Ageing, Family, Health, Health Insurance, Long Term Care Insurance, Podcast, Retirement
December 08, 2022
Listen to Podcast Episode:
Today’s episode features two questions you have to ask yourself, about money matters of the heart; what is the best way to buy a former partner out of a home and managing the cost of caring for aging parents.
Suze: December 8th, what year KT?
KT: 2022. We have a real countdown. 2023 is around the corner everybody.
Suze: But you know what we have a real countdown to? December 15th everybody.
Suze: Have you gotten involved with the Alliant Suze Holiday Sweepstakes? Enter because December 15th it is over. Where two of you could win $10,000 each. you gotta do
Suze: it. If you're not a member right now of the Alliant Credit Union.
KT: Become a member today. This is a really big chance to win. It's not like there's thousands of millions and millions and millions of entries. You have a really big chance to win.
Suze: So very briefly,
Suze: right, if you're not a member right now of the Alliant Credit Union you wanna get a good return on your money, right now it's at 2.60%. You open an account, you put in at least $100 a month, you do so every month for 12 consecutive months, gets what? You'll get $100, you're entered into the sweepstakes right away.
Suze: And for those of you who are already a member don't you want more entries? Just give the link that you can get at myalliant.com/suze. That's S-U-Z-E.
Suze: Get a link. If you already have one, give it to a friend a family member. If they just open up an account you get an extra entry and they're entered as well. What do you want to say?
KT: The best Christmas gift or holiday gift that you could ever give anyone is the Ultimate Opportunity Savings Account. We all need to save especially for next year.
Suze: Right, so once again for those of
Suze: you who don't have an account yet, you go to myalliant.com. If you are already a member, you have an account but you haven't gotten a link to send to friends that goes back to you, so you both get extra entries. It's myalliant.com/Suze. Okay Miss Travis...
KT: Wait a minute! Welcome to the Women & Money podcast...
Suze: I totally forgot.
KT: Hey everybody, this is KT,
Suze: This is Suze.
KT: Welcome to the Women & Money podcast
Suze: and everyone smart enough
KT: to listen.
Suze: This is the Ask KT and Suze edition. KT, what has your life been like with me lately watching gooooaaaalllll!
KT: My God, Suze has become an absolute football queen and I say football
KT: as in soccer.
KT: she's watching World Cup and she watches it absolutely faithfully with Colo. The two of them sit in these really big chairs we brought in from outside in front of the television, with a little table between them for snacks and drinks and the two of them watch...
Suze: Drinks, what kind of drinks?
KT: Well non-alcolholic drinks.
Suze: Right, we don't drink everybody.
KT: They sit there and they watch the game like all day long,
KT: and I run around doing Colo's job, doing Suze's job, I'm cleaning, I'm washing, and they just love it. And every now and then if I'm outside I hear
KT: well I hear them both screaming, especially Colo, he loves soccer, he was a great player himself in Colombia.
KT: Okay let's get
KT: started. So this is a special
Suze: Wait, I have one more thing to say.
Suze: So last Thursday we did three questions and we went in depth with them. So many of you wrote in and you said you loved that format.
Suze: This day, we're gonna do three questions as well, but they're a little bit different in nature, the type of questions they are. Because as you know,
Suze: I believe deeply that money is just not money. Money has a lot to do with your emotions, your relationship, your psychology, your fears, your shame, your anger, all of those things.
KT: Yeah, these are personal questions. But I think many of you will relate to it or certainly know someone that has been in this situation.
KT: So let me start with the first one. This is from Genevieve. And she said, Hi Suze, I'm in a tough situation. My partner Sam and I purchased our first home together in December 2020. We put down 25,000 as our down payment, and my grandmother contributed 10,000 of that.
Suze: Hold on one second KT, I want all of you to be doing as KT is reading.
Suze: I want you to get out your little notebooks again. And I want you to write down these figures, and I want you to listen to this as if this was a problem in your family. As this is something that maybe somebody is coming to you and asking you to solve. So play along with what would you tell these people to do?
Suze: All right, KT, go on.
KT: So then it continues. Genevieve said, I financed the mortgage to the house on my own since I was able to get us a better interest rate. However, I still put Sam's name on the deed as joint ownership with rights of survivorship. We were engaged at the time,
KT: and she did contribute towards our down payment too, though not as much as me since I make more than she does. Nonetheless it all made sense at the time. We also had combined our money into one joint checking account back in 2019. And everything from that point on was split 50-50. I know not...
Suze: Wait one second. I want everybody to take note.
Suze: Really on what Genevieve just said.
Suze: She makes more than Sam,
Suze: but they put everything into a joint checking account where they split everything 50-50. First mistake. Go on KT.
KT: And and Genevieve said, I know not very smart on my end. Just as it wasn't smart of me to put her on the deed to the house. You ready everyone?
KT: Then she said in 2021, my grandmother moved in with us. In July of this year, me and Sam broke up. This is where it all starts to go downhill everyone. We got our own separate bank accounts and now just use the joint account to pay shared household bills. So we're still living together. I want to buy her out of the house so I can keep it. Sam wants to sell the house.
KT: My grandmother said she wants to give me however much money I need from the proceeds that she made for when she sold her own home, which is currently under contract to settle at the end of this month so that I can buy Sam out of the house. Sam told me
KT: that since the house is an investment, and that she partly owns that, she will get charged capital gains taxes unless she waits until the two-year mark from the date we closed our house on December 2020. Now, Genevieve is asking, Suze, I thought capital gains taxes were only paid if you try to sell the house before the two-year mark.
Suze: Wrong, go on.
KT: I had offered to gift the money to her, and she alluded to that not being the right way to do this. Here are my questions. Number one:
KT: am I going to have to pay any taxes on the money my grandmother gifts to me? Number two: is Sam going to have to pay capital gains taxes if I buy her out in December? Number three: what about the 10,000 my grandmother contributed towards our down payment? Should she get that back from Sam's portion of the equity?
KT: Number four: once we get the house appraised, in order to find out exactly how much I'm going to owe her for this buyout, Sam, ready for this Suze? Sam wants me to sweeten the pot
KT: and give her more than what it appraises for, like five or 10 grand more, because she says that if we sold it, we could get more than what it appraises for. Hence the reason she wants to sell and not let me buy her out. Wow. She said Suze, any advice would be greatly appreciated. I'm a faithful listener and absolutely love listening to you and KT.
KT: So how can we help her one, I'm going to give this to you so you can go through one question at a time.
Suze: Now everybody, before I even answer Genevieve's questions,
Suze: this would not have been a problem if the house had just been in Genevieve's name.
Suze: If somebody can't contribute equally. If you haven't been in a relationship for a long time, if you needed money from somebody else for the down payment,
Suze: like granny,
Suze: and you are the one that is responsible for the mortgage,
Suze: than the other person's name does not belong on the deed. So it may feel like that's harsh. You're in love with somebody. Whatever. Money is money.
Suze: And unless you have an agreement,
Suze: that if you know the mortgage is just in your name,
Suze: then therefore the title to the house should just be in your name as well. What do you want to say?
KT: I have to share this with all of you. Suze and I have been together now for 21 years. About 21 years.
Suze: Almost 22.
KT: So I just want you all to know that when we met each other,
KT: I had a beautiful, fabulous home in San Francisco. Suze had a home in Oakland California. When we met each other, we wanted to renovate the home. Suze put in the lion's share a huge amount...
Suze: two million dollars in fact.
KT: ...in renovation. But I said to Suze this home is in my name. I wanted in both names. And she said absolutely not. And I said why?
KT: She said, because KT I want you to feel secure. This is your home. We haven't been together long enough. We don't know what the future holds. So I want you to always have a home.
KT: Suze, meanwhile had two homes at the time. Oakland and New York City. So I just want to share that with all of you. She kept that home in my name, I think forever right?
Suze: Yeah. Until we sold it. But the point is, the person that you're with, you have to trust enough that she or he wants as much for you as you want for them.
Suze: And they should want to protect you. And if you are taking all the risk of your name being on the mortgage, then their risk has to be their name is not on the title in case there is a breakup. Especially if you gave the majority of the down payment, and a lot of it also came from a gift from granny.
Suze: That's number one. All of you, that's a rule that you should do. So, my dear Genevieve. If granny let's just assume gives you $200,000. I don't know the amount. But let's just say it's $200,000 to buy out Sam. Or 100,000 to buy out Sam.
Suze: She's not gonna owe taxes on that money, you're not going to owe taxes on that money, because every one of us has what's called the lifetime gift tax exclusion.
Suze: Just really in plain talk, it's how much money you can leave to somebody over your lifetime, above the $16,000 a year currently this year, 17,000 next year. And currently that amount is about $12 million. Next year, it's going to almost $13 million. So if you're not planning on giving one person more than that amount of money,
Suze: I don't think I'd worry about it. Even though in 2025, it does go back down to somewhere in the $5 million dollar area,
Suze: but I think you're pretty safe. So I won't worry about that if I were you.
Suze: Is Sam going to have to pay capital gains tax if I buy her out prior to December? The key is, how long have the two of you lived in that house as your primary residency?
Suze: And essentially you have lived in it since December of 2020.
Suze: If you were to sell that house, whether it's to somebody else, or Sam is selling you her half,
Suze: she gets a $250,000 exemption. This was not an investment, this was a primary residency that both of you bought together. And live in it. And if you have lived in it for two out of the past five years, as your primary residency, because she's still living in it,
Suze: and that will make December when that happens,
Suze: alright, it'll be two years that you've lived in it, make sure the date of December what is when you buy her out, to be safe you might want to just wait til January of next year, which is just a few days away truthfully, she is not going to owe anything in capital gains tax at all. If, let's just say
Suze: it was an investment,
Suze: she's owned it over one year. Therefore she would only have to pay capital gains tax. However, if she's not making at least like 40 some odd thousand dollars a year or so, she would still only 0% in capital gains tax. Next year, if she is making under $44,000 a year, just let's say she is, and this applies to all of you,
Suze: no matter how much money you made in capital gains, you owe 0% in capital gains.
Suze: So capital gains tax is attached to how much money you are making. So no, this doesn't apply to her. And you Genevieve, should not be listening to anything
Suze: that Sam is telling you at this point in time, because it is obvious that everything she is telling you is for her benefit, nothing is for your benefit, and the only reason that she is benefiting is your generosity that you gave her as well as the generosity of your grandmother. Number three:
Suze: what about the 10,000 my grandmother contributed towards our down payment? Should she get that back from Sam's portion of the equity?
Suze: She should. Because she contributed to you being able to buy the house. However, don't go there.
Suze: Don't do anything else that put Sam on alert and wants to make her more angry. What's that?
KT: I think goal is to get Sam out of the house.
Suze: Just get her out
KT: of your
Suze: life. So forget about that because really it's in the house. Although if she was ethical,
Suze: she would be splitting that with you. Or taking the 10,000 off of whatever money she made. Next. She says that she can sell the house for more than the appraisal. Well girlfriend, the price of houses are coming down. The best way to do it is not buy an appraisal, is to have three real estate agents come in,
Suze: give you what they think the house would actually sell for.
Suze: And why. And then maybe what you would do is you would average the price of all three of those, and then subtract 6% for the real estate commission since you would have to pay that if you sold it like she wants to.
Suze: And give her half of whatever that amount happens to be. Just that simple. But here's what you need to start doing.
Suze: You need to be a little bit tougher.
Suze: So that Sam doesn't feel like she can just say anything, and you Genevieve are going to do it.
Suze: You need to start showing her, that you know what? My grandmother made it possible for us to buy this house. My credit score made it possible for us to pay less on this house. I contributed more to this house to even get it.
Suze: So don't be telling me that you want 50%. Now you can be nice, yeah,
KT: I would I would be very very
KT: firm but kind. When I said this and here's the other thing that Suze's not putting in there. Have granny's voice say something like you know, Sam I don't want to move from this house. I don't want to sell it.
KT: I want to live here with my granddaughter and we wish you well Sam, goodbye.
Suze: We'll try not to go so long. Everybody on the next one. But the reason that I did
Suze: is this is a problem that happens with so many of you, it's not even funny, just so you know.
KT: And this next one isn't a problem. But it's a real-life situation. This may be all we need to talk about on this podcast because this next one, every single one of us one way or another,
KT: have to cope and deal with this next email. Ready? Taking care of mom. So true. Everyone, this is from Lisa. Hi KT and Suze. I've been a longtime reader and listener. I heard you speak of your mother, so I thought maybe you could offer some advice about my mother.
KT: First, she is an amazing woman, raised six children and has been an inspiration to all of us.
Suze: You know, who's going to really be able to talk to this, is KT.
KT: Don't make me cry. I don't want to cry.
Suze: 'Cause that's her.
Suze: her mother was an amazing woman.
KT: Let me get through this. Our father passed away at 67. Pretty much true by the way, from my family.
KT: My mom was a widow at 60. She worked until she was 80. Ready for this? 80 years old as a waitress, and could have run circles around all of us until the last year and a half. Ready? Mom is now 90. She's had a series of medical issues which have left her frail with mobility, cardiac, and breathing issues. We tried for about eight months to keep her in her own home
KT: with health care workers coming in during the day, and one of us spending the night with her. It was unsustainable for us to continue doing this. Financially and emotionally it has been hard. As a family, and with mom's consent, we decided assisting living would be...
Suze: Go on KT.
Suze: You see it is emotional everybody. Yeah,
Suze: It's okay.
Suze: It's okay.
KT: I'm a little bit weepy because I'm the one out of the six of my siblings that had to... that moved my mom,
KT: and I'll never forget what that was like putting her in assisted living. It was so sad.
Suze: I was right there with you.
KT: as a family, and with mom's consent, we decided assisted living would be the best option for us.
KT: We had mom try a less expensive facility, but the food was not good, the clientele were not always alert or everything, there were always issues. So the present facility overall is a better fit for mom, but the cost will go up as her level of care increases.
KT: worry that mom will run out of money. Frankly, I don't think any of us envisioned this scenario of mom declining in this way.
KT: The whole experience has been eye opening for our family.
KT: None of us realized the expense involved in how devastating the cost of elder care is. The whole experience has made me worry about how all of us should be approaching the fact that we may all need help as we get older.
KT: Suze, any insights you could offer. And again, this isn't a solution email, it's a, it's a fact of life. It's a reality.
KT: We took good care of my mom and Suze took great, great care of her mother in a private facility.
Suze: KT, your mother had a private room and private help that I got her, right.
KT: But the person that took my took care of my mother the most was my twin sister.
Suze: What I wanted to say there is that
Suze: yes, I was able to take care of everything because I had so much money. But all the money in the world never could have replaced KT's sister Lynn.
KT: Let me tell them what she did. She would go every afternoon after work, four o'clock, to my mom's room, and they'd watch Oprah together and then Lynn would stay there and wait till her meal tray came,
KT: and would help her cut all the food and feed her. Because she couldn't use her hands at the end.
Suze: For years actually.
KT: Yeah. And and my mother - Lynn was so loyal, of all of us, Lynn was the one. But we had six siblings, what if you're just one person listening, and you know that your mom or dad is getting older. What are you going to do? And then I mean this is a great, great
KT: email because it's so true.
Suze: You know, it's coincidental everybody that today,
Suze: and this is again December 8th, at 1 p.m. east coast time. If you go to the Women & Money app,
Suze: there is, if you look on the wall there, there is one of the postings that gives you the link to go to a free webinar today where it's about care givers. And Phyllis Shelton will also be there. And Phyllis Shelton in my opinion is really one of the experts if not the expert on long term care.
Suze: And these are things that you need to learn about, because when you are a caregiver it's a big deal. So today's webinar is about caregiving, and alternatives for you, especially if you don't have a lot of money. But also hopefully it will give you the information of how to contact Phyllis Shelton if you either have long term care and you just want to check out your policy, and or
Suze: you're thinking about buying a long-term care insurance policy, do not do it without contacting Phyllis. She's honest, she's not going to be there just to sell you something, she has been there and she has helped hundreds of you for free, over the years.
KT: I have my own long term care policy, and Phyllis um set me up with that. It's a great one.
Suze: Yeah. If I could,
Suze: I would have a long-term care insurance policy. But I don't qualify for one. So do not wait. Because you never know when your health can change. Okay. So Lisa, that's kind of the answer.
Suze: You asked me, you know what can you do?
KT: Yeah, Lisa and her siblings I think range from something like 50-60, 50 something to their early 60s.
Suze: Yeah. So this is the time that you now start looking, really. If you can afford it, into long-term care insurance. The other thing, I just want to say one other thing,
Suze: It's really important that families have a conversation.
Suze: And they have a conversation with their parents as well.
Suze: I tried, and I tried, and I tried to buy a long-term care insurance policy for my mother. And I started this when she was 66 years of age. My mother said to me, there is no way I'm going to allow you to buy me a long-term care insurance policy. I am never going to need it. I am always going to be independent.
Suze: And even when I would buy one for her, and then they would have to give her an examination, she wouldn't do it.
KT: And that's one of the qualifications,
Suze: yeah, a medical,
KT: You have to have a medical exam
Suze: she refused and she... 00:28:22
KT: she was adamant about not having long term care. And and in the end look what happened.
Suze: I was totally responsible. She lived remember till 97.
Suze: All, for years, I begged her, my aunt and uncle listened to me. They did it.
Suze: But in the end when she needed assistance and needed care, I had to pay for it out of my own pocket to the tune of millions of dollars. If we had had a conversation with the family, who's going to be responsible if mommy needs care? Who physically is going to be responsible and financially,
Suze: maybe it wouldn't have all fallen on me.
Suze: So it is important that the parents have a seriously honest viewpoint of what could happen. The children all have it, and this really is a family affair. Do not wait until you are later on in life, and that is needed to have the conversation. You all need to agree while you're younger and...
Suze: if long term care insurance is not in place, it would not hurt for all six of you in this situation to have been putting money every month into a fund to have to take care of Mommy later on.
Suze: So obviously we're out of time. So we only got 2 of them. I actually liked the third one best of all, but we'll save that till next Thursday. So these are two questions that aren't just Ask KT and Suze Anything. These are two questions that I am begging you to ask yourself.
Suze: And the two questions are: if you're buying a home with somebody else, and the relationship doesn't work out,
Suze: how are you going to split it? How is it going to work? And that is to be committed by a contract between the two of you. So you know what to do. You're going to decide if you're going to put the other person's name on title, if you're the one financing everything. I suggest you do not. You want to have this conversation when you are in a state of love, not when you are in a state of hate. That's number one.
Suze: Number two, you really need to have a conversation with your family
Suze: as to who does what, how much can you each contribute, can you afford long term care insurance, and you need to make sure that your parent or parents are involved. I am asking you all to do that now. Alright, Miss Travis.
KT: That was a very emotional podcast. But really valuable.
Suze: It was really emotional for you.
KT: It always is. I miss my mom every day and my daddy. But boy, we miss her so much.
Suze: Your mommy was so great. And you all know about me and my mom and mom... I so wish that I could have...
Suze: no, don't make me cry now. All right. That's it. It's over.
KT: She's crying.
Suze: Now until next week. Take it out, KT.
KT: Okay. We want you all, look at her, she's crying. Suze's crying. Yeah, it's okay. We want you to all be safe, secure, smart and happy.
Suze: Alright until Sunday. Just remember, stay safe. See you then. Bye bye.
Take advantage of the Ultimate Opportunity Savings Account with Alliant Credit Union at: https://bit.ly/3vEUTZW
Get Suze’s special offers for podcast listeners at suzeorman.com/offer
Join Suze’s Women & Money Community for FREE and ASK SUZE your questions which may just end up on her podcast!
To ask Suze a question, download by following one of these links:
CLICK HERE FOR APPLE: https://apple.co/2KcAHbH
CLICK HERE FOR GOOGLE PLAY: https://bit.ly/3curfMI