Simply Money presented by Allworth Financial

Episode Transcript

Speaker 1 (00:00):
There's a huge accident on the Parkway this morning. Another
update coming up. Here we go again fifty five KRZ
the talk station.

Speaker 2 (00:14):
Tonight, the state of the markets, the economy and your portfolio.
As we have officially eclipsed the halfway mark in twenty
twenty five, you're listening to Simply Money and presented by
all Worth Financial. I'm Bob sponsorer along with Brian James. Brian.
It is amazing to just ponder the fact that twenty

(00:35):
twenty five is now halfway over. It's amazing how time
flies when you're having fun and getting older or both
at the same time.

Speaker 3 (00:45):
You know, Bob, If I were Rip Van Winkle and
I fell asleep on January first of this year, and
I just woke up this morning and I looked at
the markets, I would go, wow, must be a nice
quiet year with absolutely nothing going on, nothing to worry about.
We're all just kind of skipping through the with the
butterflies and the unicorns.

Speaker 2 (01:01):
Right. Absolutely not. We've been through. We've been through an.

Speaker 3 (01:04):
Awful lot of stuff. The market has been extremely volatile
this year. As we're sitting here right now, things are
looking okay again, as long as you ignore the headlines
and all the vitriol and the hate that flies back
and forth all day long.

Speaker 2 (01:15):
Yeah, despite that two week stretch in April where you know,
Liberation Day took hold and caused you know, a couple
of weeks of craziness and volatility, the markets actually look
really good right now as we approach the second half.
Let's just throw out a couple quick numbers. The dal
Jones edded the first half of the year up three
point six percent, the Nasdaq ended the first half of

(01:36):
the year up five and a half percent, and the
good old broad Index are tried and true S and
P five hundred ended the first half of the year
up five point five percent. Brian, we talk about it
all the time, the markets over the long term average
I don't know, somewhere between nine and ten percent. Just
leave it alone, and leave it alone and let it go.

(01:57):
And I'll be darned if you don't take these number
we just read off and multiply times two. It projects
out at about ten percent for the year. Funny for that.

Speaker 3 (02:07):
Works better than anything else you're going to find over
the long term. That doesn't mean we're not jumping up
and down saying mortgage your house and throw everything in
the market.

Speaker 2 (02:13):
That's not the point.

Speaker 3 (02:14):
But at the end of the day, for the portion
of your portfolio that is geared toward keeping up with
inflation and helping you pay your bills over the remainder
of your life, you've got to have something in there.
Don't get married to the guarantees, those kinds of things.
Those things have their place, but they're not going to
help you with inflation. So I think that the interesting
thing to look at, though, Bob, is over the last
six months, we've really seen almost it's a tale of
two cities here, tail of two markets. We've seen the

(02:36):
best and the worst that the markets can be. So
you mentioned at the beginning of April or so, there's
a few weeks there where things got really bumpy. That
was kind of the most intense part of the tariff arguments.
At that point, the S and P five hundred was
down almost fifteen percent. The Nasdaq, which is they always
call it the tech heavy Nasdaq because it's most of
those big technology companies that we've been paying so much

(02:58):
attention to over the last couple decades, that was down
eighteen or nineteen percent.

Speaker 2 (03:02):
Both of those have now turned around. S and p.

Speaker 3 (03:04):
Five hundred, as you just said, is up up about
five percent. The Nasdak is also up about five percent
deep into the hole and then back out on top
and then some So we're now currently knocking on wood here,
knocking on.

Speaker 2 (03:15):
This fake wood here. We are currently back in growth mode.
We'll see if we get to keep it. Well, let's share,
Let's just kick this back and forth for a couple
of minutes. Why do you think things are doing so
well so far after all the volatility from back in April,
And I you know, I've got my reasons why I
think it's the case. What do you think Why have
things calmed down so much and recovered from what was

(03:38):
going on in early April.

Speaker 3 (03:40):
So the market runs on two things. It runs on
fear and greed, and in between those times we get bored,
So Jenry. Usually if you look at the market day
to day, it normally does a whole bunch of nothing. Up, up,
a little bit, down, a little bit. It's the it's
the really volatile times where the money is made and
where we tend to lose. But and when we had
that right when we had those scary headlines there in

(04:01):
early April, it did spook the herd a little bit
and we saw a lot of volatility as a result
of it. Now, underneath all of this, as we're sitting
here right now, there's still a relatively strong economy. Yes,
there's an awful lot of chaos out there, and if
we keep arguing, we're still arguing and fighting like we
are right now ten years from now, then that's not
going to be a good situation. However, when we remember
that all of the fighting usually results in some kind

(04:23):
of conclusion, because absolutely no one benefits from eternal chaos, Eventually,
cooler heads will prevail and we make intelligent business decisions
and we move on. That seems to be happening. Even
with these tariff arguments. People are coming back to the
countries are coming back to the table. We're coming to
some level and agreement, good, bad, or indifferent. And as
we always say, Bob, the market doesn't is not worried about,

(04:45):
you know, the scary headlines. It can pivot with whatever.
Companies will find way to make profits, but they need
to know what playbook to use well.

Speaker 2 (04:52):
And that leads into the point I wanted to make.
I mean markets, I don't care who's in the white house,
what's going on in the media, what have you mar kids?
Respond to A few things. Number one is earnings. If
companies are making more earnings and earnings are growing, that's
going to be good news for the stock market. What
causes profits to go up. Lower inflation, lower taxes, People

(05:17):
are employed, people have jobs, people are spending money. All
those things are happening right now. And if you went
into January and you just look from January to today,
of all the things everyone was worried about or thought
was really bad was going to happen. I mean, we've
had conflict in the Middle East. We've dropped bombs on Iran,

(05:37):
We've had trade wars and rhetoric. We've had uncertainty with
tax laws on and on and on, and extreme political division.
In spite of all that, inflation is relatively team. We
haven't had taxes go up. We're probably going to have
tax policy get passed here in the next week or
so that you know, makes these tax laws permanent. From

(06:01):
back in twenty seventeen, we're moving into second quarter corporate earnings.
I mean, in spite of all the uncertainty out there,
the economy marches on. Companies pivot country companies make adjustments,
they make money, people are employed, people are spending money.
Life goes on, and I think this is just real

(06:22):
illustrative of the point is do not pay attention to
these crazy headlines every day, because it will derail you
off of a sound long term plan.

Speaker 3 (06:33):
I still have people who talk about inflation as though
we are in that eight nine percent range from three
years ago, and that's just not the case anymore from
two or three years ago.

Speaker 2 (06:42):
I guess that is.

Speaker 3 (06:42):
But anyway, that's just not the case. We're not there.
But we've had it beaten into us that inflation is
a problem, it's a huge problem. Well, inflation is about
two point four percent right now, we've got we've only
got numbers through the first five months of the year.
We'll hear a couple of weeks, we'll hear what June was.
But so far inflation about point one percent, a tenth
of two percent month over month, year over year. We're
two point four percent then, more than we did in

(07:04):
May last year. So that means inflation is almost back down.
We wanted it two percent. That's what the Fed wants
to hear to kind of declare that the inflation dragon
has been slain, but it's almost like we're trying to
lose those last couple pounds of belly fat. We've been
stuck at two point four percent for a while now.
That is not terrible. We were a heck of a
lot lower than nine percent inflation. We are only slightly

(07:25):
higher than where we want to be. And at this
point it's kind of like, you know, what life happens.
This is not a thing to worry about so much anymore.

Speaker 2 (07:31):
You're listening to simply money presented by all Worth Financial.
I'm Bob Sponsorer along with Brian James. Back to that
point on inflation. I know, you know the headline CPI
is at two point four. We know the Fed looks
at core CPI and that's trending it more at a
two point eight percent rate, and I think that's why
the Fed has been reticent to the lower interest rates.
You know, we'll leave that topic alone for now, but

(07:53):
you know, looking ahead, the Fed as indicated the possibility
of maybe two rate cuts later on in twenty twenty five. Brian,
we headed into the year expecting five rate cuts. So
the fact that that's down to two or one. Some
people have said maybe even zero the fact that the
markets are doing fine and are growing, I think makes
your point that inflation is not at a point where

(08:16):
it is getting in the way of good sound fundamental
economic growth. Would we like it lower, sure, I think
the housing markets should could could sure use a little
jolt here if we lower rates. But other than that,
things seem to be working pretty well.

Speaker 3 (08:31):
Yeah, so under that and that's and that brings us
back to the point of this, of this whole topic here,
which is you know that the market, given all the
crazy headlines, the markets are actually still up. Hopefully you
weren't one of those folks who panicked when the tariffs
talks got crazy and sold out, went to cash and
made that flight to safety we always hear about when
the markets get bumpy. I always wonder who is actually

(08:51):
doing who is flying to safety right now? None of
my clients are panicking when these headlines come out, and
I'm certainly for the ones who are nervous.

Speaker 2 (08:57):
We're having conversations about long term so on so far.

Speaker 3 (08:59):
So I always wonder who these people are who are
flying to treasury bonds and cash and goal and what
are they going to say two years from now when
they've had the time their way back in.

Speaker 2 (09:07):
Yeah, let's pivot for a few minutes on what people
should be doing here at the mid year. Mid year
is a good time to just take an overall look
at your portfolio now that volatility is calmed down at
least for the short term. Now is where you can look,
you know, at a thirty thousand foot view of what
your overall plan looks like. Does it make sense to rebalance?

(09:27):
Have you had some good growth in some of your
stocks or some of your stock ETFs. Now's a good
time to trim some of those gains, get your portfolio
back in balance. You know, ask yourself, how much money
have I made? Am I still on track? You know?
Compare your returns not just to the overall market, but
to your personal goals and the goals of your financial plan.

(09:49):
Don't just look at year to date numbers, but also one,
three and five year average numbers in terms of return,
And don't overreact to short term moves. Look long term
on your asset allocation strategy, and along with that, reassess
your risk tolerance. If you did get super nervous back

(10:10):
in April, it almost had to be talked off the ledge.
Now that things are recovered, Ask yourself, am I more
aggressively allocated? Then maybe I really want to be. If
that's the case, now's the time to ratchet down that
risk exposure. If that's something that your playing will tolerate.

Speaker 3 (10:27):
Yeah, and one other thing out there, some of you
may be out there if you were thinking this in
this situation. If you were in April kicking yourself because
the market took a huge hit and you were going
to do something because you got to build to pay
I don't know, pay off a loan, do some to
the house, got to buy a car, whatever, but you
needed to take that out of something that's in the investments. Well,
first of all, don't think that way. You should have
an emergency fund. We should be planning ahead for all

(10:49):
this stuff. But second of all, if that was you, well, congratulations,
you get a bit of a reprieve. You got all
that money back and then some, So don't look to
keep writing it. Consider yourself lucky. If that money is
coming out, take it out now. Will the market's at
an all time high?

Speaker 2 (11:02):
Yep? Absolutely, here's the all Worth advice. A midyear portfolio
check up is less about chasing performance and more about
just making sure your investment plan still fits your life today.
Coming up next, a new study suggests in my time
to rethink one of the most common investing habits. We're
going to talk about that. You're listening to Simply Money,

(11:24):
presented by all Worth Financial on fifty five KRC the
talk station.

Speaker 1 (11:29):
Whatever you want to do, honey.

Speaker 4 (11:31):
You cannot say whatever you want to do, honey.

Speaker 1 (11:33):
The Ramsey Show.

Speaker 4 (11:34):
I'm not taking the responsibility for this whole thing by
myself more financial advice. I make better decisions with the
other half of my brain plugged in called her. I
don't want to do everything I want to do, saving
you cash and maybe your marriage.

Speaker 1 (11:50):
You're gonna be with make weekdays at set. I trust
my virtuous wife and I have had no lack of game.
On fifty five KRC is the talk station.

Speaker 2 (12:00):
The best way to wake up in the morning, A
hot cup of coffee and Brian Thomas Tomorrow from five
till nine am on fifty five KRC D Talkstation.

Speaker 5 (12:10):
All Worth Financial a registered investment advisory firm. Any ideas
presented during this program are not intended to provide specific
financial advice. You should consult your own financial advisor. Tax
consultant or a state planning attorney to conduct your own
due diligence.

Speaker 2 (12:29):
Good Money presented by all Worth Financial on Bob Sponsorer
along with Brian James. Hey, if you can't listen to
Simply Money every night, subscribe and get our daily podcasts.
You can listen the following morning during your commute to work,
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And if you think your friends could use some financial advice,
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(12:51):
on the high Art app or wherever you find your podcasts.
Straight Ahead at six forty three, we go deeper into
when it's time to change your long term financial plan.
All right, Brian, We've got some headline news from Kroger tonight.
Interim Kroger CEO Ron Sargeant said on June twenty six

(13:12):
that the real retailer wants to ramp up some new
store construction in twenty twenty six, and that's coming off
the heels of some layoff announcements earlier. So it doesn't
look like Kroger's done growing and modernizing. They're just you know,
re shuffling the deck, so to speak, positioning themselves for

(13:32):
future growth.

Speaker 3 (13:33):
You know, we're so fortunate to have Kroger here based
in town, one of the largest grocers on the entire
face of the earth, and that would include the universe too.
I always wonder what would Barney Kroger think if he
was standing at the base of that tower downtown with
his little vegetable cart looking up at it. But anyway,
appreciate those of you out there who keep us fed.
So Kroger has announced that they want to shutter sixty
unprofitable stores over the next year and a half and

(13:55):
planning to reinvest those savings back into the business. Now,
some people might look at this and they might just
kind of glance at the idea all Kroger is shutting
stores down. That's not that that must be business isn't good.
They're having to kind of retrench and all that kind
of stuff. This isn't really the case. They're simply making
the company more profitable.

Speaker 2 (14:12):
Now.

Speaker 3 (14:12):
I hope these are in places where that have other
alternatives for groceries. You know, we never want to hear
that some places, some neighborhood has lost its groceries or
that kind of thing. But unfortunately Kroger has a duty
to its shareholders. It has to do what it can
do to make sure that the businesses is profitable and
is healthy going forward. And groceries are a razor razor
razor thin margin, about as thin as you can possibly get.

Speaker 2 (14:32):
They got to get it right. Yeah, sometimes we all forget,
and I know I've forgotten until I've done a little
traveling and then spend some time out in Colorado and
see like King super stores and all that. That's all
part of Kroger. So, I mean, Kroger is active in
thirty five states now and the district of Columbia. So
they're talking about store closings that amount to just two

(14:54):
percent of its total store volume of over twenty seven
hundred store nationally. So this is not a big change,
not a big move. None of the stores in Cincinnati,
Northern Kentucky, or Dayton are going to, you know, be
shut down. So again, this is just some shuffling of
the deck and modernizing some stores that need a little upgrade.

(15:16):
We're a little spoiled here in Cincinnati.

Speaker 3 (15:18):
We get to see the crown jewels of what a
Kroger's supposed to look like as they tend to build
the prototype stores here. But I'm thinking of when I'm
down in Red River Gorge or something like that, and
you stumble across the world's tiniest Kroger down there. Lovely people,
But the stores down in those places don't look like
the ones we're used to here.

Speaker 2 (15:32):
Well, maybe when they redo that store, they'll put indoor
plumbing in an indoor bathroom.

Speaker 3 (15:37):
It's not that bad. They're just small, They're just smaller.
All right, people, Let's move on before I get myself
in trouble.

Speaker 2 (15:43):
All right. Tonight we're diving into a new study from
Vanguard titled the Dividend Reinvestment Puzzle. Brian, I want to
get into this. This is a very interesting topic to cover,
and I have to suspect a lot of people that
listen to this show have you know, reinvested dividends for years,
if not decades. Vanguard has a new study out on

(16:05):
is this a good thing or not? Yeah?

Speaker 4 (16:07):
So?

Speaker 3 (16:07):
And for some reason, for the last couple of weeks,
I've talked to a lot of prospective clients who come
in with that notion that the idea that I want
to own a bunch of stocks that spit out a
bunch of dividends, and I want to live off of them,
because then I'm not spending my principle. And I remember
that Bob from twenty thirty years ago as well as
my grandparents talking about it, and I think it made
a lot of sense at that time. But you know,

(16:28):
Vanguard's own study is starting to is looking at the
kind of things that says, maybe that's not the greatest idea.
So so with the cons of this, when you're automatically
reinvesting your dividends, you're buying more of the same stock
or the same fund, regardless of the current valuation or
your portfolios allocation. These might not be stocks that you
would look at new if he didn't already own them,
you might not want to buy more. Well, dividend reinvestment

(16:49):
means you are buying more, whether it's their companies in
a good situation or not well.

Speaker 2 (16:53):
And I have to think that, you know, when Vanguard
talks about a con of dividend reinvesting, I think they're
talking about the people, like you said, they've they've had
this stock for years and years and years, and it
probably makes up a very large portion or percentage of
their overall portfolio. And yeah, buying too much of even
a good thing can cause you to be underdiversified and

(17:16):
inadvertently subject your portfolio to too much volatility if that
one company happens to you know, have a hiccupper two.

Speaker 3 (17:24):
Right, and not all companies. It's it's tough to have
a truly diversified portfolio and focus on your dividend payers.
Your dividend payers tend to be your biggest, oldest, blue
chip type companies that have the ability to pay out
some of their profits in the form of a dividend,
and they use that to attract investors. If I'm a
big old company and I've got good cash flow and
a solid product line and all that stuff, then but

(17:46):
I don't have a great sexy growth story, you know,
then I might have to you to to say, hey,
here's what you know. We're good, we're gonna be around
for a while, and we're gonna give you a little
piece of the action. Versus a company like you know,
for example, Apple is a great example of a company
where you can say there's a lot of money goes
into research and development. Apple does technically pay a teeny
tiny dividend, but that's really for show. I think nobody

(18:06):
buys Apple because of the dividend coupons. But anyway, they
put a lot of money they instead of paying a dividend,
they reinvest all of that into R and D and
new products that can come to market. So if you
decide you don't want that, you want all dividend payers,
you're going to wind up with a portfolio that is
heavily weighted towards some industries and you're going to miss
out on others that can be really, really profitable over time. Well,
and if you overtilt your overall portfolio to value stocks,

(18:31):
I mean, that's really what we're talking about here. For
the most part, these big dividend players, you're not participating
in some of these big growth sectors like AI or
semiconductor stocks or things that are really growing. And that's
where you want to make sure.

Speaker 2 (18:46):
And I think this is the point Vanguard's trying to
point out here, just don't let all the benefits of
dividend reinvestment cause you to be overweighted to sectors or
industries that don't expose you to to true growth. That's
going to allow that portfolio to get you the returns
that you really should be getting out of a broadly

(19:06):
diversified portfolio, right, and don't convince yourself that there are
tax benefits.

Speaker 3 (19:11):
There could be if you have a significant sum of
money outside of IRA's, outside of four to one k's,
then yes, dividend income can be a little more tax efficient.
But on the other hand, if you are like most
people around here, we're a fortune five hundred city, right,
we all work for big companies, not all. Most work
for big companies or smaller companies that support those big companies. Therefore,
we have employers, we have four to oh one k's,

(19:32):
it's all tax deferred. That means the tax the more
favorable taxation you get off of dividends doesn't help you
because you're taking money out of your IRA or four
one K at ordinary income rates.

Speaker 2 (19:41):
Anyway, you're listening to simply money presented by all Worth
Financial on Bob's spondseller along with Brian James. Just so
we don't come across as being anti dividend reinvestment, let's
make sure we touch age old principles of what does
work and all the benefits of the dividend reinv investing,
because they are plentiful, the benefits correct.

Speaker 3 (20:03):
And we're not talking about going all in on anything.
But when people come wanting a dividend portfolio, they tend
to have a notion that this will act like kind
of like a CD or a bond, where it'll just
sped out income and I won't have to worry about it.
And that's not the case. These stocks can be just
as valatile as anything else, and they are really really
impacted by things like interest rates.

Speaker 2 (20:19):
Here's the all Worth advice. Automatic dividend reinvestment may not
be for everyone. With you your entire portfolio, investors should
consider personalized strategies that align with their financial goals and
tax situations. Coming up next something that many people never
even consider when doing estate planning, and that's taxes. You're

(20:41):
listening to Simply Money presented by all Worth Financial on
fifty five KRC the talk station Shuke.

Speaker 1 (20:49):
This is fifty five KARC, an iHeartRadio station.

Speaker 2 (20:57):
You're listening to Simply Money presented by all Worth Financial
on Bob Sponsorller along with Brian James, joined today by
our estate planning expert, Dan Perry from the law firm
of Wood and Lamping. Dan, thanks so much for being
with us today and I know you want to talk
about a very loaded topic, and that's estate taxes.

Speaker 4 (21:16):
There's been a lot of talk this week about the
Trump tax bill. You know what's in it, what's included,
And any time Congress proposes any kind of tax change,
in my world, people always talk about the depth tax
or the estate tax. So the estate tax is a
tax that is assessed on the total value of your

(21:37):
assets which transferred death to your heirs or beneficiaries you know,
including you know, your property, your financial accounts, everything in
your name, And as of twenty twenty five, the estate
tax only applies for a state's work more than thirteen
point ninety nine million dollars per individual or twenty seven
point nine to eight million for married couples who elect

(21:58):
what's called portability. Upon the death of the first spouse.
You see, you can leave an unlimited amount of property
and assets at debt to your spouse without incurring estate taxes. However,
this means that that a state tax exemption I just
mentioned is more or less wasted due to the death
of the first spouse, and portability permits the transfer that

(22:21):
unused a state tax exemption to the surviving spouse, which
creates a twenty seven point nine eight million dollars state
tax exemption for that surviving spouse.

Speaker 3 (22:30):
As I'm dealing with a situation where related to portability
as we're speaking, and then then and the thing that
occurs to me. I'm not an attorney, and thankfully we
have people like you to help us through these situations.
But portability in my brain used to be called an
A and B bypass trust. I know those are very
different things and are not as related as I'm pitching
them to be here, But can you can you kind
of weigh in on if I do nothing, I can
simply file an IRS form and I've and I've taken

(22:51):
advantage of both tax credits. How is that different from
the old A and B bypass approach.

Speaker 4 (22:56):
So yeah, there's in order to gain to gain portability,
you have to file the state tax return and elect
portability upon the death of surviving spouse. The old ab
trust of more or less is directing the trustee upon
the first spouse's death to elect that before it's to

(23:17):
elect that portability. But it's very important to file that
estate tax return. There are time limits. You don't want
elect it. It can be wasted. Now with a state taxes,
the current is the current rate for estate tax. It
can be as high as forty percent, So as an example,
even a state worth fifteen million, only one point zero

(23:40):
one million above that exemption is going to be taxbule. However,
this high exemption is currently temporary unless Congress acts it's
set to sunset or expire down to approximately seven million
per person starting twenty twenty six, subjecting more estates to
the estate tax. Under the Biden administes, there was a

(24:00):
discussion of reducing the estate tax exemption to three and
a half million, and the new Trump tax bill proposal
has discussion about raising that exemption to fifteen million per person.

Speaker 1 (24:12):
Now.

Speaker 4 (24:12):
In addition to estate taxes, certain states also have a
state taxes. Luckily, Ohio isn't one of them, Kentucky does
have what's called an inheritance tax. So unlike a state
taxes where which is going to be paid by the estate,
inheritance taxes are going to be paid by the persons
in inheriting those assets. The Kentucky inheritance tax can reach

(24:35):
as high as sixteen percent. Over Close family members such
as spouse's children, grandchildren, and siblings are exempt from that
inheritance tax, but it's important to watch out for inheritance
taxes if you are in a state where the inheritance
tax would apply. There are also a variety of ways
to limit estate taxes, and one of the most common

(24:56):
ways is with lifetime gifting. You can get gift up
to nineteen thousand dollars per person annually without touching what's
called your lifetime lifetime exemption from the gift tax. You see,
you can get away thirteen point ninety nine million dollars
in taxable gifts during your lifetime, and that would be
a gift in excess of that nineteen thousand dollars per year.

(25:19):
But every taxable gift you make reduces your lifetime exemption
from the estate tax, so you need to be careful.
So for example, a couple could get thirty eight thousand
dollars to each child or grandchild nineteen thousand times too
without even making any taxable gifts. Another way is by
transferring assets to an irrevocable trust to remove those assets

(25:43):
from a person's taxable estate. And one option is with
what's called an irrevocable life insurance trust, and that is
a trust in which the death benefit pays upon your
death will be owned by the irrevocable life insurance trust
what we call an islet, and this can be by
a cash free benefit to your beneficiaries named in the trust,

(26:03):
but it can also be used to provide liquidity for
anticipated federal state taxes. So I've represented many family family
farms in the past, and an issue that's common in
that situation is that we have a taxable estate, but
there is very little liquid assets, and the surviving family
doesn't want to be put in a situation to sell

(26:25):
the family farm just to pay the estate tax. And
that's where an islet can be very beneficial and provide
that necessary liquidity to pay those anticipate in the state taxes.
Another option is with charitable giving, where you can donate,
where donating to charities is going to reduce your state
and reduce your taxable state as well as offer some

(26:47):
income tax deductions. Charitable trust can also be used, and
one common example is what's called charitable remainder trust, and
that's where you gift assets into a trust, you get
an income tax seduction to the year you make the gift.
An income stream comes back to you for a set
number of years, and at the end set number of years,

(27:10):
the balance of that trust goes to the charity that
and that gift is removed out of your taxable estates.
And those are just a few examples.

Speaker 2 (27:18):
All right, Dan, As we get through the second half
of twenty twenty five here, we could be just hours,
if not just days away from some kind of new
tax bill getting passed through Congress. What are you seeing?
I know you guys follow this stuff closely. What are
you seeing in terms of numbers for where that estate
tax exemption on the federal side? Where do you think

(27:39):
that's ultimately going to settle out?

Speaker 4 (27:42):
So as of right now, if Congress does nothing, which
is possible in twenty twenty six, we're gonna have a
seven million dollars state tax exemption per person, portability will
still exist. So if family could pass fourteen million without
a state taxes, the Trump tax bill has put in
a proposal of a fifteen million dollar exemption. At what

(28:06):
we're seeing right now is that there you know, there's
a lot of negotiation and discussion between both political parties
that and I would be surprised if we settle on
a fifteen million dollar exemption. What we're what we're thinking
is likely going to happen is somewhere between seven million
and fifteen million dollars is going to be the exemption.

Speaker 2 (28:26):
What's your best advice now for families how to plan
here during the second half of twenty twenty five based
on what we know and I guess just as importantly
what we don't know.

Speaker 4 (28:37):
So with the only guarantee right now is that the
federal exemption is going to be cut in half, going
to be cut in half if nothing happens. So twenty
twenty five is a critical year to engage in a
state tax planning portability again unless that surviving spouse use
the undas spouse's unused the state tax exemption. And you

(28:58):
know what we're thinking family should do is they may
want to lock in that current thirteen point nine nine
million dollar exemption and get you know, essentially fourteen million
dollars out of their estate before this state tax exemption expires.
But with all this planning, you should also be reviewing
things annually because asset values can grow faster than you

(29:20):
expect and can push you over those exemption limits.

Speaker 2 (29:23):
All right, great stuff is always from Dan Perry, our
estate planning expert from the law firm of Wood and Lamping.
Thanks so much.

Speaker 6 (29:30):
Dan.

Speaker 2 (29:31):
You're listening to Simply Money, presented by all Worth Financial
on fifty five KRC the Talk station.

Speaker 1 (29:38):
The natural world develops slowly forming over the course of millennia.
In our world developments, we have a developing situation that's
happened fast. The latest developments developments. This is just developing
out of the Middle East. Their ability to develop a
nuclear weapon. It's been neutralized, But for how long? For

(29:59):
what's developed?

Speaker 6 (30:00):
Quite a striking development now.

Speaker 1 (30:02):
Right now it's developing. Fifty five krc D talkstation. His
Ryan talm Us here with stingions are welcome to here.

Speaker 2 (30:10):
Why do we keep letting thousands of people come over
and do nothing about it?

Speaker 1 (30:13):
My family's safety is at risk. Fifty five KRC the
talk station.

Speaker 2 (30:22):
You're listening to Simply Money becauseented by all Worth Financial
on Bob Sponseller along with Brian James. Do you have
a financial question you'd like for us to answer. There's
a red button you can click while you're listening to
the show right there on the iHeart app. Simply record
your question and it'll come straight to us. Financial planning
should not be a set it and forget it proposition.

(30:44):
It is a dynamic framework that must evolve when life's
life's biggest changes come down the pike, Brian, We're going
to talk tonight about looking at some of what these
life changes are. We're going to talk about what happens
in people's lives and what should signal some very important
changes as we monitor one's lifetime financial plan.

Speaker 3 (31:07):
Yeah, Bob, And in a perfect world, everybody would have
built a financial plan, you know, either on their own
with some knowledge and a good amount of work, or
with a professional to help you kind of figure those
things out. But ideally, and again life doesn't work this way,
But ideally you've done that in advance of any of
these crazy topics happening to you. And that's important because
that way you would have set a kind of a
baseline to know, here's the path I was on now

(31:28):
with whatever this new information is. Here was the impact?
And I found when when people have done this, then
they understand that when they can see it, then the
impact is usually not nearly as much as they thought
it was going to be. So first one, you know,
here's here a curveball that kind of comes out of
nowhere is of course, divorce. So obviously, you know you
may have made your financial plan with the assumption of
two incomes and to people helping carry the weight and

(31:51):
so forth, and sometimes, of course things just don't kind
of work out.

Speaker 2 (31:54):
Uh.

Speaker 3 (31:54):
And the divorce is setting aside all the emotional stuff
that's enough weight to carry. But there's a lot of
moving parts to the different things. You're going to have
to decide on who gets what. And it's one thing
to decide who gets the house and who gets the
dog and all that, but the more complicated stuff, there
are executive compensation packages out there that one spouse might
have gained during the marriage. The other spouse will have

(32:15):
some kind of entitlement to that, but it can be
tied up. It can be super complicated out there. There's also,
you know, for certain investment structures there is carried interest,
which you know that's a common thing found inside of
hedge funds and more complicated investments not easy to split up.
Closely held businesses you might have in the family generational
trust that maybe you set up for kids and sometimes
grandkids who'd only even exist. There's an awful lot of

(32:37):
moving parts to these different things, and again a lot
more complicated than who gets the dog.

Speaker 2 (32:42):
Yeah, and then post divorce. You know that I run
into this. Thankfully, most of my clients have not gone
a divorce. I haven't had to deal with this personally
a lot, but it's during the times I've had to
deal with it. You know, there's been some surprises that
come up, and one of them is post divorce estate planning,
people just forget, as you said, with all the emotion
involved and all the sense of loss and all the change,

(33:05):
people simply forget to update their IRA beneficiaries and beneficiaries
of the assets, leaving it to the airs that they
want to leave their assets to. Brian, I know you've
run across this. I run across this more times than
I want to remember. People leave there now ex spouse
as the beneficiary of the retirement plan, and it's just

(33:26):
because they got caught up and doing everything else and
they forgot to do some of this basic bucket intent.
There can be a lot of emotion going on here.

Speaker 3 (33:34):
Sometimes it's an amicable divorce and the new spouse gets
along with the old spouse and everything is fine. But
in a lot of cases, and this is where you know,
these are the water cooler stories that we talk about.
When you know an ex spouse is left as the beneficiary.
They don't get along, and sometimes it's to an extreme,
and now all of a sudden, the person who owns
the assets is getting questioned by new spouse as to

(33:55):
why didn't you ever take the name of your old spouse,
your ex husband, ex wife off this account. That person's
going to get a bunch of money, and it's not necessarily.
Don't assume that the courts will sort this out and go, well, no,
this person is your spouse now, so that's the one
who should get the money.

Speaker 2 (34:09):
That's not the case, because there are legit reasons.

Speaker 3 (34:11):
If we have a Brady Bunch situation, a lot of
times people will get married, but then they'll keep their
own assets separate within their own families. And if my
spouse is going to be caring for my kids, potentially
may I may want him or her to go ahead
and inherit my assets so that my kids are okay,
so they will not be assumed that the new spouse
is the one who gets it. If the name on
the piece of paper is different, that's who's going to
get the money.

Speaker 2 (34:31):
All right. Let's move on to another very common adjustment phase,
and that's just retirement, adjusting to a new stage of
life after you retirement. After you retire, hopefully people are
planning at least two to five years ahead of time
for this one. But even those that do, you know,
for folks that retire, it's not just you know, give

(34:52):
two weeks notice to your employer and be done. There's
a lot of stuff that needs to be done adjusting
to this new stage of life.

Speaker 3 (34:58):
Let's get into some of those things. Yeah, of course,
and again i'll go back to what I said earlier.
If you have a financial plan before retirement, then it's
going to be a lot smoother transition, because, yes, things
are going to change. Your income sources are going to change,
your spending is going to change. Your daily routines are
going to change. A lot of people tend to hide
behind that unknown. If I don't know what's coming therefore,

(35:19):
and I don't have time to think about it, I'll
think about it this weekend. And then they get busy
this weekend and they haven't ever done a financial plan.
Retirement comes along and they've never thought about it, and
it seems positively terrifying. It does not have to be
that way, So you want to make sure that you've
looked at, what does it look like to withdraw money
out of my investments versus someone else handing me money.
I have different types of tax treatments across my investments.

(35:39):
It's going to make sense to pull from this one
sometimes from the tax free versus the income taxable versus
the stuff I pay capital gains on, so it changes.
You want to make sure you understand what the different
impacts are, all right.

Speaker 2 (35:50):
In Another situation that definitely requires the adjustment of a
long term financial plan is, unfortunately, the death of a
spouse or a loved one. Brian Wheat, you know, have
this come up often, and I think there's some things
that you definitely should do, but there's also some things
you shouldn't do. And I've always counseled people when they've
lost a spouse or what have you don't make any

(36:13):
major decisions, major changes for at least six to twelve
months because you've got to allow things to just settle in.
But there are some things that you should do right away,
just to make sure that a state is settled correctly
and you've got your assets position the way they need
to be positioned. You know, when it's just one of
you moving forward.

Speaker 3 (36:31):
Yeah, some of the things that you need to be
thinking about is if there's an opportunity to clean cost
basis step ups, then you should go ahead and do
that too.

Speaker 2 (36:40):
All right, here's the all Worth advice. With the right
preparation and guidance, transitions are a chance to realign your
finances with what matters now. Coming up next, we've got
Brian's bottom Line where he's going to help us with
some advice on managing our personal real estate holdings. You're
listening to Simply Money, presented by all Worth Financial on
fifty five KRC the talk station Mark Levin.

Speaker 6 (37:04):
We have three hundred and twenty five thousand unaccompanied minors
that the Trump administration's trying to find because under the Democrats,
their media, and the Biden regime, somebody tuck them. Where
are they? God knows what's happening to them? Where are
the Democrats? Not a damn thing they're they're defending this
thuck car seea. They're trying to turn him into the pope.

(37:26):
He's a thug, that's what he is.

Speaker 1 (37:28):
Tonight at ten o six on fifty five KRS the
talk station, he was between groceries for my kids or
gas for my car. Talk about it here fifty five
krs the talk station.

Speaker 2 (37:44):
You're listening to Simply Money because I'm by all Worth
Financial on Bob Sponsorer along with Brian James, and it's
time for Brian's bottom Line where he's going to give
us some straight talk advice on managing our real estate holdings.

Speaker 3 (37:56):
So Bob stopping, I've heard this one before. We have
clients that will come in and they've retired, they've got
some assets, they're looking to kind of change things around
a little bit, and a lot of times they'll come
up with the idea of, you know what, never owned
real estate before, I'd like to try that. Get some
rental income going and you know, get property appreciation all
that kind of stuff.

Speaker 2 (38:13):
And you know, I feel like.

Speaker 3 (38:14):
The world exists of two people, two kinds of people.
There are people who buy one and cannot wait to
unload it, and then there are people who buy several
of them and understand how the game works and are
okay with the commitments to come along with it. And
I'm speaking of you know, real estate is not that
great of an investment from an appreciation standpoint. It's one
thing to look at what property was worth a long
time ago, what it's worth now. Yeah, you can do

(38:36):
math and see that that's a huge return. But along
the way you have to remember every year you're paying
property taxes, you're paying for upkeep. You have to replace
the heater and all the hot water heater and the furnace,
all that kind of stuff comes along, and that is
a drain on the portfolio. So but again that doesn't
mean don't do it. Just go in eyes wide open.
And I'm bringing this up because I just had this

(38:56):
conversation yesterday with a young person who's starting to go
down this path, a child of my client U and
one of their they're just getting started, not married yet,
and they're talking about I want to buy a property
somewhere and living it for five years, after which we'll
probably outgrow it with kids and so forth, and then
I want to continue to own it and then we'll
buy a bigger house for ourselves.

Speaker 2 (39:14):
And then we'll rent rent the other one out.

Speaker 3 (39:16):
And in my mind, I'm going, all right, you're at
that time, you're probably gonna have young kids three four
five years old. At that time, you're going to be busy,
and you're either going to need to learn how to
do the work when you're when your tenant calls and
says something's broken or you're going to have to pay
a property management company. Those property managing companies take about
ten percent out and when you factor in the fact
that you're probably going to have a mortgage in the

(39:36):
mix here, you might be looking at, you know, a
twenty year timeframe before you can really net out a
profit on this. So again, just go in wide eyes,
wide open. Real estate is not it's it's not an annuity.
It doesn't pay out like a CD without all those
moving parts. You know, you just want to be be
sure you understand and you want what the outcome of
those types of situations really is.

Speaker 2 (39:56):
I feel like I'm getting a free post mortem portfolio
analysis from Brian James, because what you just described was
my exact experience, Brian buying a condo that I actually
absolutely had to buy down in Florida in two thousand
and eight. And it was great. It was beautiful down there.
Loved it, but it was right when my kids were

(40:17):
getting into their active years playing sports. I didn't know
I was going to be coaching for years and years.
We could never get down there we just didn't have
time to get down there. But yep, we had to
hire a management firm to rent it. They take their
ten percent. You're still getting the tax bill. I'm getting
the phone call at you know, six in the morning
saying the toilet didn't flush. And yeah, after about a

(40:40):
six year period of this, you know, euphoria, it was
time to just sell the thing and move on. All right,
Thanks for listening. You've been listening to Simply Money, presented
by all Worth Financial on fifty five KRC, the Talk Station.

Speaker 1 (40:53):
The threat have I ran? The end of the Twelfth
Day War, cease fire, the latest news. I gotta get
Israel to come down now we're on the verge of
real peace in the Middle East. And your latest opinions
we should not be involved. We have to be involved.
I trust what President Trump is doing. They don't want peace.
It will never end. You're about it's the constantly changing narrative.
More news out of the Middle East, talk about it.

(41:14):
I have thoughts and questions. There's a lot of news
in the world right now. How our team is always
here to answer your questions. Fifty five KRC, the Talk Station,