401k, Must Have Documents, Retirement, Roth, Trust, Will
August 12, 2021
Listen to Podcast Episode:
On this podcast of Ask Suze (and KT) Anything, Suze answers questions from Women & Money listeners Tracey, Anne, Deanna, Robert, Sarah, Michael, Mark and more, selected and read by KT.
Tracy - Should I make a revocable trust?
Anne - Do I still need a trust if my husband is signed on my deed and savings?
Deanna - How do I liquidate a regular 401k plan to a Roth?
Anonymous - How can I list the exchange rate to pay for my grandparents on taxes?
Robert - Do I need to revoke my old documents when I notarized my updated documents?
Sarah - Should I file as married filing separate? Do I fund a Roth IRA?
Michael - Should I invest in an EESP or towards my mortgage?
Judy - Can I fund a Roth IRA while filing married?
August 12th, 2021. Good Morning, Mrs. Travis. Morning Suze. You know why? You're so happy. I bet. I do know why. But tell everyone else why she's happy number one because her family is here. Her twin sister, Lynn, her husband, Tom and John KT's brother, my brother-in-law. They're all here on the island and they came yesterday to celebrate Colo’s birthday. Our little baby boy at 42. Yeah, he's getting old. He is such a big guy. He's so big. I wish, he's all muscle. He's such a hunk. But anyway, is that bad to call him that? All right, So, forget it. I didn't say that, but he really is. Ok. Here's what we really though. Want to tell all of you. Last Sunday I started to hint at the sweepstakes that Alliant Credit Union is offering and now we're going to go into detail about it. So, you first have to know that Alliant Credit Union is going to be giving away in this sweepstakes. A total of $20,000. There's going to be 1 $10,000 grand prize won, 1 $5000 2nd place winner and 5 $1,000 3rd place winners. Yeah, but that's not the best part. The best part is the grand prize winner wins a virtual one on one with Suze, and the 2nd and 3rd prize winners will be featured on Suze's and KT's podcast to feature them on our Thursday podcast will feature them. However, they want to be featured. So, we're real excited. This is really great news, but Suze's going to tell you why she's telling you now. She's giving you a little bit of a head start. So, here's what you all need to understand that the sweepstakes officially starts September 13, but there's an extra treat for anyone who opens the ultimate opportunity savings account at Alliant before September 13. Now listen for those of you who already have opened up your Ultimate Opportunity savings account, you're automatically going to be entered into the sweepstakes but your name is going to be entered twice two times. If you open up the Ultimate Opportunity savings account and fund it before September 13, your name is going to be entered twice as well after that. From September 13 till October 13. If you open up an account, your name is only entered one, so if you're going to take advantage of this, now is the time to do it. So really, I am asking all of you to go to myalliant.com, that is where you need to go and that is where you open up your account, you fund it and automatically your name will be entered. Now it doesn't even matter. I just have to say this about the sweepstakes, even though it is extraordinary. You've got to take advantage of the offers that Alliant Credit Union is giving you right now. Besides one of the highest interest rates out there of 0.55%. Besides the fact if you put $100 a month and every month for 12 consecutive months, you get $100. You also, if you want to can open up a checking account and the checking account pays you 0.25%. No fees, no charges, nothing. You have got to take advantage of this. So, all right, Alliant credit union, who are you going to be giving almost $20,000 to? That is the question at hand. And if you're smart, it will be one of you. All right. This is Ask Suze and KT anything. So, are you ready? I'm ready. I have a good lineup today. That's a hard thing to follow what we just announced. I know we really who gives away $20,000 these days. Not a lot of people, but the Alliant family has become part of our real family. A really great group of folks. We love our meetings with them. We talk every week and it's just really a good group of people. We're excited. They're good. I just have to say this and then we'll come off of this. They are good because they really care about all of you. They're really good. Who else would have done what they have done over this past year with the $100 giveaway with no fees with a high interest rate and now $20,000 if they didn't care about you. Okay. Okay. My first question enthusiasts from Tracy. So, Tracy says my Mama will be 75 in December. I am her only child. Tracy's 53, everyone. She is showing signs of early dementia but does not want to be tested. So, I'm trying to get as much in order as I can before she's unable to do anything on her own. I am already on all of her investments and bank accounts. Do I still need to get the revocable trust and will, since I'm her only child, I ordered the Must Have Documents a month ago but I have not completed them yet. I'm not sure if I need to. Now Suze, I have one more question before you answer that from Anne which is very similar and it says Hello Suze and KT, I love here. The two of you laugh and giggle on your way through a podcast and then she goes on to talk about us and how she has a lot of fun with us. But her question is this her 90-year-old mom and owns a condo in Florida and has $20,000 in a high yield savings account. She has no other investments. The deed to the property is in her name and her son, my husband. So that's Anne's husband. The savings account is in both of their names also. So, the question is the same as similar as Tracy does. Does she still need a trust since her husband is on the deed and savings account? She also has a medical directive and will. So, Anne and Tracy have a similar question about the need of must have documents. So, here's the thing. Let's first deal with Tracy's if that's all right, KT which is this Tracy, you already have the must have documents, you already have paid for them. Therefore, why not just do them? Because you know you have to make sure that everything is in order and you have to know that even though you own everything jointly and things like that. That if mom becomes incapacitated all of a sudden and who knows what can happen. You want to know that you have control over everything when it comes to mama and that includes her directions to her doctors. You deciding certain medical things for mom and things like that. Also, where to all of mom's things go that are in her house. You really want everything set up legitimately. So therefore, since you already have spent the money to do it, can you just put everything in trust and in the long run I think you'll be far better off. That's for now. I just want to add something else. She's her only daughter and Tracy, you're 53. Yes, I was going to say he needs one for herself. You need your own will and trust what I was gonna say. And also, Tracy so many times we assume that of course because Mommy's older than us, that mom is going to go before we do. And so therefore those documents will absolutely protect your mother because you're going to choose who steps in. If your mother is declared incompetent, if you're not there, maybe both of you are in a car crash and you become incompetent yourself, things happen in life. So please do the must have documents not only to protect yourself and how these things can be, but most importantly in this circumstance to protect mama. All right now Anne your answer to your question is almost identical to Tracy's believe it or not, because here's what you're not thinking about. All right, your husband and his mother own a property and both of their names are on the property and now mom wants to sell the property, let's just say or your husband wants to sell the property but your mother-in-law is now incapacitated. It will take both of their signatures to sign. And if she's incapacitated, let's say that's true, she can't sign. Therefore, if you don't have a will and a trust in everything, then what's going to happen is this, you're going to have to have her declared incompetent at a conservatorship for her that could be $5,000 or more. And it's just ridiculous. All you need is to own it in a living revocable trust that says if one of them becomes incapacitated, the other can sign now again what's to say that something doesn't happen to your husband and now he can't sign and your mother-in-law wants to sell but she can't sell because he's incapacitated. So, can you all understand that? There are more reasons why if you really want to protect your loved ones rather than just putting both names on the deed or whatever holding an account in joint tenancy. There's a reason why you seriously need a living revocable trust and a will, an advances directive, a durable power of attorney for healthcare and a financial power of attorney if you're looking for those seriously everybody, just go to suzeorman.com/offer. And that must have documents which were created by my own trust lawyer. It's the documents I use. You can pick them up for $69 on that site and it's they're worth over $2,500 and you can share them with your family members. Something you all should think about and do. Okay. Suze. Next question is from Deanna and I want to say hi to Deanna's twins. Hi twins I’m a twin. So can you please go over the best way to liquidate a regular 401K plan, I have $175,000 in IRA accounts Roth and regular and I have 400,000 in a regular 401K. I'm 59 a half0years old. I'm still working. I plan to retire at 67. Should I start transferring money now from my regular 401K. To my Roth IRA in small amounts so that I will pay taxes now or what is the best way for using this 401K? Deanna, it's hard for me to answer that question for you because I don't know how much money you're making per year right now. But given that you're only eight years away from retiring and therefore probably having to use this money to live on and therefore you will be in a lower income tax bracket most likely than you are now. I probably would not be transferring amounts over to a Roth. I would however be contributing as much as I possibly could to a Roth 401K, if your employer offers it. But I just don't think there will be enough time for you to make up for the taxes that you will pay even if it's small amounts so I would just leave everything like it is. But new contributions to a Roth 401K. Suze, I have another question about 401K and here it is. Is it true that if I leave my company the company would take back their match investment? It's possible that it could be true. Some 401K companies so some companies that you work for have what's called a vesting period, which means they will match your contribution meaning you put a dollar into your 401K, maybe they give you a dollar, 50 cents, 25 cents, some portion up to about 6% of your base pay. But for you to be able to keep that money that they're giving you, they want to make sure that you've worked with them for a number of years. It could be five years, four years, one year up to the company. So, if your company has a vesting period for you to qualify for your match to be able to keep it and you leave before that time, you do not get to keep it and they get to take it back. That's good to know. I didn't know that. I know that there's a vesting period, but I didn't know they would take it back. Well, that's what a vesting period is. Good. All right. This next question is from anonymous. So, I like when it says anonymous, thank you for your guidance Suze. Quick question. I take full care of my grandparents. Both live in another country. The cost before the exchange rate is about $800 a month when no additional medical expenses come up. Are there any tax or other benefits for this expense or can I list this expense on my taxes under donations? Funny that they said anonymous. Wouldn't you think that they would want everybody to know that they're taking care of their grandparents. I don't know. Some people don't. Well obviously, this person doesn't. So anonymous, it depends if your grandparents live in another country and they're US citizens and you are providing more than half of their income and in this case, you're taking full care of them. So, you're providing 100% of their income then you could claim them as dependents. However, if they are not US citizens then you cannot get any deductions whatsoever. So, it depends on whether they're citizens or not. But if they are yeah there's something they can do. Does it dependent have to be a family member? Not necessarily but can be a friend. Well, it could be a friend but usually they want to see that it's a parent, a grandparent that there is some connection there. Yes. Okay. Next question is from Robert. Hi KT and Suze, what made you smile when you said Robert? Because I think of our Robert. Tell everybody who are Robert is they all know our Robert? They hear his voice, Robert, Robert is our editor, Robert is our everything bagel. That's what I like to be behind the scenes of the women in money podcast. He puts the theme song there and edit takes Suze's little coughs out. He if we laughed too much he takes half of the laughter out. Sometimes he leaves in too much. We love Robert. He makes us sound good and look good. He makes a sound. I was going to say, I don't think he makes us look so good. But that's besides the point. All right. So, this says Hi KT and Suze, I set up a living revocable trust about 16 years ago with an attorney needless to say I now have many changes I would like to make. I would like to use the must have documents which I purchased. Good choice Robert. My current trust name is the Robert J. Haga 2005 Trust. Now his question is this once he these are good questions by the way, once he generates the new trust docks with Suze's program and have them notarized. Do I need to revoke the old trust? Okay, that's the first. Let me answer that question first and then go to the next one. So, Robert, when you make a change which I do all the time, you just need to make sure that you keep your old trust document some place and then it will go according to date. They will see that you have a new trust. Same name and everything, but a new notary date, a later date. That will absolutely replace the old one. So, it's not like you revoke it. It's your amending it by the new trust documents and therefore it automatically replaces your old trust. All right. Next so that you just answered the second question, do I rename the new trust and include a date? No, the trust always will be the name of the original trust like Suze Orman trustee for the Suze Orman Living Trust let's say dated in the year 2000. That will always be the name of my trust. No matter how many times I redo it. So that original date and when you originally did the trust sticks with you forever. All right. So, how do you so when you said the updated date on it explained that. Well, the updated to date is the new one but he never changes the original title. So, KT are trusts are dated Kathy Anne Travis Trust 2000. That is the date that will always be your living revocable trust. So, if you do a new one, it still has that original date. But the date that it's notarized and witness. Okay. She just answered the question. So, everyone the notary date is the most current that they will follow. That’s right. Very, very, very, very important. Why you need to have that notarized. Okay then it said so you answer this question. Should I keep the old trust docs together with the new? Yeah, I read them or shred. I would I would keep that the pile of trust. You know I'm thinking my God Suze, I need a locker for all the times we made changes. Yeah, but I just keep them and it's whatever. The truth of the matter is if you got rid of the old ones and that was the only one around and all fine. But given, here's the thing, given that the date goes all the way back, you might have a stickler that in the family or somebody that wants to see all the versions and to make sure that this is the latest in everything. So, I just keep them for that reason. And then the last question is this, I titled my home, same with brokerage and bank accounts with the original trust name created. So, the title shows owner Robert J. Baga and his original date. Does this now need to be changed with my new trust name? No, you're not going to have a new trust name because your name of your new trust is going to be the same. It's where everything goes according to that trust will be different. And the banks and everybody don't need to know who you're leaving things too. So, the answer for Robert, the short answer is that your original trust is the name that stays and when you make your changes and updated the notarized date on that final page will determine its the most current. That's correct. There you go. That's easy. And you Suze's, it's real easy to keep changing it. We do it all the time. Okay, next question, this is from Sarah, Hi KT and Suze. Now that I'm married, I think I will need to file my taxes as married filing separate because my husband is a veteran and due to his disability, he has not been required to file taxes from past podcast. I learned from Suze that if I'm filing married and separately and earning more than $10,000 I am ineligible to contribute to my Roth IRA I have been unsure of the best way to continue saving for my retirement. I know how Suze loves the Roth IRAs. Is there any way around my situation? Should I open a traditional IRA even though it's not the most tax advantage for me, please advise. Yes, so, the truth of the matter is Sarah, you could, if you're married filing and separately you could open a traditional IRA believe it or not. And given that your husband isn't covered by any retirement plans at work and everything and maybe I'll do something about that this coming Sunday, what you can do if you are married finally separately when it comes to retirement accounts. However, in your situation just because he hasn't been required to file a tax return because he doesn't obviously make enough money and everything. The truth of the matter is you both can still file a joint tax return. There's nothing keeping you from doing so. So, if I were you, I would file married finally jointly include whatever it is that he's getting on disability, make it all one and then you can have your Roth IRA like you want. However, if for whatever reason you don't want to do that, then listen up on Sunday and I will explain other ways and other things that you can do because you can if you're married finally separately, there are things that you can do with a traditional IRA. All right. This next question is from Michael. I like the, I have three men questions. I like this one. Hi KT and Suze. I started a new job and he wrote, yay, congratulations. Michael. One of the benefits is an employee stock purchase plan. I've never worked at a company that had this option. I contribute the max to my employer sponsored retirement account each year. And I have a Roth IRA maxed out as well. I can allot about 3% of my pay to the ESSP is this a good idea for investing or Suze? Should I be using this money towards my mortgage? And Michael's only debt is his mortgage. What should he do? How old Michael? I don't think he told me his age. Regardless of how old you are, Michael, you should absolutely do the employee stock purchase plan. What that is. Everybody is. Sometimes you work for an employer and their employer is actually a company that has stock on the exchange that's sold that's traded, that's bought, that's everything, all right. And they offer it to their employees to be able to purchase it. And they usually offer it at a 15% discount. So, you can buy the employer stock for 15% discount. And if you wanted to you could turn around and in most cases, sell it right away. Obviously, you would pay ordinary income tax on that gain. But I think it's a fabulous thing for you to take advantage of if you know that your company is a good company that's the key. So, if you have faith in this company their stock is healthy. A lot of people have been purchasing it in the stock market I would do it if I were you. Okay So last email Suze is not a question but it's from Mark and it was subject concerned so I read it and this is what Mark has to say. He said hi Suze. I followed you for years and I'm a big fan of your advice. However lately I've been concerned with some of the positions you're taking. You seem to be happy that the moratorium on evictions has been extended. What about the landlords that still have to pay taxes maintenance and their own bills? What are they supposed to do? Is the government, meaning the taxpayers, supposed to bail them out as well? I don't see that happening. Plus, the U.S. is in trillions and trillions of dollars of debt already. When is enough, enough? Also canceling some portion of student debt, is another huge program that we simply can't afford. Should those that are able to make payments on their loans also get a portion canceled? What happened to personal responsibility for those that knowingly take out loans knowing they will need to be repaid. There are plenty of available jobs out there. People need to take personal responsibility and make enough money to support themselves. It's called being an adult and not depending on the government for handouts and Mark ends with this. He said, I wish the best for you and KT and I'll still be a fan of your podcast. Well, first of all, Mark, thanks for being a fan. But Suze, what do you want to say to Mark? So, Mark, interesting KT that you chose. I did. Here's the thing in normal times. I can understand exactly where you're coming from. Truthfully and on some level I agree, but we aren't in normal times for the past almost two years now we have been hit with a pandemic. We've been hit with a total shutdown of the entire economy. Never has that happened before in the history of the United States of America and everything came to a halt. And now many people who possibly took out those loans knowing for sure that they could afford it, no knowing for sure that they were going to be able to pay the rent because they had good paying jobs because they had money in emergency funds because everything was going the way that it was supposed to be going, disappeared from them. Their jobs disappeared. They weren't able to go out, they had to stay home and take care of the kids. They had to do lots of things that nobody ever thought anybody would have to do, especially the single moms that we hear from or the single dads or whatever it may be. And so, you have to really look at this situation very, very differently. A lot of the renters were totally up to date with their rent before all of this happened. But then you have people that were making $5,000 a month as dealers in Las Vegas with three kids and everything was doing great and Las Vegas shut down and then everything stopped and there was absolutely no place for them to get another job. And what were they supposed to do? Get kicked down and live on the streets and spread the pandemic and everything. In terms of student loans, the same thing. So, I understand your concern, but the truth of the matter is for the landlords, there was $48 billion, $46 or $48 billion that was supposed to be distributed that was supposed to help the landlords pay the rent but the states and the cities, they never got around to really distributing more than three billion of it. So, there are resources out there to help everybody. So, at this point in time, the reason that I'm happy that the moratorium was extended is because there's too many people out there that still don't know how to solve their problems. There are jobs that are out there, absolutely. But you have to always have compassion and faith that people are doing the best that they can possibly do in their situation and not just come down on them because there are, they should be adults and get their act together. It's just it's just you have to be a little bit more compassionate in my viewpoint because I'm the one reading with KT, emails that would break your heart, break your heart and what are they going to do? But I honor your opinion and I love that you wrote in and I love that you're going to continue to listen to our podcast. All right, KT, you know quizzie time. Now I don't expect you to absolutely know the answer to this question, but it's one that I think that's important that people do know the answer to it. Okay, give it a shot. All right. So does that take the pressure off of you know, give it does. All right. This is from Judy. She says I am no longer living with my husband, but we still file married filing separately and I have heard you say therefore I cannot open a Roth IRA if I make over $10,000 just checking. Is that true? What is that face for? Because she's not living with him. But they're still filing married filing separately. So, they're married. They haven't gotten divorced yet. They're not living together, but they're still filing married, filing separately. So, the answer is yes or no? All right. I'll give it a shot. Yes. That's still true. Yes. You're positive. Wait was no your answer? Yes. Yes. No. Was your answer? Yes. No. So, so since I didn't expect you to absolutely get that. Ding Ding Ding Ding. Did I? Did I get it? So, what's your answer? Yes. Hey, why break my record. Really? I don't know how to make any other time. So, Judy here's what you and everybody else needs to understand if you are not living with your spouse and you are finally married filing separately. Yes, you in that situation because you're not living together, can open up a Roth IRA and funded to the max as long as you are making under $125,000 a year of adjusted gross income. What does, what does that have to do with it living, what does that have to do with what someone that military, they're not well, they're still that's different. But if you're no longer living together. All right. You're you have separate addresses and everything. Yes. You can have a Roth IRA in that situation. Which is why on Dunday. I should do a whole nother Suze school on the intricacies of this married finally jointly versus married, filing separately, living together, not living together. The whole thing when it comes to a Roth. And the traditional IRA. All right, KT that brings us to the end. So, Suze Sunday are you going to tell them more about the sweepstakes? I'll mention the sweepstakes again to them. But really, I'm just gonna say it again. If you have not yet opened the ultimate opportunity savings account, go to myalliant.com right now. Open one up. Fund it. And guess what? Everybody, your name will be entered twice to win 15,000 or five of you are going to win $1000 each. Come on. You got everything to gain and nothing to lose until Sunday. We want all of you to do what KT. Stay safe. Stay strong. Stay secure and be smart and open up your Alliant credit union account. All right, everybody see you Sunday. Bye bye.
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