Amy: Tonight, well, the year isn't over just yet. We've got the Federal Reserve raising interest rates for, yes, the seventh and final time of 2022. You're listening to "Simply Money" presented by Allworth Financial. I'm Amy Wagner, along with Steve Sprovach. Yes, I know, we all wanna put 2022 in the rearview mirror, but not quite yet. Today, a huge day for the economy and markets. Of course, we had Jerome Powell announcing what wasn't unexpected, 0.5% interest rate hike. Markets didn't like it.

Steve: Well, they didn't like it even though there was nothing really unexpected. You know what this was, Amy? This was a reality check. You know, investors are humans, and we tend to get a little bit overexuberant, to use an old Federal Reserve term, when things are going good.

Amy: And emotional.

Steve: And emotional. And when things are bad, we tend to go off on the deep end on that side also. What Chairman Powell said today, yeah, he raised interest rates, 0.5%, and that's a pretty... You know, we've had a lot of increases in interest rates this year, and the only good news is it's December, and they're not meeting again before the end of the year, and there is no January meeting, so we're good till at least February, but...

Amy: Everyone can breathe a collective sigh of relief, right? I have never spent so much time in my life waiting kind of between meeting to meeting, and the Federal Reserves is... And I think a lot of us feel that way. I mean, you know, we go about our daily lives, but a lot of times, the Federal Reserve is kind of under the radar. Not this year. they've been very much on everyone's radar because the decisions that they're making have had such a real impact on everyone's life, starting, remember what? Midway through 21 when, you know, Fed Chair Powell started saying, "Hey, yeah, we are starting to take note of this thing called inflation. We're gonna call it transitory. We don't think it's going to stick around very long." Yes, well, that was a really nice way of putting what we're now seeing a year and a half later, which is the worst inflation rates we've seen in 40-plus years.

Steve: Yeah, well, the good news is, again, 0.5% increase is expected. You know, what we don't wanna see as investors, as economists, we don't wanna see surprises. We hate surprises. So, that part was expected, and 0.5% increase is less than the previous increases of 0.75%. That's all well and good. But what Chairman Powell also came out and said was, "You know what? We're gonna just change some estimates for what we're expecting next year." I know we were talking about inflation, you know, coming down a certain amount, well, it might not come down quite that much. We're expecting 5.6% inflation for 2022. And next year, yeah, we'll see a drop-down to about 3.1%. But that's not as low as previous estimates were.

So, he came out in his press conference after he announced the 0.5% increase in interest rates and basically said, "Oh, yeah, unemployment? Yeah, that's gonna go up. It's gonna go up from 3.7 probably till about 4.6. Oh, and that 1.3% growth rate that we've been talking about for gross domestic product this year, yeah, maybe 0.5%. It's not gonna be as good." So, you know, as usual, the announcement was not unexpected, but in the press conference afterwards, again, a reality check. The news is that, "Okay, the economy's slowing down," which I kind of...this is the only expected consequence of these actions. It's what people should expect, but they don't like hearing it, and that's why markets didn't react positively.

Amy: I do not envy this man this year. I don't care how much he gets paid, what he's doing isn't necessarily popular. Right, I mean, if you were to ask any Joe Schmo on the street, of course, everyone's gonna say, "I hate the fact that I'm paying...

Steve:For sure, yeah.

Amy: ...you know this much more for groceries right now." But also...

Steve:Oh, imagine shopping for a house right now and you're looking at 7% 30-year mortgage rates, not 3% just a year ago.

Amy: Yeah, so what he's doing, not popular, right? But the reason behind it, of course, we can all understand and get behind. I want inflation to come down, we all do. At the same time, it's not easy because, you know, he's throwing out these numbers, and I say throwing out, and that's not fair. These are well-calculated numbers, but at the same time, they're making these rate hikes. We've had four 0.75% rate hikes. So we hadn't seen anything like that for decades, this latest one, of course, today, the 0.5% hike. But, yeah, we haven't seen anything like this in years. But the thing is, is what we don't know is the goal is to get back down to 2%.

Steve: Yeah, it's...

Amy: What does it take to get to 2%?

Steve: Oh, man.

Amy: And then what does the economy look like when we get there? Right?

Steve: Yeah, yeah.

Amy: Lots of questions.

Steve: And the answer to your question is, what does it take? It takes time. It's gonna take...you know, we didn't get inflation up to these numbers overnight, and we're not gonna get... It's like losing weight, it's gonna take time, and you have to have some pain to get down here. What I don't like...and when he talks about the economy's gonna have to suffer pain, he's talking about people that you know and maybe even yourself being out of work. I mean, when the unemployment rate is gonna go from 3.7% to 4.6%, there's a lot of layoffs involved there. We've been sitting pretty with two jobs for every unemployed person for the last couple of years. I don't remember a time ever in my professional life where we've seen that. Well, that ain't lasting much longer. You know, that's the whole point of if we're gonna reduce demand so prices come back to earth, well, if you're out of work, you're not demanding a whole heck of a lot when you go to the store, you know? And that's really the...whether you call it unintended or intended consequence, that's the consequence of raising interest rates.

Amy: There's a term in economics, rocket and feather. We see it a lot when it comes to gas prices. Gas prices seem to rock it up all the time overnight, and then coming back down is so brutally slow, like that feather falling. Well, the same can be said for inflation. You might feel like you kind of just woke up and prices were insanely high, well, then they should go down that quickly, right? Absolutely not. I mean, when you understand how the system works, it actually is brutally slow once again. And, yeah, the fallout from that can have real effects, not only on Wall Street but also on Main Street.

Steve: You're listening to "Simply Money" on 55KRC. I'm Steve Sprovach, along with Amy Wagner, and we're talking about the Federal Reserve announcements today. Again, Amy, nothing unexpected, but we're also looking at a reality check of, yeah, the economy is slowing down, that's what we want to happen, but the numbers and talking about the actual impact of how it's gonna affect people like you and me, that's the part I don't think investors really like seeing, and, you know, that our word is gonna be back in the lexicon. We're gonna be talking about a recession in 2023.

Amy: I think what you can focus on tonight is you can't control what Jerome Powell does, you can't control inflation, you can't control how high these interest rate goes, right? We can look at the dot plot, we can listen to his tone in his press conference and try to glean what's gonna happen in the future, but I think you always have to come back to what can you control? Right? I mean, yes, the circumstances are far different right now than they were just a couple of years ago, but what can you do? Pay down debt, especially that consumer credit card debt, right? If you are carrying balances, if you are holiday shopping and you are going into these doors and you're opening these retail credit cards, some of those average percentage rate right now, 30%.

Steve: I know. I've heard 30% also. That's ridiculous.

Amy: Thirty percent, do not carry a balance.

Steve: That's usually what a guy named Vinny charges on overnight loans, you know? I mean, that's crazy, and it's not gonna get better anytime soon. But there is hope out of all this, Amy. I mean, when we look at our 401(k)s and, you know, start to smolder because it's been a rough year, all right, well, is it gonna keep going down? Is it gonna come back? We've already seen somewhat of a rebound in stock prices because of the expectations of where the Fed will be 6 months and 12 months down the road. The Fed's not gonna raise interest rates forever. As a matter of fact, we're looking at probably...I mean, the economists are saying maybe another 0.75% In all of 2023.

Amy: In total.

Steve: Yeah, which is, okay, that tells me we're getting at the tail end of the Fed doing what they're doing. Maybe only 0.25% in February. We'll see 0.25%, 0.5%. I don't think there's any expectation higher unless we get really bad inflation numbers between now and then. But, you know, we're also dealing with the end game. You know, at some point, the Fed's gonna say, "We're taking a break, we're not raising interest rates anymore." And we're gonna reevaluate and see how the data comes in because there is a lag time between their actions and the impact of their actions on the economy, and at some point, and we'll see, it might be over the summer, it might be in the fall, they're gonna have to start talking about, "You know what? The numbers are good, inflation's coming down." If we see 3% by the end of next year, okay, they might start talking about reducing interest rates. And you know what? That's when bonds come back and that's when stocks get back on track, and that's not that far down the road.

Amy: But you know what's not fair as we're talking about these higher interest rates? Okay, yes, you're gonna pay more in credit card debt now, you're gonna pay more to take out a mortgage, if you're gonna buy a car this year and you're gonna finance that, you're gonna pay more for all of those things, yet the money that you have sitting in a bank account, in a savings account, has been making 0.000007% over the past several years, and you don't even think about it because that has become the norm. But as these interest rates have been rising, you might be thinking, "Okay, how about the amount that my bank is paying me, the interest my bank is paying me on that savings account? Well, now what you can control is there are some banks that are starting to cave and raise those interest rates.

Steve: Yeah, as they should.

Amy: You've gotta shop around. Not everyone is there yet.

Steve: Yeah, the disturbing thing I've seen lately, there's a few very large, very well-known local banks that are paying exactly what you're saying, you know, 0.00001%, but not everybody. I know of a couple of credit unions that are paying 2.5% on their high-yield savings account also known as the money market. I mean, that's not a risk investment, that's not in the stock market, that's just your savings account, 2.5%. So, if you're not getting somewhere around 2% on your savings or money market, make a few phone calls, do a couple searches on Google because they're out there.

Amy: You mentioned earlier the dreaded R-word, recession. We don't know when it's coming.

Steve: Yeah, we kinda moved on when I said that, didn't we?

Amy: Well, we don't know where this economy is heading. And listen, no one wants to hear about it. But under the context of what you can control here, you can recession-proof your finances. You can't avoid a recession, but I think...and I would say the number one thing under that is creating that emergency fund, getting that beefed up. If you've got a couple of months in there now, make that a priority, six to nine months of at least those critical expenses if something were to happen, right? If you were to get laid off, you are gonna sleep so much better at night if you have that little cushion.

Steve: Yeah, no lie. I got more than a few phone calls late last year, late 2021, "Hey, I had this $3,000 CD come due. It's not making me squat. What can you do? How can you invest that?" Well, the answer is, if it's an emergency fund, no, you don't invest it, but at least now you're getting a couple of percent interest. So, you know, it's okay to have some extra money in the bank right now. And I just wanna clarify my comments. When I say recession, I don't know there's a recession, but it wouldn't take much to push us into negative GDP, negative gross domestic product for 0.25% or 2% in 2023 when the best forecast I've seen right now is 0.5% for all of next year, and that's from the Federal Reserve. That's down from 1.3%. So, if they've already dropped their expectations from 1.3% to 0.5% growth in the economy over four quarters, to have one or two negative quarters wouldn't surprise me or anybody else. That's kind of what they're kind of shooting for is what they call a soft landing, not a brutal recession but a little bit of contraction.

Amy: Here's the Allworth Advice, be proactive with your financial life so you aren't as impacted by moves that are made that are outside of your control. Coming up next, do you wanna use that investment option in the HSA? Is that what makes sense all the time? Maybe not. We'll explain. You're listening to "Simply Money" here on 55KRC THE Talk Station. You're listening to "Simply Money" presented by Allworth Financial. I'm Amy Wagner, along with Steve Sprovach. If you can't listen to our show every night, we hope you'll subscribe and get our daily podcast. Listen to it on your way into work the next morning, or maybe while you're working out at the gym, share the word with your friends that need a little extra money help, too. Just search "Simply Money" on the iHeart app or wherever you get your podcast. Straight ahead at 6:43, how to help someone who is not just a hoarder, but, yes, a financial hoarder. What that is and what can be done about it. Sometimes, Steve, it's good to be known for something. A lot of times people are known for good things, but sometimes you hear a name or the name of a group of people and you recognize it because they're known for not-so-good things.

Steve: Exactly. And one of those names is the three initials, AIG. Most people never heard of these initials, never heard of the company until 2008. We also heard a phrase in 2008 that most of us never heard of before called credit default swaps. Well, guess what? AIG was big into this derivative type of investment called the credit default swap, and that can arguably be considered the primary cause of the 2008 meltdown of the entire global economic system. The big news is the financial unit that is part of AIG and was involved in those credit default swaps filed Chapter 11 today.

Amy: Yeah, right, I mean, this infamous financial products unit, I mean, is credited with nearly taking down the global economy, yet, you know, they were able to kind of limp through, of course, because of all those government bailouts to banks during that time. But the weird thing has been that over the years since 2008, the money that the federal government, of course, paid those banks had to be paid back. But AIG was swapping out some funds in between themselves, the parent company, and then this financial products group, and, well, now, they've kind of come to the end of the rope as you mentioned, filing Chapter 11 bankruptcy. And I think, you know, most of the time we wouldn't, like, take major note of the fact that this sub-component of a bank is closing for good, but because they're sort of synonymous with that financial collapse, I think it's worth making note of the fact that they will be with us no more.

Steve: I agree. And, you know, the point I wanna make is, yeah, this was a huge bailout and the whole too big to fail concept came about because, honestly, if the government let AIG default, it could've been way worse in 2008, in 2009. AIG paid back the entire 182 billion that they borrowed from the government by 2013. So, they paid it all back. But the problem is they do so much wheeling and dealing internally from one department to a different department at AIG that they still have $37 billion in debt that they owe to their parent, not the government but to AIG the parent company, and that's what they can't pay back. So, that unit is now bankrupt and one sad chapter of this aspect of 2008 in a global meltdown. The books are being closed on it.

Amy: Right, going down an infamy not necessarily in a good way. Okay, so everyone has questions about money. What is yours? You can email it to us at asksimplymoney@allworthfinancial.com. Again, that's asksimplymoney@allworthfinancial.com. You can ask an advisor anytime, right? We're happy to respond. First question comes from Alex in Fairfield, "Is there ever a reason why you wouldn't want to use the investment option in an HSA?" And, of course, Alex, you're talking about health savings account, which is, like, my favorite thing in the world because it's triple...

Steve: Amy's wheelhouse.

Amy: ...it's triple tax advantage, and I just think it's the best thing that the government has ever given us. But I will say, yeah, one reason why you wouldn't wanna use the investment option is because you need the funds in that account...

Steve: You need the money.

Amy: ...yes, as medical expenses arise, right? If you've got medical expenses that you don't have an emergency fund to pay, then for most people that HSA is the way that you pay. Right, still a tax advantage there to using it, but you wouldn't wanna invest that money because you need that money.

Steve: Yeah, and let's talk about that a little bit more because this is an interesting question, a health savings account. If you walk into a bank and say, "Can I open up an HSA?" They'll likely say, "Yes, and here's what it pays." What they're really quoting you is the interest rate on a savings account that is set up as an HSA. If you go to a brokerage firm, a Fidelity or, you know, Charles Schwab or a TD Ameritrade and say, "Do you have an HSA?" They'll say, "Yes, we can set that up for you. Do you want to use the money market? Do you want to use mutual funds? How do you wanna invest that?" So, they're both HSAs, but one allows you to invest it and the other says, "No, this is a savings account." So, you know, there's a lot of people that have been putting money in HSAs, Amy, for the long term, for, you know, 10, 15 years down the road, and they're sitting there earning, you know, 1% interest. Though, that type of person probably wants to go to an HSA that can allow you to invest the money. But I agree with you 100%, if that money's gonna be used in less than two or three years, like, I would advise anybody considering investing, I'd say, "No, put that in the bank. If you need it within two or three years, you don't need volatility, that's what banks are for."

Amy: Next question tonight comes from Don in Villa Hills. "My father died," I'm so sorry to hear that, "but now I've inherited his IRA. Can you explain the distribution rules?" From what I understand, they've changed. I feel like they change on a daily these days.

Steve: I know. Isn't this great when Congress sets up a new type of set of rules...

Amy: Oh, good grief.

Steve: ...without making specific rules? And that's what happens.

Amy: Yeah, and then they say, "Hey, just do what you're gonna do, and then we'll tell you if you did it wrong."

Steve: We'll tell you if it's illegal, yeah. I mean, that's really what's going on. The Secure Act of 2019 is what changed the rules on inherited IRAs. Before January 1st of 2020, if you inherited an IRA and were not the spouse, and usually a child, you had one set of rules. After January 1st of 2020, you've got a new set of rules because of the Secure Act. And the new set of rules says, "Okay, you have to completely drain this IRA by the end of the 10th year." "Okay, that's pretty straightforward. We gotta cash out mom or dad's IRA within 10 years." But then the IRS said, "Yeah, but we might wanna have you start taking money out every year." And then they changed their mind and said, "Nah, disregard that," and then they're back saying, "Maybe you should." Nobody knows what the rule is. So, most people are saying, "Don't worry about it this year. Just make sure it's gone within 10 years." And hopefully, the IRS will be a little bit more definitive with their rules in the next 10 years, I don't know, forget this.

Amy: Yeah, I agree, just focus on that 10-year span to get that money pulled out of that account. Next question from Charles in Sycamore Township, "My mother recently passed," sorry to hear about that, "and I'm trying to sell my childhood home. Will I have to pay capital gains taxes on the sale, or would that only have applied to my mom?"

Steve: Yeah, well, first of all, contact a tax advisor for the real answer because I'm not one, but some of the basic rules are inheritances are not taxed as income. So, okay, sorry about losing your mom, but that house, once it passed through probate and became your inheritance, you basically are considered to have paid a stepped-up cost basis or the value of that house on the date of mom's, passing. So, if that house went up in value and you sold it at a profit from the value on the date of your mom's death, yeah, you'll pay some capital gains that'll be considered a profit, but based on the date of her death, not what she paid for, it maybe 20, 30, 50 years ago. So, contact your tax advisor, but it's a great...

Amy: Yeah, that's what I was gonna say, right? If your mom bought that house in 1975 and, you know, bought it for $30,000 at the time, and now it's worth, you know, hundreds of thousands of dollars, you're not gonna have to pay all of those gains. It's just simply on the date that that passed into your custody, that house became your house, what was it worth at that time versus, you know, do you hold onto it for a couple of years? You know, probably the worth then would go up and then you would pay the difference between just that couple of years, not what mom paid for it.

Steve: Yeah, you might be able to beat that by moving into it for two years. Again, talk to your tax advisor, but, yeah, real interesting advantage of inheriting property as opposed to being gifted.

Amy: Coming up next, the tax implications of gifting money away and other important tax tips you need to know, especially this time of year. You're listening to "Simply Money" here on 55KRC THE Talk Station. You're listening to "Simply Money." I'm Amy Wagner, along with Steve Sprovach. You've lost a loved one and inheritance is coming in? There's so many feelings about these things, but there's also financial repercussions, and a lot of them have to do with taxes. What you need to know about paying taxes on an inheritance. Joining us tonight, of course, our legal expert, Mark Reckman, from the law firm of Wood + Lamping. A lot to think through here. You know, Mark, I'm always a proponent of, once you have your estate plan set, actually talking to your children, grandchildren, your heirs about it so that not only can you all get on the same page, but a lot of these money issues, they can be thinking about before the actual money comes to them.

Mark: Oh, absolutely. And the more you know in advance, the better your expectations will be.

Amy: Yes. So, let's talk through this here because it's like, you know, I said an emotional time, right? You've lost someone that you love, but all of a sudden here is this money, where to start first, what's taxed, how it works. It can be overwhelming, I think.

Mark: And let's talk about the basics. And I get this question all the time, Amy. There are really three taxes that come into play when we're talking about inheritance. That's the income tax, the gift tax, and the estate tax. And I thought we would take them in that order. Generally, inheritance is not taxable income because income tax is on earnings, but there are two exceptions, a big one and a small one. The big exception are retirement accounts. These are what we call qualified funds because they were put into a qualified retirement account, which means they have never been income taxed. So, when you inherit retirement-qualified funds from someone, you will eventually pay income tax on that retirement account. Now, when that tax is due depends on your relationship. If it's from a spouse, for example, if my wife dies and leaves her retirement accounts to me, then I will roll those in and they will be treated the same as my own retirement accounts. However, if my parents leave a retirement account to me or some other individual, then the IRS will require that I pay income tax on a faster scale. In fact, the longest I can defer is 10 years for what we call non-spousal inherited retirement accounts. Now, remember, this is money that's never been taxed before, it's just a question of when it becomes taxed after death.

Amy: And I think that's what can get confusing because tax-deferred accounts, at some point, you have to pay the piper, Uncle Sam. And some of these rules have changed in the past several years, so figuring this out is a biggie.

Mark: Now, the bulk of your inheritance that's not retirement, that's not taxable income, except there is a small exception, and that is that while the estate is being administered, often this money will earn a little bit of income. Your stock may pay dividends, you may get some interest on a CD, you may get some dividend. There are small amounts. Life insurance, for example, pays interest after you die. Until the check is paid to the beneficiaries, there's a little bit of interest earned. So, this little bit of interest that is earned during the administration of the estate, that is taxable income, but the principal is not.
Amy: You're listening to "Simply Money." Tonight here on 55KRC, we're joined by Mark Reckman. He's our legal expert, an estate planning expert from the law firm of Wood + Lamping. Mark, let's talk about what we need to know when it comes to inheritance and taxes. What are the other taxes that we need to think through here? And kinds of money that we would inherit and how that would be looked at differently.

Mark: Gift tax is the next one. And decades ago, the federal government would tax gifts, but that has all changed, and now the gift tax has been merged with the estate tax. So, if you give money away while you're alive, or if you give it away when you die, it's all taxed the same, and it's called the unified gift and estate tax, and it's not due until death. Now, the third tax that we think about is the estate tax. Now, the federal government taxes large gifts in estates. Ohio does not tax gifts in estates at all anymore. Ohio is one of the few states that converted and eliminated its estate tax about 10 years ago now. Kentucky on the other hand is one of the few states that still has an inheritance tax, and the tax you pay depends on how closely related you were to the person who died. Now, the federal...

Amy: And while I live in Kentucky, and so that's a bummer, likely I don't have the millions upon millions of dollars that would actually impact this. I mean, when we talk about these estate taxes, these are large sums of money.

Mark: Well, that's right. And in Kentucky, the inheritance tax is in the range of 6% or 7%. So, there's a threshold below which you pay no tax, above that tax you pay on a sliding scale that goes up to about 7%. So, generally, you think about that on the scale of a sales tax, it's not a life changer. The life changer is the federal gift of a state tax, that's the 600-pound gorilla. But remember, as you just said, it only applies to the very wealthy. Currently, every American has about a $12 million allowance. So, for a married couple, that's about 24 million. Now, I fully expect that number to be cut in half sometime in the next few years, but until then, that's a substantial allowance. So what I mean, Amy, is that you don't pay any tax on the first 12 million, you only pay tax above that. Now, when you do pay tax, it's hefty. The maximum tax rate is 40%. So, it's a substantial tax, but it only applies to the very wealthy.

Amy: You know, Mark, as we talk about inheritance, I know a lot of people who say, "I wanna give my money away, or at least part of my money away to my children or my grandchildren while I'm still alive so I can see them going on vacations and using it for college and actually getting some use of it." In that case, how is that money taxed?

Mark: Well, when you're talking about small gifts that are made within the family, those are not actually taxed. So, what the IRS rules say is that you can give away $16,000 per person per year without telling anybody, without reporting it to them, without paying any tax. Now that $16,000 annual amount has changed over the years. It used to be $10,000 and then it was $11,000. It's crawled up. This year, it's $16,000. So, if you give $16,000 to your child, you don't even have to report it. The IRS says we only care about gifts over $16,000, and if it's over $16,000, you report it to the IRS, but you do not pay tax because it comes out of your $12 million allowance. So, many people think that a $16,000 amount is cap. No, it's not a cap at all, it's just the reporting threshold. Above that you report, but you don't pay tax until your gift exceeds 12 million.

Amy: Got it. And could each person give $16,000? I guess it wouldn't matter because you're just reporting.

Mark: Sure, you could give $16,000 to your daughter, your husband can give $16,000 to the same daughter.

Amy: Okay. What else do we need to know, Mark, as we're thinking through these things? I mean, I started this show by saying this, but I think it's worth repeating, communication has to be part of this estate planning.

Mark: Well, that's right. And I think if you simply tell your family members that this tax is an issue, it's not a big issue, it's not nearly as bad as most people believe that it is, and just tell them to contact the tax accountant. And most people have somebody that prepares their taxes these days. Taxes are complicated. So there's no reason not to use the same tax preparer that was used prior to death.

Amy: So have these conversations. Anything else that we need to know about the logistics of taxing and inheritance?

Mark: Well, you've got a final income tax return that is due the year that you die. So, if you die in December of 2022, you're gonna have to file an income tax return for 2022. And then while your estate is being administered during 2023, you may have to file an additional tax return. It depends on how much income there is in 2023. But you have to prepare.

Amy: What's generated from your investments?

Mark: That's right. That's right. It all depends on how fast those investments gets distributed. And this is why it's a good idea to have a relationship with a tax preparer who can help you think that through and minimize the tax that you pay.

Amy: Also thinking through the executor, if that's right, one of the children or one of the people that are part of this inheritance and how that can get tricky, so communicating that can be a huge point as well, right?

Mark: Well, that's right. And what I tell people is that the executor does not have to be a lawyer, does not have to be a CPA. The executor is the team captain. The executor is the person who hires the lawyer, he hires the CPA, hires the financial planner, he hires the funeral home. He or she runs the show. That doesn't mean that he or she does the work themselves.

Amy: Yes, and non-emotional is also a major bonus there. Great insights as always from Mark Reckman. Of course, he's our estate planning expert from the law firm of Wood + Lamping. And Inheritance, if it's coming your way, if you're gonna be involved in one, understanding the tax implications of that. You're listening to "Simply Money" here on 55KRC THE Talk Station. You're listening to "Simply Money" presented by Allworth Financial. I'm Amy Wagner, along with Steve Sprovach. Do you have a financial question you want us to talk about here on the show? Easy way to do it, there's a red button you click on while you're listening to the show on the iHeart app, record that question, and it's coming straight to us. And straight ahead, is it time to tell that boss to take the job and shove it, right? Are you not liking the current job? Are you looking to move what you need to think through first? I love those reality shows about hoarding because I think...and I don't watch them often, but when they pop up, I find myself getting sucked in because I'm so OCD about being organized that I'm like, "Wow, look at all the different ways that people live." And we're talking about hoarding tonight, but not from the sense of how much that can cost you because when you look at all that stuff, it costs a pretty penny. But people tend to financially hoard things.

Steve: And I just had a vision in my head of 30 years from now, Amy, with a house with boxes piled up and walk your way around.

Amy: And cats. I picture cats everywhere, too.

Steve: Cats, yes. The cat lady, Amy Wagner. Yeah, now, this is a real thing, and I've encountered it a number of times over the years. Sometimes, it's controllable, sometimes it's totally out of control. Financial hoarding is when...and it's usually somebody who's older that they just took that phrase of don't put all your eggs in one basket to the extreme, okay? In the old days, in the '80s and into the '90s, I used to see it as, "Hey, I've got these stock certificates. Can you sell these for me?" "Sure." And they come in literally with a box, and stock certificates from all over the place. And, you know, they'll find more in a different drawer later on. Today, it's less about stock certificates and more about bank statements, about collectible coins, mutual funds.

Amy: Or different IRAs, different 401(k)s, right? If they say...

Steve: Yeah, some cases, 20 different IRAs, 20 different IRAs. Yeah.

Amy: And well, If they say that the average person is gonna have what, a dozen jobs over the course of your lifetime, that's potentially a dozen or more 401(k)s. And if you don't roll any of those over, even in not trying to hoard, you've got all of these accounts. But I also think there's kind of this old-school mentality. I think about my grandparents who lived during the Great Depression. There was always kind of this mistrust of the bank and these kind of big organizations. And so rather than having everything in one bank or everything, you know, invested with one kind of brokerage firm, it's, you know, I'm gonna do a little here, I'm gonna do a little there and a little there. That way if this guy goes down... And honestly, after 2008, the banking collapse, you almost could understand why people think that way.

Steve: Oh, you can, yeah.

Amy: But at the same time, keeping track of all of this stuff becomes, in some cases, completely unmanageable.

Steve: Yeah, and I'll give you a great example, and this was a couple I had known for literally decades. Wife passes away, and it was a second marriage. So, you know, she had some things in her name, and that's what happened here. She had a couple mutual funds, and unlike most people, she had certificates for the mutual funds in her name, okay? So, she passes away. Husband never gets around to having them transferred into his name. And they had a will, you know, so it was definitely his property after she passed. What happened when he passed? So, the kids inherit...

Amy: Oh, boy, what a mess.

Steve: ...these certificates in mom's name, and mom's been gone 10 years at this point. So, I mean, you not only have to go back to the transfer agent...and by the way, that's an important phrase for somebody dealing with this. That's the company in charge of record keeping, keeping track of who owns what. So, they had to go to the transfer agent, first prove mom passed away with a death certificate. Good luck with finding that after 10 years later, then showing the will that dad was the rightful owner, showing dad's death certificate, showing that that was dad's rightful ownership. And then that when he passed away, here's his will, and here's what the probate court found, and this is why me and my brother now own these shares. Took about a year and a half. Took about a year and a half of staying right on top.

Amy: What a mess.

Steve: Yeah, exactly. And it all could've been taken care of with transfer on death, with, you know, pointing beneficiaries, joint tenants with rights of survivorship. It all could've been solved within days if the documents were put in place and people did what they needed to do while they were alive.

Amy: If this sounds familiar to you, maybe it's you or someone you live with, or it's someone that you know or love, there is a way out of it, and I think first of all, it's just trying to get control, and at least list it out everything so you can figure out what you need to consolidate. But going back to what you said, you know, I mean, if I were to talk to my children about a paper stock certificate, they would look at me like I had a hole in my head, right?

Steve: Exactly.

Amy: Because they don't even understand what that is. They've never seen it. Everything has been digital. But going back...

Steve: And you talk about this every night at the dinner table, too.

Amy: We talk about this, but we don't actually have the stock certificate, you know, out for show and tell. If you have the physical stock certificates still, if that's something that from your parents or your grandparents or whatever, those are still laying around, those can be converted to digital so that you don't have to keep up with a paper.

Steve: Yeah, and it sounds like, "Well, wait a second, at least with a certificate, I can hold it." Yeah, you can hold it until you lose it. You don't wanna go through replacing lost certificates. You've gotta file a bond, you've gotta fill out lost certificate paperwork. What if the kids find that loss certificate down the road and try to cash it? I mean, it is such a mess. Once you convert it digitally, well, now the custodian, now the company who carries the digital records, they're responsible for loss due to theft or fraud or misplacement, okay? It's on them. It sounds like it's a little riskier, but it's actually to your benefit because now they're the ones that are responsible.

Amy: Yeah, and then if you've got a lot of accounts, consolidating those accounts, 401(k)s. With 401(k)s, they can be transferred to IRAs. You know, just, you don't need 85 different kinds of accounts. So, getting them kind of all transferred, but keeping in mind you can't put a traditional 401(k) with a Roth IRA or anything like that, it's kind of different kinds of money, different kind of tax treatments. But consolidation can be hugely helpful here.

Steve: It can. And not that you wanna give everything to one advisor or one custodian, which you've got protections in place, but, Amy, it's not a bad idea to have an investment advisor that is aware of where everything is. I mean, that's routine for me when kids come in after, you know, parents pass away, "Okay, did you know that they kept this money at this bank and this over here and that over there,?" It can solve a lot of problems.

Amy: And then also that legal will, that estate plan...

Steve: Oh, yeah, you gotta have that.

Amy: ...regardless of how much you have, and I know a lot of people think, "Estate plan, I don't have an estate," if you own a home, if you have a 401(k), that's worth protecting. You wanna make sure it goes to who you want it to go to. So, this is kind of all part of getting organized. And then I wanna go back to the point that you just made about a trusted advisor. You think about your life, right? I mean, the holidays right now, things are so crazy. You've got probably your other job and maybe kids or grandkids or whatever, this is someone whose job it is to make sure that your financial house is kind of in order, and that if you've got questions, you go to them, and that they can help keep track of these things. If something were to happen to me tomorrow, my family knows exactly who to go to where all of the information is stored. That's incredibly helpful.

Steve: It is. No question about it.

Amy: Here's the Allworth Advice, organizing your assets can only help keep you engaged of planning your financial future. Coming up next, how do you know if it's truly time to say goodbye to that boss? You're listening to "Simply Money" here on 55KRC THE Talk Station.

Take this job and shove it
I ain't working here no more

Amy: Johnny Paycheck. You're listening to "Simply Money" presented by Allworth Financial. I'm Amy Wagner, along with Steve Sprovach. Perfect music for this segment because I think a lot of people are singing that tune these days, just unsure, right? Talks of a recession and argue on steady ground when it comes to your work, and that can be incredibly stressful. And they do see that the job market is still going well, right? The numbers kind of show us that. So, is it time to stay or should you go?

Steve: Well, four million people in October said, "I'm outta here," you know, so there's still two jobs for every unemployed person out there, Amy, and this is driving the Federal Reserve more than a little bit crazy because, I mean, keep in mind, if they're trying to slow down the economy, they want more people unemployed, which, you know, isn't a great thing, but that's kind of what the end result of their actions is gonna be. And I'll tell you what, before you pull the string, I don't care how strong the job market is, take a hard look on whether the grass is really greener on the other side.

Amy: Well, yeah, and ask yourself, are you running towards something or away from something, right? Like, if you're running away from something, maybe that problem can be solved at work. So, just lots of questions to think through, but also this window could be closing. So if you're thinking about leaving soon, probably the time is now. Thanks for listening tonight. We hope you're gonna tune in tomorrow. We're gonna talk about gift returns, what you'll need to know, and also you're gonna have to make 'em sooner rather than later this year. We'll explain why. You're listening to "Simply Money" presented by Allworth Financial on 55KRC THE Talk Station.