Your Parent's Money Mindset Series Recap | Series 3.8

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Welcome to the EnjoyMore30s Family Finance

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podcast. The only podcast dedicated to making life more

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enjoyable for young families by hitting on the financial topics

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that tend to weigh on us stress us out and distract our focus

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from simply enjoying life.

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Hello, and welcome to the series three, Your

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Parent's Money Mindset series recap. We really covered a lot

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so far this season. We talked about bridging that initial

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financial conversation gap, better understanding your

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parent's existing mindset, how titling and account types will

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affect what you receive, to really the major medical

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expenses and exposures. That's a lot. It's valuable, actionable

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information but as I always say, at the same time, we don't want

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to be overwhelmed by it, right? If we take positive action on

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one of these seven relevant episode topics, you and your

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parents this time around, are better than you were before. And

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you should really be proud of that. You're improving not only

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your life, but your parent's life too. The people that have

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really looked out for you since you were born. We also want to

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make sure we're remembering the goal, remove anxiety and

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financial worries so we can focus our energy on what matters

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most, enjoying more living with family and our friends of

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course. Whether it's our own financial anxiety or that

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anxiety derived from our parents well being the same end result

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is reached. So the kind of worry that goes away when you know

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your parents aren't going to run out of money. Knowing your

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parents are covered medically and not going to come live with

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you kind of worries you might have. Know where you're going to

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have to go to or talk to when your parents pass away kind of

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worry. Know how to handle some of what you may receive when it

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happens, worry. So be proud of all these steps as you take

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them. You're making life more enjoyable than for you and as

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that natural consequence based on this series, for your loved

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ones as well. Lastly, stay tuned to the end as we're going to be

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announcing our focus for the next series to come, which is

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always very exciting.

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So without further ado, get together with your spouse and

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let's review. Number one, how to talk with parents about money.

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So the main point from this initial episode here is to

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acknowledge that money is hard to talk about. But there are

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very significant reasons why you should think about having those

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conversations with parents. The first is to head off any bad

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track earlier than later. No surprise they have to come live

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with you. And secondly is the reverse of that, where if

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they're in a good position to get them thinking about making

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the most out of their money that they've worked so hard to earn

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over their lifetimes. Either way, know that they are almost

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certainly coming from a very different money mindset. So

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remember, very likely no public Venmo purchases with emojis.

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Lastly, start bridging that gap by asking very basic financial

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preference questions. So how many banks do you use? Do you

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like credit cards or cash? When did you start talk, talking to

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somebody about investments, things like that. So those that

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are kind of expressing maybe concern without being invasive?

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Again, the goal is to start a conversation, not tell them why

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they're wrong.

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Number two, your parents trust their advisor. The main point

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here from this episode is if you were able to form that

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conversation around money with parents, don't underestimate the

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trust they likely have in whoever they're already working

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with. Your parents are older, they've likely been working with

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them for a very long time. Secondly, while you may be used

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to asking why-based questions, your parents may not be. They

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didn't grow up with the internet to fact check or self research

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everything. If the professional said it was this way, then many

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times you just kind of went with it. You didn't have any other

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options, you can go research it on your own very easily. Lastly,

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if you are able to ask some more thought provoking questions. So

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for example, what life expectancy assumption did your

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advisor make? How does your annuity actually work? And who

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does it go to if something were to happen to you? What assets

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transferred directly as opposed through the will and again, this

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is the one that most people just always kind of assume it's all

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going to pass through the will, but a lot of assets especially

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annuity retirement assets, do not. Be respectful again. The

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goal is to have them think and evaluate and ask your opinion as

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needed. The quickest way to get shut out is to preach to them.

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Episode Three, What About Mom? Surviving Spouse = CFO. This

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deals with the fact that one of your parents is going to outlive

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the other one. And the one that is going to be the longest

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living may not be the one who currently handles the finances.

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If that is the case, you are going to have to provide

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significant assistance. Having both parents fluent to some

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degree in what is going on financially ahead of time really

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is the smartest approach. I shared how with my own

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grandparents, my grandfather passed first, but because his

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illnesses kind of stacked up a little bit, as time went on, he

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had the opportunity to teach my grandma enough about the

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finances so that now today she's able to manage. If you find

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yourself needing to assist, start with organizing with what

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they have. Generally the best place and starting is with the

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bank accounts. Lastly, help in adding extra awareness in

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certain areas for that surviving spouse, such as you know, Social

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Security, where they're only going to maintain the higher of

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the two. Life insurance where maybe, you know, they don't know

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where the documents are, they already paid it off. So you

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don't want to miss that obviously. Annuities which have

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so many moving parts, many times. IRAs, which is an all

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likelihood not be immediately liquidated to help ensure no

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unfixable mistakes are made when it comes to taxation. And then

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the last part of that, which we also mentioned, was talking

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about making sure to have that appropriate power of attorney

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(POA) in order. Because now with one spouse, if something were to

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happen to them, you need somebody that can speak on their

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behalf if you need to you your sibling, somebody.

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Inheriting Assets, Opportunities and

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Headaches. Here we touched on how there can be a lot of

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headaches that come up, whether through incorrect beneficiaries

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being listed, incompetent executors, or just scattered and

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disorganized paperwork. These can significantly delay the

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settling of the estate cause issues in taxation, or really

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worst of all, it could mean that money goes to people they didn't

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want it to go to. The best course of action by far is to be

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proactively asking some questions again, to your parents

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ahead of time. These are not you know, how much do you have mom

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and dad? How much you guys worth kind of questions, just

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questions to make sure that they have their ducks in a row. Does

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everything go through your Will you have retirement accounts?

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They probably don't go through your will. Are you sure who the

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beneficiaries are? Do you know where any important information

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is? Should I know where any important information is now, or

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at least who to go to in order to find it if I need it? So

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questions kind of like that.

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Step Up! The Gain Is Gone. Here we covered the

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current rules again, as of the spring of 2021. Were

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non-retirement account gains are essentially wiped away from the

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individual inheriting again, the non-retirement assets. The

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second thing to make your parents aware of though, is some

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of those general questions we touched on. Because quite

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frankly, we find very few people have these things kind of

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explained to them. So again, the broad workings of this step up

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rule, you have a stock, I bought it, it's worth $50 a share, it

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goes up to $120 a share, I pass away. The person that is

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inheriting that account, all that gain is wiped away here.

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Inherited IRAs, More Limited Options. So while the

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last episode Step Up! The Gain Is Gone, could possibly be

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changing with the current administration over here,

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inherited IRAs already were changed back in 2019, with the

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Secure Act. So this episode, we focused on how these inherited

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IRAs now have new unique rules, where instead of being able to

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have a lifetime distribution window, it's been shrunk all the

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way down to 10 years. All the money in an inherited IRA has to

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be distributed within 10 years. However, your parents do still

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have some powerful options at least, in potentially minimizing

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that tax and they can do that through what's called a Roth

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conversion. So ask your parents, did you hear about how they

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significantly changed the rules for people inheriting IRAs? Do

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you know if your plan is set up to properly try and help

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minimize or reduce these total taxes paid long term so that

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Roth conversion can be powerful because you can take those

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assets, and you can move them into a place that could be

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growing tax free, instead of leaving them currently where

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they may be in a place that they're going to continue to

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accumulate tax deferred, meaning that it's going to be a large

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growing tax burden that you may likely have to be, you know,

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paying at the top of your working career.

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And finally, number seven, Retiree Healthcare for Parents,

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A Lot Isn't Covered. This was a really, really important one.

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The takeaways here are to realize your parents may not be

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fully aware of what coverage they have medically in

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retirement, and could possibly be assuming they are more fully

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covered than they actually are. So talk to them about what they

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may have. Say that there are certain things that are only

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partially covered by Medicare, and others that are flat out not

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covered at all, like essentially all long term care expenses.

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Remember there is that guaranteed issue or acceptance

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period right after losing existing medical coverage for

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obtaining that Medigap supplement. So again, Medicare

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only covers roughly the first 80%. That extra 20% you do need

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to fill either with a Medigap supplement or with a Medicare

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Advantage plan. And even a rough plan of what would happen in a

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long term care situation is highly, highly recommended. What

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do you guys going to do? Do you need to use your home equity?You

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have an account that you're not touching? Did you just happen

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enough to be lucky to have purchased a long term care

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insurance policy back in the day before the prices went up so

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much? What is our plan if God forbid something happens?

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And so there you go, the first series I have ever heard about

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trying to help you speak with your parents about money is

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complete. So take some time to review these important areas.

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And remember, again, if you can make one positive change just

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one, then you are one step farther along and having life be

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more enjoyable for you and this time your parents as well.

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If you can absorb and implement all of the items that's

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fantastic. That's great. You have an ability to now really

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take big leaps ahead for where most where most people

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unfortunately tend to be. So I'm happy to be able to provide this

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to you. If it is overwhelming, if you have questions, just want

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someone to help you get all this stuff in order so you know

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exactly where you are and what path you're going on, head over

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to our website at www.enjoymorethirties.com.

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That's enjoy more three zero s.com and click Ask Joe to

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connect. I'd always be happy to help.

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Overall as always, thanks for tuning in. If you enjoyed this

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episode, like I always say please make sure to click,

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follow, and review us on Apple podcasts or wherever you listen.

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There are literally millions of young families out there I'm

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trying to reach and help just like you.

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Now to finish off today, I still need to share our next series as

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promised, which is entitled The Main Money Misnomers. Have you

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ever wondered as an advisor, what are the main

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misunderstandings when it comes to money that I get most

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regularly? I'm going to share some of those most prevalent

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misnomers I come across, especially when it comes to

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young families. We are going to cover tax refunds, goal setting,

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crypto, what's actually worse than death, and even Hershey

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bars. So it's a really wonderfully unique, colorful lot

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of topics that you may have thought about before and with a

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little information can likely worry about less than the

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future. As always trying to help in achieving that goal that we

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always have here of making life more enjoyable. So thanks for

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joining me today and I can't wait to connect with you again

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soon in the series to come.

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The conversations on this show are

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Joe's opinions and provided for general information purposes

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only. They do not constitute accounting, legal, tax or othe

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professional advice for you specific situation. You shoul

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always seek appropriate advic from a financial advisor

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accountant, lawyer or othe professional before acting upo

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any content or information foun here first. Joe is affiliate

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with New Horizons Wealt Management LLC, a branch offic

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of TFS Securities, Inc., and TF Advisory Services an SE

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registered investment adviso member FINRA/SIPC