Why Merely Signing a DNR isn’t Enough

 And, are the tax consequences of switching to ETFs from mutual funds worth it?

 Ric Edelman: It's Thursday, October 3rd. What are your desires for heroic acts to save your life? Now, I'm not talking about you driving your car in a ditch and it catches fire and some Good Samaritan jumps into the ditch, pulls you out of the burning car. I'm not talking about those kinds of heroic acts.

I'm talking about you having a terminal illness.  You're living in constant agonizing pain, your death is certain within a very short period of time, weeks or months, and your heart stops. Do you want medical personnel to resuscitate you, only to prolong your life for another few weeks of agony?

Many people conclude, absolutely not, do not resuscitate me. If that's the situation I'm in, please allow my misery to end, allow me to die naturally… which you can't prevent you can only delay and that doesn't do much for me or my very, upset family. So, many people argue that they do not want heroic acts taken by medical personnel if I'm in a hospital in the last stages of life. Other people say, absolutely, do whatever it takes. You know, I want my life prolonged for as long as possible, no matter what.

In fact, my parents were a really good example of this. They both had these two views. They had diametrically opposing opinions of this. My father's attitude was: “let me die, don't do anything heroic, my death is inevitable.” My dad had COPD. He was in a nursing home. It was a really horrible situation for him and for all of us. And his attitude was: it's inevitable. Nothing you can do about it. Don't prolong it artificially.

My mom had a totally different attitude about her own life.  Her attitude was whatever disease I've got, they're going to cure tomorrow. So, keep me alive no matter what for as long as it takes, because it'll eventually work out well. So, my mom and dad had different attitudes. My dad signed a DNR…Do Not Resuscitate. My mom refused to sign such a document because she wanted them to resuscitate her.

And that's the fundamental question that you have to answer for yourself. If you are in the kind of a situation that I've described, do you want healthcare professionals to engage in heroic acts to save your life? Do you want them to do CPR? Do you want them to bring in a crash cart and a defibrillator? And you've seen those paddles stuck to people's chests on TV shows. Do you want them to do whatever it takes to bring you back, to keep you] alive? Or do you want to be allowed to die peacefully, naturally pain free?

There's no right or wrong to this question. This is strictly personal preference. It's entirely up to you, but there are a couple of things you have to keep in mind here. Number one, merely signing a DNR and sticking it into your medical file isn't going to be of any value to you when the time comes. You know, if you were to be in a hospital and you crash, your heart stops, the fact that there's a DNR in your file is irrelevant for the simple reason that the nurses who come rushing into the room because the monitors are beeping and the lights are blinking and they're yelling code blue in the heat of the moment…they're not going to stop and look at your file to see what the paperwork says.

They're going to do what they do, which is save your life. That's why they're nurses and doctors. That's why they became healthcare professionals. They want to save people's lives and they aren't going to stop to see if there's paperwork. So, you have to have the DNR notice slapped in big print above your bed. You've got to have it posted on the door. Ideally, you need to have an advocate in the room 24/7 to say to everybody, stop, wait, this person doesn't want you to do what you're doing. But how many people can afford to have a paid advocate in the room 24/7? Even if your spouse is with you all the time, they're not going to be in the room 24/7. How could that be? So, the DNR has to be known to everybody who might possibly come to your rescue. And, that's one issue.

So, number one, you've got to not just sign the DNR. You got to tell everybody that you did so, and not just your family, but all the medical professionals, your own doctor, as well as the hospitalists and all of the nurses, everybody's got to know. So that's one thing.

The second thing, if you are thinking of not signing a DNR, I just want you to be aware of what it means to be resuscitated. Because when you do see it on TV shows, Oh, this person crashes. They all rush in, five minutes later they bring them back and everybody's very relieved and very happy and the tragedy is avoided. That's not real life. If you talk to medical professionals who have been involved in, resuscitations, you know what they're going to tell you? They're going to tell you that CPR can cause irreparable harm to the patient. Like breaking the sternum and the ribs, and those ribs, which are broken, can then puncture lungs.

Only a third of older patients who are resuscitated in the hospital, who get CPR, only a third of them survive. And when people do survive, they've often got brain damage, because their heart has not been beating for so long that the blood flow stopped, causing brain damage.

So, you've really got to ask yourself, do I want to put my body through that trauma?  Do I really want that as the potential outcome? Like I said, not right or wrong. I'm not trying to influence you one way or the other. I want to make sure you are making an informed decision. The best thing to do is to talk with your own doctor about all of this, and then talk about it with your family.

And in the end, make your own decision that you are comfortable with.

Ric Edelman: Got an email from Valentine in North Carolina. And, here's what Val sent to me:

 Val: "Hi Ric, long time listener and appreciate all of your advice. After you described the mutual funds versus ETFs in one of your recent podcasts, I have a follow up question. What are the tax implications of converting a mutual fund into an ETF? Is that considered selling one category of funds and buying a different one?  Because that would be considered income and therefore affect the tax returns. Thank you."

Ric Edelman: What Val is talking about here is a podcast that I did where I explained that ETFs are radically overtaking the mutual fund world. Mutual funds have been the dominant investment over the past 30 years, the most popular investment in America.

There are, I think last time I looked, $18,000,000,000 in mutual funds. But the flows are showing a different story. Meaning over the last several years, including this year, there's a net outflow of money out of mutual funds. More people are moving money out. They're selling their mutual fund shares. Then there are people putting money in. Why? Because people are moving the money away from mutual funds and into ETFs.

If you missed that show, a link to it is in the show notes. And I talked about why this is happening, that ETFs have, net inflows massively so because they are now the most popular investment in America. And I cited all the great reasons for this and said that if you own a mutual fund, you might want to sell that mutual fund and move it to an ETF.

That is why Val asked the question about the tax implications. Yes, If you own a mutual fund and a taxable account and you sell it, you're going to incur a capital gain. And you're going to have to pay taxes on that capital gain. And the remaining money, net of tax, is what you'll move to the ETF.

So, is it worthwhile to do this? Well, a couple of issues here, Val. Number one, most Americans have most of their money in their In tax deferred accounts, meaning IRAs or retirement accounts of some other sort, meaning there is no tax liability for selling your mutual funds. If you have mutual funds in an IRA, there's no reason I can think of to keep the money in that mutual fund, in that IRA. You should move the money out of the mutual fund and into the ETF, still inside the IRA where it is shielded from taxes.

If it is a taxable account, then yeah, you do have to deal with it. But think about this: What is your ultimate intention and goal? Are you going to continue owning that mutual fund forever until you die? 

For most people, the answer is no. For most people, they're going to say, well, I'm going to eventually sell this mutual fund. And my point is this, if you're eventually going to sell it during your life, you're eventually going to incur the tax. So you might as well just do it now. Move it over to the ETF where the future tax efficiency will, I think, more than compensate for the tax hit you're going to incur now, which by the way, you're going to incur sooner or later anyway.

One final point on taxation. Many people believe, given the current fiscal crisis in America, the fact that we have a massive federal deficit and a huge national debt, that tax rates are going to be rising. Kamala Harris has been very strongly advocating for a massive increase in ordinary income taxes, capital gain taxes, estate taxes, and such.

And therefore, you could argue, you're much better off selling those mutual funds now, while the tax rates are as low as they are, before the tax rates go higher. Better to pay the tax now at a lower rate than pay the tax later at a higher rate. So that all depends on whether Kamala wins the election and whether Congress goes along with her tax increase proposals and all of that TBD.

Now I'm not saying you need to sell those assets today because of today's low tax. We've got plenty of time before we know who wins the election and even more time before the new president takes office and even more time after that before the new president manages to get a new tax law passed by Congress. And even more time after that before the tax law will become effective, which is not likely until January 1, 2026.

So, just food for thought. Bottom line: Yeah, there may be a tax implication for you, and for most people, but it doesn't outweigh the benefit of keeping an expensive, tax-inefficient mutual fund.

You can send me your question as well. Just send it to askric@thetruthayf.com. The link is in the show notes.

Ric Edelman: Hey, it's coming up quickly...Wednesday, October 9th, my webinar for RIAs on crypto yield, staking, lending, and custody. You're going to want to learn all about this. The link to it is in the show notes where you can learn more about what we're going to be talking about. It's free to attend. You get one CE credit. Check it out by clicking the link in the show notes. Look forward to seeing you there, October 9th, 1:00pm EDT

I'm glad you're with me here on The Truth About Your Future. If you like what you're hearing, be sure to follow and subscribe to the show, wherever you get your podcasts, Apple, Spotify, YouTube, and remember to leave a review on Apple podcasts. I read them all. Never miss an episode of The Truth About Your Future. Follow and subscribe on your favorite podcast app.

I'll see you tomorrow.

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Links from today’s show: 

10/9 Webinar - Crypto for RIAs: Yield, Staking, Lending and Custody. What’s beyond the ETFs?  https://dacfp.com/events/crypto-for-rias-yield-staking-lending-and-custody-whats-beyond-the-etfs/

10/23 Webinar - How to Factor Longevity into Your Financial Planning: https://www.thetayf.com/pages/october-2024-webinar-how-to-factor-longevity-into-your-financial-planning

9/25 Webinar Replay - Unlocking Alpha in Crypto-Equities and Beyond: https://dacfp.com/events/unlocking-alpha-in-crypto-equities-and-beyond

9/20 Webinar Replay - Q4 Crypto Outlook: What You Need to Know Now: https://dacfp.com/events/q4-crypto-outlook-what-you-need-to-know-now

9/11 Webinar Replay – Rates are Poised to Drop, Now What?: https://www.thetayf.com/pages/rates-poised-to-drop-now-what

Become Certified in Blockchain and Digital Assets: https://dacfp.com/certification/

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