← HerMoney with Jean Chatzky
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- [00:01]
A
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B
Every holiday shopper's got a list. But Ross shoppers, you've got a mission like a gift run that turns into a disco snow globe, throw pillows and PJs for the whole family, dog included. At Ross, Holiday magic isn't about spending more, it's about giving more for less. Ross, work your magic. Hey everyone, I'm Jean Chatzky. Welcome to her Money. We've got a very special mailbag episode for you today. It's one that we know will resonate with many of you who are caring for aging parents, supporting loved ones in retirement, or just trying to navigate the financial responsibilities that come with growing older and helping others do the same. Beth Pinsker is back with us. She is a financial planning journalist, a certified financial planner, and the author of My Mother's Money, her book about financial caregiving. She is here to help us answer your real life questions about everything from lending money to families to navigating RMDs and dealing with medical bills after a loved one passes. So whether you are already in a caregiving role or you're Planning ahead for the future as you should. This episode is packed with practical, compassionate advice to help you protect your finances and your peace of mind. Beth, welcome back.
- [03:05]
C
Thanks for letting me into your mailbag.
- [03:08]
B
Anytime. Okay, our first question comes from Denise. She is stepping in to help her husband's mother make some essential home repairs and she writes. Hey, Jean and Beth. We are considering loaning money to my husband's elderly mother to make necessary repairs to her condo which would help her safely age in place. Her only income is Social Security, so our plan is to be repaid when the condo is eventually sold, either as part of her estate or if she enters long term care. She's currently in decent health but is in her 80s. We're not exploring options like a HELOC or reverse mortgage. She likely wouldn't qualify and we're trying to keep it simple. We stepped in to help after my sister in law looked into covering the cost, but would have had to dip into her IRA and pay a penalty. So here's the core of my question. Do we need a lawyer to formalize the loan or could we just file a lien with the county recorder to protect our interest? We want to ensure we're in line after the mortgage, which is small, to recover the loan proceeds. Especially since I've heard that in long term care situations, assets often have to be liquidated or signed up over for context. We're in Indiana. Boy oh boy, it is complicated and I think kudos to them. I mean, I know that only a very small supply of the housing stock in this country is actually equipped for aging in place and yet most people want to stay in their own homes. So helping your mother in law get through this, Denise, is incredibly kind and generous of both of you. Beth, what do you think about this sort of semi financial, semi legal question?
- [05:01]
C
Well, this is just advice because I'm not a lawyer and I don't know all of the details, so I'll just preface it by saying that. But to my ear, this has too many ifs and too many conditions placed on this loan of money for the mother in law. And, and if you're going to do it in a formal route and want the money back at some point, definitely get a lawyer because you want all the terms and conditions to be spelled out. But I would say that, you know, when dealing with family, things get complicated and I don't know if there are any other siblings involved or what the delineation of the inheritance would be like. Who else are they sharing the inheritance with? If it's an only child and the mother is going to pass the whole condo to the husband in this scenario, then why not just make a gift? Just like if you want to help your mother in law out, help your mother in law out if there's another child there. And yeah, things are going to get complicated. You don't know what the mother in law's situation is going to be. You don't know if she's going to go into a nursing home on Medicaid. You could fix up the house and she could have an incident and have to move out immediately or she could live there 15 years. There's a lot of ifs involved. And I would say with family, you know, if you want to help, help and just make a gift perhaps.
- [06:30]
B
Yeah, if that's something that you can afford. I mean, I don't know what. I'm not sure, Denise, what your financial situation is and if that's something that you are able or willing to do. My two cents on this, and I agree with Beth that it can get very, very complicated and is first, I do think you're probably right that she may not qualify for a HELOC based on her income. But your mother in law is precisely who reverse mortgages were made for. And so I wouldn't discount that option before you take a serious look at might simplify the situation because she would be the one borrowing from her own home. And so if she would need to enter long term care, then only the remaining value of that house would need to be liquidated. A reverse, unfortunately is not a free transaction. It definitely costs several thousand dollars, sometimes more than several thousand dollars to get into it. But at her age she would be able to get a significant amount of money out of that house. She could access it as a line of credit and only spend what she needs, not pull out a lump sum. If you decide that a reverse is not going to work and you are still going forward, you absolutely need a written loan agreement. You need to get this in writing. That's where the lawyer comes in. The IRS is going to mandate that there be some interest involved. I'm not a lawyer either. So you may be able to push that interest down the road, but the interest has to be documented, which means that you'll get paid interest when you get paid back the loan. Otherwise they could look at it and basically say this is a gift, not a loan. And yeah, you definitely need to file a lien. So a lawyer will be helpful with all of those things. And although you can find templates online from Various legal sites that will do this for you. I would talk to a real estate lawyer in your area and make sure that you've got it really buttoned up. Let's go to our second question. Our listener says, hey, Jean and Beth, I have a question about what happens with medical bills after the death of an elderly family member. They recently passed away after spending nearly a month in the hospital, having been transferred between three different facilities by ambulance as doctors worked to determine the very best course of treatments. I'm having flashbacks. This is exactly what happened to my mother. The final surgery was very specialized. There was a lot of back and forth between the medical teams before it was done. Now the surviving spouse is starting to get claim denials from the Medicare Advantage plan. Although no actual hospital bills have come in yet, the care was not out of network and no one signed any documents agreeing to financial responsibility at any of the hospitals, at least not that they're aware of. The deceased didn't leave behind any significant assets, just a primary residence. And they were listed as the secondary joint holder on a brokerage account, an IRA and a joint check checking savings account with the spouse. Both the deceased and the surviving spouse were collecting Social Security and RMDs. So here's the core question. And I just. I gotta love my listeners. They give us so much information. Here's the core question. Can the hospitals or providers come after the surviving spouse for payment? What do you think?
- [10:27]
C
They wouldn't be coming after the surviving spouse per se. They'd be coming after the estate of the deceased. And they'd be limited. And this might be good news for your listener. They'd be limited by the maximum out of pocket on the Medicare Advantage plan. And you know, those are different all across the board. The maximum that could be by federal statute currently is like 93 and change, 9,300 and some amount of dollars. So that's the most that those bills could add up to. So at least there's some limit. It's not an infinite amount of money that this could be. So we're talking about up to $9,000, but the average maximum out of pocket is more like 4 or 5,000. So you could be talking about maybe 4 or $5,000 at the end of the day. And then it's going to depend on what's in the estate of the person who died. Some married couples don't go through probate, and so there is technically no estate.
- [11:29]
B
For the deceased because the assets of one spouse automatically transfer to the other. That's how that works.
- [11:36]
C
That's how that works. When my father died, my mom didn't go through probate for him. It's part of why we had the bank account problems that we had, because his name was still on a bank account, but my mom didn't need to go through probate. So if there's no estate, there's nothing for the Medicare Advantage plan to come after. They may send you bills. Like, I would just get a billing advocate of some sort to say, you know, write back and say, this person is deceased, there's no estate, and how do you want to proceed? And in all likelihood, at the end of the day, a lot of these bills get written off by the insurance company after somebody dies. But, you know, you may get bills, and if there is an estate, the money would come out of the estate.
- [12:22]
B
So when you say if there is an estate, you're basically saying if there were any. If there was any property owned by the individual, not by the couple jointly. What about, for example, a retirement account?
- [12:39]
C
Yeah. If that passes by beneficiary, then that's not part of an estate that would be probated.
- [12:44]
B
Okay. And when you talk about getting a medical benefit billing advocate, what is that and where do you find one? They sound very useful.
- [12:53]
C
They do, and they are. So you can. You can find one in your area. You can go to an insurance broker and ask for their recommendations. You can go to some of the, like, social service type agencies like the National Council on Aging or AARP and find somebody who will go through the bills with you. There's an organization called Boomer Benefits. There's a number of these out there that will help you with your billing problems and advocate on your behalf. Some of the services are free if they're, you know, a nonprofit. Some of them are for pay. If you find a billing advocate who charges by the hour, they can charge a contingency fee on the amount of money that you're going to be relieved of. Or if you have a family lawyer who's dealing with the other matters that you have to deal with. If there is a will that needed to be probated and you have a probate attorney, you have a trust that needs to be administered, and you have an attorney who's dealing with that, they can handle these sorts of things, too. They'll know all of the rules and permutations and the time limits, because it's not forever that they have. In order to do this, I had to go to probate with my mom's estate, and her hospital system came up with $10,000 in bills at the last minute that they said that she owed. And I had to spend a day and track them down and say, what are these bills for? And it turned out to be items that were Ms. Billed. She had a car accident years before and some of her bills had gone to the car insurance of the lady who hit her. And then it got all mixed up on the back end and they kept trying to build this other lady's car insurance for some of my mom's bills. And when they went to close out the account that she was dead, they said, oh, there's still $10,000 in charges. And by the time we sorted it all out, it was zero. So you should work with the hospital billing system to see if those bills are really legit first and then deal with what you're liable for in terms of an estate.
- [15:01]
B
We are going to take a quick break. We'll be back with Beth Pinsker in just a sec to continue answering your questions. Pop quiz. Can you name all your financial accounts right now? 401k savings, credit card, mortgage, investments? My producer Hayley thought she could until she started using Monarch and discovered a crypto account that she hadn't touched in years. With a couple hundred dollars just sitting there, that one surprise made her realize how easy it is to lose track of your money. Feel organized and confident in your finances with Monarch, an all in one personal finance tool that brings your entire financial life together in one clean interface on your laptop or your phone. And right now, just for our listeners, Monarch is offering 50% off your first year with code hermoney@monarch.com Now Hailey uses Monarch to keep everything in one place, spending savings, investments and even shared budgets. No more spreadsheets, no more surprises. Don't let financial opportunity slip through the cracks. Use code hermoney@monarch.com in your browser for half off your first year. That's 50% off your first year@monarch.com with code hermoney. Is your wireless bill still way too high? If so, it might be time to rethink what you're really paying for and what you're not. At Mint Mobile, their favorite word is no. No contracts, no monthly bills, no overages, no hidden fees, no bs. Mint is changing the game with premium wireless starting at just $15 a month. Every plan includes a unlimited talk and text and high speed data, all delivered on the nation's largest 5G network. You can even keep your own phone and number, so switching is seamless. Just better service, fewer headaches and a lot More savings. Ready to say yes to saying no? Make the switch now@mintmobile.com hermoney that's mintmobile.com hermoney upfront payment of $45 required, equivalent to $15 a month limited time. New customer offer for first three months only. Speeds may slow above 35 gigabytes on unlimited plan taxes and fees extra. See Mint Mobile for details. And we are back. Beth Pinsker is the author of My Mother's Money. Last but not least, and this is not a caregiving question, this is an RMD question. So Beth, put on your CFP hat for me for just a second. We've got Anna, she's 75, she's retiring. She's facing an eleven thousand dollar RMD which is a required minimum distribution. And she says, I'm 75, I'm single with no children. I'm facing an RMD of over $11,000 this year. I don't rely on it for income. I have no debt besides a mortgage. My savings include $22,000 in a high yield savings account, 10,000 in laddered CDs and $315,000 in an IRA. I've previously used RMDs for home improvements and savings. I'm looking for smart income generating or asset preserving options to help cover possible future needs like assisted living or long term care. I'm not interested in QCDs. Those are qualified charitable distributions that donations that you can make right out of an ira. Do you have any suggestions? What would you suggest for her?
- [18:51]
C
This is more of an investment question really than an RMD question because the amount's not going to change no matter what she does, right? So like she's going to have $11,000. She has to do something with it. And you can do, you know, anything with it. Virtually anything that you do with it will that earns interest is better than doing nothing with it. A lot of people, I have found the statistics from like places like Fidelity and Vanguard that people put money into accounts and don't realize that they have to do something with it. And so like 40% of people who make an IRA contribution in any given year just leave it in cash. And that's not a way to sustain it for the future because you'll lose ground to inflation. So kudos to this person for knowing that they have to do something with that RMD in order to make it grow. At 75, there's no need to be risky. This person has assets and just needs a place to sort of stash this money. I would say that she probably needs more ready cash on hand. And so like my general advice, not in specific investing advice would be to bolster her high yield savings or to bolster her CD ladder, depending on the CD rates of the day. CD rates are on their way down and bonds, treasury products are on their way down as the Fed lowers interest rates. So now would be a good time to lock into something for a longer period of time. And if you want to take that $11,000 and put it on the back end of your CD letter and get it for a longer amount of time, you know, a two year or five year or something like that, then you would bypass maybe some of the lower rate times that we're going to go through because you don't know what's going to happen in five years, rates could be back up again. But if rates are going to be low for the next, say two years, then you get a product that bypasses those two years and just save that money and have it available for if you need it down the road.
- [21:00]
B
I agree with you. I'm just wondering if you'd suggest that maybe she looks at a TIPS ladder if she's concerned about inflation.
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C
A TIPS ladder, any sort of treasury product will do. TIPS ladder will help you with inflation. You could even $11,000 is just over the limit of an I bond. The thing is, is that some of these things like an I bond are hard for people to keep separate. And so, you know, like you don't want your money all different places. So keeping it simple for this woman, if she already has a ladder set up, adding to the back end of that, you know, keeps things simple for her. And I would say that if that's of value to this person or to anybody else out there listening to just know where their money is and when it's coming due all in one place. That can have value because the mental accounting of it is the important part. You want to know it's there, you want to know it's growing and that's what's important rather than really maximizing every cent. But the inflation protection of the TIPS allows you to invest in a product that will guarantee your principal and guarantee an inflation amount adjustment so that if you are thinking about putting this money away and not needing to use it for five plus years, then you have the protection in case inflation goes all flu y again.
- [22:19]
B
Beth Pinsker author of My Mother's Money where can we find more information about you in the book?
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C
I am my name everywhere I go. So it's BethPinsker.com for my website. Beth Pinsker on Social Media Beth Pinsker on MarketWatch. I'm fairly easy to find after 30 years in this business.
- [22:38]
B
Thank you so much for being with us. Thanks for answering the questions.
- [22:42]
C
Thank you.
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B
If you loved today's episode, please please take a moment to leave us a five star review on Apple Podcast. Your feedback means the world to me. And if you're ready to keep the Money conversation going, HerMoney has three amazing programs designed to help you feel more confident and in control of your money. There's Finance Fix. It's our four week coaching program that helps you rethink your spending, find hidden savings and make make smarter choices for the future. Our pre retirement program runs for six weeks and walks you through building a retirement strategy that's personalized for your next chapter. Finally, there's Investing Fix, our investing club for women. It meets every other week on Zoom. It is a supportive space to learn, ask questions, grow your investing confidence and build your portfolio. And your first month is absolutely free. These programs are truly helping level the playing field for women financially. I'd love for you to join us. Her Money is produced by Haley Pascalides and our music is provided by Video Helper. Thanks so much for listening and we'll talk soon. Ah, the sounds of an Etsy holiday. Now that's special. Want to hear it again? Get original and affordable gifts from small shops on Etsy. For gifts that say I get you shop Etsy, tap the banner to shop now.