Rob West: Puritan poet Anne Bradstreet once said, "Wisdom without an inheritance is better than an inheritance without wisdom." Hi, I'm Rob West. Every parent hopes to leave an inheritance for their children, but doing so wisely takes careful thought and prayer. Today, Ron Blue joins us to discuss the uniqueness principle and how it can guide parents in passing down wealth effectively. And then it's on to your calls at 800-525-7000. That's 800-525-7000. This is Faith & Finance on American Family Radio. Biblical wisdom for your financial decisions.
Well, we always look forward to having Ron Blue on the program. He's co-founder of Kingdom Advisors, the author of many books on personal finance, and a dear friend of mine. Ron, great to have you back.
Ron Blue: Good to be a part of it, Rob. Thank you.
Rob West: Ron, studies show that around two-thirds of parents divide their estates equally among their children. And while this certainly isn't a bad thing, can you share with us how this can be problematic in some cases?
Ron Blue: Yes. I think, Rob, if we think about it, the way God treats us, He loves us all equally, but He treats us uniquely. He doesn't just divide up everything equally. Some have some things, and others have others.
So when it comes to leaving an inheritance to our children—we have five children, and I can tell you this: they all sat at the same dinner table, but they sure didn't all turn out the same way.
Rob West: Amen!
Ron Blue: I mean, they've done fine. I don't mean to imply something negative there, but they married differently. They parent differently. They're in different economic situations due to jobs lost, jobs taken. So what I have found over time is that when Judy and I started, our kids were—none of them were married. Well, I'm sorry, there were two of them that were married.
And we asked three questions, Rob. We said, "If we left X amount of money to X child, what's the worst thing that could happen?" And it took us about two years to really think that one through. The second question then was, "Well, how serious is it?" In some cases, it wasn't serious at all. Like, we had one child we said, "Well, if we left them whatever, they'd give it all away." So that's not real serious.
We had different situations with another child where it would have really harmed their marriage because the husband really had a passion to provide for his family. So we asked those questions: "What's the worst thing that could happen?", "How serious is it?", and then "What's the likelihood of it occurring?"
And that's the process that we follow. It doesn't say how we'll end up. And I can tell you this now, at my age—83, with a daughter that will soon be 59 as the oldest, and the youngest being 47—circumstances change over time. So how we would answer the question today that we asked for the first time 25 years ago is totally different.
But it's the process that's the thing to think about. And in America, the default is equal, and it's not necessarily wrong to be equal, but it is, I think, unwise to not think through the consequences of leaving this wealth to a particular child.
Rob West: Well, I so appreciate that about your teaching, Ron, because here, once again, you're not saying that it's better or worse to leave the same amount to each child. What you're saying is what's important is to follow a decision-making process, right?
Ron Blue: Absolutely. Because what you don't want to do is—you know, and you've heard me say this, too: Don't pass wealth unless you pass wisdom. Because wealth never creates wisdom, but wisdom can create wealth. So what I want to do as a parent is the best thing for my children, and I need to think that one through very, very thoughtfully and very, very prayerfully. It may end up I treat them equally, but it may not, either. The most important thing is the process that I follow and—you know, if you don't ask the right question, you'll never get the right answer. And the right question is, "What's the worst thing that could happen?" because I don't want that to happen, okay?
Rob West: Yeah, that's right on. Ron, I know you've said wealth transfer, at the end of the day, should reflect God's wisdom, not human emotions, because ultimately, we're accountable to Him. This has once again been so valuable, Ron. Thanks for stopping by.
Ron Blue: Always a delight, Rob. Thanks for having me.
Rob West: That's teacher and author Ron Blue talking about the uniqueness principle.
Your calls are next: 800-525-7000. That's 800-525-7000. I'm Rob West, and this is Faith & Finance on American Family Radio. We'll be right back after this break.
David Wollen: For your walk with Jesus, I'm David Wollen with Haven Today, inviting you to anchor your day in God's word. Ever heard the quote, "Preach the gospel at all times. When necessary, use words"? Often, it's attributed to Saint Francis of Assisi, but there are two problems. First, he never said it. Second, it's poor advice. The content of the gospel cannot be shared only by actions. Words are necessary. Paul wrote in Romans 10, "How can they believe in the one whom they have not heard? And how can they hear without someone preaching to them?" So, don't play charades with the gospel. Open your mouth and proclaim that the Father sent the Son to die in the place of sinners, so that by faith in Him, they may have eternal life. That is the gospel. Get more encouragement for your walk with Jesus at haventoday.org.
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Rob West: I'm so glad you're with us today on Faith & Finance here on American Family Radio. I'm Rob West. We're going to begin taking your calls and questions here in just a moment. The number: 800-525-7000. That's 800-525-7000. Whether you're thinking about giving, saving, or spending, we want to help you do it under the lordship of Christ, recognizing there are a lot of passages in God's word dealing with this subject—as many as 2,300. And you might think about, why did the Lord put so much on this topic in His word? And that's a great question, I think one that we ought to wrestle with as we consider just the sheer volume on this topic. And I think it's in part because this is a topic that competes for our affections. You know, as we think about money, we know that it can rival our hearts like very few other things—our desire for security and significance. Unfortunately, money provides neither of those. Only the Lord can, but so often, I think we attempt to fill a void in our lives through the money door, and it's just not created for that. When we worship the creation over the Creator, we have real problems.
And so we recognize that there's truth in God's word, and in some cases, it's a hard truth. You know, as we look at—if we were to take a course on this topic and understand what's in God's word here, we would understand that the Bible speaks with directness on this subject. And Jesus' words about money often penetrate deeply because they touch our fears, and our ambitions, and our comforts, and our insecurities, perhaps in a way we didn't realize. But God never exposes us in order to shame us; He does it to heal us.
C.S. Lewis, prior to his conversion, called God "the transcendent Interferer." And there's truth in that description because God lovingly interferes in our lives, interrupting our self-centeredness. He steps into areas we would rather keep private and off-limits. But every divine interruption is motivated by grace. I mean, think about it like a skilled surgeon: He wounds us only to heal us. And that's what we see in Proverbs: "Wounds from a friend can be trusted" in Proverbs 27. And Jesus calls us His friends. He says, "I no longer call you servants; instead, I call you friends." What an extraordinary thought: the King of Heaven speaks hard truths to us, not as a distant tyrant, but as a faithful friend. The Savior who convicts us is also the Savior who loves us beyond measure.
And so, as we look at the counsel of Scripture, we realize there are some hard truths there, and we also understand that the goal of our Lord is not condemnation, but transformation—that we would be transformed by the renewing of our minds, and that that would work itself out in part through our daily money management decisions. Well, each day on this program, we want to help you tackle your daily financial decisions through the lens of God's word to be able to apply these truths to everything that you're dealing with—as you invest, and you pay down debt, and you think about preparing the next steward, whatever you have going on in your financial life today. Call right now. We've got some lines open. We'll dive into those questions here in just a moment. 800-525-7000 is the number to call.
Well, in the news today, the Social Security Administration is warning about a scam with an especially sneaky twist. Listen to this: Criminals are offering to help protect you from identity theft by asking for the very information they need to steal your identity. The warning says that scammers are pretending to be from Social Security and offering to use your Social Security number to verify your employment records or address, or check whether someone has fraudulently applied for benefits in your name. Now, the scammer may direct you to an official-looking website or online form and ask for your Social Security number or other personal information. Well, of course, once they have it, they can use that information to steal your identity, access your accounts, or commit other types of fraud. The Social Security Administration says legitimate SSA employees will never contact you unexpectedly and ask for personal information—that's always a telltale sign that you need to hang up or move on. They also won't threaten to suspend your Social Security number, or seize your bank account, or tell you that you need to move money somewhere to protect it. Another red flag is an unusual payment request: Social Security will not demand payment using gift cards, or gold, or prepaid debit cards, or payment apps, or cryptocurrency, or wire transfers, or even cash—that should be a sign that you need to get out of there. If someone contacts you unexpectedly claiming to be from Social Security, don't provide or even confirm personal information. Hang up and report the contact at ssa.gov. Now, you can also check your earnings record and benefit information securely through your own "my Social Security" account. Let me just finish by saying faithful stewardship includes protecting what God has entrusted to you. Sometimes that means being skeptical—never let urgency, or fear, or someone else's claim that they're trying to help pressure you into giving away sensitive financial information, and be sure to share this with your loved ones as well.
All right, let's dive into your questions today: 800-525-7000. We're going to head to Georgia. Claudette, you'll be first up. Go ahead.
Claudette: Good morning. Yes, I'm recently retired, and I have about 46,000 in savings that's in just a regular savings. So, I was wondering what I could really do with that, and of course, the return on that is very low, do with that to kind of maximize my interest, or whatever?
Rob West: Yes. So, the 46,000, is this what I would call your emergency fund? Is it liquid reserves that need to be safe, but available if you need it for the unexpected?
Claudette: That is correct.
Rob West: Okay. Yeah, great. So, you want to keep this in a money market account or a high-yield savings account, both of which could have either public or private insurance up to $250,000. So, there's a couple of options. I mean, one would be if you want a banking partner that's aligned with your values, our friends at AdelFi Christian Banking are the largest Christian credit union in the country. They're paying 4% right now for up to $100,000 for up to a year. And, you know, that's a great option there because that would give you something that's safe, it's liquid if you need it, but over a month—over a year's time, you could bring in a couple of thousand dollars in interest, which is great.
You know, that's the kind of thing I would be looking for. Now, you could do that at AdelFi, you could do that at, you know, your local bank or credit union as well, or you could look at an online bank and see who has the best interest rates that they're offering. But I think that's the type of account, Claudette, that you'd be looking for: a high-yield savings or a money market account. If you wanted to check out AdelFi, you could go to faithfi.com/banking. That's faithfi.com/banking. They're also doing a bonus of up to $400 when you use the code FAITHFI. But I think that's the type of thing you would want to look for. Does that make sense?
Claudette: It does. It does. Thank you so much.
Rob West: You're welcome. And just to say, you know, I think the target typically for somebody who's in their working years, I would say for an emergency fund, is 3 to 6 months' expenses. Once you are retired, a lot of folks will bump that up to 6 to 12 months' worth of expenses just because we're—we're not working, you know, we want a little bit more conservative posture, but we also want a little bit more access to funds if we need it. And so, that might be where you'd look and say, "Okay, what am I spending over a typical month?" And then multiply that by 6, you could go all the way up to as much as 12 months. But that's a good, I think, rule of thumb. And then if you end up saving beyond that, maybe you put it to work and go beyond a savings account or money market account and look to invest in a balanced mutual fund or exchange-traded fund to get it growing for you and offset inflation.
Claudette, I hope that helps. Tammy, coming your way after the break. We'll be right back.
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Rob West: Great to have you with us today on Faith & Finance here on American Family Radio. I'm Rob West. We're taking your calls and questions today at 800-525-7000. We do have lines open at the moment, so this is a great time to call. Any financial question today, call right now. The team is standing by: 800-525-7000. We'd love to help you think through your situation in light of biblical wisdom. Let's go back to the phones. To Indiana, Tammy, go right ahead.
Tammy: Hi. Thanks, Rob. I enjoy listening to your—your advice and your show on at work.
Rob West: Oh, thank you.
Tammy: My question—uh-huh. Thank you. My question is, my mom and dad put everything in a trust. Their home, which is paid for, through the trust, is designated to go to me. They had bought a second home, a second house, for my sister, for them to use, and there's still a loan out on that one. And I am wondering—and it's designated to go to my sister. I'm wondering what happens to that loan when something happens to mom? Dad is already deceased. When something happens to mom and we start using that trust, you know, as estate planning, what—what happens to that loan?
Rob West: Yeah, it's a great question. So essentially, you know, the key point is putting that second home in the trust doesn't make the mortgage disappear. The loan remains secured by that particular property. So assuming the trust says you receive home one with no mortgage, your sister receives home two and still has a mortgage, then when your mom passes away, the trust distributes the home. Your sister can generally receive the second house subject to its existing mortgage. So federal law provides protections for certain transfers to relatives following a borrower's death. So the lender can't simply invoke a due-on-sale clause and demand the entire balance solely because the house passed to a relative. So she would need to work with the mortgage servicer, and depending on the circumstances, she may be able to continue the mortgage payments, formally assume the loan, refinance it into her own name, or pay it off, or sell the house and pay the mortgage from the sale proceeds. But those would be her options. Does the—you know, an important consideration though, and this would go back to the trust documents and their estate plan, but do you know if the trust says the mortgage has to be paid off by the trust before your sister receives it?
Tammy: Can you hear me okay? Because I lost you there for a minute.
Rob West: Oh, yes, I can.
Tammy: Okay. Okay. I am pretty sure it does not say that because we were in on the meetings when we were draw—having mom put that in the trust.
Rob West: Okay. Yeah.
Tammy: Is that something it probably ought to say?
Rob West: Well, it depends on what her intentions were. So, you know, if, suppose the mortgage-free house is worth $400,000 and your sister's home is worth $400,000, but it has a $150,000 mortgage, if she receives the property subject to the mortgage, then she's effectively receiving about $250,000 of equity and you're receiving $400,000. But if the trust directs other assets in the trust to pay her $150,000 mortgage first, in my example, then that's a different issue. So I wouldn't assume that the trust automatically pays off her mortgage, but I would have perhaps an estate planning attorney show you exactly what the trust says about debts and specifically the mortgage on home number two. That's the place, or that's the piece, if you will, that determines whether your parents intended you all to receive equal amounts or designated properties, and when, you know, it applies subject to the mortgage. And it sounds like you think it's the latter, and if that's true, then she would need to satisfy that mortgage after receiving that asset from the trust in the ways I mentioned—either by selling it, refinancing it, or just taking over the mortgage payment, or just paying it off completely.
Tammy: Right. Yeah, they have helped her quite a bit over the years, and so mom—that was mom's intention for her to—it's not necessarily going to be equal at the time of settling the account. So yeah.
Rob West: Okay. Yeah, so then at that point, she would need to, you know, figure out how she wanted to proceed. And if she didn't want to take on the mortgage payment, didn't have the ability to pay it off, well then, she would just liquidate the property and out of those proceeds, pay off the mortgage and then keep whatever equity remained.
Tammy: With the balance. Yeah. Okay, good deal. Good deal. I was a little worried about that. Okay, do you have time for one more question?
Rob West: Yes, ma'am.
Tammy: The other question is, my home is paid off. Mom's home is paid off. So when it comes down to what I'm going to do with two houses, I'm going to probably ought to sell one of them, you know? Is there a benefit to sell one as opposed to the other tax-wise, like the one that I personally own as opposed to the one that's in the trust?
Rob West: Hmm. Yeah. Good question. So, there's two different things going on here with regard to these homes that determines any tax that would be owed. With the property that you'd receive from your mom, assuming it comes to you through the trust and not because she made you a joint owner during her life, then you get what's called a step-up in basis. So, regardless of what your parents paid for the property that you're inheriting, the cost basis becomes the market value as of the date of death. And so if you turn around and sell the home you inherited shortly after their passing, or your mom's passing, then there would be no tax due because you would have a cost basis equal to the selling price. With your home, assuming it's your primary residence and that has been the case for two out of the last five years going back from the sell date, you would get up to $250,000 in gains that you could exclude from capital gains. And if you're married, that would be half a million dollars. So, as long as you don't have either $250,000 or $500,000, depending on whether you're filing single or married, in gains, then you would be able to sell that one as well free and clear without having any taxes owed. Any gains that went above that would probably be at either 0% or 15% capital gains tax.
Tammy: So either—so it doesn't really matter, I mean...
Rob West: In that case, it wouldn't matter. And so then it would just be: which one do you want to live in from a lifestyle and an enjoyment standpoint and a location standpoint, or which one, you know, allows you to get the money out that you're looking for? I hope that helps, Tammy. Thanks for your call. Back with more questions after this. Stick around.
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Rob West: Great to have you with us today on Faith & Finance here on American Family Radio. I'm Rob West, taking your calls and questions today. We've got lines open, we're ready for you: 800-525-7000. That's 800-525-7000. Whether you're thinking about what we shared just a moment ago—how do I stay safe? You know, maybe you're concerned about identity theft, or doing business online and keeping your identity protected. For you, maybe it's paying off some credit card debt or getting your credit score up. Maybe you're just thinking through how much to give and how much is enough with regard to your lifestyle and your giving. Whatever it is you're wrestling with today, we'd love to hear from you and tackle your question. Phone lines are open. Calls are coming in, but we've got a few at the moment: 800-525-7000. You can call right now. Let's go out to Louisiana. Donna, thanks for calling. How can I help?
Donna: Um, I was wondering on some Social Security benefits. Um, I'm not quite sure of my rights I'm receiving. I widow uh support right now, and um I was wondering if I could also collect my Social Security on top of his widow support, or can you only collect one Social Security?
Rob West: Yeah. Yeah, it's a—it's a great question, and uh potentially. So uh we need to identify uh what that 5,000 of widow's support actually is. Uh do you mean that you're receiving a survivor benefit?
Donna: Right, right, right, from a deceased spouse. But I'm also divorced and collecting um on a retirement fund through him, which is not Social Security. Okay. That's a retirement, but I do get widow uh benefits.
Rob West: Okay, got it. Yeah, and so the—the retirement benefit is separate from your uh spouse's employer, is that right?
Donna: Yes, sir.
Rob West: Yeah. So if—if you uh if you're divorced from the spouse who later passed away, then you may qualify as their surviving divorced spouse. Um so as long as the marriage to the deceased ex-spouse lasted at least 10 years, then you generally can qualify for the survivor's benefits beginning at 60, and the fact that you were divorced doesn't eliminate that. Um so at 66, the important planning opportunity is—is that the survivor benefits are treated differently from ordinary divorced spouse benefits. So you may be able to collect the survivor benefit uh on your deceased ex-husband's record now, leave your own Social Security retirement benefit untouched, and then later switch to your own benefit as late as age 70 if it becomes larger. Um they will allow you to do that, which is not something that's available if you are um, you know, just taking a spousal benefit.
Donna: Oh, okay, okay, 'cause I do receive my spous— Yes, uh yes. I do receive my uh the survivor benefits already right now.
Rob West: Yes.
Donna: I haven't—I'm 66 and I'm semi-retired. I'm just wondering if I collect on my Social Security also.
Rob West: Yeah. Yeah, so exact—right. So you can't take both, but what you do have the ability to do is switch to yours if it's higher. Uh now, if—if the survivor's benefit is higher, then it doesn't matter, you would just take it and you can't get both. Um but what a lot of people do is they will take the survivor benefit and let your own benefit grow by waiting, and you could let it grow uh beyond full retirement age every year that you wait, your benefit will grow by 8% up to age 70. And so whatever your full retirement age benefit based on your work record is, you could wait till age 70 and it would be 25% higher than that. And if that amount is higher than what you're currently getting as a survivor benefit, then you could switch and get that higher benefit down the road, if that makes sense.
Donna: Right, ex- exactly. Yes, sir, it does, because as of right now, mine is lower than what I am receiving.
Rob West: Okay, yeah.
Donna: And I didn't know if I can get them both, so it's just sitting there. Okay.
Rob West: So you can't get both. So you would leave that one um alone, and the only reason you would ever switch is down the road. So, let me give you an example: let's say you're receiving 2,000 a month as a survivor benefit, and your own benefit at full retirement age would be 1,800. Well, you would keep the 2,000 survivor benefit, but let your own benefit continue to grow, and let's say at age 70 it wasn't 1,800, it was now 2,300. Well, then you could switch to the 2,300 at that point and then take that one for the rest of your life and get that higher amount. That's assuming that that would be true. Now, it could be that your benefit will never, even at age 70, surpass his. Well, in that case, you would just stay with the survivor benefit because, again, you can only receive one or the other.
Donna: Okay, okay. And and and you're probably so correct at that uh, 'cause right now his survivor is 25 and mine is way under than that, and I don't think I'm ever going to reach that, even though I'm still working. Though, but uh so my Social Security just sits there, goes unclaimed.
Rob West: That's right, because you can only get—
Donna: Nobody can— All what I paid in, nothing, nobody gets it.
Rob West: That's exactly right, 'cause you can only get one benefit. And from the IRS's standpoint, they're saying, "We'll let you take the higher of the two; we won't let you take both."
Donna: Okay, okay. And what if you owe taxes? Can they take that out of your Social Security if it's not claimed?
Rob West: So, tell me a little bit more about that.
Donna: Well, well, uh every year I pay a lot in taxes. I don't have a lot of uh things to claim. I don't have a lot of um overhead. I'm I'm I'm single, and I I get $5,000 a month on top of a a part-time salary. So I pay a lot of taxes. I'm just wondering if they can't counteract, since I'm not claiming my Social Security, if it can go toward the taxes.
Rob West: No, unfortunately it can't. So, yeah, your your tax rate is going to be a function of the income you have plus half of your Social Security income is going to determine what your taxable income is, uh and and that will affect whether or not your Social Security itself is taxable. But that there's nothing that can be done with that kind of unclaimed benefit from your work record. It just sits there because you've you've opted for your late husband's, and it for good reason, because it's higher.
Donna: Exactly, exactly. Okay. And I just hate to see it sit there. You know, we all pay a lot into our Social Security not to be able to get it.
Rob West: Yes, ma'am. I totally understand. Unfortunately, that's the way the—the system is set up, and—and I get your frustration there. Hopefully that's cleared it up though for you, Donna. God bless you. Let me go to Ohio. Julia, go ahead. How can I help?
Julia: Yeah, thank you so much for your show. It's a great um one to hear every day.
Rob West: Thank you.
Julia: Yeah, I was wondering, um we're 50 now and our kids are freshmen, and my husband will get a pension when he's 55, but he plans on continuing to work. And I'm just wondering as far as like saving for the kids' uh college, we have the 529, but is that enough?
Rob West: Yeah. Uh, you know, it really is just a function of how much you think you're going to need. And so, you know, you could start down that road and look at the various options, and really the number that you're looking for is the cost of attendance. And so that's going to vary widely from, you know, community college to uh, you know, four-year school, in-state, out-of-state, public, private. And so it's all a function of what do we want to, you know, where do the kids want to go? Where do we want to um, you know, and and how much do we have to put toward it? And what I would recommend is you decide how much you can afford to put aside and and dedicate that to their schooling, let them know what that is, and then they'll know that what they can choose from and whether they need to add to it. Let's talk a bit more about that after the break. Stay right there, Julia. We'll be right back.
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Rob West: Great to have you with us today on Faith and Finance here on American Family Radio. Before the break, we were talking to Julia. She and her husband are in their early 50s. Her husband's still working full-time. He'll get a pension at 55. They're saving for their kids' college through a 529 plan and just wondering, how do we know how much to save? And, you know, I think it's going to come down to ultimately what you want to be able to provide, what you have the ability to provide, and then they'll be able to match that up with the various options they have for schooling that may involve them, depending on where they want to go, having to get a part-time summer job, maybe working on campus. I was a resident assistant to pay for my room and board my junior and senior year. You know, I managed the Christian radio station on campus. You know, my wife got lots of scholarships and grants. I mean, there are other ways to pay for college other than debt. And so you need to look at kind of the whole picture.
But I think, you know, the goal doesn't have to be to save enough to pay 100% of college. I think the key is once you know what your plan is and what you can realistically save, then communicating that clearly to the kids so that they know what they need to supplement based on where you all agree they're going to go to school at some point. But I do like the 529 in terms of once you set that reasonable benchmark for what you want to be able to provide and what's possible, just given what you have available to be able to fund this 529, you know, I think you set that savings target. The 529 is an excellent vehicle to do that because you can invest it, the money grows tax-deferred, and then it comes out tax-free as long as you use it for qualified educational expenses. But let me stop there and get your thoughts on all that.
Julia: Oh, yeah. That sounds really great. I didn't really think about it from that perspective. The only thing is like, we do have twins, so we'll be paying for college at the same time. And right now in the 529, we've gotten maybe about $60,000, $50,000 in each of their accounts, and they'll go to an in-state four-year university, I assume. You know, I don't think that they'd be unreasonable to go out of state.
Rob West: Yeah, so that's great. And I can appreciate what you're saying because I've got twin girls as well. They're seniors, and so they're going to be headed off to college next year, and I'm going to be in the same boat that you will be a little further down the road. So I get it. And well done. The fact that you've got those 529s with $60,000 each is a great start. And maybe, Lord willing, if they stay in-state, you know, it's enough to cover it.
But I wouldn't, just because it's there, miss the opportunity to really—and I would put this back on them—to start researching what scholarships and grants are available. You know, there's some great books on Amazon, or you can do some digging locally. I mean, some of our kids applied for a local scholarship from the local power company, and, you know, one of them got $5,000. And, you know, they really took the initiative to go out and look for scholarships and grants. I've had a couple that worked during the summer and used that as spending money.
So, you know, I wouldn't just automatically assume that everything needs to come out of there. But at the same time, you know, you may want them, you know, not to work and be available for internships. So I think that's part of what you all need to work through and develop a plan for. But the good news is, regardless of where you land, you've got a great head start toward a meaningful amount that you can apply to college.
Julia: Oh, yeah. Those sound good. Yeah, I've written them down as you spoke.
Rob West: Awesome. Well, listen, Julia, well done. And I think you're on the right track here. I love the 529 for this purpose. I think the key is let's plan early, let me know kind of where we're headed, let's communicate clearly with the kids so they understand what they're going to be responsible for, and then let's do everything we can to offset any additional cost through scholarships, grants, work, not debt if at all possible. Thanks for being on the program today.
Let's go to Louisiana. Hi, Casey, go ahead.
Casey: How are you doing?
Rob West: Good. How can I serve you?
Casey: Uh, I am, uh, in my mid-70s. My wife's in her, uh, late 60s. Uh, we're both retired. Uh, we have pensions. I've got, uh, uh, a little bit of a, uh, Social Security, so does my wife, and, uh, also 100% disabled as a veteran. Uh, so I'm getting that. And, uh, we've been married about 9 years ago, 6, 7, 8, 9 years ago. And, um, so we kind of combined, uh, our finances, and she's got a bunch of kids, I've got a bunch of kids. It's kind of that situation. I don't have a, um, um, um, will. She has one that she needs to change, and we've been delaying because we've got no idea how to go about this.
We've also got about 8 acres that, uh, we are considering down-sizing. Which, uh, is probably worth about 450. We only owe about 120 on it. So, uh, that plus about 60,000 in savings is kind of like a situation, and I don't want a war happening if one or both of us pass away, you know, you know, family skew.
Rob West: Yeah. Really helpful. We're having a little trouble hearing you, but I think I got the gist of it. So essentially, um, you know, I would, uh, absolutely move forward with getting a will in place. Even if you're planning to downsize, I wouldn't wait until you do that. The fact that you currently have no will, even though your wife has a will that may predate or not fully reflect this blended marriage, is the bigger immediate issue. So with several children, and that's great, you all are blessed, from those prior relationships, the goal should be to answer really two questions clearly: First of all, what happens when the first spouse dies, and what happens when the second spouse dies?
Without careful planning, it's very easy for, you know, one side's children to be unintentionally favored or disinherited. But the key is, there's not a right or wrong decision there. You just want to have open and clear communication and make intentional decisions. And then you want to, you know, update her will, make a new will for you that reflects your desires.
And perhaps one of the things you want to do is say, "Listen, what each of us brought into the marriage, we're going to separate out for each of our respective kids." Or, "You know what, we really didn't have a whole lot, and all we've got now is this property." And so then we just want to make a plan for, okay, how are we going to, you know, ensure that when one spouse dies, the other can continue to enjoy the property and the assets that you have as a married couple? But then the key question at that point is, then what? And maybe it's just everything is liquidated and distributed equally. Well, great.
A trust could help with that, where, you know, you want to ensure that the surviving spouse is financially secure, but then also guaranteeing certain assets pass to each spouse's respective children. You also have a VA disability status that adds another planning issue because ordinary VA disability compensation generally isn't something you simply leave to children through the will. So depending on your disability rating, you know, how long you've been rated totally disabled and the circumstances, your surviving spouse could potentially qualify for VA Dependency and Indemnity Compensation.
But I would say bring that existing will to the attorney that you go see, the deed to the 8 acres and the home, bank statements, retirement accounts, life insurance policies, and then you're going to want to, you know, have talked about in advance ultimately what you all would like to have happen and then make sure that that's documented in new wills—at least an updated will for her and a new will for you—and then any other tools that are needed, like a healthcare surrogate, a durable power of attorney, perhaps a trust, although it doesn't sound like one is needed there just given what you're describing. But I wouldn't wait on that. I'd get that done sooner rather than later. Thanks for your call today, Casey. We appreciate you being on the program. Lord bless you.
Let's go to Louisiana. Al, how can I help?
Al: Good morning. Can you hear me?
Rob West: Yes, sir.
Al: Thank you. Uh, I'll try to be brief. I have a son who is disabled. He has a mental illness, and he will never be able to work, um, at a normal job. He does have attributes that are positive and things that he can do, but he'd like—he has started a small business, and it has been fluctuating, you know, from good to bad to not so good to... What I would like to do is, or what I've been looking for, is a, um, some type of, uh, disability loan, maybe a government loan or something that I could, uh, try to get for him because of his, uh, disability. His credit is brought up to an acceptable level over the last couple of years. He never believed in establishing a credit, uh, uh, level. And, uh, so that was my question. Is there something I can do to help him, uh, in that respect?
Rob West: Hmm. Yeah. It's a great question, and I'm certainly not an expert in this. What I would say is there's not just a general category of a disability business loan, but there are some options available. And I would say the US Department of Labor does recognize self-employment and business ownership as employment options for people with disabilities. So I'd probably start with your state vocational rehabilitation agency and let them know that the disability prevents him from working, but he has a business that accommodates his disability and he wants to pursue self-employment, and, you know, see if there's a business financing program available through the state.
You could also do an SBA microloan, where that would provide up to $50,000, and that could be a, you know, a key option. So the SBA could be a great place to look through the microloan, and then their other loan called the 7(a). And then, you know, beyond that, I would just look for any kind of other disability-specific business assistance, but I don't have anything specific to direct you towards at the moment. But hopefully this at least gives you started, Al. I love the track you're on here, and I would certainly do my homework to see what you can find. God bless you, sir. Thanks for being on the program today. We appreciate you.
Well, folks, that's going to do it for us. Big thanks to my team today: Jim, Taylor, Devin, Patty, Pat, everybody here at FaithFi that makes this possible. We're so grateful to serve you each day, come alongside you, encourage you as you apply God's wisdom to your financial decisions. Hope you'll come back and join us tomorrow. We'll do it all over again, Lord willing. Until then, may God bless you. Bye-bye.
Announcer: The views and opinions expressed in this broadcast may not necessarily reflect those of the American Family Association or American Family Radio.
Rob West: Puritan poet Anne Bradstreet once said, "Wisdom without an inheritance is better than an inheritance without wisdom." Hi, I'm Rob West. Every parent hopes to leave an inheritance for their children, but doing so wisely takes careful thought and prayer. Today, Ron Blue joins us to discuss the uniqueness principle and how it can guide parents in passing down wealth effectively. And then it's on to your calls at 800-525-7000. That's 800-525-7000. This is Faith & Finance on American Family Radio. Biblical wisdom for your financial decisions.
Well, we always look forward to having Ron Blue on the program. He's co-founder of Kingdom Advisors, the author of many books on personal finance, and a dear friend of mine. Ron, great to have you back.
Ron Blue: Good to be a part of it, Rob. Thank you.
Rob West: Ron, studies show that around two-thirds of parents divide their estates equally among their children. And while this certainly isn't a bad thing, can you share with us how this can be problematic in some cases?
Ron Blue: Yes. I think, Rob, if we think about it, the way God treats us, He loves us all equally, but He treats us uniquely. He doesn't just divide up everything equally. Some have some things, and others have others.
So when it comes to leaving an inheritance to our children—we have five children, and I can tell you this: they all sat at the same dinner table, but they sure didn't all turn out the same way.
Rob West: Amen!
Ron Blue: I mean, they've done fine. I don't mean to imply something negative there, but they married differently. They parent differently. They're in different economic situations due to jobs lost, jobs taken. So what I have found over time is that when Judy and I started, our kids were—none of them were married. Well, I'm sorry, there were two of them that were married.
And we asked three questions, Rob. We said, "If we left X amount of money to X child, what's the worst thing that could happen?" And it took us about two years to really think that one through. The second question then was, "Well, how serious is it?" In some cases, it wasn't serious at all. Like, we had one child we said, "Well, if we left them whatever, they'd give it all away." So that's not real serious.
We had different situations with another child where it would have really harmed their marriage because the husband really had a passion to provide for his family. So we asked those questions: "What's the worst thing that could happen?", "How serious is it?", and then "What's the likelihood of it occurring?"
And that's the process that we follow. It doesn't say how we'll end up. And I can tell you this now, at my age—83, with a daughter that will soon be 59 as the oldest, and the youngest being 47—circumstances change over time. So how we would answer the question today that we asked for the first time 25 years ago is totally different.
But it's the process that's the thing to think about. And in America, the default is equal, and it's not necessarily wrong to be equal, but it is, I think, unwise to not think through the consequences of leaving this wealth to a particular child.
Rob West: Well, I so appreciate that about your teaching, Ron, because here, once again, you're not saying that it's better or worse to leave the same amount to each child. What you're saying is what's important is to follow a decision-making process, right?
Ron Blue: Absolutely. Because what you don't want to do is—you know, and you've heard me say this, too: Don't pass wealth unless you pass wisdom. Because wealth never creates wisdom, but wisdom can create wealth. So what I want to do as a parent is the best thing for my children, and I need to think that one through very, very thoughtfully and very, very prayerfully. It may end up I treat them equally, but it may not, either. The most important thing is the process that I follow and—you know, if you don't ask the right question, you'll never get the right answer. And the right question is, "What's the worst thing that could happen?" because I don't want that to happen, okay?
Rob West: Yeah, that's right on. Ron, I know you've said wealth transfer, at the end of the day, should reflect God's wisdom, not human emotions, because ultimately, we're accountable to Him. This has once again been so valuable, Ron. Thanks for stopping by.
Ron Blue: Always a delight, Rob. Thanks for having me.
Rob West: That's teacher and author Ron Blue talking about the uniqueness principle.
Your calls are next: 800-525-7000. That's 800-525-7000. I'm Rob West, and this is Faith & Finance on American Family Radio. We'll be right back after this break.
David Wollen: For your walk with Jesus, I'm David Wollen with Haven Today, inviting you to anchor your day in God's word. Ever heard the quote, "Preach the gospel at all times. When necessary, use words"? Often, it's attributed to Saint Francis of Assisi, but there are two problems. First, he never said it. Second, it's poor advice. The content of the gospel cannot be shared only by actions. Words are necessary. Paul wrote in Romans 10, "How can they believe in the one whom they have not heard? And how can they hear without someone preaching to them?" So, don't play charades with the gospel. Open your mouth and proclaim that the Father sent the Son to die in the place of sinners, so that by faith in Him, they may have eternal life. That is the gospel. Get more encouragement for your walk with Jesus at haventoday.org.
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Rob West: I'm so glad you're with us today on Faith & Finance here on American Family Radio. I'm Rob West. We're going to begin taking your calls and questions here in just a moment. The number: 800-525-7000. That's 800-525-7000. Whether you're thinking about giving, saving, or spending, we want to help you do it under the lordship of Christ, recognizing there are a lot of passages in God's word dealing with this subject—as many as 2,300. And you might think about, why did the Lord put so much on this topic in His word? And that's a great question, I think one that we ought to wrestle with as we consider just the sheer volume on this topic. And I think it's in part because this is a topic that competes for our affections. You know, as we think about money, we know that it can rival our hearts like very few other things—our desire for security and significance. Unfortunately, money provides neither of those. Only the Lord can, but so often, I think we attempt to fill a void in our lives through the money door, and it's just not created for that. When we worship the creation over the Creator, we have real problems.
And so we recognize that there's truth in God's word, and in some cases, it's a hard truth. You know, as we look at—if we were to take a course on this topic and understand what's in God's word here, we would understand that the Bible speaks with directness on this subject. And Jesus' words about money often penetrate deeply because they touch our fears, and our ambitions, and our comforts, and our insecurities, perhaps in a way we didn't realize. But God never exposes us in order to shame us; He does it to heal us.
C.S. Lewis, prior to his conversion, called God "the transcendent Interferer." And there's truth in that description because God lovingly interferes in our lives, interrupting our self-centeredness. He steps into areas we would rather keep private and off-limits. But every divine interruption is motivated by grace. I mean, think about it like a skilled surgeon: He wounds us only to heal us. And that's what we see in Proverbs: "Wounds from a friend can be trusted" in Proverbs 27. And Jesus calls us His friends. He says, "I no longer call you servants; instead, I call you friends." What an extraordinary thought: the King of Heaven speaks hard truths to us, not as a distant tyrant, but as a faithful friend. The Savior who convicts us is also the Savior who loves us beyond measure.
And so, as we look at the counsel of Scripture, we realize there are some hard truths there, and we also understand that the goal of our Lord is not condemnation, but transformation—that we would be transformed by the renewing of our minds, and that that would work itself out in part through our daily money management decisions. Well, each day on this program, we want to help you tackle your daily financial decisions through the lens of God's word to be able to apply these truths to everything that you're dealing with—as you invest, and you pay down debt, and you think about preparing the next steward, whatever you have going on in your financial life today. Call right now. We've got some lines open. We'll dive into those questions here in just a moment. 800-525-7000 is the number to call.
Well, in the news today, the Social Security Administration is warning about a scam with an especially sneaky twist. Listen to this: Criminals are offering to help protect you from identity theft by asking for the very information they need to steal your identity. The warning says that scammers are pretending to be from Social Security and offering to use your Social Security number to verify your employment records or address, or check whether someone has fraudulently applied for benefits in your name. Now, the scammer may direct you to an official-looking website or online form and ask for your Social Security number or other personal information. Well, of course, once they have it, they can use that information to steal your identity, access your accounts, or commit other types of fraud. The Social Security Administration says legitimate SSA employees will never contact you unexpectedly and ask for personal information—that's always a telltale sign that you need to hang up or move on. They also won't threaten to suspend your Social Security number, or seize your bank account, or tell you that you need to move money somewhere to protect it. Another red flag is an unusual payment request: Social Security will not demand payment using gift cards, or gold, or prepaid debit cards, or payment apps, or cryptocurrency, or wire transfers, or even cash—that should be a sign that you need to get out of there. If someone contacts you unexpectedly claiming to be from Social Security, don't provide or even confirm personal information. Hang up and report the contact at ssa.gov. Now, you can also check your earnings record and benefit information securely through your own "my Social Security" account. Let me just finish by saying faithful stewardship includes protecting what God has entrusted to you. Sometimes that means being skeptical—never let urgency, or fear, or someone else's claim that they're trying to help pressure you into giving away sensitive financial information, and be sure to share this with your loved ones as well.
All right, let's dive into your questions today: 800-525-7000. We're going to head to Georgia. Claudette, you'll be first up. Go ahead.
Claudette: Good morning. Yes, I'm recently retired, and I have about 46,000 in savings that's in just a regular savings. So, I was wondering what I could really do with that, and of course, the return on that is very low, do with that to kind of maximize my interest, or whatever?
Rob West: Yes. So, the 46,000, is this what I would call your emergency fund? Is it liquid reserves that need to be safe, but available if you need it for the unexpected?
Claudette: That is correct.
Rob West: Okay. Yeah, great. So, you want to keep this in a money market account or a high-yield savings account, both of which could have either public or private insurance up to $250,000. So, there's a couple of options. I mean, one would be if you want a banking partner that's aligned with your values, our friends at AdelFi Christian Banking are the largest Christian credit union in the country. They're paying 4% right now for up to $100,000 for up to a year. And, you know, that's a great option there because that would give you something that's safe, it's liquid if you need it, but over a month—over a year's time, you could bring in a couple of thousand dollars in interest, which is great.
You know, that's the kind of thing I would be looking for. Now, you could do that at AdelFi, you could do that at, you know, your local bank or credit union as well, or you could look at an online bank and see who has the best interest rates that they're offering. But I think that's the type of account, Claudette, that you'd be looking for: a high-yield savings or a money market account. If you wanted to check out AdelFi, you could go to faithfi.com/banking. That's faithfi.com/banking. They're also doing a bonus of up to $400 when you use the code FAITHFI. But I think that's the type of thing you would want to look for. Does that make sense?
Claudette: It does. It does. Thank you so much.
Rob West: You're welcome. And just to say, you know, I think the target typically for somebody who's in their working years, I would say for an emergency fund, is 3 to 6 months' expenses. Once you are retired, a lot of folks will bump that up to 6 to 12 months' worth of expenses just because we're—we're not working, you know, we want a little bit more conservative posture, but we also want a little bit more access to funds if we need it. And so, that might be where you'd look and say, "Okay, what am I spending over a typical month?" And then multiply that by 6, you could go all the way up to as much as 12 months. But that's a good, I think, rule of thumb. And then if you end up saving beyond that, maybe you put it to work and go beyond a savings account or money market account and look to invest in a balanced mutual fund or exchange-traded fund to get it growing for you and offset inflation.
Claudette, I hope that helps. Tammy, coming your way after the break. We'll be right back.
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Rob West: Great to have you with us today on Faith & Finance here on American Family Radio. I'm Rob West. We're taking your calls and questions today at 800-525-7000. We do have lines open at the moment, so this is a great time to call. Any financial question today, call right now. The team is standing by: 800-525-7000. We'd love to help you think through your situation in light of biblical wisdom. Let's go back to the phones. To Indiana, Tammy, go right ahead.
Tammy: Hi. Thanks, Rob. I enjoy listening to your—your advice and your show on at work.
Rob West: Oh, thank you.
Tammy: My question—uh-huh. Thank you. My question is, my mom and dad put everything in a trust. Their home, which is paid for, through the trust, is designated to go to me. They had bought a second home, a second house, for my sister, for them to use, and there's still a loan out on that one. And I am wondering—and it's designated to go to my sister. I'm wondering what happens to that loan when something happens to mom? Dad is already deceased. When something happens to mom and we start using that trust, you know, as estate planning, what—what happens to that loan?
Rob West: Yeah, it's a great question. So essentially, you know, the key point is putting that second home in the trust doesn't make the mortgage disappear. The loan remains secured by that particular property. So assuming the trust says you receive home one with no mortgage, your sister receives home two and still has a mortgage, then when your mom passes away, the trust distributes the home. Your sister can generally receive the second house subject to its existing mortgage. So federal law provides protections for certain transfers to relatives following a borrower's death. So the lender can't simply invoke a due-on-sale clause and demand the entire balance solely because the house passed to a relative. So she would need to work with the mortgage servicer, and depending on the circumstances, she may be able to continue the mortgage payments, formally assume the loan, refinance it into her own name, or pay it off, or sell the house and pay the mortgage from the sale proceeds. But those would be her options. Does the—you know, an important consideration though, and this would go back to the trust documents and their estate plan, but do you know if the trust says the mortgage has to be paid off by the trust before your sister receives it?
Tammy: Can you hear me okay? Because I lost you there for a minute.
Rob West: Oh, yes, I can.
Tammy: Okay. Okay. I am pretty sure it does not say that because we were in on the meetings when we were draw—having mom put that in the trust.
Rob West: Okay. Yeah.
Tammy: Is that something it probably ought to say?
Rob West: Well, it depends on what her intentions were. So, you know, if, suppose the mortgage-free house is worth $400,000 and your sister's home is worth $400,000, but it has a $150,000 mortgage, if she receives the property subject to the mortgage, then she's effectively receiving about $250,000 of equity and you're receiving $400,000. But if the trust directs other assets in the trust to pay her $150,000 mortgage first, in my example, then that's a different issue. So I wouldn't assume that the trust automatically pays off her mortgage, but I would have perhaps an estate planning attorney show you exactly what the trust says about debts and specifically the mortgage on home number two. That's the place, or that's the piece, if you will, that determines whether your parents intended you all to receive equal amounts or designated properties, and when, you know, it applies subject to the mortgage. And it sounds like you think it's the latter, and if that's true, then she would need to satisfy that mortgage after receiving that asset from the trust in the ways I mentioned—either by selling it, refinancing it, or just taking over the mortgage payment, or just paying it off completely.
Tammy: Right. Yeah, they have helped her quite a bit over the years, and so mom—that was mom's intention for her to—it's not necessarily going to be equal at the time of settling the account. So yeah.
Rob West: Okay. Yeah, so then at that point, she would need to, you know, figure out how she wanted to proceed. And if she didn't want to take on the mortgage payment, didn't have the ability to pay it off, well then, she would just liquidate the property and out of those proceeds, pay off the mortgage and then keep whatever equity remained.
Tammy: With the balance. Yeah. Okay, good deal. Good deal. I was a little worried about that. Okay, do you have time for one more question?
Rob West: Yes, ma'am.
Tammy: The other question is, my home is paid off. Mom's home is paid off. So when it comes down to what I'm going to do with two houses, I'm going to probably ought to sell one of them, you know? Is there a benefit to sell one as opposed to the other tax-wise, like the one that I personally own as opposed to the one that's in the trust?
Rob West: Hmm. Yeah. Good question. So, there's two different things going on here with regard to these homes that determines any tax that would be owed. With the property that you'd receive from your mom, assuming it comes to you through the trust and not because she made you a joint owner during her life, then you get what's called a step-up in basis. So, regardless of what your parents paid for the property that you're inheriting, the cost basis becomes the market value as of the date of death. And so if you turn around and sell the home you inherited shortly after their passing, or your mom's passing, then there would be no tax due because you would have a cost basis equal to the selling price. With your home, assuming it's your primary residence and that has been the case for two out of the last five years going back from the sell date, you would get up to $250,000 in gains that you could exclude from capital gains. And if you're married, that would be half a million dollars. So, as long as you don't have either $250,000 or $500,000, depending on whether you're filing single or married, in gains, then you would be able to sell that one as well free and clear without having any taxes owed. Any gains that went above that would probably be at either 0% or 15% capital gains tax.
Tammy: So either—so it doesn't really matter, I mean...
Rob West: In that case, it wouldn't matter. And so then it would just be: which one do you want to live in from a lifestyle and an enjoyment standpoint and a location standpoint, or which one, you know, allows you to get the money out that you're looking for? I hope that helps, Tammy. Thanks for your call. Back with more questions after this. Stick around.
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Rob West: Great to have you with us today on Faith & Finance here on American Family Radio. I'm Rob West, taking your calls and questions today. We've got lines open, we're ready for you: 800-525-7000. That's 800-525-7000. Whether you're thinking about what we shared just a moment ago—how do I stay safe? You know, maybe you're concerned about identity theft, or doing business online and keeping your identity protected. For you, maybe it's paying off some credit card debt or getting your credit score up. Maybe you're just thinking through how much to give and how much is enough with regard to your lifestyle and your giving. Whatever it is you're wrestling with today, we'd love to hear from you and tackle your question. Phone lines are open. Calls are coming in, but we've got a few at the moment: 800-525-7000. You can call right now. Let's go out to Louisiana. Donna, thanks for calling. How can I help?
Donna: Um, I was wondering on some Social Security benefits. Um, I'm not quite sure of my rights I'm receiving. I widow uh support right now, and um I was wondering if I could also collect my Social Security on top of his widow support, or can you only collect one Social Security?
Rob West: Yeah. Yeah, it's a—it's a great question, and uh potentially. So uh we need to identify uh what that 5,000 of widow's support actually is. Uh do you mean that you're receiving a survivor benefit?
Donna: Right, right, right, from a deceased spouse. But I'm also divorced and collecting um on a retirement fund through him, which is not Social Security. Okay. That's a retirement, but I do get widow uh benefits.
Rob West: Okay, got it. Yeah, and so the—the retirement benefit is separate from your uh spouse's employer, is that right?
Donna: Yes, sir.
Rob West: Yeah. So if—if you uh if you're divorced from the spouse who later passed away, then you may qualify as their surviving divorced spouse. Um so as long as the marriage to the deceased ex-spouse lasted at least 10 years, then you generally can qualify for the survivor's benefits beginning at 60, and the fact that you were divorced doesn't eliminate that. Um so at 66, the important planning opportunity is—is that the survivor benefits are treated differently from ordinary divorced spouse benefits. So you may be able to collect the survivor benefit uh on your deceased ex-husband's record now, leave your own Social Security retirement benefit untouched, and then later switch to your own benefit as late as age 70 if it becomes larger. Um they will allow you to do that, which is not something that's available if you are um, you know, just taking a spousal benefit.
Donna: Oh, okay, okay, 'cause I do receive my spous— Yes, uh yes. I do receive my uh the survivor benefits already right now.
Rob West: Yes.
Donna: I haven't—I'm 66 and I'm semi-retired. I'm just wondering if I collect on my Social Security also.
Rob West: Yeah. Yeah, so exact—right. So you can't take both, but what you do have the ability to do is switch to yours if it's higher. Uh now, if—if the survivor's benefit is higher, then it doesn't matter, you would just take it and you can't get both. Um but what a lot of people do is they will take the survivor benefit and let your own benefit grow by waiting, and you could let it grow uh beyond full retirement age every year that you wait, your benefit will grow by 8% up to age 70. And so whatever your full retirement age benefit based on your work record is, you could wait till age 70 and it would be 25% higher than that. And if that amount is higher than what you're currently getting as a survivor benefit, then you could switch and get that higher benefit down the road, if that makes sense.
Donna: Right, ex- exactly. Yes, sir, it does, because as of right now, mine is lower than what I am receiving.
Rob West: Okay, yeah.
Donna: And I didn't know if I can get them both, so it's just sitting there. Okay.
Rob West: So you can't get both. So you would leave that one um alone, and the only reason you would ever switch is down the road. So, let me give you an example: let's say you're receiving 2,000 a month as a survivor benefit, and your own benefit at full retirement age would be 1,800. Well, you would keep the 2,000 survivor benefit, but let your own benefit continue to grow, and let's say at age 70 it wasn't 1,800, it was now 2,300. Well, then you could switch to the 2,300 at that point and then take that one for the rest of your life and get that higher amount. That's assuming that that would be true. Now, it could be that your benefit will never, even at age 70, surpass his. Well, in that case, you would just stay with the survivor benefit because, again, you can only receive one or the other.
Donna: Okay, okay. And and and you're probably so correct at that uh, 'cause right now his survivor is 25 and mine is way under than that, and I don't think I'm ever going to reach that, even though I'm still working. Though, but uh so my Social Security just sits there, goes unclaimed.
Rob West: That's right, because you can only get—
Donna: Nobody can— All what I paid in, nothing, nobody gets it.
Rob West: That's exactly right, 'cause you can only get one benefit. And from the IRS's standpoint, they're saying, "We'll let you take the higher of the two; we won't let you take both."
Donna: Okay, okay. And what if you owe taxes? Can they take that out of your Social Security if it's not claimed?
Rob West: So, tell me a little bit more about that.
Donna: Well, well, uh every year I pay a lot in taxes. I don't have a lot of uh things to claim. I don't have a lot of um overhead. I'm I'm I'm single, and I I get $5,000 a month on top of a a part-time salary. So I pay a lot of taxes. I'm just wondering if they can't counteract, since I'm not claiming my Social Security, if it can go toward the taxes.
Rob West: No, unfortunately it can't. So, yeah, your your tax rate is going to be a function of the income you have plus half of your Social Security income is going to determine what your taxable income is, uh and and that will affect whether or not your Social Security itself is taxable. But that there's nothing that can be done with that kind of unclaimed benefit from your work record. It just sits there because you've you've opted for your late husband's, and it for good reason, because it's higher.
Donna: Exactly, exactly. Okay. And I just hate to see it sit there. You know, we all pay a lot into our Social Security not to be able to get it.
Rob West: Yes, ma'am. I totally understand. Unfortunately, that's the way the—the system is set up, and—and I get your frustration there. Hopefully that's cleared it up though for you, Donna. God bless you. Let me go to Ohio. Julia, go ahead. How can I help?
Julia: Yeah, thank you so much for your show. It's a great um one to hear every day.
Rob West: Thank you.
Julia: Yeah, I was wondering, um we're 50 now and our kids are freshmen, and my husband will get a pension when he's 55, but he plans on continuing to work. And I'm just wondering as far as like saving for the kids' uh college, we have the 529, but is that enough?
Rob West: Yeah. Uh, you know, it really is just a function of how much you think you're going to need. And so, you know, you could start down that road and look at the various options, and really the number that you're looking for is the cost of attendance. And so that's going to vary widely from, you know, community college to uh, you know, four-year school, in-state, out-of-state, public, private. And so it's all a function of what do we want to, you know, where do the kids want to go? Where do we want to um, you know, and and how much do we have to put toward it? And what I would recommend is you decide how much you can afford to put aside and and dedicate that to their schooling, let them know what that is, and then they'll know that what they can choose from and whether they need to add to it. Let's talk a bit more about that after the break. Stay right there, Julia. We'll be right back.
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Rob West: Great to have you with us today on Faith and Finance here on American Family Radio. Before the break, we were talking to Julia. She and her husband are in their early 50s. Her husband's still working full-time. He'll get a pension at 55. They're saving for their kids' college through a 529 plan and just wondering, how do we know how much to save? And, you know, I think it's going to come down to ultimately what you want to be able to provide, what you have the ability to provide, and then they'll be able to match that up with the various options they have for schooling that may involve them, depending on where they want to go, having to get a part-time summer job, maybe working on campus. I was a resident assistant to pay for my room and board my junior and senior year. You know, I managed the Christian radio station on campus. You know, my wife got lots of scholarships and grants. I mean, there are other ways to pay for college other than debt. And so you need to look at kind of the whole picture.
But I think, you know, the goal doesn't have to be to save enough to pay 100% of college. I think the key is once you know what your plan is and what you can realistically save, then communicating that clearly to the kids so that they know what they need to supplement based on where you all agree they're going to go to school at some point. But I do like the 529 in terms of once you set that reasonable benchmark for what you want to be able to provide and what's possible, just given what you have available to be able to fund this 529, you know, I think you set that savings target. The 529 is an excellent vehicle to do that because you can invest it, the money grows tax-deferred, and then it comes out tax-free as long as you use it for qualified educational expenses. But let me stop there and get your thoughts on all that.
Julia: Oh, yeah. That sounds really great. I didn't really think about it from that perspective. The only thing is like, we do have twins, so we'll be paying for college at the same time. And right now in the 529, we've gotten maybe about $60,000, $50,000 in each of their accounts, and they'll go to an in-state four-year university, I assume. You know, I don't think that they'd be unreasonable to go out of state.
Rob West: Yeah, so that's great. And I can appreciate what you're saying because I've got twin girls as well. They're seniors, and so they're going to be headed off to college next year, and I'm going to be in the same boat that you will be a little further down the road. So I get it. And well done. The fact that you've got those 529s with $60,000 each is a great start. And maybe, Lord willing, if they stay in-state, you know, it's enough to cover it.
But I wouldn't, just because it's there, miss the opportunity to really—and I would put this back on them—to start researching what scholarships and grants are available. You know, there's some great books on Amazon, or you can do some digging locally. I mean, some of our kids applied for a local scholarship from the local power company, and, you know, one of them got $5,000. And, you know, they really took the initiative to go out and look for scholarships and grants. I've had a couple that worked during the summer and used that as spending money.
So, you know, I wouldn't just automatically assume that everything needs to come out of there. But at the same time, you know, you may want them, you know, not to work and be available for internships. So I think that's part of what you all need to work through and develop a plan for. But the good news is, regardless of where you land, you've got a great head start toward a meaningful amount that you can apply to college.
Julia: Oh, yeah. Those sound good. Yeah, I've written them down as you spoke.
Rob West: Awesome. Well, listen, Julia, well done. And I think you're on the right track here. I love the 529 for this purpose. I think the key is let's plan early, let me know kind of where we're headed, let's communicate clearly with the kids so they understand what they're going to be responsible for, and then let's do everything we can to offset any additional cost through scholarships, grants, work, not debt if at all possible. Thanks for being on the program today.
Let's go to Louisiana. Hi, Casey, go ahead.
Casey: How are you doing?
Rob West: Good. How can I serve you?
Casey: Uh, I am, uh, in my mid-70s. My wife's in her, uh, late 60s. Uh, we're both retired. Uh, we have pensions. I've got, uh, uh, a little bit of a, uh, Social Security, so does my wife, and, uh, also 100% disabled as a veteran. Uh, so I'm getting that. And, uh, we've been married about 9 years ago, 6, 7, 8, 9 years ago. And, um, so we kind of combined, uh, our finances, and she's got a bunch of kids, I've got a bunch of kids. It's kind of that situation. I don't have a, um, um, um, will. She has one that she needs to change, and we've been delaying because we've got no idea how to go about this.
We've also got about 8 acres that, uh, we are considering down-sizing. Which, uh, is probably worth about 450. We only owe about 120 on it. So, uh, that plus about 60,000 in savings is kind of like a situation, and I don't want a war happening if one or both of us pass away, you know, you know, family skew.
Rob West: Yeah. Really helpful. We're having a little trouble hearing you, but I think I got the gist of it. So essentially, um, you know, I would, uh, absolutely move forward with getting a will in place. Even if you're planning to downsize, I wouldn't wait until you do that. The fact that you currently have no will, even though your wife has a will that may predate or not fully reflect this blended marriage, is the bigger immediate issue. So with several children, and that's great, you all are blessed, from those prior relationships, the goal should be to answer really two questions clearly: First of all, what happens when the first spouse dies, and what happens when the second spouse dies?
Without careful planning, it's very easy for, you know, one side's children to be unintentionally favored or disinherited. But the key is, there's not a right or wrong decision there. You just want to have open and clear communication and make intentional decisions. And then you want to, you know, update her will, make a new will for you that reflects your desires.
And perhaps one of the things you want to do is say, "Listen, what each of us brought into the marriage, we're going to separate out for each of our respective kids." Or, "You know what, we really didn't have a whole lot, and all we've got now is this property." And so then we just want to make a plan for, okay, how are we going to, you know, ensure that when one spouse dies, the other can continue to enjoy the property and the assets that you have as a married couple? But then the key question at that point is, then what? And maybe it's just everything is liquidated and distributed equally. Well, great.
A trust could help with that, where, you know, you want to ensure that the surviving spouse is financially secure, but then also guaranteeing certain assets pass to each spouse's respective children. You also have a VA disability status that adds another planning issue because ordinary VA disability compensation generally isn't something you simply leave to children through the will. So depending on your disability rating, you know, how long you've been rated totally disabled and the circumstances, your surviving spouse could potentially qualify for VA Dependency and Indemnity Compensation.
But I would say bring that existing will to the attorney that you go see, the deed to the 8 acres and the home, bank statements, retirement accounts, life insurance policies, and then you're going to want to, you know, have talked about in advance ultimately what you all would like to have happen and then make sure that that's documented in new wills—at least an updated will for her and a new will for you—and then any other tools that are needed, like a healthcare surrogate, a durable power of attorney, perhaps a trust, although it doesn't sound like one is needed there just given what you're describing. But I wouldn't wait on that. I'd get that done sooner rather than later. Thanks for your call today, Casey. We appreciate you being on the program. Lord bless you.
Let's go to Louisiana. Al, how can I help?
Al: Good morning. Can you hear me?
Rob West: Yes, sir.
Al: Thank you. Uh, I'll try to be brief. I have a son who is disabled. He has a mental illness, and he will never be able to work, um, at a normal job. He does have attributes that are positive and things that he can do, but he'd like—he has started a small business, and it has been fluctuating, you know, from good to bad to not so good to... What I would like to do is, or what I've been looking for, is a, um, some type of, uh, disability loan, maybe a government loan or something that I could, uh, try to get for him because of his, uh, disability. His credit is brought up to an acceptable level over the last couple of years. He never believed in establishing a credit, uh, uh, level. And, uh, so that was my question. Is there something I can do to help him, uh, in that respect?
Rob West: Hmm. Yeah. It's a great question, and I'm certainly not an expert in this. What I would say is there's not just a general category of a disability business loan, but there are some options available. And I would say the US Department of Labor does recognize self-employment and business ownership as employment options for people with disabilities. So I'd probably start with your state vocational rehabilitation agency and let them know that the disability prevents him from working, but he has a business that accommodates his disability and he wants to pursue self-employment, and, you know, see if there's a business financing program available through the state.
You could also do an SBA microloan, where that would provide up to $50,000, and that could be a, you know, a key option. So the SBA could be a great place to look through the microloan, and then their other loan called the 7(a). And then, you know, beyond that, I would just look for any kind of other disability-specific business assistance, but I don't have anything specific to direct you towards at the moment. But hopefully this at least gives you started, Al. I love the track you're on here, and I would certainly do my homework to see what you can find. God bless you, sir. Thanks for being on the program today. We appreciate you.
Well, folks, that's going to do it for us. Big thanks to my team today: Jim, Taylor, Devin, Patty, Pat, everybody here at FaithFi that makes this possible. We're so grateful to serve you each day, come alongside you, encourage you as you apply God's wisdom to your financial decisions. Hope you'll come back and join us tomorrow. We'll do it all over again, Lord willing. Until then, may God bless you. Bye-bye.
Announcer: The views and opinions expressed in this broadcast may not necessarily reflect those of the American Family Association or American Family Radio.
Every parent hopes to leave an inheritance for their children, but doing so wisely takes careful thought and prayer. On this Faith & Finance on AFR, Rob West welcomes Ron Blue to discuss the Uniqueness Principle. Discover how it can be used to guide parents in passing down wealth effectively. Then, it’s on to calls.
(00:00) Rob West and Ron Blue examine passing on an inheritance of money and wisdom
(08:30) Attempts people make to fill voids in life with money
(12:06) In the News: Social Security Administration is warning of a new scam
(14:23) Caller Claudette: How to earn the most on emergency savings monies
(21:01) Caller Tammy: Parents put home in trust. What happens to mortgage upon parent’s passing
(32:05) Caller Donna: Qualifications for divorced spouse social security benefits
(38:50) Caller Julie: How much to save for children’s college. Is 529 savings enough
(42:20) Continue conversation with Julie on saving for children’s college
(46:28) Caller Casey: Remarried, how to manage wills and estate planning for mixed family
(51:11) Caller Al: Seeking a loan for disabled son to start a business
Every parent hopes to leave an inheritance for their children, but doing so wisely takes careful thought and prayer. On this Faith & Finance on AFR, Rob West welcomes Ron Blue to discuss the Uniqueness Principle. Discover how it can be used to guide parents in passing down wealth effectively. Then, it’s on to calls.
(00:00) Rob West and Ron Blue examine passing on an inheritance of money and wisdom
(08:30) Attempts people make to fill voids in life with money
(12:06) In the News: Social Security Administration is warning of a new scam
(14:23) Caller Claudette: How to earn the most on emergency savings monies
(21:01) Caller Tammy: Parents put home in trust. What happens to mortgage upon parent’s passing
(32:05) Caller Donna: Qualifications for divorced spouse social security benefits
(38:50) Caller Julie: How much to save for children’s college. Is 529 savings enough
(42:20) Continue conversation with Julie on saving for children’s college
(46:28) Caller Casey: Remarried, how to manage wills and estate planning for mixed family
(51:11) Caller Al: Seeking a loan for disabled son to start a business
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