Investing, IRA, Life Insurance, Retirement, Saving
December 01, 2022
Listen to Podcast Episode:
This episode of Ask KT and Suze Anything is a little different.
Podcast Transcript:
00:00:33
Suze: December 1, 2022. Before we begin. Before we say anything.
00:00:40
KT: Hi Suze.
00:00:43
Suze: Hi KT, Good morning. I need to thank Sophia and Travis Race. My niece and nephew for their surprise, Thanksgiving... I don't know was it a tribute KT? What was it?
00:01:00
KT: It was a giving thanks to Aunt Suze. Oh my God, it was so wonderful.
00:01:04
Suze: And where did those two decide that they should do that Miss Travis? Did you encourage it at all?
00:01:10
KT: Yeah, I did. I said you know
00:01:13
KT: we want you to to say something on the podcast to Aunt Suze. Let's make it a surprise. But the why those two, we have many nieces and nephews. We love them all. But Travis and Sophia grew up with Aunt Kathy and Aunt Suze. So they're very special to us. It's almost like our grandchildren. They're very, very special. And we had Travis I think at the age of three and Sophia was just born. So they've been...
00:01:41
Suze: Tell everybody how old they are.
00:01:44
KT: Travis is 25 which is makes sense. and Sophia is 21 or 22.
00:01:53
KT: We're getting old, Suze.
00:01:55
Suze: Is she 22 or 23?
00:01:58
KT: No I think there are three years apart.
00:02:00
Suze: Well there's something like that, who cares? But
00:02:03
KT: But they're brother and sisters that also love each other so much. And Sophia was always in love with her big brother but
00:02:11
KT: it was really cute and for those of you that didn't hear that little Aunt Suze tribute or what it was like growing up with an Aunt Suze. You should absolutely go back to the Thanksgiving day podcast and have a listen. You will enjoy it.
00:02:29
Suze: You know what else everybody will enjoy KT? They have two weeks left from today for the Suze holiday sweepstakes
00:02:40
KT: with...
00:02:41
Suze: Alliant Credit Union. So if you are not part of that yet, just go to myalliant.com,
00:02:50
Suze: join Alliant Credit Union. Read about it there. And if you've been a member of Alliant Credit Union with the Suze holiday sweepstakes, this is where in two weeks it will be over where two people will win $10,000 each. Again, you're automatically entered
00:03:10
Suze: and you should have gotten an email with a link that you could send to friends and family members. And if they open an account at Alliant Credit Union, they're automatically entered into the sweepstakes, and you get another entry. If you haven't gotten that email, go to my alliant, A-L-L-I-A-N-T .com/suze.
00:03:35
Suze: All right, KT, we're doing something different today. I chose the questions and I decided that we can do question answer, question answer, question answer. Or we can do what I do on Sunday
00:03:55
Suze: Suze School, where I go into real depth about a topic. Or we can do what I would like to do today, which is do an Ask KT and Suze Anything with like only two or three questions, where I can go into depth
00:04:14
Suze: with the answers of these questions. And this is kind of an Ask KT and Suze Anything about the mistakes you cannot afford to make everybody. So get your little notebooks out. Keep your ears perked, because you never know when you may fall into one of the situations like one of these emailers. By the way, one last thing, KT.
00:04:41
Suze: If you want us to answer your question, send it in to asksuze, S-U-Z-E podcast@gmail.com. Or you can go on to the Women and Money app and you can ask your question there, and if you're not part of the Women and Money app, you should be because that's where I am downloading updates on
00:05:05
Suze: oil, Bitcoin, things that I'm not going to do on the podcast. If I need to say something in between a podcast. If that made sense. Alright, KT!
00:05:19
KT: I just tried to follow. Okay, ready? The first question that Suze selected is from Angela. And this may be appropriate for many of you out there. So listen up.
00:05:31
KT: Hi, Suze. First and foremost, I want to thank you for your generous dedication to people's financial literacy. Here is my situation. My sibling and myself are slated to inherit my mom's home upon her death, we are in a living revocable trust.
00:05:51
KT: This is the question now that Angela has, Suze. After the deed formalities, if we sold the property and split the proceeds, would we pay ordinary income tax on monies gained?
00:06:06
Suze: You know, quizzie. I'm sorry, you know, KT..
00:06:10
KT: You can call me quizzie.
00:06:12
Suze: Okay,
00:06:13
KT: Some people call me the Quizzie Queen.
00:06:16
Suze: Right? So each one of these could be your little quizzie as well. So on this one, just out of curiosity, everybody, because this is for all of you as well, you inherit a property. The property is in a living revocable trust.
00:06:36
Suze: When you get the property, and because it's in a living revocable trust, by the way, KT, it doesn't have to go through probate. It's not going to take them six months to one year and a whole lot of money to get the deed of this house into their name before they can even sell it.
00:06:53
Suze: All they have to do is go down to the title company, change the deed from their mother's name to their name because of the trust, it's in the trust and it says to do that. Maybe it'll cost them a few $100, but it's there's within two weeks. All right. So now they have the house and their name, and they want to sell it. Are they going to have to pay ordinary income tax on the gain of that house?
00:07:23
KT: Well, I don't know if it's a yes. I think it's a yes that they have to pay, but I'm not sure if it's on the gain of the house at the value that the mom bought it or what.
00:07:35
Suze: All right. So.
00:07:36
KT: So it's a little there's some layers there.
00:07:38
Suze: There's some layers there.
00:07:40
KT: I remember that.
00:07:41
Suze: Which is why everybody I wanted
00:07:44
Suze: this question to be answered. Because all of you need to understand exactly how it works because there's no sense for you to be worried about something, thinking you have to pay for something at a time when you've just suffered a loss of a loved one, when that's not how it works.
00:08:07
Suze: Because the house was in the mother's name, whether or not it was in the mother's name in a trust, or it was in the mother's name and she was going to leave it to her kids via a will. Either way doesn't matter. When it comes to taxes,
00:08:25
Suze: the day that the mommy dies. Whatever that house is valued at at that time,
00:08:35
Suze: that is the cost basis of the house for the people inheriting it. So let me give you an example. You have this house. Mommy bought it, and she bought it years ago. And she bought it for $50,000. Maybe she bought it for $100,000. Nobody knows, it's possible. Right? That house today all these years later
00:09:04
Suze: has appreciated in value and now it is worth $500,000. Maybe a million. Could be worth anything.
00:09:15
Suze: Because Mommy died and left it to somebody, not just because it's to her kids, anybody that person gets what's called a step up in cost basis. So if the house is valued at $1 million dollars the day that mommy dies,
00:09:37
Suze: and you, my dear Angela, turn around with your sibling and you sell it for a million dollars, you do not pay one penny of capital gains tax. However.
00:09:50
Suze: If you get the house and it's worth $1 million today. And you decide to hold that house another year. Now that house is worth $1,110,000 let's just say that's true.
00:10:06
Suze: You now would owe either ordinary income tax on that $110,000 gain if it wasn't held for a year since you inherit it, or you will pay capital gains tax on that $110,000 if you've owned it for over a year. This is assuming you did not take it over as your primary residency. If you moved into that house,
00:10:37
Suze: now you want to live in that house as your primary residency, and maybe you even want to live in it with your sibling.
00:10:47
Suze: Your cost basis is $1 million.
00:10:52
Suze: And now you've lived in it for two out of the past five years as your primary residency, and now you both decide you want to sell it.
00:11:05
Suze: You each have a $250,000 exemption.
00:11:11
Suze: Because you lived in it as your primary residency. If only one of you did it, you get a $250,000 exemption. But you then could turn around and sell that house if just one of you did it for $1.25 million dollars,
00:11:28
Suze: and not pay any tax or $1.5 million if you both lived in
00:11:34
Suze: it with that
00:11:35
Suze: exemption. Or if one of you chooses to live in it with a spouse or somebody else and their name is on the title, that will count as well. I went into great detail with that because these are the things that you need to know everybody. Okay good.
00:11:54
KT: Are there any disadvantages of
00:11:57
KT: making that your primary residence and well I guess not unless you really stay there way longer and then the whole value changes because it can go down.
00:12:07
Suze: No, there were never KT be a disadvantage of making that your primary residency for a few reasons. Number one, think of the emotional connection that those kids would have to that house if mommy had owned it for all those years. And they were raised there.
00:12:27
Suze: And it's their home and the memories that are in that home, and when they maybe have kids or nieces and nephews, and they can say I used to sit in that corner and I used to do this. You know I have this memory of me
00:12:43
Suze: in the living room of our house that I grew up in
00:12:47
Suze: on the south side of Chicago. I think my parents, yeah they paid $14,000 for it, and years later I don't think they got anywhere near 14,000. I think they sold it for 10 or 12,000. But that's besides the point.
00:13:03
Suze: There was this little gold like bronze type little bowl, half bowl. And my mother loved that bowl. And it was so shiny. And I would take that bowl and put it on the rug and I would sit in it and spin around so fast, I can't even tell you. And obviously I would bend the bowl out of shape because I kept doing it as I was getting bigger and bigger.
00:13:34
Suze: And my mother would always say, what is going on with this bowl. And I would just kind of look at her because it was like this brass, it was a thin bowl. It was like you know like just a little like that shaped. So think about the memories that they may have in there. And I think memories are always worth more than money. Anyway. Yes.
00:13:57
KT: All right. Next question from Samantha.
00:14:00
KT: Hi KT and Suze. Oh she put KT first! Hi KT and Suze. And you know why Suze picked this one? Under the subject, it says "short and sweet email."
00:14:11
KT: So we have a question about life insurance and whether term or permanent is a good solution for our situation. My husband age 34, and I age 37, are expecting our first child in February 2023. Valentine's Day to be exact.
00:14:33
Suze: Sweet.
00:14:33
KT: What do you think of that, Suze? A love baby. I will be staying at home as a full-time mother and my husband will continue working. We wanted to get your advice about purchasing life insurance. Should we go for a 10 year, 250,000 term policy for each of us
00:14:56
KT: to be used in the event that we need to pay off mortgage or any other expenses? We make similar incomes so the surviving spouse would work and pay for childcare as needed. Is this a good plan Suze or a waste of money?
00:15:15
Suze: Quizzie for everybody: How would you all answer that? What was the reason that I chose this question for an Ask KT and Suze Anything? Was it simply to say, yeah it's a good idea. Get term insurance.
00:15:35
Suze: Why this question? How would you answer Miss Travis?
00:15:39
KT: Well they definitely should get term insurance having a child now, first child. But she said a 10-year policy. Now. I'm just wondering if they could should get a longer policy, because the child
00:15:55
KT: wouldn't be legal till they're 18. Right Suze? 18. And that's when they could actually inherit or get money or..
00:16:02
Suze: They could get money but could they even an 18-year-old handle seriously?
00:16:06
KT: Probably not. But I'm just saying that to kind of cut to the chase
00:16:10
KT: they definitely should get term don't get whole life.
00:16:14
Suze: And but you're saying the only thing they should change is extend from 10 to like a 20-year level?
00:16:19
KT: But I think I'd only get it on on one. I'd only get one policy.
00:16:23
Suze: And why is that?
00:16:25
KT: Um why spend the money for both of them?
00:16:27
Suze: Uh Huh. Good.
00:16:30
Suze: Final Answer?
00:16:30
KT: Yea.
00:16:31
Suze: (Wrong Answer Noice) Oh God.
00:16:38
Suze: Oh no you were doing so great.
00:16:42
KT: Then they should both get it. You don't know which one might pass.
00:16:45
Suze: Alright, here is the reason that I chose this question.
00:16:51
Suze: The mistake that many of you are making,
00:16:54
KT: ...and KT.
00:16:55
Suze: The mistake that many of you are making is you are making assumptions. The assumption in here. Number 1 assumption. Was that we make similar incomes, so the surviving spouse would work and pay for childcare as needed.
00:17:16
Suze: How many times have I had to help people
00:17:20
Suze: because they were in a car accident.
00:17:24
Suze: Two spouses, kid is at home, they're in a car accident. One of them is killed, the other one is injured so badly. Not necessarily incapacitated, but they can never work again. Or emotionally, they're so distraught because they just lost the love of their life, that emotionally they can't work.
00:17:53
Suze: They just can't. They're devastated, or physically
00:17:59
Suze: they can't and they probably never will be able to.
00:18:03
Suze: And then we assume that since both of these people, according to what Samantha is saying here, is that one will work and pay for childcare as needed. Are you sure? Are you sure they're going to be able to?
00:18:19
Suze: So you always have to hope for the best, but plan for the worst. So number one, both of you seriously need
00:18:30
KT: A policy.
00:18:31
Suze: a policy. The length of the policy. How long should all of you have term insurance for?
00:18:39
Suze: You should have term insurance till your youngest is at least 23-24 years of age, because by then they're out of college, and they could if they had to
00:18:53
Suze: probably support themselves. Obviously now,
00:18:57
Suze: there are many exceptions to the rule. If you have a special needs child, or somebody on the spectrum or whatever it may be, you change that accordingly. But in the next 20 or 23 years, while the child is growing older, you now have all of that time to pay down the mortgage, to get out of debt, to take the difference of what a whole life insurance policy would cost you,
00:19:26
Suze: which is probably 10 times what a term policy would cost you, and you've had the ability to put more money into your retirement accounts, to save money. So along with all of that, and hopefully having raised
00:19:44
Suze: a really, you know, strong child that could take care of themselves as well.
00:19:50
KT: Let's also put in something else into the equation. This is child number one.
00:19:54
Suze: Yes. So they may be going on a long time. However, they are 37 and 34 years of age. That's not why I'm saying that KT.
00:20:05
KT: Ok.
00:20:06
Suze: Right they’re 37 and 34.
00:20:09
Suze: They're so young. So even a 20-year level term policy, which means a term insurance policy, that's good for 20 years,
00:20:22
Suze: and the premiums are level for all 20 years, maybe they're young enough to do a 30-year level term policy. Now.
00:20:33
Suze: The reason why I say that
00:20:37
Suze: is that I want people to number one understand why you always want a term policy versus a whole life policy.
00:20:45
Suze: In 99% of the cases you want term, you do not want a whole life a universal life or a variable life insurance policy. They are not worth it, they are not worth it. Remember, investments are investments, insurance is insurance. Life insurance. Do not mix the two. However,
00:21:10
Suze: we now just discussed how both people need it and why, we discussed how long the term should be for. What's really lacking here, is the amount of life insurance in this particular situation. Their goal is to have $250,000, so if one person were to die,
00:21:36
Suze: obviously the mortgage on the house would be paid off. Now I'm looking at this email, and you didn't mention KT, cause you were being succinct here. So I get that,
00:21:48
Suze: that their current mortgage is $120,000. So in their mind, $250,000 would be enough to pay the $120,000 mortgage off, and still leave them with $130,000 to do whatever.
00:22:09
Suze: However, remember when I said, we don't know the other person will ever be able to work again. We don't know if they're seriously injured or what.
00:22:20
Suze: So the true way that you figure how much life insurance you need,
00:22:28
Suze: is that in this particular case for instance, they say that their monthly expenses are $5600 a month. Now that includes their mortgage. So since they only owe $120,000 more on that, let's just say their mortgage payment was $1000 a month.
00:22:52
Suze: So their expenses no longer will be $5600 a month. Let's just assume that maybe their monthly expenses will be cut to around $4500 a month.
00:23:05
Suze: $45,000 a month is $54,000 a year. Now I just want you to put a pin in that for one second.
00:23:16
Suze: Even if they only had a $250,000 term life insurance policy. $120,000 goes to the mortgage. That leaves the surviving spouse $130,000. This $54,000 a year need will not even last the surviving spouse three years.
00:23:44
Suze: So now this spouse is in trouble. Do you see that KT?
00:23:49
KT: So there's a formula that you want to tell them.
00:23:53
Suze: Yes. So the formula goes like this:
00:23:56
Suze: Whatever the annual need happens to be, and in this case it's $54,000. You multiply that by 40.
00:24:08
Suze: In this example,
00:24:11
Suze: that is $2,160,000. Why $2,160,000? It's very simple. Listen closely.
00:24:25
Suze: Upon the death of a spouse in this situation, the surviving spouse will get $2,160,000 tax-free.
00:24:37
Suze: Now the surviving spouse pays off the mortgage, because that's what they wanted to do. And that will leave them with approximately $2 million. At this point, because we don't know. Can the surviving spouse work? What can the surviving spouse do? So let's assume that the surviving spouse can't do anything possibly for the rest of their life.
00:25:03
Suze: So they then take that $2 million and they invest it. They can invest it in, Treasury Notes, they can invest it in stocks, bonds, dividends. All kinds of things. But they could easily get approximately 4% on that money. Which gives them $80,000 a year.
00:25:30
Suze: Now remember the need in this case was $54,000 a year, but that was after tax.
00:25:41
Suze: Now this surviving spouse is getting 80,000 a year, most likely will be taxable.
00:25:50
Suze: So after taxes,
00:25:53
Suze: what you're going to see here is that the surviving spouse will easily have $54,000 a year to spend on their expenses, and have extra money for growth and inflation. That is how it works.
00:26:12
Suze: So in this situation, they both need approximately $2 million dollars
00:26:21
Suze: of a term life insurance policy to cover the what ifs of life. Now. Because they are so young, which is what I was pointing out a little bit ago to you, KT.
00:26:36
Suze: At the age of 34 or 37...
00:26:39
KT: In good health.
00:26:40
Suze: In great health. It is not going to cost them a whole lot on any level.
00:26:47
KT: For 30 years.
00:26:48
Suze: For 30 years. It's something that they need to put into their budget. Maybe it will be $200 a month,
00:27:00
Suze: maybe less, who knows? But here's what you have to keep in mind, everybody. I just gave you the formula for two young people about to have a baby, and they don't have any other assets, any other income.
00:27:18
Suze: As you get older, you have to take into consideration, if you need $54,000 a year to live on.
00:27:30
Suze: And let's say you're in a situation where maybe you qualify for widow's benefits, or a pension, or Social Security, or whatever it may be.
00:27:40
Suze: You would subtract from that 54,000 that you need, all the income that you know is going to come in, whether you work or not. Maybe you have a big IRA or retirement account that can generate for you 10, 15 or $20,000 a year of income. So therefore your true need would only be maybe in this situation $34,000 a year.
00:28:09
Suze: So whatever your annual need is after all your other sources of income that you don't have to work for, that is the figure that you multiply by 40 to give yourself the correct amount of insurance that you need.
00:28:33
Suze: As you get older,
00:28:36
Suze: again, hopefully you will not need any insurance at all, because your assets will have accumulated and you would have built up equity in your home and everything else. So that eventually no life insurance is needed. So this formula that I just gave you, really
00:28:57
Suze: works well for those of you who are really young. You haven't had a chance yet to build up your assets, and term insurance is still seriously affordable for all of you. That's what you need to know.
00:29:14
KT: So Suze, that was a great lesson. And I'm glad you said everyone straight and gave them a formula to use and think about. But listen to this next email.
00:29:24
Suze: Yes. Now everybody, I chose this next email,
00:29:28
Suze: because this is not just happening to this person.
00:29:33
KT: It happens to so many...
00:29:34
Suze: It is happening to so many of you now that it actually makes me sick to my stomach.
00:29:40
KT: So let me get to it.
00:29:42
Suze: Wait, wait. If any financial advisor tells you to do this and you do it, in my opinion, you are making one of the biggest mistakes out there. Go for it KT.
00:29:53
KT: This is from Joan. And sadly she said
00:29:57
KT: Suze, I just retired at the end of April, and I wish I started listening to you much sooner. Everyone says that, Joan you're not alone. Anyway, was wondering what your thoughts are on including a whole life insurance policy as part of my portfolio. Right there is a big red flag, Suze. Ready? Says my investments are all tax deferred.
00:30:25
KT: A certified financial planner is suggesting I convert $50,000 a year for 10 years from my IRA into this policy. At year 11, it starts paying me $38,000 a year for 15 years. Tax-free. Which reduces the death benefit. That would also be tax free. Wow.
00:30:56
KT: This is giving me goose bumps and memories of my mistake Suze. But then then Joan says so many options, so many opinions, I do value yours.
00:31:08
Suze: Again, I chose this email because I don't want this ever to happen to any of you.
00:31:16
Suze: The red flags here are this.
00:31:18
Suze: Her certified financial planner. Which just shocks me because most CFPs are so integris, they've had to pass an exam. I've had my CFP designation since the middle eighties. A certified financial planner is suggesting to this woman, to Joan,
00:31:40
Suze: that she take $50,000 a year out of her IRA. That means Joan is going to have to pay ordinary income tax on that $50,000 number one.
00:32:01
Suze: Number two. She says that she just retired at the end of April, which may also mean that she is starting to collect Social Security as well as Medicare. So withdrawing $50,000 of income
00:32:20
Suze: from her IRA, is not only going to put her in a higher income tax bracket, number one. Number two, she's gonna owe income tax on 85% of her Social Security, and she is going to pay more tax on her Medicare B premium. That's number one.
00:32:43
Suze: So even though she is going to be depositing $50,000 directly from her IRA into this whole life insurance policy, where is she going to come up with the 10,000 or more of money that she is going to owe an income tax? Just put a pin in that for a second.
00:33:07
Suze: KT, Have you noticed my new phrase?
00:33:10
KT: Put a pin in it.
00:33:11
Suze: Pin in it, put a pin in. What's that song? Put a pin in it
00:33:13
Suze: or something. Alright anyway, next.
00:33:19
Suze: She is going to be doing this for 10 years. Then in year 11,
00:33:28
Suze: it starts to pay her $38,000 a year tax-free for the next
00:33:36
KT: 15,
00:33:38
Suze: 15 years?
00:33:39
KT: I just want to give everyone some numbers. Let's assume she retired at 65, she's going to be 76, 15 years after that, 91 years old. And she still isn't making money. Alright. She's still losing
00:33:54
Suze: Wait, wait. So say what you just said again.
00:33:56
Suze: All the way from 65
00:33:59
KT: to 91.
00:34:00
Suze: All the way from 65 to 76,
00:34:08
Suze: Joan is going to have to be putting $50,000 a year into this policy.
00:34:16
Suze: What happens if Joan gets ill? What happens if Joan needs home health care? What happens if Joan as she's getting older possibly, needs to do what?
00:34:31
Suze: Go into an assited living facility? What happens? Where does that money come from? And now she needs more money to live on, and she can't afford to put the $50,000 a year in. Just, just, think about that.
00:34:48
Suze: So now she's 76. She doesn't have to put money in anymore, and now for the next 15 years, how old will she be at that
00:35:00
Suze: point?
00:35:01
KT: 91.
00:35:04
Suze: 91! All she's gotten is $38,000 tax free. Then after that it doesn't say what happens, but the death benefit now is reduced. So Joan,
00:35:19
Suze: just imagine
00:35:21
Suze: that you left that $50,000 a year in your IRA. Just let's imagine you did so, and you did it for 10 years.
00:35:35
Suze: Just at 4%. If all you made on it was 4% and you could put right now $500,000 which is what that adds up to right now into a you know Treasury and get 4.5%, but just let's say you could easily get 4% for the next 10 years, which you will be able to do. Do you know that 10 years from now,
00:36:01
Suze: you would have approximately $625,000 in your IRA?
00:36:10
Suze: Think about that.
00:36:12
Suze: Now if you were to just earn 4% on that 625,000, that's like $25,000 a year. That you could easily withdraw, yeah and pay taxes on.
00:36:28
Suze: But you could do that forever and you could probably withdraw a whole lot more because really 4% if the money was invested in, certain things was done with it, you could easily have that generate 35 - 40,000 a year
00:36:45
Suze: if you wanted to, number one.
00:36:48
Suze: The $10,000 a year that you are probably going to have to pay taxes on that $50,000 if you left that wherever you would have left it at 4% in 10 years, that could be like another $124,000 - $125,000.
00:37:09
Suze: That could easily generate another $5,000 a year of income. So you're easily at $30,000 a year.
00:37:18
Suze: But the good news is you haven't touched one penny of your principal.
00:37:26
Suze: You could have such a larger income. Who cares if you're paying taxes on it or not over these next years. If you wanted to you could be converting some money into a Roth IRA, investing it there, let it grow there over the years if you wanted to,
00:37:50
Suze: and take out money tax free.
00:37:54
Suze: This is one of the biggest ripoffs I've ever heard of in my life.
00:38:01
Suze: I have no doubt that the commission on this is exorbitant. It would not surprise me if it was thousands and thousands of dollars in commission.
00:38:15
Suze: I just want to take a few more minutes for you to understand how these work.
00:38:21
Suze: You put money in. It is a life insurance policy with a death benefit. Every single life insurance policy when there is a death benefit
00:38:35
Suze: charges what's called a mortality charge, they charge you for that insurance. They take it from your money. They're not giving you insurance for free. Just so you know, in most cases anyway, number one.
00:38:53
Suze: As the years go on
00:38:56
Suze: and you now are taking out money tax free. The reason that it's tax free is you take it out as a loan.
00:39:08
Suze: You are loaning out your own money and because it's a loan, there are no taxes on it. But there is an interest rate, believe it or not. And even if it's at what they call a net 0% interest rate if the policy doesn't perform the way that it needs to inside, to generate that they've paid you out this money.
00:39:36
Suze: The policy starts to decrease and decrease in value, which they're already telling you that the life insurance is going to go down.
00:39:46
Suze: And they're only quoting 15 years.
00:39:50
Suze: They are making so much money off of you, it's not even funny.
00:39:55
Suze: So none of you should ever ever should do anything like what Joan was just asked to do. It will be one of the biggest mistakes you ever make.
00:40:11
Suze: So in summary, KT, how is that for an Ask KT & Suze Anything?
00:40:17
KT: I like it because it was very thorough, especially to help people with this insurance debacle.
00:40:23
Suze: And little things such as understanding that you don't owe any income taxes on a home when you inherit it. To understand very briefly why you absolutely need a living revocable trust versus inheriting it via probate.
00:40:41
Suze: You know, so many things that all of you need to understand, and I hope today's Ask Suze & KT "elongated version" helped you all
00:40:56
Suze: get a little what KT?
00:40:59
KT: Smarter, stronger and always
00:41:03
Suze: Secure. Alright, everybody see you on Sunday for Suze School. I already know what it is, but I'm not gonna tell you.
00:41:12
KT: Don't tell!
00:41:14
Suze: Alright until then, you stay safe. Bye bye everybody.
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