November 16, 2023
On this Ask KT & Suze Anything episode Suze answers questions about old insurance policies, investing an inherited portfolio, financial guilt and more.
Listen to Podcast Episode:
Suze: November 16th, 2023.
KT: It's almost Thanksgiving. I'm going to say that for the rest of November. I love Thanksgiving. So do you
Suze: I know but want to know something. Everybody, first of all, welcome to the Women and Money podcast as well as everybody smart enough to listen.
Suze: This is KT and Suze here for the ask KT and Suze,
KT: anything, anything, anything.
Suze: And also we're gonna tell you anything, anything, anything. This is one of the very first Thanksgiving that we are not having on the island with the entire family coming.
Suze: How do you feel about that, KT?
KT: Terrible, terrible. I love that Thanksgiving. But listen, everyone, our family as well as your families all have to tighten the belt sometimes and it's become extremely expensive, extremely difficult to find space
KT: for everyone. So everyone this year decided to take a little break and have their own little family Thanksgiving.
Suze: And also what's happened is as, the kids have gotten older, the boyfriend, the girl, they have Children, the
Suze: the whole thing. So
Suze: alright we're just going to have to figure out
KT: what we're waiting for one of them to invite us.
Suze: So it's just going to be you me and Colo. Yeah baby
KT: And my brother Johnny maybe.
Suze: No he's gonna come for Christmas,
KT: he's gonna come Thanksgiving too
Suze: for both.
KT: So here we go. So Suze, the first email I have is a sad one, but one that happens in life. Hi, Suze. I'm trying to help a family friend who recently tragically lost her son in a car accident. He was only 26 years old.
KT: Is there a way to know if he had life insurance? He was talking to his mom a few weeks before the accident and he said, mom, do you have any life insurance? And she said, no, we don't. And he said, oh, I took care of you guys. So the mom thinks that he purchased an insurance policy on himself.
KT: And when we asked at his work, since he just joined the company less than a month ago, he wasn't el eligible for any benefits yet. So the family's trying to find out if he purchased a private short term life insurance. And they're asking you, Suze, where do they go to find out?
Suze: Sadly, I know
Suze: and the reason that I know is that so many people over the past years have written in this exact same question. There's so many ways that you can try to find out, go through his bank records, go through his charges on credit cards or whatever it may be that you probably have access to
Suze: and c are there any charges or payments to any insurance company? That's number one. However,
Suze: the best way truthfully to do it is to contact the National Association of Insurance Commissioners NAIC.
Suze: and they offer what's called a free life policy locator tool. So given that you've written in, I have sent you a link directly to them for those of you who aren't lucky enough to get an email directly from me. It's E-A-P-P-S dot
Suze: N A IC dot org. So you might want to check that, but it's the National Association of Insurance Commissioners. You would always contact the insurance commissioner office in your state. But the easiest way to do it is how I just said to do so.
KT: Remember you found, um, a policy on my dad a few little ones that he had bought years ago too. And my mother was like, she hit the jackpot. She couldn't believe it. Suze found so many things that my dad did on behalf of his family that he just probably put in files and never really, they didn't have computers and everything organized very well back then.
KT: But Suze found quite a bit of money.
Suze: Well what was interesting about that? Everybody, which is why it is so important that you stay organized and you don't keep what you're doing or your money a secret is that KT lost her papa.
Suze: And then we would go visit her mother and her mother was depressed because her mother really only thought she had, what was it? A few
KT: A thousand dollars to live on.
Suze: And you can tell that she didn't want to be dependent on us or anybody else. And she was very sad about it.
Suze: So I spent the night going through boxes and boxes because one good thing her mother did was she kept, kept everything, everything from God knows how many years back. And as I was going through these boxes, I found clues of certain things that led me from one thing to another to make a very long story short.
Suze: I found $120,000 of money that her mama didn't even know that she had, that papa had left for her. And all of a sudden when we found that and she had that kind of money, which was a fortune for her,
Suze: her whole demeanor, her whole outlook on life changed. She was happy. She was able to write $50 checks to her grandkids. She was just so happy. So it makes sense to save records or at least know where your money is. All right, KT.
KT: Ok. Next question is from Chris.
KT: Hi, Suze. So grateful for all you do. We're in our sixties and we've inherited a diversified portfolio worth around $300,000. We've put about 20% in a 4% yield savings account.
KT: Much of the rest is in stocks and some bonds. Given all you've been saying about treasuries and being able to get 5% plus yields. Why should we have stocks that don't do as well? Why not put everything in T bills, notes and bonds? Do you agree? Ok. Let's tell Chris why.
Suze: Here's the thing, Chris over time.
Suze: it is possible for you right now, especially if the market goes down for you to be able to get really great quality stocks that are paying 5,6, 7 or 8% or more, believe it or not, in terms of dividends.
Suze: I don't know how old you are but you never want all of your money in one type of an investment. You want a mix between bills, notes and bonds. You want a mix between the types of stocks or exchange traded funds that you have
Suze: so that you have true diversification. That doesn't mean that you can't have a lot of your money, let's say in the technology area, but in different stocks or whatever it may be. But I want you to be diversified, especially if you're younger because over time, you will make more money in the stock market,
Suze: especially in stocks that pay dividends. If you reinvest the dividends over time, that will be most likely a better investment than treasury bills because once interest rates start to go down, it is possible
Suze: and those bills mature. In fact, it's not possible. It's probable there will come a time when those interest rates could go way back down again. Remember there was a time when savings accounts as well as treasury bills short term were paying nothing.
Suze: Obviously, when I tell you, if you were to put a little bit into 30 year treasury bonds, once they go above 5% they could even go higher. So just little amounts, if interest rates start to go down, then the value of those bonds will go up and probably you'll be able to sell those for a nice capital gain.
Suze: So, diversification is the key here. All right, KT.
KT: Ok. Next question is from Beth. Hi, Suze and KT. Am I missing something? I'm trying to open an Alliant Savings Account, but I'm not eligible due to not belonging to an affiliate partnership. I clicked on your link provided all of my personal information, including my social security, but I cannot go any further as you must
KT: answer how you are eligible to open an account with Alliant. Did I miss something you did? Yes you did Beth. Suze's gonna tell you it's super easy, Beth.
Suze: So Beth, I would never talk about an investment or a savings account or a place for you to put your money where some of you would be eligible and some of you would not be
Suze: every single person in the United States of America is eligible for an Alliant Ultimate Opportunity savings account or anything, the CDs that they're being offered there, which are fabulous rates right now. Right, especially for the 12 month and the 18 month one. But here's how you do it.
Suze: If you don't belong to any of those affiliates or partnerships, keep reading carefully because then what happens is you're allowed to be a member of Alliant Credit Union
Suze: by simply joining... I think it's Foster To Success, something like that, right? It's right there for you. And Alliant will pay the $5 to that organization for you then to be a member of Alliant
Suze: Credit Union. So it doesn't cost you anything and then you are a member and then you could take advantage of the accounts there. And since I'm talking about it right now, everybody, please remember you only have 'till the end of this year
Suze: to open up an ultimate opportunity savings account for your kids and teens where they put in $100 a month every month for 12 consecutive months and then they get $100 plus whatever interest rate it is that Alliant happens to be paying at that time,
Suze: that's approximately a 16% return on their money. You can only do that. However, if you yourself have an Ultimate Opportunity savings account, if you don't, you should have one as well and make finances a family affair. And again, for the
Suze: those of you who it's too complicated to do treasuries or whatever that may be, they're 12 and 18 month certificates of deposits are fabulous. So take a look at those. You do. So by going to my, Alliant A L L I A N T
Suze: dot com, my Alliant com. And you'll see my little face right there. And the choices that you can make.
KT: This next question is from Sally. She's about 70 odd years old. She owes approximately 31,000 in credit card debt and she's working part time. She said which physically is about all I can manage.
KT: She also gets a small social security check, but Sally wants to stop working because she's got a grandchild that she would like to take care of so the parents can continue working. A brand new grandchild. Is there any hope... so Suze, think about this. What do you think she should do? I think this is a brilliant, brilliant idea
Suze: That you have?
KT: Want me to tell you my idea?
Suze: It's gonna be the same as mine.
KT: So the parents should be paying Sally for childcare. If listen, everyone, all of our friends that have kids or grandchildren, it's a fortune for childcare.
KT: And if they pay Sally even a little less than they would be paying out on the open market. Guess what? That credit card debt could go away before she blinks. Sally can stop working. Enjoy the grandchild, parents will feel safe because they know who the baby's with. Right?
Suze: the only thing I disagree there with you, KT is, Sally also has to take care of herself and she has credit card debt, which means even with her working, she's living beyond her means. So that's... Sally, you have to think about that. Why do you have credit card debt? What have you been spending money on?
Suze: So the real key here is you have to understand because we're the exact same age essentially as you.
Suze: And if your income stops, even though you're working part time because that's all you can physically handle here. It's how are you going to really get by? So we have to have a plan because eventually there will come a time and you're going to get older, that your children won't need somebody to take care of their kid
Suze: and then they'll stop paying you. And then what happens to you?
Suze: Now, you could be in financial trouble, KT. Because let's say...
KT: Let's say five years though, she'll take care of the...
Suze: yes, but then she'll be 75 or 76 and then what? And then she might get ill more.
Suze: So here's the thing, it is a privilege to have a family member and somebody that you know that you can trust and take care of your child. So, KT, rather than paying her a little bit less, they should pay her actual more money I'm not kidding.
KT: Pay off the debt, right? They should assume...
Suze: Granny can take care of their kid.
Suze: But kids have to take care of mommy and they have to take care of mommy by helping her get rid of her debt, paying her and helping her save and making a plan so that they always take care of mommy as well. All right. Ok.
KT: So ready everyone listen to this one.
KT: This one follows that one. Ready? Is it smart to turn over all of my finances to my children's name now that I'm in my mid seventies. Ready Suze. 123. No way. Right.
KT: So it's like us handing over our whole life to kids.
Suze: So here's, here's the thing. You may think that you're doing them a favor, but you are not. When you hand over your finances to your children, you're then really making the assumption that your children know what they're doing more than you. That's number one.
Suze: Chances are they probably don't. But even if they do what happens, then if something happens to your children, you never know what can happen in life. Do not give up your power. This is your money. This is something that you need to know about. If your Children are so wise with money, have them teach you what you need to know about your money.
Suze: The biggest mistake however you could ever make is if what you say, turn over if you change the title from your stock portfolio, whatever it may be your home into their name, you will be making the biggest mistake ever. So without explaining why
Suze: don't do it, don't do it, don't do it. You keep everything in your name and the only way that your beneficiaries get what you have is upon your death. Do you hear me? All right. Ok.
KT: Next question, Suze is from VJ who in my opinion is a really good son.
KT: He says hi, Suze, your financial wisdom not only helped me, but it also helped me to set myself in a way that I could take care of my parents. I'm 38 years old. I lost my father last week to stage four cancer and I spent the year supporting him where I could on care, cost rent on the house, et cetera. I do have guilt that I could not do more than I could.
KT: But on the back of my mind I knew I could not jeopardize my own financial future. Is that a common guilt you've heard Suze? How do I overcome that?
Suze: Mm. Don't cry.
KT: This makes me sad.
Suze: Why KT?
KT: He shouldn't have guilt.
Suze: All ight. Go on.
KT: I am now working on making sure I have enough set aside to take care of my mom.
Suze: Yeah. Give it to me and let me finish it for you, KT. Oh
Suze: Yeah, because it reminds you of your mom. Right? Yeah. KT misses her mama so much. It says I am now working on making sure I have enough aside to take care of mom by paying her rent and sending her some money to compliment her widow pension allowance. Your guidance on this emotional rational dilemma keeps me wondering.
Suze: Alright. You ok KT? Yeah.
KT: Alright but tell him not to be guilty.
Suze: I will.
Suze: VJ. It's just one of the facts of life
Suze: that as a child obviously when you have such love for your parents, you always want to take care of them,
Suze: but you can't forsake everything just to do so because you have a responsibility not only to yourself but to your family as well. I don't know if you have children or the situation that you're in, but the truth of the matter is do you want your children to have to take care of you? And the chances are you don't and if you don't have children,
Suze: then who's going to take care of you if you can't take care of yourself. You know, I have that thing when you're in an airplane, you always hear them say put the oxygen mask on your face first before your children. The same is true when parents start to get older and they can't take care of themselves, they kind of become like your children at that point as well.
Suze: So you have to put the financial oxygen mask on your face first. Guilt. You should have no guilt, my love. Don't think that your parents don't know your sacrifice. Don't think that your father and I'm so sorry for your loss, didn't feel your love?
Suze: Don't think that your mother doesn't feel your love. And whether you have enough money or not to help them, what you have that is worth more than all the money in the world is your devotion to them. The time that you spend with them, the care that you show them, the conversations that you have with them
Suze: and the absolute adoration that you have. That is something that more than all the money in the world could ever ever buy. So don't feel guilty. VJ, feel privileged that you have parents that were able to raise you in such a way that instilled such love for them in you. Next question...
KT: Suze is getting teary.
Suze: I'm not, read that question. There is only room for one emotional person around this place is enough.
KT: That was a great, great uh answer. But here's, here's one that'll make you both make us both laugh. Hi, Suze. I'm asking a question for my husband who is too shy to ask you.
KT: My husband Joe says we have a home equity line that's costing us 7% in interest. He wants to know, does it make sense for him to take a loan from his 401k? Pay himself the 7% interest back? Thank you so much for helping out my husband who is too shy to ask you and me. Of course, send my love to KT, you want me to answer that? No way.
Suze: Tell me why.
KT: Because you don't like anyone to dip into their 401.
Suze: Do you know the reason why?
KT: I think because you pay double tax or something? I don't know, exactly. I'm not that smart.
Suze: But KT here's what's important. It's good that, you know, not to
Suze: do that. It would be even better if you knew why not.
KT: Well tell everyone why.
Suze: So I want you to listen closely because one day I'm going to give this to you as a quizzie.
KT: Ok, do it.
Suze: You promise me?
KT: I promise. I'm listening up.
Suze: All right. So, Susan, the answer to that is no, number one, if God forbid your husband were to lose his job.
Suze: All right, while he's still working, he loses it. It's very possible. We still could go in recession six months from now or so.
Suze: All the money that he took out is due and payable. Usually within one month of him losing the job. If he doesn't have that money and he's not 55 years of age or older. When he loses his job, he will owe a federal tax penalty of 10% and possibly a state tax penalty as well depending on what state you live in.
Suze: He also will, no matter how old he is, will owe ordinary income tax on that amount of money that has yet been repaid
Suze: and that could be a lot. All right. So you don't want to do that. You also don't want to do that because if you take money out right now, you may think that you're paying yourself back that interest and it's a great thing. Oh, please, you're also
Suze: possibly going to miss out on the growth of that money over the years that it hopefully will still be in there. So, bottom line, there's so many reasons why not to do it. Don't do it, don't do it, don't do it. All right, KT, what else you got for me?
KT: This one, this one I like.
KT: So this is from Sherry. Can any attorney make changes to a trust or do I need to go back to the attorney who drew it up?
Suze: Any attorney can do it?
KT: Ok. There you go. So this is from Ruth. Hi, Suze and KT. First, I cannot tell you how much I love you both for what you do for us and how grateful I am
KT: for everything I've learned listening to the podcast. I was re-listening to the Alliant Ask Suzie Orman anything webinar from last month and Suze mentioned a step up in cost base on an inherited stock, having a spouse with a lot of health issues. I'm wondering if I had
KT: my own brokerage account that my husband's name isn't on. If that would be wise to add his name as a joint owner on the account to be eligible for a step up in case something happens or would I still get the step up, even if my spouse's name isn't on my account?
Suze: for those of you who don't know a step up in basis is that, let's just say your spouse or anybody for that matter who leaves you an inheritance,
Suze: bought a stock at $10 a share, they still own that stock and now it's worth $200 a share. Let's just say that's true.
Suze: If they die and they leave that to you, your new cost basis is $200 a share.
Suze: So if you were to turn around and sell it for $200 a share, you wouldn't owe any income tax or capital gains tax on it whatsoever. If they gifted it to you, they would also be gifting you their cost basis of $10 a share
Suze: and then they die and it's yours anyway. But you turn around and sell it for $200. Now you owe income tax. So when a person gives you something, they leave you something in their will or trust or even if you are a direct beneficiary of something, because it's a pay on death account or transfer on death account, you get a step up in basis on whatever it is that they are leaving you
Suze: as to what it is the day that they died or within six months, there's a way they figure it out, but that's how it works. So, ruth, the answer to this question is if something is in your individual name
Suze: and your husband dies, you do not get a step up in basis on it.
Suze: If his name is on the account and you own it in joint tenancy with right of survivorship, which means you equally own 50% of what's in there. You will only get a step up in basis on his half of it. If however you live in a community property state, let's say California
Suze: and you own it in community property with your husband or your spouse and they happen to die, then you get a step up in basis on 100% of it. So for all of you that live in a community property state and you have somebody that you own something with or you want to
Suze: and you're married, especially if you're married, hold it in community property. That is the correct way to hold it
Suze: in joint tenancy. You would put his name or her name on it and that way you would get a step up in basis on half. But again, you do not get it if it's just in your name and a spouse dies.
Suze: All right. KT, you know what time it is?
Suze: Quizzie, quizzie time.
Suze: This one's very short.
KT: Is it easy?
Suze: Yes, it is. Ok. Everybody listen to the quizzie. You should know the answer to this. My question is regarding buying stocks. Let's say I buy a stock at $10 a share. Ok. Write it down $10 a share.
Suze: Then the stock dips 50% and the stock is now worth $5 a share.
Suze: Now I buy one share of the same stock at $5 a share.
Suze: So now I own two shares
Suze: because I own two shares.
Suze: My cost basis now is 750 a share. Just so you know how they got that, everybody is that if you buy something at 10
Suze: and then you buy something at 5 - 1 share each, that's $15 you invested. Now you have two shares. So your cost basis is 750 a share. Ok. That company, however, now is only worth $5 a share.
Suze: So you're still down $2.50 a share, but that is far better than being down $5 a share. All right. So the question is, does this mean that I own two shares at 750 a share?
KT: Yeah, so far that's true.
Suze: Right. But if I decide to sell one share, do I get $7.50?
KT: No, five.
Suze: That's right. Ding, ding, ding, ding, ding. So you have to understand that when you dollar cost average everybody, you dollar cost average your price of what it cost you, your basis down like in this situation.
Suze: But if you sell, you still only get the price of what the stock is trading at, at that time.
Suze: And it's a lot easier to recoup when a stock goes from 5 to 750 than when a stock would go from five back up to 10. That's one of the reasons that you do what you dollar cost average. All right, Miss Travis
KT: It is the end of the week and I just want to do a shout out to my twin sister Lynn
KT: Last Friday, my sister Lynn was honored with a number of other great, great volunteers at the Volunteer of the Year Awards here in South Florida. And I just want to tell my sister Lynn Travis Stender that in my book, she's a winner every single day.
Suze: And I second that my dear sister, congrats. Congrats, sweetheart.
Suze: What do we want everybody to do every single day?
KT: Today, wherever I go, I will create a more peaceful, joyful and loving world.
Suze: And we want you to say that every single day because if you do, I promise you, you will be
Suze: All right. See you soon. Bye bye.