

00:08:07

Suze: Because your son lived with you, he did not have any siblings, anything, any you know spouse, any children, nothing else. You and his father are entitled to 100% of everything that he has. So you now have to prove that number one he's dead. So hopefully you got a certified death certificate.

00:08:37

Suze: I'm not exactly sure if you did or not. But again for an overview on this for everybody. If ever you experience a death of a loved one,

00:08:48

Suze: you have to immediately get a certified death certificate. And that is where you have a death certificate that has been certified. The easiest way to do that is through the funeral home or the mortuary. It usually will cost 10 or $20 for a certified one. You should have at least 10 of them, preferably 20. As time passes like in this case since it was last October,

00:09:17

Suze: you can't go to the funeral home anymore. It's got to be done right away. So then in this case, what you would do is you would go to the Bureau of Vital Statistics and that is where you would apply to get a certified death certificate. But first you are going to have to be appointed by the court in your state

00:09:41

Suze: that you are the executor and that you have the right to do all of these things. Now I know that Pat, you you don't have a brain for it. You say how would you at this point in time you're not in your brain, you're in your heart and your heart is broken and when your heart is broken your brain is broken as well.

00:10:06

Suze: And that's true for everybody because you can't think straight because you are hurting so badly. Therefore

00:10:15

Suze: you need to just take your time. You need to just do this step by step. You might want to go to the county of vital records and see if you could get everything you need there. But you may very well need to do what? Go and get it a sign where you are the executor. You might need a lawyer to help you do this. I think that would be the absolute best thing for you to do since it's just so difficult for

00:10:45

Suze: you. But little by little those are the things that you have to do and then you contact the brokerage firm, his bank, everybody and all of that will be transferred to you. Just that simple. KT, I have to just say when you die in intestate, let's say her son right? There were siblings and parents.

00:11:14

Suze: It might be divided between all of them. It's very for every state has what's called the rules of intestate succession, which is how they determine the assets are to be split if you die without a will. So that is something all of you that you don't want to have to go through. Trust me on that one. I know sometimes your kids are young

00:11:41

Suze: and they don't have much. They have a car. Maybe they have, you know, a life insurance policy, whatever it may be. And you don't think that they need these things. They need these things. 00:11:53

KT: And you need to have the documents in order to protect you and no matter what. Right. Yeah. Alright. Alright. Good. Suze. Thank you for doing that. And Pat again. We're so sorry for your loss.

00:12:05

Suze: Yeah. All right. Next question.

00:12:07

KT: Suze, this next question is from John. Dear Suze and KT. I have a question or two.

00:12:13

Suze: Did you pick that because it was your brother's name?

00:12:16

KT: No, we call my brother Johnny . Okay, so dear Suze and KT. I have a question or two about rollover ira accounts, My husband and I each have a rollover account for our old 401(k)s. He has approximately 12,000 in his

00:12:37

KT: And I have about 30,000 in mine. We are both fast approaching 60 years of age with the market down as it has been lately. A couple of positions in our rollover accounts are looking pretty good

00:12:51

KT: as far as adding to a position at a much lower cost basis. Are we allowed to contribute to these accounts since they are funded with pretax dollars? Are these accounts subject to RMDS as our 401()s are? When we reach a certain age are rollovers in 401(k)s case treated the same way?

00:13:15

Suze: Yes rollovers, traditional rollovers

00:13:20

Suze: meaning pretax rollovers and pretax 401(k)s, traditional 401(k)s are treated the same way that if you were born between 1951 and 1959 then at the age of 73 is when required minimum distributions start

00:13:42

Suze: 1960 and later. You can wait till you are 75 years of age. However your first question is can you contribute to this? If you are earning money

00:13:58

Suze: and you make new contributions into this, that would be then a pretax contribution. It would be a traditional IRA and you can put money in it because you can combine your ira rollovers with your iras and all of that fine. As long as they're all pre tax.

00:14:18

Suze: However if you want to put more money into it, why not just open up a Roth IRA and do it through there. If you qualify for it income tax wise. So that's what I would be doing. That would be smarter for you than putting

00:14:36

Suze: more money into a pre tax situation, if you ask me. Next question, KT

00:14:41

KT: OK. This is from Amy Lee. Hi Suze and KT, both myself and my husband's employers offer Roth 401(k)s but we're not sure if we should be taking advantage of them.

00:14:55

KT: Is there an income level or tax bracket where you would say you would be better off using the traditional 401(k). Thanks so much.

00:15:05

Suze: So a few things and it is actually kind of relates to the last question to that, John asked and first of all, Amy, I have to tell you,

00:15:16

Suze: I don't care what tax bracket I'm in right now. If I could put money in a Roth 401(k) versus a traditional 401(k), I had a company that offered them, oh, you betcha, I would do it. Hands down for two reasons. Hands down a Roth 401(k) now is so fabulous. I can't even tell you why

00:15:40

Suze: Before Secure 2.0 was passed just a little bit ago.

00:15:47

Suze: If you had money in a Roth 401(k), you would have to start taking required minimum distributions out at the appropriate age.

00:15:58

Suze: However, a Roth I R A you don't have to take required minimum distributions out ever. That was one of the main differences between a Roth 401(k) and a Roth IRA now because of Secure 2.0

00:16:17

Suze: you can leave that money in your Roth 401(k) for as long as you want to. And it is no longer required that you take required minimum distributions from a Roth 401(k).

00:16:34

Suze: And that then takes me back to, why are you better off doing a Roth 401(k) versus a traditional 401(k), is because you can just leave it in there for the rest of your life. You can put larger amounts of money in there than you can in a Roth I. R. A.

00:16:54

Suze: And anytime you want, you can always convert it to a Roth IRA you just want to make sure that the Roth IRA has been open for at least five years, but no a Roth 401(k) is so fabulous now. I don't see any downside in it at all.

00:17:12

KT: Okay, Go Roth. All right. All right. Next question from Dana. Hi Suze. I'm in my late sixties and I have a small alimony coming to an end

00:17:22

KT: Before my divorce, my husband siphoned all his money and stopped contributing his salary to our joint account. I was in a very violent abusive marriage and everything was controlled by him until I finally had the guts to sign a lifetime restraining order. Good for you, Dana.

00:17:46

KT: And then she said long story short, I ended up with very little in an IRA  it's in cash for years because I just don't know what to do with it. I don't want to lose it. So I need some advice. However, there's other circumstances. All of my ex's marital debt was allowed to be discharged years ago in an individual bankruptcy, 00:18:10

KT: The debts became mine. So I followed the same horrible path. I lost my house, which was the only safety net. I had. Suze, what should I do? Now Suze, this this was the reason I picked this question is because I didn't know that can happen. The debts became hers, wow!

00:18:32

Suze: What really is important? Everybody...

00:18:35

KT: I never knew that.

00:18:36

Suze: ...is that when you when you get married,

00:18:40

Suze: this is very important for you to understand, even if your spouse has credit cards in their individual name

00:18:50

Suze: at the bottom of the application it asks, are they married? And when they say yes, then there's a little tiny thing and really small writing that says these debts will then be jointly and severally liable. Which means that if you separate the other person is liable for the debt that that person charges on that individual credit card.

00:19:20

Suze: So that's why I have always asked all of you to please sign a prenuptial agreement before you're married. That states that you are not responsible for any debt occurred after

00:19:36

Suze: the marriage takes place and that you should always make sure that you should know that if your spouse is opening up in individual credit card that that credit card knows that there's a prenup stating that.

00:19:51

KT: So where does she begin with this?

00:19:53

Suze: But it's important for everybody to know because Dana has already gone through this that if you are in a relationship and now you're getting a divorce and any money

00:20:06

Suze: is owed on any credit cards, especially those that were in joint names.

00:20:13

Suze: That those credit cards have to be paid off in full and closed down.

00:20:20

Suze: Otherwise your ex spouse can now claim bankruptcy like Dana's did. And then what will happen is the creditors will come knocking at your door

00:20:31

Suze: and unless you have to claim bankruptcy like Dana did you are going to be the ones to pay those debts. Student loan debt will not as long as they didn't combine their student loan debt. As long as the student loan debt is an individual name, Dana is not responsible for that. However

00:20:53

Suze: now Dana to answer your question which is, you know you have this little IRA  it's in cash and it's been that way for years because you don't know what to do with it. Any advice basically you have to know that you feel secure you're in your late sixties here. So you want to make sure that this money is kept safe and sound

00:21:18

Suze: wherever that account happens to be, you might want to ask them, can you purchase Treasury bills three and six month treasury bills right now within that I. R. A. And they will probably say yes to you. And it's those types of investment certificates of deposit, things like that that you should do right now. Okay.

00:21:41

KT: All right. Next question is from Israel...

00:21:44

Suze: Are there gonna be any more sad ones?

00:21:49

KT: I hope not.

00:21:50

Suze: Alright keep going keep going.

00:21:54

KT: Next question is from Israel. On a previous podcast you mentioned to buy T bills on a secondary market since these transactions would entail some fees, Why not buy them through the brokerage account or ready everybody: Treasury direct?

00:22:14

Suze: Israel you absolutely can and should do it that way. I don't have a problem with that at all. Sometimes people like doing it on the secondary market because they know exactly what they're going to get and it's just that easy. And sometimes you can arrange it with your brokerage firm as well on the secondary market that there is no fee. Just to

00:22:35

Suze: depending on your situation. Go on KT.

00:22:38

KT: A similar question Suze. This is from Daniel. Do you have any problem putting emergency savings into short term T. Bills or at least part of it?

00:22:49

Suze: No. Not on any level. If you do three or six month treasury bills or maybe you want to take Alliant Credit

00:22:56

Suze: Union up on their offer and do a three or and or six months C. D. You can do it there as well. And then when you want that money can go into your ultimate opportunity savings account currently earning 2.95%. You might want to look at that as well to do so by the way you all should go to my M. Y.

00:23:17

Suze: Alliant. A. L. L. I. A. N. T. Dot com. And that's where you open up the ultimate opportunity savings account. Alright.

00:23:26

KT: Alright. This is from Patti.

00:23:28

KT: My husband is 65 and on disability. I am 63 and working we have a net worth of about $2 million. Yeah good for you guys. House is paid off. Kids are grown independent and financially stable. And then wait. Patti writes. Yay.

00:23:47

KT: We're cheering you on too Patti. Ar 15 year term insurance has run its course. The renew rate is about four times what we've been paying. How do I know if we still need term insurance?

00:24:02

Suze: By simply asking yourself the question if you died, Patti or your spouse died, would you still be totally financially okay?

00:24:15

Suze: If the answer to that is yes then you don't need term insurance anymore. However, at 63 with a net worth of $2 million dollars, shortly, you're gonna be able to collect social security here and everything. You do not need term insurance. I can already tell you that one. All right,

00:24:37

KT: Suze. This next one is my favorite. This is my very favorite favorite emails from Roz. I'm just starting out. Suze. I'm getting my finances on track. I have $2000 in a savings account and 1000 in emergency cash. Is it worth it for me to even buy a three month C. D. At this point

00:25:00

KT: it seems like I need more money to put in a CD to make the interest gained worthwhile. Is my thinking correct. I just got a small raise at work. I'm planning on using that new income to start and fund a Roth IRA. It seems like everyone else is working with thousands of dollars and I'm working with just penny, Suze.

00:25:23

KT: Not saying the principles don't apply but just disheartening to see my yield on a three month is equivalent to maybe a meal at a restaurant. I need to help with my thinking so I can keep growing my money. So we don't know how old Roz is, but let's assume Roz is about 25. Yeah.

00:25:43

Suze: So you asked me a question in here is my thinking correct.

00:25:48

Suze: It is so not correct, I can't even tell you. More important than the amount of money that goes into a savings or a Roth IRA is time time because of compounding is more important than the amount of money that you actually put in. Believe it or not and I'll just give you an example, let's just say that

00:26:15

Suze: you're 25. That's how old were making her. Let's just say you put in only $100 a month in this Roth. I. R. A a pittance for what probably other people are putting in. $100 a month and you do so for 45 years. Because now 70 is the new retirement age, you're all aiming towards 70. And let's just say over those 45 years

00:26:45

Suze: that the markets went up and they went down. But over those 45 years you averaged an 8% annual average rate of return. In 45 years, you would have about $500,000. However, if you were to do true market returns because I was being conservative there.

00:27:08

Suze: That over all of that time, 45 years, let's say you just averaged 11%, you would have $1.2 million.

00:27:21

KT: Amazing right? Compounding

00:27:24

Suze: And that's at $100 a month. Now

00:27:29

Suze: this is what I would do if I were you, I really want you to take me up on the ultimate opportunity savings account at Alliant Credit union. And let me just give you an example as to why.

00:27:47

Suze: Let's say you took $100 a month. Forget the Roth ira whatever it is, you just took $100 a month and put it in one of these accounts right now that are saying they'll pay you three or 4% or whatever, right? And usually those are accounts that require very high minimums and they're kind of just suckering you in and will change the rate in my opinion. All right. But just let's say you do that

00:28:12

Suze: after one year, you would have 1200 you put in 1200 $100 a month. For 12 months, you would have $1225. So you would have earned $25 in interest over that year at $100 a month. If some institution was paying you 4%

00:28:35

Suze: if you put $100 a month into the ultimate opportunity savings account at Alliant Credit Union where they're currently paying 2.95%.

00:28:49

Suze: At the end of 12 months, you would have $1,319. Now, why is that? That is because with the ultimate opportunity savings account, if you put in $100 a month every month for 12 consecutive months, Alliant will give you $100.

00:29:13

Suze: So that $100 makes a serious difference. It comes out to be an 18% return on your money versus a 4% return if you go somewhere else. So, again, my aliant.com. And look for me is where you need to go. That was one of the reasons that we started the ultimate opportunity savings account.

00:29:42

Suze: So you should take advantage of it, my girlfriend. All right.

00:29:47

KT: You know what time it is.

00:29:49

Suze: You know what? I know I have an interesting one for you.

00:29:53

KT: Okay, I'm ready.

00:29:54

Suze: All right, so this one is from Jaffa. Alright. She says Suze, please don't be mad at me. I love that. I'm 69

00:30:07

Suze: but two months ago I foolishly requested to collect my social security benefits. I don't really even need the income from it. I believe my first check would arrive in february. I know it's dumb, but it's done already.

00:30:27

Suze: So, the question to all of you, because quizzie time is all about. Can KT answer this quizzie but can all of you answer this quizzie as well? Because these are the things that you need to know. So KT can Jaffa,

00:30:46

Suze: She's already started. It's going to be here. It's already probably here at the first of this month. Now is there anything she can do about it?

00:30:56

KT: I don't think so.

00:30:57

Suze: So she's stuck?

00:30:59

KT: I think so.

00:31:00

Suze: Alright. Is that your answer? Because she already claimed

00:31:04

KT: Yeah. Unless she defers it.

00:31:06

Suze: Can't defer it. She already claimed.

00:31:08

KT: So if she already claimed that she's it's done. Done and done.

00:31:12

Suze: Alright. Alright. Is that your final answer?

00:31:15

KT: I think so. I think you're stuck. I think you just have to take the money.

00:31:20

KT: Okay. So what can she do?

00:31:22

Suze: Alright everybody you have 12 months...

00:31:25

KT: to change your mind?

00:31:26

Suze: Yes. From the time...

00:31:28

KT: I didn't know that.

00:31:28

Suze: Well, that's why I picked this.

00:31:30

KT: Did any of you know that? No. Did I mean is this something?

00:31:36

Suze: KT, are you defending yourself again? Let me answer this and tell everybody what they need to know, more than smoothing your little feathers here because you gotta (wrong answer)

00:31:47

Suze: Anyway, I'm sure everybody else did as well. So that should make you feel bad. You have 12 months from the time that you claim social security to let them know. You want to give them all the money back and start over now in this situation. Jaffa, what I would be doing if I were you ready, I would be taking this social security check that you do not need.

00:32:15

Suze: And I would be investing it in where either a three or six month treasury bill or C. D. Whatever state you're living. And makes sense to you. And at the end of the time, maybe in seven or eight months from now where that money has earned interest. I would call them and say I've changed my mind.

00:32:37

Suze: And it used to be now, maybe they've changed this. But I don't think so. It used to be that when you paid them back, you paid them back without any interest. You just gave them the money, which was the amount of your social security check. So you then pay that back and then you started when you are 70. So,

00:33:01

Suze: If you can do that. And that makes sense to you. Great. If that's too much trouble for you and you don't need the money. Do me a favor. Just call them back. Tell them you don't want it now and you're going to be starting it at 70. Just that simple. But those are two things that you can do and you should do.

00:33:23

Suze: All right, KT...

00:33:25

Suze: what's that look for now?

00:33:26

KT: Well, now what?

00:33:28

Suze: It's over

00:33:30

Suze: Now we go feed our chickens.

00:33:32

KT: Let's have breakfast and feed the chickens.

00:33:35

Suze: The chickens haven't been coming every morning. Makes me very sad.

00:33:38

KT: I have to show everyone that the chickens are eating out of your hand. I know, but will see little seeds. She orders some really good organic...

00:33:47

Suze: For two mornings in a row, they did not show up.

00:33:50

KT: I think because they're getting big now they're kind of on their own.

00:33:53

Suze: ...and I sit there and I go chicky chicky chicky come here chicky chicky chicky and nobody comes. I wait for like a half

00:33:59

Suze: an hour. The sun has just come up and I'm like, where are you? And so sad do we lose...

00:34:05

KT: Yea, I think so, they are like teenagers now.

00:34:08

Suze: We see that eating other places, but no more. Are they coming to us? All right, So, KT, are you ready to take us out? Alright, So there's only one thing that we want all of you to say every single morning when you wake up and it is

00:34:27

Suze: as follows today, wherever I go, I will create a joyful world. Alright, Everybody say it every single day and make it come true. Until Sunday. There's really only one thing that I want for you. I want you to stay safe

00:34:53

Suze: and for you to never stop yourself from being who you are meant to be and what you want to do. All right, See you soon. Bye bye. Everybody.

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