Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
He served at the Pentagon as an army jag. He
graduated from Notre Dame and has two law degrees from
Boston University and Georgetown University. He's been practicing law for
over thirty years. He's your family's personal attorney. It's time
for the David Carrier Show.
Speaker 2 (00:19):
Hello, jump the gun there a little bit. Hello, and
welcome to the David Carrier Show. I'm David Carrier, your
family's personal attorney. And now we're closing in right on
the two hundred and fiftieth anniversary of the fourth of
July of the Independence. Right now, we're past the two
and forty ninth anniversary. Now we're closing in on two fifty.
(00:42):
I don't know if you remember the bi centennial. Oh
my goodness, that was a big deal. Everyone with American
flag decaus they used to know. Gas stations they used
to pump your gas right, and they would also slap
an American flag on your car, you know, if you
bought a certain number of gallons whatever decount those American
flag decals. Big deal, big deal. Back when I was
nine years old, nine eleven, whatever it was. Anyway, somebody, yeah, anyway,
(01:09):
during the Bison that yeah, eighteen. I guess there you go.
That was a big that was I remember in South Bend,
Indiana they painted all uh they were nationally known for this.
I guess they painted all the fire hydrants and they
made them look like revolutionary war characters, you know what
I mean, like patriots and stuff, and they paint and
the fire hydrants. You know, it was you know, I
(01:32):
saw it a couple of years later, I guess when
when everything was starting to fade and peel, But you know,
I guess it was. It was quite a thing at
the time. Remember there were Bisentennial cities and all kinds
of the rest of that stuff. Well, anyway, we're coming
up on that, and in the spirit of revolutionary uh,
revolutionary change as their h you know, as their continues,
(01:56):
as there continues to be revolutionary change, we get the
big beautiful bill that pass. That's not a big beautiful
bill anymore. It's a big beautiful BS right. I mean
big BS right, is that what it is? It's the anyway,
it's big beautiful statute now or big beautiful law whatever. Anyway,
(02:21):
there's there's so much in there to unpack, so much
of that that is going to affect your life that
we're going to be doing some we'll be getting deeper
dive into it because we're just getting the just getting
the legislation right now. But there is there is a
there is a ton of stuff in there. A lot
of folks, I don't know if you're aware, but a
(02:42):
lot of folks have been thinking about roth I Ra's okay,
let's talk about that for just a minute. But first
let me mention that if you have a question, a
comment or concern, question, comment or concern about Will's trusts
or probate. If you're wondering how do we beat the
high cost the long term care, how do we protect
our assets let's see, or if you have a question
(03:04):
about real estate that stuff anyway, that would be the
estate planning and older law portion of the show. If
you have a question about that, or if you're wondering
about real estate or business law, that's another big area
that the big beautiful what have you is going to
be having a major, major impact and some ways that
(03:26):
are good, in some ways that are not so good.
It's going to add three trillion according to the Congressional
Budget Office. But here's a question for you, why would
you count on somebody, why would you rely on the
CBO Congressional Budget Office? Okay? And they have always relied
on the CBO whenever they're doing tax law, whenever they're
(03:48):
changing something like this, they always look at the tax
estimates at the Congressional Budget Office. Tells you what's going
to happen. Okay, What if you took a test and
you never got graded on it. No one ever looked
back and say, how'd you do on that one? Right?
Have you ever read a story about the Congressional Budget
(04:08):
Office after the tax law passed? Have you? I haven't.
I've been looking. So they do this thing called static scoring.
Not that you really care, it's just but what it is,
it's they look at some things and not other things.
Now that's very important inside the Beltway in Washington, d C.
(04:29):
What the Congressional Budget Office comes up with is important.
You know why, because it gives the it gives the
mainstream media. It gives people a number to argue about. Okay,
And sometimes it's a good number, sometimes it's a bad number,
but it's almost always a wrong number. And this idea,
(04:50):
I mean, think about this for a moment. Think about
if there was a administration presidential administration that boasted about
what great job numbers they had, about how wonderful within
the Apartment of Labor comes you know, disinterested government bureaucrats
coming up with these numbers and everything's wonderful and all
the rest of this stuff. Let's imagine that, okay, And
(05:10):
now let's imagine after that guy gets out of office, right,
all the numbers get revised downwards so that there's actually
a net loss of jobs over four years. You're told
new jobs, great jobs, wonderful jobs, super duper jobs, right,
and then you find out, uh uh no, there really
weren't he it was actually down all right, Well, what
(05:34):
would you say about the person giving you the score?
Wouldn't you say, hmmm, I wonder, you know, were they
doing the will of the person who was in office
at the time. You would wonder about that, wouldn't you.
I bet you would. I bet you would wonder. And
same way with the CBO, with the Congressional Budget Office,
they give these estimates on the taxes. Is it dynamic scoring,
(05:56):
is it static scoring? Is it you know, is it
roll the dice scoring? Now there's a methodology to it.
But here's what I'm just saying. And this will come
as no news. I'm about to share some no news.
This is no news to anybody who's ever run a business,
(06:17):
been involved in forecasting for a business, or you know,
it's been following what goes on. Okay, if you've ever
put together a budget estimate. And remember what Yogi Barrett
said about predictions. They're difficult because they're all about the future. Okay,
they're all they're all smoking mirrors. Nobody knows, right. So
(06:41):
when they do these when they do these prognostications right,
and you would say, well, wait a second, you would
just talk about job numbers, that'd be easy to figure, right,
I mean people got a paycheck. People don't get a paycheck, right,
I mean that's easy to figure. You should be able
to figure that one out. And the answer is no,
that's not how they do it. They do it survey.
Get this. Remember remember there was this thing called presidential election.
(07:04):
Didn't be other elections too?
Speaker 1 (07:06):
Right?
Speaker 2 (07:06):
How close are the pollsters to getting it right? Sometimes,
depending on their political perspective, they are way wrong. Well,
that's how they figure out what the unemployment rate is.
They call a bunch of people they're polsters, their government
posters and they're supposed to be disinterested, high minded, and
you know, reliable as a rock at Gibraltar. But well,
(07:33):
apparently over a four year period at least, and this
happened recently. You might want to look at the newspaper
to verify this. They revised with these great numbers, and
then they revised them all so that at the end
of it there was actually a net loss. Okay, but
we were told how wonderful everything was now, and that
(07:53):
is just a hypothetical situation, right, you know, hypothetically, right,
if that happened, you'd want to know what the hell
was going on there. And similarly with tax scoring, when
you're trying to figure out, well, how much money is
going to come in on this proposal and will it
really cost trillions of dollars trillions of dollars? It might,
(08:14):
it might, but you know what, I'm going to guarantee
you right now, no one will ever look into it.
There will be no big story. There will be no
big headline about did it work, didn't it work. There
was no big story after the Reagan tax cuts, There
was no big story after any of the other things
that were life and death, tax policy sorts of things.
It doesn't. It doesn't happen, okay. But now it's the
(08:37):
law and we got to deal with it. And that's
okay because you know, we deal with the law around here.
But if you have a question about that, give us
a call six one six seven seven four twenty four
twenty four. That's sixty one six seven seven four twenty
four to twenty four. Will get your question, comment or
concern on here. You can also drop me an email.
(08:59):
I'd love to get the email. David at David Carrier
Law dot com. That's David my name, Right, David at
David Carrier Law. That's the rest of my name with
law stuck on the end dot com. Right David at
David Carrier Law dot com. And we'll get your question,
(09:19):
comment or concern. On the air. We are going to
be talking about the effects of the big beautiful bs whatever,
big beautiful statute. I don't know, big beautiful law, big
beautiful whatever the hell it is. It's it's the law,
the law of the land, now right. They made it.
They made it by they made it by the fourth
(09:39):
of July. Yay hurrah for that. Uh independence, Well, who knows, well,
we'll talk about that a little bit but there are
some amazing things that will affect you and should affect
you and your planning in this in this legislation, and
now it's the law of the land. We got we've
(10:00):
got to be thinking about it. And there's some very
tight deadlines now that you've got to take got to
take account of. So well, we talk about that when
we get back, and we're taking your questions as well.
On David Carrier, Your Family's Personal Attorney.
Speaker 1 (10:17):
This hour of the David Carrier Show is pro bono,
so call in now at seven seven four twenty four
twenty four. This is the David Carrier Show.
Speaker 2 (10:29):
Welcome back to the David Carrier Show on David Carrier,
Your Family's Personal Attorney. The Roth conversion is what we're
going to be talking about. But you can talk about
anything you want to. All you have to do is
give me a call six one six seven seven four
twenty four twenty four. That's six one six seven seven
four twenty four twenty four. Drop me an email David
(10:50):
at Davidcarrier Law dot com or go to the website
David Carrier Law dot com. And on the website Davidcarrier
Law dot com is the is the AI, the super
enhanced what have you? You can't ask you questions of that thing,
including when the next workshops are. We're doing the workshops
of course, at our offices in Norton Shores, Holland and Portage,
(11:15):
also in Grand Rapids, in the in the Mothership in
Grand Rapids, all the schedules and all the rest of
the there, asked the AI bot. You know it's a
super high tech aren't we Aren't we fashionable? Oh boy,
we are so fashionable. Its unbelievable. But anyway, it's it's
a wonderful thing to check that out now. It was
(11:36):
just it is the fourth of July weekend, which you know,
you think about other fourth of July as you've enjoyed.
And there was an ad for oh don't drive drunk
and if you do, give us a calls for auto
law sponsor. Thank you very much for sponsoring the show.
We do appreciate it. But it just put me in
mind the fourth of July. We're heading back from the fireworks,
(12:00):
just my beloved spouse and I, and we were having
what I would call a spirited conversation, and perhaps perhaps
I was distracted from absolutely sound lane keeping during this
spirited conversation, and and then I noticed that there were
(12:21):
I was being followed right, and so I slowed down
and they slowed down. I speed up and they speed up,
and I'm, oh, well, I did I offend someone at
the fireworks? What's going on here? So I made a
quick turn down a unusual access road to where we live,
and then all the lights came on and I had
to walk the line. And I had a beer earlier
(12:44):
in the day. I'm not a drinker, sorry, but I
did have to. I did have to walk the line,
you know, touch my nose and you know, come backwards
from one hundred by three starting at ninety nine, you know,
all the all the fuel sobriety stuf. And it was like, hey,
fellas number one, I didn't do anything dangerous and number
(13:06):
two and there were like three of them. So anyway,
that can now not a bad idea to drive drunk,
that's a bad idea. It's also a bad idea to
have a spirited conversation, discussion, presentation of opposing views with
(13:27):
your spouse while you're doing that. Okay, so you know
that's the that's see, that's why you're dial in, right.
I mean, it's not why we listen to the radio.
You get handy hittens that help you get through life.
We're all about that, handy hints that help you deal
with life, the confusion of life in a very good way. Now,
there are two kinds of iras out there, individual retirement accounts,
and actually there's a multiplicity of them, but two basic ones.
(13:49):
One is the pre tax IRA, also traditional ira, individual
retirement account or four.
Speaker 1 (13:57):
Oh one K.
Speaker 2 (13:58):
All right, I'm gonna I am not going into detail
on the radio on this stuff. I'm just giving you
the heads up. Okay. So you've got your traditional IRA,
which you do yourself. You go to the financial advisor
of the fidela, whoever it is you go to, and
you can set these up right, and you can deduct
the money that goes into it, subject to limits, of course. Okay,
(14:21):
So subject to limits, you can put money into an
IRA and take a current tax deduction for that money.
It encourages people to put money in the ira, traditional ira.
It also works that way at your place of employment.
Right at your place of employment, you may have a
four to oh one K. Most everybody does these days,
(14:43):
or many many people do. All the fast food joints
do I've seen the applications and they're all bragging about
their four oh one K plan, So very little excuse
not to have a four to oh one k. If
you are gainfully employed outside the home, that's great. Do
a four oh one k thing to do. And again
there's a rough four oh one k which is for
(15:05):
after tax dollars. You've paid your tax on this money. Right,
you could go out and spend it and they wouldn't
no more income tax on it or but tax, no
income tax deduction for the wrath. But the key is,
the beauty thing is that however much this thing grows too,
you're not going to pay income tax on it in
(15:26):
the future. Are you with me on this? You're not
gonna pay pay the income tax now. And the thing
can grow, grow, grow, go crazy, but at the end
of it, you won't be paying income tax when you
take it out. With the traditional IRA, you pay income
tax when you take it out at whatever your rate
of tax is. Okay, Now, do you think tax rates
are going up? Do you think they're going down? Well,
(15:47):
it depends on who you believe. I understand that there's
a fellow out there who says he's going to eliminate
all taxes forever in a day. Well, I'll believe it
when I see it. But then again, the same guy said,
get one big beautiful bill through by the fourth of July,
and nobody thought that was going to happen either, And
here we are, wonderful day. But here's the So I
(16:13):
have a hard time believing taxes are going away. I
also have a hard time believing tax rates are not
going up. Maybe not in the next four years, but
four years after, four years after who the hell knows,
I don't know. We're staring in an abyss of tax
of debt as a country. How you how you clean
that up without tax rates going up? Well, I'm not
a swami. I don't know how you do it. I'm
(16:35):
not sure it can be done. So you ought to
be playing. You ought to be at least thinking about
tax rates going to be higher. And with a wroth ira,
you pay the taxes now? Yes it's painful, Yes it's terrible,
Yes it's horrible. Will you pay the taxes now? And uh,
you don't pay the taxes later on when you take
the when you take the money out. And of course,
(16:58):
if you've been you know, invested in the stock market.
You know that you're going up, up, up up up.
You know, the stock market keeps keeps. You know, it's
the best plan. You know. My dad told me when
I was little, you know, what was going on and
on about how lucky I was. And I'm like, with
all the crap you got me doing, I'm lucky, okay,
(17:18):
if you're fine, whatever you say, which, of course I
was thinking. I was not saying because I didn't want
to get propelled across the room. Anyway, The point, the
point is, his point was you're in America. You know,
you're born in you know. And he had done World
War Two in the whole nine yards, of course, and
he his perspective was anyone born in the United States
(17:39):
or naturalist in the United States had one life's lottery, okay,
because you're in the best place in the world. And
his perspective was that the world had never been as
good as it was, you know, in the fifties sixties, right,
I mean, especially in the United States, like it hasn't
been better. And you know something, if you look around
(18:00):
right now, this is just a sideline. If you look
around right now, we are I mean, when would you
rather be alive. Right When when has there been more
peace and chance of peace than there is right now?
I mean peace in the Middle East? I mean, whoever
(18:22):
thought about it? I don't know. We're not there yet.
But this war in Africa that apparently apparently who knows,
we'll see has been settled, at least settled down. You know,
the thing, the wars that make the headlines. They're killing
tens of thousands, which is a lot of people, thousands, thousands,
(18:45):
you know, of course Ukraine and Russia, right, almost a million,
but that's over three years, right, Well, this Rwandan Congo war,
they were killing millions of people every single year for
like thirty years. I mean what and now it's settled.
You're living in a You're living in a pretty good
world right now. All right now, we don't have a challenges.
(19:07):
We have a challenges, but they're very good things happening. Okay.
One of the things that was a very good thing
was what's called a backdoor wroth conversion where you could
put money tax money, you pay the tax on it,
you put it into your traditional ira, and then you
put it into a wroth whoo whoop. And when you
(19:27):
do it like that, you're not subject to limitations. People
have been doing it for years. But guess what, the
Big Beautiful What have You is taken that away December
thirty first. You got between now and December thirty first
to take advantage of the back door Wroth conversion. And
I'm going to be explaining that a little bit more
when when we get back. The point is, there's all
(19:48):
kinds of stuff in this big beautiful What have You,
and some of it is to your benefit, some of
it is not. You've been listening to the David Carrier Show.
I'm David Carrier, your Family's person attorney.
Speaker 1 (20:01):
David's got the how too you're looking for. Just call
seven seven four twenty four, twenty four. This is the
David Carrier Show.
Speaker 2 (20:10):
Welcome back to the David Carrier Show. I'm David Carrier,
your Family's personal attorney, and we're talking about the changes
that the Big Beautiful What have You has made to
tax law. Now, one of the things that has nothing
to do with you, you know everyone's all worried about is
state taxes, right, death taxes and whatnot. There is a
(20:33):
death tax you do have to worry about. It has
to do with iras. Traditional iras it's awful as terrible.
It's horrible, and nobody ever talks about it because frankly,
it's based on the behavior of your kids. If you
have a question, comment, or concern, your behavior should be
to Clive us a call at six one six seven
seven four twenty four twenty four. That's sixty one six
(20:55):
seven seven four twenty four twenty four, and I'll explain
how your kids will manage to get your IRA taxed
at a forty two percent bracket. It's not hard, very easy,
and in fact it usually happens. But you can do
stuff about it, which I'm not going to talk about
right now because right now what I'm concerned about is you.
(21:15):
And one of the things everyone all over the estate tax.
When I die, though my estate with tax. Okay, so
you may recall, faithful listeners may recall that they've been
jacking the tax rate up right. The exemption equivalent is
what we call it. The exemption equivalent the amount you
can pass on without paying tax. You don't really care
(21:36):
about the mechanics of it, simply because it's it's super confusing.
It's like everything with taxes, right, if there's something with simple,
oh you can pass on fifteen million dollars when you die. Right.
That's an easy concept. Concept is easy. The implementation is
like mind bogglingly impossible. Okay. And the one my closest
(21:59):
approach to the way that they negotiate things like the
big beautiful bill and what have you, was when I
was at the Pentagon back in the day forty plus
years ago, and they had just changed the law, well
thirty eight years ago, and it just changed the law
(22:20):
on the tax code. They just revised the tax code, right,
And I was getting my tax degree from Georgetown at
the time, my Master Law's degree. Thank you American taxpayers.
As a commissioned officer. You guys paid seventy four percent
of it, so now you're benefiting. See, there's a return
on your investment dollar on your tax dollar. Anyway, the
point is we had the guy who was the tax
(22:43):
rating guru, the head council, you know, the chief advisor
whatever it was, to Oorn Hatch, who was the guy
who was rewriting the tax code, and I had come
up with this brilliant explanation. I thought it was brilliant.
There's another minority opinion for it. Anyway, I came up
with this great idea on how the thing was supposed
to work, and the fella from the Senate, right, the
(23:07):
Chief Counsel of the Tax Writing Committee, He's like, oh, well,
that's a very interesting theory actually, and then he described
the way the interaction between the senator from Oklahoma, the
Senator from Pennsylvania something else, something else, the CBO estimates
blah blah blah blah blah, and that's how they come
up with this. And I have to tell you, I
(23:29):
was stunned. I was thinking that up until that point,
I had been thinking that this really had to do
with tax policy and structuring the economy and weighing you know,
momentous issues and stuff like. It had nothing to do
with any of that. There's a whole bunch of tax
provisions and they were just trying to get something done.
(23:49):
That's what they were trying to do. And that's what
you've got here in the big beautiful bill. They're just
trying to get something done. But it gets very confusing
when you get into the implementation of it. Okay, we're
just going to deal with this at at the top level,
the death tax, the estate tax. Right, you may know
that it's up to like twenty six million, where they're
going to make it thirty million, fifteen each for a
(24:11):
married couple, thirteen million, fifteen million dollars each, thirty million
dollars for a married couple. You can pass on without
paying tax. So you got less than thirty million dollars.
Breathe a sigh of relief. You're cool, there's no problem.
You don't have to worry about the estate tax. And
that Remember howevery year, oh, we can only give away
nineteen thousand dollars or something like this, right, that's what
(24:32):
you're thinking. Forget about it, because if you give away
more than that annual exclusion amount, which has nothing to
do with anything except the estate tax, accept the estate tax.
Speaker 1 (24:45):
Right.
Speaker 2 (24:45):
So if you're thinking, oh, I give this to the kids,
and Medicaid won't care, No, no, no, no, it doesn't
work like that, or fast Foo won't care, Yes they will. Okay,
those numbers count for everything except for the estate tax,
and all it does is reduce that thirty million. So
you gave your grandkit an extra ex give twenty thousand
(25:05):
or something like this, right, so, oh my goodness, now
I'm over by a thousand. Well, all it's gonna do
is reduce that thirty million by a thousand. Do you see?
That's how it works. It's completely irrelevant unless you plan
on giving away or dying with more than thirty million dollars.
And of course for you powerball lovers out there, because
maybe that's your plan. But anyway, unless you're gonna do that,
(25:30):
don't worry about it. Just if you feel like giving
her away, which I don't advise, but if you feel
like it, God bless you. At least you know that
that is what you're doing. Don't loan it, give it
because you can call it alone. You're not kidding anybody.
So that's one aspect. Now we're at fifteen million a
piece instead of twelve point whatever, thirteen whatever it was.
(25:52):
You don't have to worry about that. It's going to
be indexed for inflation starting next year. So there you are.
But here's now here's we were talking about the wroth.
We'll talk about iras right. The wroth Ira is super
duper powerful because you pay the tax now, yes, you
take the tax hit now, but the damn thing grows
(26:14):
like crazy when you put it in the wroth. Okay, see,
if you have a taxable investment taxable investment in your
CD that you've got at the bank. Let's say you're
a twenty percent tax bracket, six percent rate of return, okay,
and every year that you make some interest on your CD,
(26:36):
you pay tax on the interest. I'm saying twenty percent,
So instead of making six percent interest, you're actually making
what less right, and every year it looks like you're
making it. Boom, You got to pay the tax, right,
so three point eight percent four point eight percent okay,
that's the difference at twenty percent tax right over ten years.
(26:58):
That really adds up because the snowball doesn't snowball as well.
Every time you have pack some more snow on there,
they shrink it a little bit, whereas in the WROTH
or even the traditional your investment grows without paying tax.
That means that every year there's more and at a
(27:20):
higher interest rate, it balloons three times as much over
a ten year period. Okay. That's a big deal. That
makes the difference. And if you can take it out
when it's grown through triple in value right versus the
and then you take it out without paying tax again, glory, hallelujah.
Because to put it in the CD, you had to
(27:41):
pay the tax anyway. This is the point you had
to pay the tax anyway. You already paid the tax
on the money to put it in a taxable CD.
Why not do a wroth conversion? Right? And what you
do is it's a backdoor conversion. Ooh, backdoor. That must
be bad, right back doors. Every house has a backdoor.
What's so bad about a backdoor? Nothing? Okay. What you
(28:03):
do is you put it in the traditional IRA, and
then you convert the traditional to a wrath. That's what
you do. Tax paid dollars into the traditional IRA, then
you do a roth conversion. There's a separate thing up
to seventy seven thousand dollars if you're dealing with a
four oh one K that allows that allows conversions. So
(28:26):
why are we bringing it up now? I'll tell you
why we're bringing up right now. We're bringing up now
because the big beautiful thingy there, that thing is taking
it away. This is the last year you'll be able
to do it. If you've been thinking about it, if
you've been reading a financial newsletter, if you've been watching
Who's the guy who gets everything wrong all the time? Cramer,
(28:47):
that guy on the TV right, whatever he tells you.
It's a sure thing. Sell sal right, Oh this is
really going to tank. Bye bye. Whatever he tells you,
do the opposite, Okay. I don't know if he talks
about I don't watch the guy, but I've just heard
about him. Anyway. If you've been thinking about doing a
(29:08):
roth conversion, all right, a backdoor conversion to a to
a roth ira And because because you've been crying in
your beer, I can't do a rough because I don't
have you know, I have too much money or too
much income or not enough of this and too much
of that or what have you. If you've been denied,
(29:28):
and many many people have been denied, you can't do
a direct wroth, okay, but you can almost you can
always do an unlimited backdoor wroth. That's that's going away.
Get a question, comment or concern six one, six, seven, seven, four,
twenty four, twenty four. I'm David Carrier, your family's personal attorney.
(29:55):
There it is, welcome back to the David Carrier Show.
Cha cha chick. Change is that's right, that's what we're
talking about today. Changes from the big beautiful abomination when
well it's nobody's salvation, that's for sure. But there's all
kinds of stuff in there, and it's like any any
grab bag like like this, there's there's gonna be some
(30:17):
good stuff, there's gonna be some horrendous stuff, and people
will be arguing about the ultimate impact forever in a day.
But what you need to know is that if you
have been thinking about any kind of a IRA conversion,
and I know you're thinking about it because I get
(30:38):
people approach me all the time about it. But you know,
when we're when we're going through doing the estate plan,
people talk about it, these these these roth conversions as
more about Yeah, I was thinking about that. Oh yeah,
I'll tell you what it's like. You know what it's
you know what it's like. It's like doing your estate
plan correctly. That's what it's like. That's exactly what it's like.
(31:01):
It's like you've been talking about. You know, it's a
good idea. Oh yeah, protecting my assets from my kids,
oh yeah, not going broken the nursing home, oh yeah,
having everything set and ready to go. Oh yeah, not
being por treated as a pathetic loser by generations to
come because I didn't get my stuff in place. Oh yeah,
all that stuff. Oh oh, and these guys actually follow
(31:22):
through instead of leaving me to my own devices, which
we know fail like all the time. Yeah, I'm going
to get around to that one. But the well, now
you have a reason to okay, because the big beautiful,
the big beautiful bigfoot there what did they call? What's
(31:44):
the isn't there a sasquatch? That's right, the big beautiful
sasquatch is about to sit on your head or they
sit on your Dora me. And if you've been thinking
about doing one of these roth conversions, backdoor conversions, you've
only got to December thirty first, number thirty first to
do it, Okay, less than six months, So the gloves
(32:05):
are off, the clock is ticking down, and this will
be another one of those things that you will look
back and say, Boy, I'm glad I listened to the
David Carrier Show because that guy set me straight. And
that's why we're not going broken the nursing home, and
that's why our kids are not wastrulls. Yeah, that's why
we didn't lose all the money to you know, the
(32:26):
ex spouse or whoever. Aren't we glad that we have
an estate plan that actually works. Oh boy, that'd be
just super duper. You'll be able to say that unlike
and then look pityingly on all the poor people who
didn't do it. So this is your wake up call.
This is your alert. And it's not a This is
(32:48):
not a primarily a state tax planning technique, right, because
i'm how you do with the estate tax. The estate
tax is now raised to fifteen million dollars per person
for a married couple. Right, So for a married couple
you get to combine it so it's thirty million, so
you don't have to worry about that. But here's what
(33:09):
happens nine times out of ten, ninety nine times out
of one hundred, whatever it is. And you should talk
to your financial advisor, right, who may lie to you
and tell you, oh, because I hear this sometimes rarely
usually financial envinor pretty financial advisor pretty candid about the
fact that the kids will absolutely smash the pinata of
(33:31):
your IRA before you even reach room temperature. I mean,
the flowers won't have wilted on the grave before the
money has gone out of the IRA. And the problem
with that is especially with traditional if it's traditional, then
it all gets taxed at once. Okay, this is how
your kid manages to pay forty plus percent if you're
in Michigan thirty seven percent federal plus the State of
(33:55):
Michigan tax plus city grand rapids or wherever else you are,
if you've got more a local income tax as well. Right,
that all adds up, right, and that all gets gone
from your IRA. Whereas the kid could have taken it out.
They could have let it grow for ten years and
taken small required minimum distributions based on their own age
(34:16):
over the ten years. They could have done that, but
they didn't do that, and then take a lump sum
at the end. But here's the thing. At the end,
the lump sum will be three times as big. And
it's like, oh, gonna pay all that tax on the
big lump sum. Yeah, I know, But your kid still
gets three times the money because if they take it
right now, it's gonna jack them into that bracket. Anyway.
Are you with me on this? This is very very basic,
(34:41):
middle class, regular folks type stuff. Because you've got two things.
If you're like most folks that I deal with, you've
got two things. You've got an IRA and you've got
a house, and you're so cavalier with both of them.
For things that took you thirty forty years to build up.
And it's like me, you know, oh, well, now the
twenty five thousand families have worked with us, they took
(35:02):
it seriously. But there's got to be more than twenty
five thousand families in this area. We've got to take
it seriously. I don't know, but if you're one of them,
you gotta be thinking about this stuff. And first and
foremost you've got to be thinking about it for you,
for your spouse. But then, right, the benefits that you
leave to your kids. See if you set things up
(35:25):
in such a way that the kid loses forty percent
of it, right, and yeah, the hassle of probate and
blah blah all the rest of it. But or if
you need long term care so you don't even have
an IRA anymore. A kidding me, that is routine. That's
what happens. It doesn't happen. None of the stuff has
to be as bad as it as it is now.
(35:48):
The planning that we do for that, that's not going away.
But the wroth is going away. The conversion, the if
you're gonna put money, you know, tax paid dollars, you
want to put it in wroth. I mean you don't
qualify because the numbers are so low anyway, right, it
almost doesn't seem worth it. Well, you can put and
you've already paid the tax on this money, right, the
(36:10):
investments that you have, just regular CDs and what have you.
We've already paid the tax on it. Okay, So throw
it into a traditional IRA, flip it from there, convert
it into your wrath. Now, any money that any additional
money that you take out of it, you're not going
to pay. You're not going to pay any tax on it.
So live for the next twenty years. Right, spend your
(36:34):
social security, take your r and ds from the traditional IRA,
pay the tax on it. Great, Let that wroth the
conversion that you just did. Let that one build up.
You know, we're gonna your plan is going to save
you on the long term care. Don't worry about that.
That's money that you can leave to your kids. And
(36:57):
number one, they're not going to blow it because when
they take it, they're not going to pay the forty
percent because there is no tax, right and there's a
special trust that we can do, so it locks it
up so the kid doesn't get it for ten years.
But when the kid gets it, and we get the
require memor distribution in the meantime. But but except for emergencies,
that money. Now you're leaving triple triple to your kids,
(37:18):
to your grandkids whoever, based on you know, assumptions about
their tax rates and the rate of return and stuff.
And maybe it's more than triple. We've seen that too.
But the key is, the key is you've got to
December thirty first to get it done, which is a
good reason to get it. What's the word started. You
(37:39):
don't get to finish unless you got to You gotta
start to finish. Does that make sense? And fortunately we
made it very easy for you. You knew the pitch
was coming. You made it very easy for you to
go to the website Davidcarrier Law dot com and on
the website Davidcarrier Law dot com just sign up for
one of our three secrets workshops. The process started. There's
(38:01):
ways to do this stuff. I'm not kidding. You've been
listening to the David Carrier Show. I'm David Carrier, your
family's personal attorney.
He served at the Pentagon as an army jag. He
graduated from Notre Dame and has two law degrees from
Boston University and Georgetown University. He's been practicing law for
over thirty years. He's your family's personal attorney. It's time
for the David Carrier Show.
Speaker 2 (00:19):
Hello, jump the gun there a little bit. Hello, and
welcome to the David Carrier Show. I'm David Carrier, your
family's personal attorney. And now we're closing in right on
the two hundred and fiftieth anniversary of the fourth of
July of the Independence. Right now, we're past the two
and forty ninth anniversary. Now we're closing in on two fifty.
(00:42):
I don't know if you remember the bi centennial. Oh
my goodness, that was a big deal. Everyone with American
flag decaus they used to know. Gas stations they used
to pump your gas right, and they would also slap
an American flag on your car, you know, if you
bought a certain number of gallons whatever decount those American
flag decals. Big deal, big deal. Back when I was
nine years old, nine eleven, whatever it was. Anyway, somebody, yeah, anyway,
(01:09):
during the Bison that yeah, eighteen. I guess there you go.
That was a big that was I remember in South Bend,
Indiana they painted all uh they were nationally known for this.
I guess they painted all the fire hydrants and they
made them look like revolutionary war characters, you know what
I mean, like patriots and stuff, and they paint and
the fire hydrants. You know, it was you know, I
(01:32):
saw it a couple of years later, I guess when
when everything was starting to fade and peel, But you know,
I guess it was. It was quite a thing at
the time. Remember there were Bisentennial cities and all kinds
of the rest of that stuff. Well, anyway, we're coming
up on that, and in the spirit of revolutionary uh,
revolutionary change as their h you know, as their continues,
(01:56):
as there continues to be revolutionary change, we get the
big beautiful bill that pass. That's not a big beautiful
bill anymore. It's a big beautiful BS right. I mean
big BS right, is that what it is? It's the anyway,
it's big beautiful statute now or big beautiful law whatever. Anyway,
(02:21):
there's there's so much in there to unpack, so much
of that that is going to affect your life that
we're going to be doing some we'll be getting deeper
dive into it because we're just getting the just getting
the legislation right now. But there is there is a
there is a ton of stuff in there. A lot
of folks, I don't know if you're aware, but a
(02:42):
lot of folks have been thinking about roth I Ra's okay,
let's talk about that for just a minute. But first
let me mention that if you have a question, a
comment or concern, question, comment or concern about Will's trusts
or probate. If you're wondering how do we beat the
high cost the long term care, how do we protect
our assets let's see, or if you have a question
(03:04):
about real estate that stuff anyway, that would be the
estate planning and older law portion of the show. If
you have a question about that, or if you're wondering
about real estate or business law, that's another big area
that the big beautiful what have you is going to
be having a major, major impact and some ways that
(03:26):
are good, in some ways that are not so good.
It's going to add three trillion according to the Congressional
Budget Office. But here's a question for you, why would
you count on somebody, why would you rely on the
CBO Congressional Budget Office? Okay? And they have always relied
on the CBO whenever they're doing tax law, whenever they're
(03:48):
changing something like this, they always look at the tax
estimates at the Congressional Budget Office. Tells you what's going
to happen. Okay, What if you took a test and
you never got graded on it. No one ever looked
back and say, how'd you do on that one? Right?
Have you ever read a story about the Congressional Budget
(04:08):
Office after the tax law passed? Have you? I haven't.
I've been looking. So they do this thing called static scoring.
Not that you really care, it's just but what it is,
it's they look at some things and not other things.
Now that's very important inside the Beltway in Washington, d C.
(04:29):
What the Congressional Budget Office comes up with is important.
You know why, because it gives the it gives the
mainstream media. It gives people a number to argue about. Okay,
And sometimes it's a good number, sometimes it's a bad number,
but it's almost always a wrong number. And this idea,
(04:50):
I mean, think about this for a moment. Think about
if there was a administration presidential administration that boasted about
what great job numbers they had, about how wonderful within
the Apartment of Labor comes you know, disinterested government bureaucrats
coming up with these numbers and everything's wonderful and all
the rest of this stuff. Let's imagine that, okay, And
(05:10):
now let's imagine after that guy gets out of office, right,
all the numbers get revised downwards so that there's actually
a net loss of jobs over four years. You're told
new jobs, great jobs, wonderful jobs, super duper jobs, right,
and then you find out, uh uh no, there really
weren't he it was actually down all right, Well, what
(05:34):
would you say about the person giving you the score?
Wouldn't you say, hmmm, I wonder, you know, were they
doing the will of the person who was in office
at the time. You would wonder about that, wouldn't you.
I bet you would. I bet you would wonder. And
same way with the CBO, with the Congressional Budget Office,
they give these estimates on the taxes. Is it dynamic scoring,
(05:56):
is it static scoring? Is it you know, is it
roll the dice scoring? Now there's a methodology to it.
But here's what I'm just saying. And this will come
as no news. I'm about to share some no news.
This is no news to anybody who's ever run a business,
(06:17):
been involved in forecasting for a business, or you know,
it's been following what goes on. Okay, if you've ever
put together a budget estimate. And remember what Yogi Barrett
said about predictions. They're difficult because they're all about the future. Okay,
they're all they're all smoking mirrors. Nobody knows, right. So
(06:41):
when they do these when they do these prognostications right,
and you would say, well, wait a second, you would
just talk about job numbers, that'd be easy to figure, right,
I mean people got a paycheck. People don't get a paycheck, right,
I mean that's easy to figure. You should be able
to figure that one out. And the answer is no,
that's not how they do it. They do it survey.
Get this. Remember remember there was this thing called presidential election.
(07:04):
Didn't be other elections too?
Speaker 1 (07:06):
Right?
Speaker 2 (07:06):
How close are the pollsters to getting it right? Sometimes,
depending on their political perspective, they are way wrong. Well,
that's how they figure out what the unemployment rate is.
They call a bunch of people they're polsters, their government
posters and they're supposed to be disinterested, high minded, and
you know, reliable as a rock at Gibraltar. But well,
(07:33):
apparently over a four year period at least, and this
happened recently. You might want to look at the newspaper
to verify this. They revised with these great numbers, and
then they revised them all so that at the end
of it there was actually a net loss. Okay, but
we were told how wonderful everything was now, and that
(07:53):
is just a hypothetical situation, right, you know, hypothetically, right,
if that happened, you'd want to know what the hell
was going on there. And similarly with tax scoring, when
you're trying to figure out, well, how much money is
going to come in on this proposal and will it
really cost trillions of dollars trillions of dollars? It might,
(08:14):
it might, but you know what, I'm going to guarantee
you right now, no one will ever look into it.
There will be no big story. There will be no
big headline about did it work, didn't it work. There
was no big story after the Reagan tax cuts, There
was no big story after any of the other things
that were life and death, tax policy sorts of things.
It doesn't. It doesn't happen, okay. But now it's the
(08:37):
law and we got to deal with it. And that's
okay because you know, we deal with the law around here.
But if you have a question about that, give us
a call six one six seven seven four twenty four
twenty four. That's sixty one six seven seven four twenty
four to twenty four. Will get your question, comment or
concern on here. You can also drop me an email.
(08:59):
I'd love to get the email. David at David Carrier
Law dot com. That's David my name, Right, David at
David Carrier Law. That's the rest of my name with
law stuck on the end dot com. Right David at
David Carrier Law dot com. And we'll get your question,
(09:19):
comment or concern. On the air. We are going to
be talking about the effects of the big beautiful bs whatever,
big beautiful statute. I don't know, big beautiful law, big
beautiful whatever the hell it is. It's it's the law,
the law of the land, now right. They made it.
They made it by they made it by the fourth
(09:39):
of July. Yay hurrah for that. Uh independence, Well, who knows, well,
we'll talk about that a little bit but there are
some amazing things that will affect you and should affect
you and your planning in this in this legislation, and
now it's the law of the land. We got we've
(10:00):
got to be thinking about it. And there's some very
tight deadlines now that you've got to take got to
take account of. So well, we talk about that when
we get back, and we're taking your questions as well.
On David Carrier, Your Family's Personal Attorney.
Speaker 1 (10:17):
This hour of the David Carrier Show is pro bono,
so call in now at seven seven four twenty four
twenty four. This is the David Carrier Show.
Speaker 2 (10:29):
Welcome back to the David Carrier Show on David Carrier,
Your Family's Personal Attorney. The Roth conversion is what we're
going to be talking about. But you can talk about
anything you want to. All you have to do is
give me a call six one six seven seven four
twenty four twenty four. That's six one six seven seven
four twenty four twenty four. Drop me an email David
(10:50):
at Davidcarrier Law dot com or go to the website
David Carrier Law dot com. And on the website Davidcarrier
Law dot com is the is the AI, the super
enhanced what have you? You can't ask you questions of that thing,
including when the next workshops are. We're doing the workshops
of course, at our offices in Norton Shores, Holland and Portage,
(11:15):
also in Grand Rapids, in the in the Mothership in
Grand Rapids, all the schedules and all the rest of
the there, asked the AI bot. You know it's a
super high tech aren't we Aren't we fashionable? Oh boy,
we are so fashionable. Its unbelievable. But anyway, it's it's
a wonderful thing to check that out now. It was
(11:36):
just it is the fourth of July weekend, which you know,
you think about other fourth of July as you've enjoyed.
And there was an ad for oh don't drive drunk
and if you do, give us a calls for auto
law sponsor. Thank you very much for sponsoring the show.
We do appreciate it. But it just put me in
mind the fourth of July. We're heading back from the fireworks,
(12:00):
just my beloved spouse and I, and we were having
what I would call a spirited conversation, and perhaps perhaps
I was distracted from absolutely sound lane keeping during this
spirited conversation, and and then I noticed that there were
(12:21):
I was being followed right, and so I slowed down
and they slowed down. I speed up and they speed up,
and I'm, oh, well, I did I offend someone at
the fireworks? What's going on here? So I made a
quick turn down a unusual access road to where we live,
and then all the lights came on and I had
to walk the line. And I had a beer earlier
(12:44):
in the day. I'm not a drinker, sorry, but I
did have to. I did have to walk the line,
you know, touch my nose and you know, come backwards
from one hundred by three starting at ninety nine, you know,
all the all the fuel sobriety stuf. And it was like, hey,
fellas number one, I didn't do anything dangerous and number
(13:06):
two and there were like three of them. So anyway,
that can now not a bad idea to drive drunk,
that's a bad idea. It's also a bad idea to
have a spirited conversation, discussion, presentation of opposing views with
(13:27):
your spouse while you're doing that. Okay, so you know
that's the that's see, that's why you're dial in, right.
I mean, it's not why we listen to the radio.
You get handy hittens that help you get through life.
We're all about that, handy hints that help you deal
with life, the confusion of life in a very good way. Now,
there are two kinds of iras out there, individual retirement accounts,
and actually there's a multiplicity of them, but two basic ones.
(13:49):
One is the pre tax IRA, also traditional ira, individual
retirement account or four.
Speaker 1 (13:57):
Oh one K.
Speaker 2 (13:58):
All right, I'm gonna I am not going into detail
on the radio on this stuff. I'm just giving you
the heads up. Okay. So you've got your traditional IRA,
which you do yourself. You go to the financial advisor
of the fidela, whoever it is you go to, and
you can set these up right, and you can deduct
the money that goes into it, subject to limits, of course. Okay,
(14:21):
So subject to limits, you can put money into an
IRA and take a current tax deduction for that money.
It encourages people to put money in the ira, traditional ira.
It also works that way at your place of employment.
Right at your place of employment, you may have a
four to oh one K. Most everybody does these days,
(14:43):
or many many people do. All the fast food joints
do I've seen the applications and they're all bragging about
their four oh one K plan, So very little excuse
not to have a four to oh one k. If
you are gainfully employed outside the home, that's great. Do
a four oh one k thing to do. And again
there's a rough four oh one k which is for
(15:05):
after tax dollars. You've paid your tax on this money. Right,
you could go out and spend it and they wouldn't
no more income tax on it or but tax, no
income tax deduction for the wrath. But the key is,
the beauty thing is that however much this thing grows too,
you're not going to pay income tax on it in
(15:26):
the future. Are you with me on this? You're not
gonna pay pay the income tax now. And the thing
can grow, grow, grow, go crazy, but at the end
of it, you won't be paying income tax when you
take it out. With the traditional IRA, you pay income
tax when you take it out at whatever your rate
of tax is. Okay, Now, do you think tax rates
are going up? Do you think they're going down? Well,
(15:47):
it depends on who you believe. I understand that there's
a fellow out there who says he's going to eliminate
all taxes forever in a day. Well, I'll believe it
when I see it. But then again, the same guy said,
get one big beautiful bill through by the fourth of July,
and nobody thought that was going to happen either, And
here we are, wonderful day. But here's the So I
(16:13):
have a hard time believing taxes are going away. I
also have a hard time believing tax rates are not
going up. Maybe not in the next four years, but
four years after, four years after who the hell knows,
I don't know. We're staring in an abyss of tax
of debt as a country. How you how you clean
that up without tax rates going up? Well, I'm not
a swami. I don't know how you do it. I'm
(16:35):
not sure it can be done. So you ought to
be playing. You ought to be at least thinking about
tax rates going to be higher. And with a wroth ira,
you pay the taxes now? Yes it's painful, Yes it's terrible,
Yes it's horrible. Will you pay the taxes now? And uh,
you don't pay the taxes later on when you take
the when you take the money out. And of course,
(16:58):
if you've been you know, invested in the stock market.
You know that you're going up, up, up up up.
You know, the stock market keeps keeps. You know, it's
the best plan. You know. My dad told me when
I was little, you know, what was going on and
on about how lucky I was. And I'm like, with
all the crap you got me doing, I'm lucky, okay,
(17:18):
if you're fine, whatever you say, which, of course I
was thinking. I was not saying because I didn't want
to get propelled across the room. Anyway, The point, the
point is, his point was you're in America. You know,
you're born in you know. And he had done World
War Two in the whole nine yards, of course, and
he his perspective was anyone born in the United States
(17:39):
or naturalist in the United States had one life's lottery, okay,
because you're in the best place in the world. And
his perspective was that the world had never been as
good as it was, you know, in the fifties sixties, right,
I mean, especially in the United States, like it hasn't
been better. And you know something, if you look around
(18:00):
right now, this is just a sideline. If you look
around right now, we are I mean, when would you
rather be alive. Right When when has there been more
peace and chance of peace than there is right now?
I mean peace in the Middle East? I mean, whoever
(18:22):
thought about it? I don't know. We're not there yet.
But this war in Africa that apparently apparently who knows,
we'll see has been settled, at least settled down. You know,
the thing, the wars that make the headlines. They're killing
tens of thousands, which is a lot of people, thousands, thousands,
(18:45):
you know, of course Ukraine and Russia, right, almost a million,
but that's over three years, right, Well, this Rwandan Congo war,
they were killing millions of people every single year for
like thirty years. I mean what and now it's settled.
You're living in a You're living in a pretty good
world right now. All right now, we don't have a challenges.
(19:07):
We have a challenges, but they're very good things happening. Okay.
One of the things that was a very good thing
was what's called a backdoor wroth conversion where you could
put money tax money, you pay the tax on it,
you put it into your traditional ira, and then you
put it into a wroth whoo whoop. And when you
(19:27):
do it like that, you're not subject to limitations. People
have been doing it for years. But guess what, the
Big Beautiful What have You is taken that away December
thirty first. You got between now and December thirty first
to take advantage of the back door Wroth conversion. And
I'm going to be explaining that a little bit more
when when we get back. The point is, there's all
(19:48):
kinds of stuff in this big beautiful What have You,
and some of it is to your benefit, some of
it is not. You've been listening to the David Carrier Show.
I'm David Carrier, your Family's person attorney.
Speaker 1 (20:01):
David's got the how too you're looking for. Just call
seven seven four twenty four, twenty four. This is the
David Carrier Show.
Speaker 2 (20:10):
Welcome back to the David Carrier Show. I'm David Carrier,
your Family's personal attorney, and we're talking about the changes
that the Big Beautiful What have You has made to
tax law. Now, one of the things that has nothing
to do with you, you know everyone's all worried about is
state taxes, right, death taxes and whatnot. There is a
(20:33):
death tax you do have to worry about. It has
to do with iras. Traditional iras it's awful as terrible.
It's horrible, and nobody ever talks about it because frankly,
it's based on the behavior of your kids. If you
have a question, comment, or concern, your behavior should be
to Clive us a call at six one six seven
seven four twenty four twenty four. That's sixty one six
(20:55):
seven seven four twenty four twenty four, and I'll explain
how your kids will manage to get your IRA taxed
at a forty two percent bracket. It's not hard, very easy,
and in fact it usually happens. But you can do
stuff about it, which I'm not going to talk about
right now because right now what I'm concerned about is you.
(21:15):
And one of the things everyone all over the estate tax.
When I die, though my estate with tax. Okay, so
you may recall, faithful listeners may recall that they've been
jacking the tax rate up right. The exemption equivalent is
what we call it. The exemption equivalent the amount you
can pass on without paying tax. You don't really care
(21:36):
about the mechanics of it, simply because it's it's super confusing.
It's like everything with taxes, right, if there's something with simple,
oh you can pass on fifteen million dollars when you die. Right.
That's an easy concept. Concept is easy. The implementation is
like mind bogglingly impossible. Okay. And the one my closest
(21:59):
approach to the way that they negotiate things like the
big beautiful bill and what have you, was when I
was at the Pentagon back in the day forty plus
years ago, and they had just changed the law, well
thirty eight years ago, and it just changed the law
(22:20):
on the tax code. They just revised the tax code, right,
And I was getting my tax degree from Georgetown at
the time, my Master Law's degree. Thank you American taxpayers.
As a commissioned officer. You guys paid seventy four percent
of it, so now you're benefiting. See, there's a return
on your investment dollar on your tax dollar. Anyway, the
point is we had the guy who was the tax
(22:43):
rating guru, the head council, you know, the chief advisor
whatever it was, to Oorn Hatch, who was the guy
who was rewriting the tax code, and I had come
up with this brilliant explanation. I thought it was brilliant.
There's another minority opinion for it. Anyway, I came up
with this great idea on how the thing was supposed
to work, and the fella from the Senate, right, the
(23:07):
Chief Counsel of the Tax Writing Committee, He's like, oh, well,
that's a very interesting theory actually, and then he described
the way the interaction between the senator from Oklahoma, the
Senator from Pennsylvania something else, something else, the CBO estimates
blah blah blah blah blah, and that's how they come
up with this. And I have to tell you, I
(23:29):
was stunned. I was thinking that up until that point,
I had been thinking that this really had to do
with tax policy and structuring the economy and weighing you know,
momentous issues and stuff like. It had nothing to do
with any of that. There's a whole bunch of tax
provisions and they were just trying to get something done.
(23:49):
That's what they were trying to do. And that's what
you've got here in the big beautiful bill. They're just
trying to get something done. But it gets very confusing
when you get into the implementation of it. Okay, we're
just going to deal with this at at the top level,
the death tax, the estate tax. Right, you may know
that it's up to like twenty six million, where they're
going to make it thirty million, fifteen each for a
(24:11):
married couple, thirteen million, fifteen million dollars each, thirty million
dollars for a married couple. You can pass on without
paying tax. So you got less than thirty million dollars.
Breathe a sigh of relief. You're cool, there's no problem.
You don't have to worry about the estate tax. And
that Remember howevery year, oh, we can only give away
nineteen thousand dollars or something like this, right, that's what
(24:32):
you're thinking. Forget about it, because if you give away
more than that annual exclusion amount, which has nothing to
do with anything except the estate tax, accept the estate tax.
Speaker 1 (24:45):
Right.
Speaker 2 (24:45):
So if you're thinking, oh, I give this to the kids,
and Medicaid won't care, No, no, no, no, it doesn't
work like that, or fast Foo won't care, Yes they will. Okay,
those numbers count for everything except for the estate tax,
and all it does is reduce that thirty million. So
you gave your grandkit an extra ex give twenty thousand
(25:05):
or something like this, right, so, oh my goodness, now
I'm over by a thousand. Well, all it's gonna do
is reduce that thirty million by a thousand. Do you see?
That's how it works. It's completely irrelevant unless you plan
on giving away or dying with more than thirty million dollars.
And of course for you powerball lovers out there, because
maybe that's your plan. But anyway, unless you're gonna do that,
(25:30):
don't worry about it. Just if you feel like giving
her away, which I don't advise, but if you feel
like it, God bless you. At least you know that
that is what you're doing. Don't loan it, give it
because you can call it alone. You're not kidding anybody.
So that's one aspect. Now we're at fifteen million a
piece instead of twelve point whatever, thirteen whatever it was.
(25:52):
You don't have to worry about that. It's going to
be indexed for inflation starting next year. So there you are.
But here's now here's we were talking about the wroth.
We'll talk about iras right. The wroth Ira is super
duper powerful because you pay the tax now, yes, you
take the tax hit now, but the damn thing grows
(26:14):
like crazy when you put it in the wroth. Okay, see,
if you have a taxable investment taxable investment in your
CD that you've got at the bank. Let's say you're
a twenty percent tax bracket, six percent rate of return, okay,
and every year that you make some interest on your CD,
(26:36):
you pay tax on the interest. I'm saying twenty percent,
So instead of making six percent interest, you're actually making
what less right, and every year it looks like you're
making it. Boom, You got to pay the tax, right,
so three point eight percent four point eight percent okay,
that's the difference at twenty percent tax right over ten years.
(26:58):
That really adds up because the snowball doesn't snowball as well.
Every time you have pack some more snow on there,
they shrink it a little bit, whereas in the WROTH
or even the traditional your investment grows without paying tax.
That means that every year there's more and at a
(27:20):
higher interest rate, it balloons three times as much over
a ten year period. Okay. That's a big deal. That
makes the difference. And if you can take it out
when it's grown through triple in value right versus the
and then you take it out without paying tax again, glory, hallelujah.
Because to put it in the CD, you had to
(27:41):
pay the tax anyway. This is the point you had
to pay the tax anyway. You already paid the tax
on the money to put it in a taxable CD.
Why not do a wroth conversion? Right? And what you
do is it's a backdoor conversion. Ooh, backdoor. That must
be bad, right back doors. Every house has a backdoor.
What's so bad about a backdoor? Nothing? Okay. What you
(28:03):
do is you put it in the traditional IRA, and
then you convert the traditional to a wrath. That's what
you do. Tax paid dollars into the traditional IRA, then
you do a roth conversion. There's a separate thing up
to seventy seven thousand dollars if you're dealing with a
four oh one K that allows that allows conversions. So
(28:26):
why are we bringing it up now? I'll tell you
why we're bringing up right now. We're bringing up now
because the big beautiful thingy there, that thing is taking
it away. This is the last year you'll be able
to do it. If you've been thinking about it, if
you've been reading a financial newsletter, if you've been watching
Who's the guy who gets everything wrong all the time? Cramer,
(28:47):
that guy on the TV right, whatever he tells you.
It's a sure thing. Sell sal right, Oh this is
really going to tank. Bye bye. Whatever he tells you,
do the opposite, Okay. I don't know if he talks
about I don't watch the guy, but I've just heard
about him. Anyway. If you've been thinking about doing a
(29:08):
roth conversion, all right, a backdoor conversion to a to
a roth ira And because because you've been crying in
your beer, I can't do a rough because I don't
have you know, I have too much money or too
much income or not enough of this and too much
of that or what have you. If you've been denied,
(29:28):
and many many people have been denied, you can't do
a direct wroth, okay, but you can almost you can
always do an unlimited backdoor wroth. That's that's going away.
Get a question, comment or concern six one, six, seven, seven, four,
twenty four, twenty four. I'm David Carrier, your family's personal attorney.
(29:55):
There it is, welcome back to the David Carrier Show.
Cha cha chick. Change is that's right, that's what we're
talking about today. Changes from the big beautiful abomination when
well it's nobody's salvation, that's for sure. But there's all
kinds of stuff in there, and it's like any any
grab bag like like this, there's there's gonna be some
(30:17):
good stuff, there's gonna be some horrendous stuff, and people
will be arguing about the ultimate impact forever in a day.
But what you need to know is that if you
have been thinking about any kind of a IRA conversion,
and I know you're thinking about it because I get
(30:38):
people approach me all the time about it. But you know,
when we're when we're going through doing the estate plan,
people talk about it, these these these roth conversions as
more about Yeah, I was thinking about that. Oh yeah,
I'll tell you what it's like. You know what it's
you know what it's like. It's like doing your estate
plan correctly. That's what it's like. That's exactly what it's like.
(31:01):
It's like you've been talking about. You know, it's a
good idea. Oh yeah, protecting my assets from my kids,
oh yeah, not going broken the nursing home, oh yeah,
having everything set and ready to go. Oh yeah, not
being por treated as a pathetic loser by generations to
come because I didn't get my stuff in place. Oh yeah,
all that stuff. Oh oh, and these guys actually follow
(31:22):
through instead of leaving me to my own devices, which
we know fail like all the time. Yeah, I'm going
to get around to that one. But the well, now
you have a reason to okay, because the big beautiful,
the big beautiful bigfoot there what did they call? What's
(31:44):
the isn't there a sasquatch? That's right, the big beautiful
sasquatch is about to sit on your head or they
sit on your Dora me. And if you've been thinking
about doing one of these roth conversions, backdoor conversions, you've
only got to December thirty first, number thirty first to
do it, Okay, less than six months, So the gloves
(32:05):
are off, the clock is ticking down, and this will
be another one of those things that you will look
back and say, Boy, I'm glad I listened to the
David Carrier Show because that guy set me straight. And
that's why we're not going broken the nursing home, and
that's why our kids are not wastrulls. Yeah, that's why
we didn't lose all the money to you know, the
(32:26):
ex spouse or whoever. Aren't we glad that we have
an estate plan that actually works. Oh boy, that'd be
just super duper. You'll be able to say that unlike
and then look pityingly on all the poor people who
didn't do it. So this is your wake up call.
This is your alert. And it's not a This is
(32:48):
not a primarily a state tax planning technique, right, because
i'm how you do with the estate tax. The estate
tax is now raised to fifteen million dollars per person
for a married couple. Right, So for a married couple
you get to combine it so it's thirty million, so
you don't have to worry about that. But here's what
(33:09):
happens nine times out of ten, ninety nine times out
of one hundred, whatever it is. And you should talk
to your financial advisor, right, who may lie to you
and tell you, oh, because I hear this sometimes rarely
usually financial envinor pretty financial advisor pretty candid about the
fact that the kids will absolutely smash the pinata of
(33:31):
your IRA before you even reach room temperature. I mean,
the flowers won't have wilted on the grave before the
money has gone out of the IRA. And the problem
with that is especially with traditional if it's traditional, then
it all gets taxed at once. Okay, this is how
your kid manages to pay forty plus percent if you're
in Michigan thirty seven percent federal plus the State of
(33:55):
Michigan tax plus city grand rapids or wherever else you are,
if you've got more a local income tax as well. Right,
that all adds up, right, and that all gets gone
from your IRA. Whereas the kid could have taken it out.
They could have let it grow for ten years and
taken small required minimum distributions based on their own age
(34:16):
over the ten years. They could have done that, but
they didn't do that, and then take a lump sum
at the end. But here's the thing. At the end,
the lump sum will be three times as big. And
it's like, oh, gonna pay all that tax on the
big lump sum. Yeah, I know, But your kid still
gets three times the money because if they take it
right now, it's gonna jack them into that bracket. Anyway.
Are you with me on this? This is very very basic,
(34:41):
middle class, regular folks type stuff. Because you've got two things.
If you're like most folks that I deal with, you've
got two things. You've got an IRA and you've got
a house, and you're so cavalier with both of them.
For things that took you thirty forty years to build up.
And it's like me, you know, oh, well, now the
twenty five thousand families have worked with us, they took
(35:02):
it seriously. But there's got to be more than twenty
five thousand families in this area. We've got to take
it seriously. I don't know, but if you're one of them,
you gotta be thinking about this stuff. And first and
foremost you've got to be thinking about it for you,
for your spouse. But then, right, the benefits that you
leave to your kids. See if you set things up
(35:25):
in such a way that the kid loses forty percent
of it, right, and yeah, the hassle of probate and
blah blah all the rest of it. But or if
you need long term care so you don't even have
an IRA anymore. A kidding me, that is routine. That's
what happens. It doesn't happen. None of the stuff has
to be as bad as it as it is now.
(35:48):
The planning that we do for that, that's not going away.
But the wroth is going away. The conversion, the if
you're gonna put money, you know, tax paid dollars, you
want to put it in wroth. I mean you don't
qualify because the numbers are so low anyway, right, it
almost doesn't seem worth it. Well, you can put and
you've already paid the tax on this money, right, the
(36:10):
investments that you have, just regular CDs and what have you.
We've already paid the tax on it. Okay, So throw
it into a traditional IRA, flip it from there, convert
it into your wrath. Now, any money that any additional
money that you take out of it, you're not going
to pay. You're not going to pay any tax on it.
So live for the next twenty years. Right, spend your
(36:34):
social security, take your r and ds from the traditional IRA,
pay the tax on it. Great, Let that wroth the
conversion that you just did. Let that one build up.
You know, we're gonna your plan is going to save
you on the long term care. Don't worry about that.
That's money that you can leave to your kids. And
(36:57):
number one, they're not going to blow it because when
they take it, they're not going to pay the forty
percent because there is no tax, right and there's a
special trust that we can do, so it locks it
up so the kid doesn't get it for ten years.
But when the kid gets it, and we get the
require memor distribution in the meantime. But but except for emergencies,
that money. Now you're leaving triple triple to your kids,
(37:18):
to your grandkids whoever, based on you know, assumptions about
their tax rates and the rate of return and stuff.
And maybe it's more than triple. We've seen that too.
But the key is, the key is you've got to
December thirty first to get it done, which is a
good reason to get it. What's the word started. You
(37:39):
don't get to finish unless you got to You gotta
start to finish. Does that make sense? And fortunately we
made it very easy for you. You knew the pitch
was coming. You made it very easy for you to
go to the website Davidcarrier Law dot com and on
the website Davidcarrier Law dot com just sign up for
one of our three secrets workshops. The process started. There's
(38:01):
ways to do this stuff. I'm not kidding. You've been
listening to the David Carrier Show. I'm David Carrier, your
family's personal attorney.
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