Episode Transcript
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Speaker 1 (00:00):
Holding peaks. We'll be holding talks here. Talks are being
held all day.
Speaker 2 (00:06):
Got to keep talking.
Speaker 1 (00:07):
The good fifty five KRC the talk station.
Speaker 3 (00:17):
Tonight, more wrangling over FED policy, some positive news on
bank earnings, and the NASDAC continues to hover at all
time highs. You're listening to simply Money presented by all
Worth Financial. I'm Bob Sponsler along with Brian James.
Speaker 2 (00:32):
Brian.
Speaker 3 (00:32):
I couldn't help notice, you know, yesterday President Trump was
added again, resuming his public spat with FED Chair pal
after yesterday's inflation numbers came out begging him, urging him,
criticizing him about his reluctance to cut interest rates, and
he also mixed in some criticism of I guess what
(00:56):
is a very expensive renovation of the Federal Reserve building
as Chair Pale begins the final year of his term.
Speaker 4 (01:05):
Yeah, so this has been an ongoing saga here between
these two men, almost a bit of a bit of
a soap oper or, if you will. But President Trump
comes from the business world, of course, and he very
much wants the fiscal policy and UH and all of
the various financial decisions that need to be made by
the federal government that are owned by the federal government.
He wants them to be business friendly, and that usually
(01:26):
means that starts really with low interest rates. So his
his I think his focus is going to be in
the short run low interest rates will help, but will
help companies make money, be more expand profit margins and
so forth. So that's really been his his driving force,
and he has said this from time to time ever
since he was elected for the second time, as well
as throughout the campaign. Uh and so, but Chair Powell
(01:48):
has a different has a different job. He'd used it
a little differently. I think President Trump is looking again
in the very short term, which what can we what
could we do now that will make businesses more profitable
and therefore, you know, make everybody more money. Chair Power
is looking at if I make certain decisions now that's
gonna have some kind of an impact over the next.
Speaker 5 (02:04):
Two three four years. He has to.
Speaker 4 (02:06):
He must have a longer term timeframe than the one
that President Trump is currently looking at. So a bit
of an argument there between these two men. And Chara
Poweace tends to stay fairly quiet. He doesn't really speak out. Obviously.
The president is a little bit different, and so We're
gonna see how this plays out. But you know, there's
good and bad to both of these and the outcome
(02:26):
could go either way. But I don't think I don't
think we're looking at any changes here in the very
short run.
Speaker 5 (02:30):
This is probably going to be more of a Q
three thing, as CHERA.
Speaker 4 (02:33):
Powell wants to kind of sit around and wait to
see how things play out with all these tariff decisions
bouncing around.
Speaker 3 (02:40):
Definitely, And I think the other reason the President wants
rates to come down is because of the size of
our national debt. I mean, let's face it, if you
lower the cost of borrowing for the United States of America,
that helps with our budget deficit.
Speaker 5 (02:53):
And speaking of that, we.
Speaker 3 (02:55):
Did have, you know, like it or not, we did
have a twenty seven billion dollar budget surplus in the
month of June, the first time we've had a budget
surplus in years, mostly due to those tariff revenues, which
you know, a lot of people hate and it can
be inflationary and on and on and on, but we
did get a budget surplus in June. Meanwhile, I got
(03:16):
I got a bit of a chuckle here. I think
JP Morgan CEO, Jamie Diamond is part of his earnings
announcement yesterday. I think kind of played the role of
the adult in the room, and I know he and
the President have a great relationship. I think he even
felt it necessary to kind of weigh in here and
and just stress again in front of the media the
(03:37):
importance of maintaining the independence.
Speaker 5 (03:40):
Between the White House and the FED. I got a
little bit of a chuckle out of that. Yeah, no,
And I'm glad he's out there.
Speaker 4 (03:47):
You know, a lot of times CEOs of banks of
big banks aren't the most popular people in the world
because sometimes they, in their roles, have to say and
do things that can can run counter to you know,
your average person who's just trying to make ends meet.
Speaker 5 (03:59):
That's just it.
Speaker 4 (04:00):
But I'm very glad that he's not completely lining up,
that he is at least one voice who's willing to
stand up to the President.
Speaker 5 (04:06):
Again.
Speaker 4 (04:06):
I really think the President good, better and different. Focus
is on what gets me the most bang from my
buck right now? Immediately, How do I move things to
make people happy with me right now? And he really
never thinks about you know, down the road. We cannot
think that way. That's not how you run your own
personal financial plan. Right, if we go off of instant
gratification for every decision we make, that's going to cause
long term problems. So I'm very very glad that mister
(04:28):
Diamond is out there kind of pulling the reins in
a little bit.
Speaker 5 (04:31):
He's a very well respected voice.
Speaker 4 (04:33):
So another part of the headline here is there's about
a nine billion dollar budget decision package that's coming through Congress.
US Treasury reported a twenty seven billion dollar budgets for
plus in June. As you mentioned, that mostly is coming
from the tariffs. Part of that is, so we're seeing
and we're kind of seeing more developments there. So we've
got a new trade deal with Indonesia. There's now going
to be a nineteen percent tariff that they've agreed to.
(04:54):
That's down from the thirty five percent that was originally threatened.
And what they gave up what Indonesia's offering exchange, will
have access to copper, and there's also a deal where
Indonesia will be spending I think it's fifty billion dollars
on jets from Boeing and some other things like that.
So this is we're starting to see we're nowhere near
these ninety deals in ninety days. That was blooney to
(05:15):
begin with, but we are starting to see progress with
some of these smaller company country so hopefully we'll see
some more with our larger trading partners as time passes.
Speaker 3 (05:24):
Well, this is kind of a resumption of the theme
we talked about as recently as yesterday, Brian.
Speaker 5 (05:29):
I mean, these announcements.
Speaker 3 (05:30):
Get made, the quote unquote tariff letters get sent out,
and like it or not, I think this is just
the President's way of getting people to the table and
doing negotiating and getting deals done. And so yeah, we
get a deal done with Indonesia yesterday and lo and behold,
the EU calls and says, hey, we're going to send
(05:50):
our trade chief to the United States to resume talks
this week. Go figure, you know, with this thirty percent
tariff deadline looming on August first, look like we're actually
gonna get the EU and the United States in a
room and hopefully hammer something out here over the next
week or ten days, and there'll be some kind of
positive tariff number, but it'll be some number below thirty percent,
(06:13):
and everybody can claim that they negotiated and won. And
I think this is among other reasons why the stock
market has just gotten to the point now where it
just yawns over some of this tariff noise because it's
just all part of the ongoing negotiations between these various
countries right now.
Speaker 4 (06:32):
There's gonna be bumps, there's always gonna be turbulence ahead.
So one of the headlines I saw this morning with
my morning coffee here was that the Port of Los
Angeles reported record volumes eight hundred and ninety two thousand
units of shipping came through in June. And that's more
evidence of this rush to clear inventory before this before
the tariffs.
Speaker 5 (06:52):
Hit here in August.
Speaker 4 (06:54):
So and the experts are warning that this surge is
pretty temporary because it's of course driven by the perception
that things are going to get more expensive. So therefore
companies and buyers are pulling the trigger now to offset
future future tariffs there, So that that's going to be
something to pay attention to. And I'm also seeing some
headlines and some opinions on the on some concerns about
the US dollar. The short US dollar is right now
(07:17):
the most crowded trade. That's according to Bank of America
in euro exposures at a twenty year high. So this
isn't the I want to make it be clear about
some things. So when we hear the term week US dollar,
that is not necessarily a bad thing, right because a
week US dollar, you know, the word week of course
has a negative connotation to it, But what it means
is that US products are can be a little more
(07:40):
reasonable for foreign countries to buy. And remember that's what
this is all about. A lot of what President Trump
is doing is to bring back on shore American manufacturing
so that company, other countries, other companies will buy our
products versus the opposite. He's trying to turn the ship around.
So a week dollar will will make it more attractive
to them to do so we have a strong dollar,
(08:00):
that would mean that that our products are more expensive quality.
Aside whether they solve the problem or not, they're just
playing more expensive and countries will look to each other
versus the United States. So we do want you know,
it's not a bad thing that we have a weakening dollar.
That's that's sort of part of this puzzle of how
this all comes together to bring back on shore American manufacturing.
We don't want too much of it though, right So,
(08:22):
I always think of this in two ways. There's week
and strong, and there's also hot and cold. It depends
on the environment that you're in. If it's February, I
would like to be hotter. If it's August, I would
like to be colder. I don't want too much of
either one.
Speaker 5 (08:33):
Though, And we want Goldielocks just right. All right.
Speaker 3 (08:37):
Speaking of just right, we did get some major bank
earnings out this morning, and Brian, the numbers were pretty good.
Bank of America and PNC posted mixed results on the
earnings and revenue side, while Goldman Sachs just posted a
blowout number to the upside, largely due to trading volume
in the second quarter. And we all know we had
some volatility back in April and May, and these banks
(08:58):
love that it allows them the trade.
Speaker 5 (09:00):
And make money.
Speaker 3 (09:01):
Morgan Stanley had a slight beat on both earnings and revenues,
again citing increased trading volume for the quarter, and Brian,
I think the IPO market both of these banks talk
about things are starting to open up on the ipo
and deal making side, which is a good sign of
the overall strength of the economy. Companies are able to
(09:22):
sell and deals are getting done. Banks cited net interest revenue,
credit card revenue, which indicates consumer is still strong. And
even though we've got uncertainty with regard to tariff policy,
I think again, as we said before, I think the
Wall Street analysts are starting to figure out the game here. Yeah,
(09:44):
we're going to bounce around between thirty thirty five and
eventually get down to the high teens in terms of terrorists,
but that leads to more clarity and confidence in the
overall economy. So we're still very early on in earning season,
but so far, Brian, the numbers look pretty good.
Speaker 4 (10:00):
Yeah, that's not limited just to banking. Those are just
the headlines from today. But Johnson and Johnson also beat
their earnings forecast. They put up a two dollars seventy
seven cent number versus the two sixty eight that was expected,
and they raised their full year adjusted earnings per share
to ten eighty to ten ninety and confirmed that yep,
they're not going to change that dividend again. So overall,
right now for Q two s and P five hundred,
(10:21):
earnings are tracking around four point eight percent year over year.
Speaker 5 (10:25):
That's the slowest since Q four of twenty twenty three.
Right now, I'm just reading the headline here.
Speaker 4 (10:29):
I hate these headlines that say slowest sense or whatever,
and then they're comparing to something like a year and
a half ago.
Speaker 5 (10:33):
Who cares.
Speaker 4 (10:34):
But realistically it's a little slower than it's been in
recent history.
Speaker 5 (10:39):
But we're still on a good path.
Speaker 3 (10:41):
Coming up next, a healthy emergency fund is smart, but
too much cash. We're going to break that down in
terms of the hidden risks how to fix it. You're
listening to Simply Money, presented by all Worth Financial on
fifty five KRC, the talk station.
Speaker 6 (10:55):
Fifty five KRC Cincinnati, available everywhere with the heart radio
app now number one for podcasting fifty five KARC an
iHeartRadio station.
Speaker 7 (11:07):
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 3 (11:28):
You're listening to Simply Money presented by all Worth Financial.
I'm Bob Sponsller along with Brian James. If you can't
listen to Simply Money every night, subscribe and get our
daily podcast. You can listen the following morning during your
commute or at the gym or out on your walk.
Just search simply money on the iHeart app or wherever
you find your podcasts. Straight ahead of six forty three,
(11:51):
the one document every high income family needs, but very
few ever create. All right, Brian, we all know there's
great comfort in having a bunch of cash. It feels safe,
it's accessible, it never drops twenty percent like the stock
market can.
Speaker 5 (12:09):
But holding too much cash a comfort can come with
a big cost. Yeah.
Speaker 4 (12:13):
Oftentimes we see this when when people inherit cash or
somehow come into a windfall. And it's always interesting to me.
And this happens especially a little bit more when the
market is a little a little bit wobbly. But it's
always interesting to me that somehow in somebody's brain that
they know they inherited let's sa two hundred and fifty
thousand dollars in cash, somehow that has now become the
emergency fund. They didn't decide that they needed two hundred
(12:35):
and fifty thousand liquid. It just is liquid, and therefore
that's the amount they need, and they're hesitant to do
anything with it, which is always an interesting conundrum for
me because cash is of course the least efficient acid
you can have. It's important and you can put it
in things that get a return. But an emergency fund
doesn't need to cover, you know, five years worth of expenses.
We're really looking for more like a year or possibly
(12:56):
two years spending on how you feel about things, minus
anything you know you're going to spa. If you know
you're going to you gotta buy a car for fifty
sixty thousand dollars maybe more, replace the roof for the
HVAC or those different kinds of things than carve that
out first and then.
Speaker 5 (13:08):
The rest of it can be your cash.
Speaker 4 (13:09):
But use the tool for what it is that enables
you to do a bunch more things rather than just
sit on it.
Speaker 3 (13:15):
Brian, I don't know about you, but I find sometimes
when people sell that business or have that big inheritance
come through and that big pile of cash is sitting there,
it's not so much sometimes that people get too conservative.
They see that pile of cash is their slush fund.
You know, they got the bat in the back of
their mind. Well, I can put in a pool, I
(13:35):
can take four cruises next year, I can give a
bunch of money away. They they don't want to do
anything with that cash and really don't want to talk
to us about it because in their mind that's the
money they can go blow on certain things and a
short do you ever run into that?
Speaker 5 (13:49):
Absolutely all the time.
Speaker 4 (13:51):
But I will say I'm a big proponent of doing
the things that you want to do that make you happy,
provided that your plan supports it. So I'll never stand
in the way of somebody who wants to do those
things to make their living situation for them and their
families a better situation, however that is. But they got
to understand what the impact is.
Speaker 3 (14:07):
That's my mainal for sure, and that's a great lead
in to some of the dangers that we're going to
talk about here of holding too much cash for too long.
The first danger, obviously is inflation erosion. And again we're
talking about Brian within the context of a fully developed,
comprehensive financial plan. So we got to run the model
and say, hey, wherever your money is cash, stocks, bonds,
(14:29):
what have you, pension, social security? Do you have enough
money to generate the cash flow you need to generate
for the rest of your life indexed for inflation, Because
inflation is just compounding year after year in the background,
and a lot of people misunderstand or don't want to
think about the impact inflation has in terms of eroding
(14:50):
that large capital base.
Speaker 4 (14:52):
Right, And a lot of people have a general understanding
of inflation, but haven't really applied that to their own situation.
In other words, what does it mean for my own expenses?
Because every situation is a different set of puzzle pieces.
Everybody spends differently and has different resources, so inflation is
going to affect them affect them differently. But Boba, I
want to also point out that, you know, I think
a lot of people assume when I know when I
(15:13):
when I talk to my clients who are in this situation,
they say, oh, no, I know you think I should
invest this. But and I always stop them there and
I say, yeah, of course that's the default. Yes we
can always invest, But that's not the first thing that
comes to mind. What are the other things in your
in your life that are screaming for money, whether you
know it or not. Perhaps there's an expense coming up
that we need to cover. Maybe there's a mortgage or
some other kind of debt out there that we could
(15:34):
use to.
Speaker 5 (15:34):
Blow it all up. At once.
Speaker 4 (15:35):
Perhaps we keep it liquid to wait for that period
of time when you between when you retire and you
turn on your social securities. Bigots to use that cash
to do wroth conversions when you are in the lowest
bracket that you have been in in decades. There are
other things to do than invest it before, you know,
before we just officially decide that.
Speaker 3 (15:52):
Yeah, because to make those wroth conversions really work and
really sing and hums, so to speak, you got to
pay the taxes. And it's great to have some cash
sitting there.
Speaker 2 (16:01):
All right.
Speaker 3 (16:01):
Well, let's get into a second risk of holding too
much cash for too long, and that's just missed growth.
For example, over the last twenty years, a basic sixty
percent stock forty percent bond portfolio has returned roughly seven
percent annually. Holding large amounts of cash means you're just
flat out missing out on that opportunity to grow and
(16:24):
compound your wealth at a rate higher than inflation on
an after tax basis.
Speaker 5 (16:29):
It's a missed opportunity.
Speaker 4 (16:31):
Yeah, And the way compounding works, the way that snowball
effect really kicks in those early years when I'm speaking
early in retirement, right, there's different phases in life, just
like the first dollar you put into your four oh
one K when you were in your twenties, that's the
most valuable dollar you'll ever own because it has spawned
many many more dollars over the forty years that it grew. Well,
you're in the same situation even if you're retired, because
we're still looking for twenty five thirty years for this
(16:52):
money to grow. So don't take a time out for
three years to decide what to do with that pile
of cash. Come up with a plan, prioritize your goals,
and then execute.
Speaker 3 (17:01):
And then the final risk we want to cover here
in this segment is just emotional decision making, making basic
financial decisions purely on emotion. And we see this sometimes
with families who have built a significant amount of wealth
or inherited a large amount of money. They get very,
very conservative after a market pullback or correction, say two
(17:23):
thousand and eight or shoot even in twenty twenty two,
and they just stayed in cash. It's like, again, I
got this big pile of money. I never want to
see that dollar amount drop at any time for any reason.
And that's not because of logic, it's because of fear.
And again, if your financial plan will support a boatload
of cash and everything's going to work out, fine, We're
(17:45):
not going to talk you into taking risk you don't
need to take. But oftentimes we find things, Brian the
fine time that the opposite opposite is true. Sitting there,
you can feel comfortable in the short term, but when
you project that plan out long term without earning any
rate of return on that cash, you could see some
dangerous things happen later on in lifeb.
Speaker 4 (18:06):
I'm gonna throw a baseball analogy at you.
Speaker 5 (18:09):
You're a baseball fan, you're a huge baseball flight on.
Speaker 4 (18:12):
You know, you're watching a game and you're in between
pitches or new batter up to the plate and you
see the outfielders pull that little card out of their pocket.
Speaker 5 (18:20):
What are they doing.
Speaker 4 (18:21):
They are reading the notes that they have on that
batter so that they can anticipate what the play might be.
And they know, if I get a fly ball, I
got to go to this base for this runner or
the guy on second is pretty quick, so I may
not be able to They're thinking ahead of time. Financial
planning is absolutely no different. If I find myself with
an abundance of cash at some point, here are the
five things that I would like to do with it
in order that I will accomplish them. In other words, first,
(18:43):
my emergency fund is x amount of dollars. Once I've
got that goal, you know, check the box. That goal
is done. Now any dollar amount over that emergency fund
amount can be applied to anything else. Maybe it's the mortgage,
it could be roth conversions, it could be helping your kids.
Speaker 5 (18:55):
Whatever.
Speaker 4 (18:55):
But once, if you have a plan put in place first,
then you can easily execute on your goals as you
already prioritize them.
Speaker 3 (19:01):
Yeah, and in the few minutes we got less left
than this segment. There are some great alternatives that we
can use here to not take a bunch of risk
with that money sitting in cash, but still earn a healthy,
respectable rate of return. Things like ladder treasuries, you know,
where you're getting yields way above what you're going to
get in a checking account or save these account, or
(19:22):
money market account things like buffer ETFs or structured notes
where you can get a piece of participation in the
market and have that downside covered. There's ways to blend
strategies to still kind of be in the game, get
a healthy rate of return and not be subject to
you know, big market decline impacting your portfolio.
Speaker 5 (19:43):
Yeah.
Speaker 4 (19:43):
I think a lot of people get confused by the
term ladder. What that means is you're spreading the time out,
so I'll have five bonds coming to one in one
year than two years, three years, four years, five years.
That way, you've kind of locked in an interest rate.
Always have fresh cash coming due to be reinvested.
Speaker 5 (19:57):
Yeah.
Speaker 3 (19:57):
In other words, you can be conservative without being one
hundred percent idol. Cash has its place, but you know
it's it's about where and when you deploy that.
Speaker 5 (20:06):
Here's the all Worth advice.
Speaker 3 (20:08):
Holding too much cash without a plan might feel safe,
but over time you could be just going broke safely.
Coming up next, some great advice from our estate planning expert,
Dan Perry from the law firm of Wooden Lamping. You're
listening to Simply Money, presented by all Worth Financial on
fifty five KRC the talk station.
Speaker 8 (20:30):
The threat of Iran, the end of the twelve day War,
to cease fire, the latest news, I gotta get Israel
to calm down now.
Speaker 5 (20:38):
And your latest opinions.
Speaker 1 (20:39):
We should not be involved, we have to be involved.
I trust what President Trump is doing and will never act.
Speaker 6 (20:44):
Fifty five KRC the talk station, an iHeartRadio station.
Speaker 3 (20:55):
You're listening to Simply Money, presented by all Worth Financial.
I'm Bob's fond seller along with Brian and James, joined
tonight by our state planning expert, Dan Perry from the
law firm of Wooden Lamping. Dan, first of all, thanks
for making time for us today, and I know you
want to talk today about estate planning, the importance of
having one, and then maybe even debunking some of the
(21:17):
more common myths out there when it comes to estate planning.
Speaker 2 (21:20):
Yeah, that's right again, thanks for having me. Happy to
be here. You know what I say is estate planning
is just real, simply is about making a plan for
what happens to your property, whether that's you know, your money,
your home, your car, even your pets after you pass
away or if you can't make decisions for yourself. It's
(21:41):
not just the wealthy, and it's really for everyone over
the age of eighteen who wants to protect their family
and ensure their wishes are followed. And I like to
think of estate planning encompassing four key pieces, the first
being a last will and testament, and that's just a
document that says who at your assets and who takes
(22:01):
care of your kids if they happen to be mad
to be minors at the time of your death, and
without a will, a court is going to decide, which
can of course lead to delays and disputes. Another key
piece is a trust, and I like to explain trust
as containers that hold your assets and are managed by
someone you choose to avoid a court process called probate.
(22:24):
Trust can also save on taxes or protect money.
Speaker 5 (22:27):
For your kids.
Speaker 2 (22:29):
A third key piece would be a power of attorney
and that names someone to handle your finances if you're incapacitated,
such as after an accident, for example. And a final
key piece would be a healthcare directive, and that says
who makes medical decisions for you and what care you
want if you can't speak for yourself, such as if
(22:50):
you're in a coma.
Speaker 5 (22:51):
Dan, thanks for breaking it down like that.
Speaker 4 (22:52):
That Really this topic can get overwhelming and Bob and
I are of course not attorneys, so we don't draft
documents or anything like that, but as certify financial planners,
these topics come up all the time and we help
people understand exactly how to arrange it. I want to
drill into one comment you made about trust, because I
think every other day I have this conversation with people
who had a trust written up, and it would makes
(23:14):
logical sense. I have a trust, I paid money for
it to exist. I should now name it as the
beneficiary of everything or the owner of everything, and.
Speaker 5 (23:21):
So that the objectives of the trust to be carried out.
Speaker 4 (23:24):
Where this comes up as an issue sometimes is when
we kind of knee jerk name the trust as the
beneficiary of iras or four oh one k's tax advantage money.
And that can sometimes make a mess in terms of denying,
in worst case scenario, denying beneficiaries their right to spread
that tax impact of liquidating that pre tax IRA or
four O one K over ten years.
Speaker 5 (23:45):
How do you address that?
Speaker 4 (23:46):
How can we safely make sure a trust can serve
its purpose as well as protect that benefit.
Speaker 2 (23:53):
Sure absolutely so. As you may know, as you probably know,
that the tax laws change significantly in this regard a
few years ago, and a spouse named as a beneficiary
in IRA has the ability to stretch that benefit out
over their lifetime upon them reaching age seventy two. But
(24:15):
a non spouse beneficiary doesn't have that right, and when
a lot of clients want to name their trust as
a beneficiary, and the problem with that is if it
doesn't have special language in the trust document self, what
we lawyers call it as see through language. If it's
not seen through the trust agreement to the specific name beneficiaries,
(24:38):
it can create a situation where the non spouse beneficiary
such as an adult child, can't withdraw that benefit over
a ten year period, and it can create a much
larger tax bull event when they inherit that account.
Speaker 5 (24:53):
So see through is the keyword. I appreciate that.
Speaker 4 (24:55):
Is there a way obviously, you know, somebody who's concerned
about this should check with the attorney who draft did
the document. But is there are they literally looking for
the word c through in the document or is there
a special section where is this language hidden?
Speaker 2 (25:07):
Usually so the language is usually hidden in a article
or a paragraph that describes that says retirement accounts, and
the language is going to usually reference a section of
the Internal Revenue Code on how the trustee is going
to view these retirement benefits. So, if you're listening this
(25:29):
and wondering if there's c through language in your trust.
Try to find a section titled retirement accounts and it
almost always will have the see through language and we'll
say see through to the individual beneficiaryes something along those lines.
Speaker 3 (25:45):
Hey, Dan, I know you see all kinds of situations
come past your desk, you know, as part of your practice.
I know probably most of the listeners out there are
thinking of themselves, Hey, I've got some kind of a
state plan in some way, shape or form.
Speaker 5 (25:58):
I got this covered. What are some of the things.
Speaker 3 (26:01):
There are situations you come across every day in your practice,
some of the land minds out there that people might
not be aware of, you know, due to the fact
that they just didn't cross all the t's and dot
all the ey's, you know, in terms of actually implementing
a good estate planning strategy.
Speaker 2 (26:17):
So the one I see the most is people that
believe that they're done when they complete their plan because
you know, as we all know, life changes. You know,
there's marriage, perhaps divorce, kids, starting a new business, and
your plan needs to keep up with those changes.
Speaker 8 (26:34):
You know.
Speaker 2 (26:34):
For example, I had a client who wrote a will
in his thirties and he named his wife as a
beneficiary of that will, and after their divorce. He never
updated it. However, in Ohio, divorce operates is what's called
a revocation of any provision going to the x YF.
But it can also create a situation of ambiguity and
(26:54):
the will on who is to receive the property that
was to go to the why when they were married,
and that can create some problems.
Speaker 4 (27:03):
So that would send it back through probate, wouldn't it
wouldn't that result in them saying there's no beneficiary.
Speaker 2 (27:08):
Therefore it would either get it would either go back
to there's no beneficiary or this falls through what's called
the residuary cause of the will. But again that's ambiguity
that a court has to has to weigh out.
Speaker 5 (27:21):
Hey, one more question that comes up very frequently.
Speaker 4 (27:23):
A lot of times we have we have clients come in,
they bring, you know, there, they bring their their stack
of papers and statements and trust documents, and they'll kind
of casually throw out, well, we set up this trust, uh,
you know, because it's going to protect us in the
event of long term care needs or if we ever
need to be on Medicaid or something like that. That's
almost like the just just thrown out there, and I
know it is not that not nearly that simple, if
(27:43):
it's even possible at all. Can you weigh in a
little bit on how a trust and whether a trust
can truly protect in the situation like.
Speaker 2 (27:49):
That, So trust can be designed to protect for medicaid
Medicaid planning purposes, in general, those trusts have to be
what's called irrevocable trusts, and the person who set up
the trust, such as a set lore is what they're called,
cannot act as the trustee of that trust. And more importantly,
(28:13):
for trust to really protect for medicaid planning purposes, the
trust has to be funded with the person's assets at
least five years prior to applying for Medicaid. So I
hear that a lot from clients as well, and it's
I always say, well, slow down, let's take a look
at what the trust actually says and what assets have
you funded to this trust?
Speaker 5 (28:34):
Okay, one more quick one in the last few seconds here,
what about nursing homes.
Speaker 4 (28:37):
What if it's not a case where we're trying to
impoverish to get to medicaid stage.
Speaker 2 (28:42):
If we're not trying to impoverish a person to get
to a medicaid stage, there's really no benefit for an
irrevocable trust for medicaid purposes. There could be a benefit
for irrevocable trust for tax planning if their estate is
valued over thirteen point nine million, for example, but if
it's for if we're just if we're not looking at
(29:03):
those two issues or any kind of asset protection an
era vocal trust, in my experience, just as in providing
that benefit, a.
Speaker 3 (29:12):
Lot of good things to think about and consider as
we review our estate plan, you know, And I think
the key point is is review it at a minimum
of every three to five years. Great stuff from Dan Perry,
are a state planning expert with the law firm of
Wood and Lamping. You're listening to Simply Money, presented by
all Worth Financial on fifty five KRC the talk station
(29:34):
Mark Levin.
Speaker 9 (29:35):
Let me tell you, so, the Internet is breeding evil,
breeding evil.
Speaker 5 (29:39):
And TikTok is the main culprit.
Speaker 9 (29:41):
And I don't know what's happening with TikTok, but that
damn thing needs to be sold now and it needs
to be cleaned up. And I don't want to hear
about free speech and everything else. It's a private company.
The company needs to clean it up because this is
crazy between the communist Chinese and all the crap that
people put on this stuff.
Speaker 1 (29:58):
Mark Levin tonight on fifty five KRS the talkstation.
Speaker 5 (30:03):
Hey' is Brian Thomas to Steve from you dot Com.
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Your opinions are welcome to here.
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Why do we keep letting thousands of people come over
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You're listening to Simply Money, presented by all Worth Financial
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Speaker 5 (30:27):
If you have a financial question.
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You'd like for us to answer, there's a red button
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Speaker 5 (30:38):
All right.
Speaker 3 (30:38):
When we talk to families who've done a great job
building wealth, one of the most common things we hear
is this something like, hey, we don't want to spoil
the kids, but we do want to help them enter
the family mission statement, or what some like to call
a wealth letter. Brian, this is an excellent topic that
I want to get into, and I'm anxious to hear
(31:00):
your perspectives on this because I have some as well, so.
Speaker 4 (31:03):
Yeah, the wealth letter is just really sitting down and
figuring out what does money mean to me? And a
lot of times it's most impactful in a situation where
maybe you are the first generation who had a significant
amount of wealth over and above what you needed to
pay the bills. Mom and dad might have done a
great job, you know, raising you and getting you off
on your feet and everything, such a great job that
(31:23):
you are in a position to have more than you need,
and therefore you have to prioritize how you're going to
spend it. Some people like the creature comforts and they
choose to spend on that, and then there's nothing wrong
with that, you know, Free country. Our only concern is
that the financial plan work. Other people think very differently
about it. I have obligations to families, to charities and
other things. I've been given so much I need to
give back a little more. Lots of people are solidly
(31:46):
in the middle, and there's no right, wrong, or indifferent
to any of it. But those are the kind of
values that you would pass along, you know, via something
like a wealth letter, which essentially is just really documenting
here's what I believe and here's how we got in
this position, and here's what I want to pass on
to you children, as opposed to, uh, here's a big
pile of money.
Speaker 3 (32:03):
I think this is an excellent idea to go through
and a lot of families don't do this, and I
think it's a potential miss. Here's what we mean by
that wealth letter. Here's a couple questions that you could
just sit down think about with your spouse. And it
doesn't have to be a one time thing. This can
be a letter that evolves over the over time. But
here's some of the big questions to write down. Answers
(32:24):
to what does money mean to our family? What are
our responsibilities with money as a family. What legacy do
we want to leave behind, not just in dollars, but
in character.
Speaker 4 (32:38):
You know, Bob, we often hear about situations where a
significant amount of wealth was passed from one generation to
the next. And you know, sometimes that includes a business,
for example, and a lot of times that second and
third generation, you know, maybe perfectly well meaning people, but
they did not have to put in the same blood,
sweat and tears and elbow grease into building that business
that the original generation did.
Speaker 5 (32:58):
And that's not their.
Speaker 4 (32:58):
Fault, but they to view it a little bit differently,
and it can be tough to pass that to pass
that drive on to someone who didn't have to do
it in order to survive. So it can be very
very important to make sure that everybody knows the history
of the family, where did this come from, and what
is their obligation in keeping it moving forward. So let's
talk about a local example here, Bob. We know a
(33:19):
family from Hyde Park. They put a whole letter together
that went all the way through their entrepreneurial story. And
this starts with an old shoe store down and over
the Rhine, and now they go through it every Thanksgiving
to remind everybody of where it all came from. And
again this goes back four and five generations. It's a
great story, and I think that's a great place to
Thanksgiving is a great time to come together not only
be thankful for the situation that you're in, but also
(33:40):
remind everybody how you got there in the first place.
Speaker 3 (33:42):
Well, and the key thing I love about that story
and that example from the family in Cincinnati is they're
not waiting for them to die to leave a piece
of paper behind. They're talking about it at the Thanksgiving
dinner table. In other words, they're living it out now
talking about their family history and their value now when
(34:03):
everyone's seated at the table and they can hear mom
and dad and grandma and grandpa talk about it today,
that is a powerful way to actually pass down these
values and live them out instead of just leaving a
document behind that says basically, it might be like, hey,
do what I say, not what I necessarily did. That
tends to sometimes fall on deaf ears.
Speaker 4 (34:24):
Yeah, and a lot of you might be hearing this going, Okay,
do I need another Documentarity got to worry about my
will and my trust and all these other things. Those
estate planning documents are about how. Those are the the
instruction manual for how your assets are to be distributed
according to whatever you have and whatever the goals are whatever.
This one is about the why. There is no legal
requirement that you put it together, but it will help
(34:45):
your descendants understand exactly why you made the decisions you did.
Speaker 3 (34:50):
You're listening to simply Money presented by all Worth Financial.
I'm Bob Sponseller along with Brian James. Brian talk about
what you've seen. Have you seen actual clients of yours
go through anything like this, either in written form or
conversation with family or both. You know, can you cite
maybe an example that you've seen your clients do that
(35:11):
have really warmed your heart and made you feel real
good about the future of a family based on this
kind of planning.
Speaker 4 (35:19):
You know, when you ask me that question, the one
that comes to mind immediately. I have a family who
every year they get together and they do they do
a state planning gifts. This is a fairly common type
of situation. If you know, an elderly couple has more
than they need and what they're concerned about a state taxes,
then what they'll do is they'll use what's called the
annual gift exclusion. You can give anybody you know a
(35:39):
certain amount. I'm thinking of a family that does annual
gift exclusions, meaning they use the annually available mount that
they can give to their families without any repercussions for taxes,
gift taxes, anything like that. And a lot of families
do this, but a lot of times it's just a
check in the mail, which just means it's money that
falls from the sky and the recipients simply stick in
the bank or blow it on something or whatever and
(36:00):
have no appreciation for it. But the family I'm thinking
of makes a production in the Over the holidays, everybody
sits down for holiday thank you, Thanksgiving or possibly Christmas dinner,
and they will talk.
Speaker 5 (36:10):
About again, as many do.
Speaker 4 (36:12):
They'll talk about why they're thankful to the situation, what
it is about the their situation that they're truly grateful for,
and then what they are going to do with that
money that's coming from the generations above. And that is
a tradition that will continue on in this family, it
already has for several generations.
Speaker 5 (36:26):
Great stuff. Here's the all Worth advice.
Speaker 3 (36:27):
A family mission statement won't show up on a balance sheet,
but it may be the most valuable document you ever create.
Coming up next, we've got Brian's bottom line. Brian's going
to spend a few minutes talking to us about Wroth
conversions and he does a wonderful job counseling clients through this.
I'm excited to hear his take on the whole Wroth
(36:48):
conversion topic. You're listening to Simply Money, presented by all
Worth Financial on fifty five KRC, the Talk station.
Speaker 8 (36:56):
The Threat of Iran the end of the twelve day war,
the latest news. I gotta get Israel to calm down.
Speaker 1 (37:03):
Now we're on the verge at real peace in the
Middle East. And your latest o Ginians, we should not
be involved. We have to be involved. I trust what
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Speaker 1 (37:19):
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Our team is always here to answer your questions.
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Talk about it here fifty five KRC the talk station.
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Moment you're listening to simply money for some of my
all were financial Lumpbop spun seller along with Brian James,
and it's time for Brian's bottom line. Brian Phillip give
us some wisdom about roth conversions as seen through the
eyes of Brian James rob Well.
Speaker 4 (37:58):
Roth conversions are an amazingly powerful tool that not a
lot of people understand.
Speaker 5 (38:02):
You know, the pros and cons too.
Speaker 4 (38:04):
But what we're talking about, of course, for a long time,
if you have had a job with the last several
decades and you had a four oh one k, most
likely that was a traditional or pre tax four oh
one k, because it's just what you did, and so
it was the only choice for a very long time.
ROTH came to be in the early two thousands, literally
the year two thousand that was IRAS, and then eventually
it found its way into four to oh one case. Now, ROTH,
(38:25):
of course means that you are paying taxes upfront. This
doesn't mean more tax You're not going to get an
extra tax bill. You're simply just not getting it deducted,
you know, getting it deducted from your income at the
payroll level. But you'll pay taxes on it now, and
you'll invest it in something and it'll grow to whatever
it grows to over time. You're going to pull it
out completely tax free. That means that there are no
(38:47):
capital gains, no dividends, no kind of ordinary income tax
at all, and there are no required minimum distributions. So
when you are seventy three or seventy five, depending on
your year of birth, you're not going to have to
deal with those kinds of things, with being forced to
take money out and pay taxes on it, and most beneficially,
your kids will inherit a tax free Not only that,
(39:08):
when they inherit wroth iras or wroth foural one k's
are subject to the same ten year rule, meaning it
has to be completely liquidated for anybody who passes after
twenty twenty, the airs have ten years to totally liquidate
that wroth ira or four one k. But what that means, though,
if you think about it, that means those errors can
let it grow an additional ten years completely tax free,
(39:29):
because they don't have to empty that bucket until then.
Speaker 3 (39:32):
The benefits of all this are obviously, you know, many,
and it's lucrative. But walk us through how do you
actually guide somebody through this process of saying, Brian, this
all sounds great, How do I do this? How do
I decide the amount to do when to do it?
Speaker 4 (39:48):
Walk us through your So, first of all, acknowledge the
fact that you are voluntarily writing a fact check to
the irs that is often sometimes in the mid to
high five digits, depending on what we're trying to accomplish.
So I'm thinking of somebody who of course that you know,
had a lucrative career, maybe thirty four years, forty years
of work, the end of which was in the higher
tax brackets. And then they retire and we've got cash
(40:09):
set aside to pay the bills for a while, and
now all of a sudden they're in a really, really
low tax bracket because they literally have no income. This
is before you turn on social Security and other income streams.
You know, maybe you can hold off as well if
there's a benefit to it, but take advantage of those
low tax brackets. Don't just be happy paying no taxes.
Turn that around. Pay low taxes, not no, but low
(40:29):
taxes to get those roth conversions done now, and then
you can turn the ship around with all the growth
that will happen inside the count from then on out
will be tax free. But again, you are definitely sacrificing
a good chunk up front. That is a sacrifice. There's
a break even point out into the future. But in
the right situation, it can be an extremely powerful tool
to control the income taxation of your hard earned assets.
Speaker 3 (40:51):
Good stuff, Brian, thanks for listening. You've been listening to
Simply Money present up by all Worth Financial on fifty
five KRCV talk station.
Speaker 1 (41:00):
Of an emergency, you should have a plan. Here is
the plan. When events are happening.
Speaker 8 (41:05):
The events of today, you should plan on listening.
Speaker 4 (41:08):
This is a great plan for big trade deal India
and Pakistan.
Speaker 1 (41:12):
Potential to get out of control the pulp.
Speaker 2 (41:14):
That it did.
Speaker 1 (41:15):
Pieces of that being beautiful Bill done. People that are
here illegally need to go home. Weave our policy, interest
rate unchanged.
Speaker 5 (41:22):
In any event. If we know something was going to happen,
check in, do it.
Speaker 1 (41:25):
Off fifty five krc the talk station. We're entering some
very uncertain
Holding peaks. We'll be holding talks here. Talks are being
held all day.
Speaker 2 (00:06):
Got to keep talking.
Speaker 1 (00:07):
The good fifty five KRC the talk station.
Speaker 3 (00:17):
Tonight, more wrangling over FED policy, some positive news on
bank earnings, and the NASDAC continues to hover at all
time highs. You're listening to simply Money presented by all
Worth Financial. I'm Bob Sponsler along with Brian James.
Speaker 2 (00:32):
Brian.
Speaker 3 (00:32):
I couldn't help notice, you know, yesterday President Trump was
added again, resuming his public spat with FED Chair pal
after yesterday's inflation numbers came out begging him, urging him,
criticizing him about his reluctance to cut interest rates, and
he also mixed in some criticism of I guess what
(00:56):
is a very expensive renovation of the Federal Reserve building
as Chair Pale begins the final year of his term.
Speaker 4 (01:05):
Yeah, so this has been an ongoing saga here between
these two men, almost a bit of a bit of
a soap oper or, if you will. But President Trump
comes from the business world, of course, and he very
much wants the fiscal policy and UH and all of
the various financial decisions that need to be made by
the federal government that are owned by the federal government.
He wants them to be business friendly, and that usually
(01:26):
means that starts really with low interest rates. So his
his I think his focus is going to be in
the short run low interest rates will help, but will
help companies make money, be more expand profit margins and
so forth. So that's really been his his driving force,
and he has said this from time to time ever
since he was elected for the second time, as well
as throughout the campaign. Uh and so, but Chair Powell
(01:48):
has a different has a different job. He'd used it
a little differently. I think President Trump is looking again
in the very short term, which what can we what
could we do now that will make businesses more profitable
and therefore, you know, make everybody more money. Chair Power
is looking at if I make certain decisions now that's
gonna have some kind of an impact over the next.
Speaker 5 (02:04):
Two three four years. He has to.
Speaker 4 (02:06):
He must have a longer term timeframe than the one
that President Trump is currently looking at. So a bit
of an argument there between these two men. And Chara
Poweace tends to stay fairly quiet. He doesn't really speak out. Obviously.
The president is a little bit different, and so We're
gonna see how this plays out. But you know, there's
good and bad to both of these and the outcome
(02:26):
could go either way. But I don't think I don't
think we're looking at any changes here in the very
short run.
Speaker 5 (02:30):
This is probably going to be more of a Q
three thing, as CHERA.
Speaker 4 (02:33):
Powell wants to kind of sit around and wait to
see how things play out with all these tariff decisions
bouncing around.
Speaker 3 (02:40):
Definitely, And I think the other reason the President wants
rates to come down is because of the size of
our national debt. I mean, let's face it, if you
lower the cost of borrowing for the United States of America,
that helps with our budget deficit.
Speaker 5 (02:53):
And speaking of that, we.
Speaker 3 (02:55):
Did have, you know, like it or not, we did
have a twenty seven billion dollar budget surplus in the
month of June, the first time we've had a budget
surplus in years, mostly due to those tariff revenues, which
you know, a lot of people hate and it can
be inflationary and on and on and on, but we
did get a budget surplus in June. Meanwhile, I got
(03:16):
I got a bit of a chuckle here. I think
JP Morgan CEO, Jamie Diamond is part of his earnings
announcement yesterday. I think kind of played the role of
the adult in the room, and I know he and
the President have a great relationship. I think he even
felt it necessary to kind of weigh in here and
and just stress again in front of the media the
(03:37):
importance of maintaining the independence.
Speaker 5 (03:40):
Between the White House and the FED. I got a
little bit of a chuckle out of that. Yeah, no,
And I'm glad he's out there.
Speaker 4 (03:47):
You know, a lot of times CEOs of banks of
big banks aren't the most popular people in the world
because sometimes they, in their roles, have to say and
do things that can can run counter to you know,
your average person who's just trying to make ends meet.
Speaker 5 (03:59):
That's just it.
Speaker 4 (04:00):
But I'm very glad that he's not completely lining up,
that he is at least one voice who's willing to
stand up to the President.
Speaker 5 (04:06):
Again.
Speaker 4 (04:06):
I really think the President good, better and different. Focus
is on what gets me the most bang from my
buck right now? Immediately, How do I move things to
make people happy with me right now? And he really
never thinks about you know, down the road. We cannot
think that way. That's not how you run your own
personal financial plan. Right, if we go off of instant
gratification for every decision we make, that's going to cause
long term problems. So I'm very very glad that mister
(04:28):
Diamond is out there kind of pulling the reins in
a little bit.
Speaker 5 (04:31):
He's a very well respected voice.
Speaker 4 (04:33):
So another part of the headline here is there's about
a nine billion dollar budget decision package that's coming through Congress.
US Treasury reported a twenty seven billion dollar budgets for
plus in June. As you mentioned, that mostly is coming
from the tariffs. Part of that is, so we're seeing
and we're kind of seeing more developments there. So we've
got a new trade deal with Indonesia. There's now going
to be a nineteen percent tariff that they've agreed to.
(04:54):
That's down from the thirty five percent that was originally threatened.
And what they gave up what Indonesia's offering exchange, will
have access to copper, and there's also a deal where
Indonesia will be spending I think it's fifty billion dollars
on jets from Boeing and some other things like that.
So this is we're starting to see we're nowhere near
these ninety deals in ninety days. That was blooney to
(05:15):
begin with, but we are starting to see progress with
some of these smaller company country so hopefully we'll see
some more with our larger trading partners as time passes.
Speaker 3 (05:24):
Well, this is kind of a resumption of the theme
we talked about as recently as yesterday, Brian.
Speaker 5 (05:29):
I mean, these announcements.
Speaker 3 (05:30):
Get made, the quote unquote tariff letters get sent out,
and like it or not, I think this is just
the President's way of getting people to the table and
doing negotiating and getting deals done. And so yeah, we
get a deal done with Indonesia yesterday and lo and behold,
the EU calls and says, hey, we're going to send
(05:50):
our trade chief to the United States to resume talks
this week. Go figure, you know, with this thirty percent
tariff deadline looming on August first, look like we're actually
gonna get the EU and the United States in a
room and hopefully hammer something out here over the next
week or ten days, and there'll be some kind of
positive tariff number, but it'll be some number below thirty percent,
(06:13):
and everybody can claim that they negotiated and won. And
I think this is among other reasons why the stock
market has just gotten to the point now where it
just yawns over some of this tariff noise because it's
just all part of the ongoing negotiations between these various
countries right now.
Speaker 4 (06:32):
There's gonna be bumps, there's always gonna be turbulence ahead.
So one of the headlines I saw this morning with
my morning coffee here was that the Port of Los
Angeles reported record volumes eight hundred and ninety two thousand
units of shipping came through in June. And that's more
evidence of this rush to clear inventory before this before
the tariffs.
Speaker 5 (06:52):
Hit here in August.
Speaker 4 (06:54):
So and the experts are warning that this surge is
pretty temporary because it's of course driven by the perception
that things are going to get more expensive. So therefore
companies and buyers are pulling the trigger now to offset
future future tariffs there, So that that's going to be
something to pay attention to. And I'm also seeing some
headlines and some opinions on the on some concerns about
the US dollar. The short US dollar is right now
(07:17):
the most crowded trade. That's according to Bank of America
in euro exposures at a twenty year high. So this
isn't the I want to make it be clear about
some things. So when we hear the term week US dollar,
that is not necessarily a bad thing, right because a
week US dollar, you know, the word week of course
has a negative connotation to it, But what it means
is that US products are can be a little more
(07:40):
reasonable for foreign countries to buy. And remember that's what
this is all about. A lot of what President Trump
is doing is to bring back on shore American manufacturing
so that company, other countries, other companies will buy our
products versus the opposite. He's trying to turn the ship around.
So a week dollar will will make it more attractive
to them to do so we have a strong dollar,
(08:00):
that would mean that that our products are more expensive quality.
Aside whether they solve the problem or not, they're just
playing more expensive and countries will look to each other
versus the United States. So we do want you know,
it's not a bad thing that we have a weakening dollar.
That's that's sort of part of this puzzle of how
this all comes together to bring back on shore American manufacturing.
We don't want too much of it though, right So,
(08:22):
I always think of this in two ways. There's week
and strong, and there's also hot and cold. It depends
on the environment that you're in. If it's February, I
would like to be hotter. If it's August, I would
like to be colder. I don't want too much of
either one.
Speaker 5 (08:33):
Though, And we want Goldielocks just right. All right.
Speaker 3 (08:37):
Speaking of just right, we did get some major bank
earnings out this morning, and Brian, the numbers were pretty good.
Bank of America and PNC posted mixed results on the
earnings and revenue side, while Goldman Sachs just posted a
blowout number to the upside, largely due to trading volume
in the second quarter. And we all know we had
some volatility back in April and May, and these banks
(08:58):
love that it allows them the trade.
Speaker 5 (09:00):
And make money.
Speaker 3 (09:01):
Morgan Stanley had a slight beat on both earnings and revenues,
again citing increased trading volume for the quarter, and Brian,
I think the IPO market both of these banks talk
about things are starting to open up on the ipo
and deal making side, which is a good sign of
the overall strength of the economy. Companies are able to
(09:22):
sell and deals are getting done. Banks cited net interest revenue,
credit card revenue, which indicates consumer is still strong. And
even though we've got uncertainty with regard to tariff policy,
I think again, as we said before, I think the
Wall Street analysts are starting to figure out the game here. Yeah,
(09:44):
we're going to bounce around between thirty thirty five and
eventually get down to the high teens in terms of terrorists,
but that leads to more clarity and confidence in the
overall economy. So we're still very early on in earning season,
but so far, Brian, the numbers look pretty good.
Speaker 4 (10:00):
Yeah, that's not limited just to banking. Those are just
the headlines from today. But Johnson and Johnson also beat
their earnings forecast. They put up a two dollars seventy
seven cent number versus the two sixty eight that was expected,
and they raised their full year adjusted earnings per share
to ten eighty to ten ninety and confirmed that yep,
they're not going to change that dividend again. So overall,
right now for Q two s and P five hundred,
(10:21):
earnings are tracking around four point eight percent year over year.
Speaker 5 (10:25):
That's the slowest since Q four of twenty twenty three.
Right now, I'm just reading the headline here.
Speaker 4 (10:29):
I hate these headlines that say slowest sense or whatever,
and then they're comparing to something like a year and
a half ago.
Speaker 5 (10:33):
Who cares.
Speaker 4 (10:34):
But realistically it's a little slower than it's been in
recent history.
Speaker 5 (10:39):
But we're still on a good path.
Speaker 3 (10:41):
Coming up next, a healthy emergency fund is smart, but
too much cash. We're going to break that down in
terms of the hidden risks how to fix it. You're
listening to Simply Money, presented by all Worth Financial on
fifty five KRC, the talk station.
Speaker 6 (10:55):
Fifty five KRC Cincinnati, available everywhere with the heart radio
app now number one for podcasting fifty five KARC an
iHeartRadio station.
Speaker 7 (11:07):
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 3 (11:28):
You're listening to Simply Money presented by all Worth Financial.
I'm Bob Sponsller along with Brian James. If you can't
listen to Simply Money every night, subscribe and get our
daily podcast. You can listen the following morning during your
commute or at the gym or out on your walk.
Just search simply money on the iHeart app or wherever
you find your podcasts. Straight ahead of six forty three,
(11:51):
the one document every high income family needs, but very
few ever create. All right, Brian, we all know there's
great comfort in having a bunch of cash. It feels safe,
it's accessible, it never drops twenty percent like the stock
market can.
Speaker 5 (12:09):
But holding too much cash a comfort can come with
a big cost. Yeah.
Speaker 4 (12:13):
Oftentimes we see this when when people inherit cash or
somehow come into a windfall. And it's always interesting to me.
And this happens especially a little bit more when the
market is a little a little bit wobbly. But it's
always interesting to me that somehow in somebody's brain that
they know they inherited let's sa two hundred and fifty
thousand dollars in cash, somehow that has now become the
emergency fund. They didn't decide that they needed two hundred
(12:35):
and fifty thousand liquid. It just is liquid, and therefore
that's the amount they need, and they're hesitant to do
anything with it, which is always an interesting conundrum for
me because cash is of course the least efficient acid
you can have. It's important and you can put it
in things that get a return. But an emergency fund
doesn't need to cover, you know, five years worth of expenses.
We're really looking for more like a year or possibly
(12:56):
two years spending on how you feel about things, minus
anything you know you're going to spa. If you know
you're going to you gotta buy a car for fifty
sixty thousand dollars maybe more, replace the roof for the
HVAC or those different kinds of things than carve that
out first and then.
Speaker 5 (13:08):
The rest of it can be your cash.
Speaker 4 (13:09):
But use the tool for what it is that enables
you to do a bunch more things rather than just
sit on it.
Speaker 3 (13:15):
Brian, I don't know about you, but I find sometimes
when people sell that business or have that big inheritance
come through and that big pile of cash is sitting there,
it's not so much sometimes that people get too conservative.
They see that pile of cash is their slush fund.
You know, they got the bat in the back of
their mind. Well, I can put in a pool, I
(13:35):
can take four cruises next year, I can give a
bunch of money away. They they don't want to do
anything with that cash and really don't want to talk
to us about it because in their mind that's the
money they can go blow on certain things and a
short do you ever run into that?
Speaker 5 (13:49):
Absolutely all the time.
Speaker 4 (13:51):
But I will say I'm a big proponent of doing
the things that you want to do that make you happy,
provided that your plan supports it. So I'll never stand
in the way of somebody who wants to do those
things to make their living situation for them and their
families a better situation, however that is. But they got
to understand what the impact is.
Speaker 3 (14:07):
That's my mainal for sure, and that's a great lead
in to some of the dangers that we're going to
talk about here of holding too much cash for too long.
The first danger, obviously is inflation erosion. And again we're
talking about Brian within the context of a fully developed,
comprehensive financial plan. So we got to run the model
and say, hey, wherever your money is cash, stocks, bonds,
(14:29):
what have you, pension, social security? Do you have enough
money to generate the cash flow you need to generate
for the rest of your life indexed for inflation, Because
inflation is just compounding year after year in the background,
and a lot of people misunderstand or don't want to
think about the impact inflation has in terms of eroding
(14:50):
that large capital base.
Speaker 4 (14:52):
Right, And a lot of people have a general understanding
of inflation, but haven't really applied that to their own situation.
In other words, what does it mean for my own expenses?
Because every situation is a different set of puzzle pieces.
Everybody spends differently and has different resources, so inflation is
going to affect them affect them differently. But Boba, I
want to also point out that, you know, I think
a lot of people assume when I know when I
(15:13):
when I talk to my clients who are in this situation,
they say, oh, no, I know you think I should
invest this. But and I always stop them there and
I say, yeah, of course that's the default. Yes we
can always invest, But that's not the first thing that
comes to mind. What are the other things in your
in your life that are screaming for money, whether you
know it or not. Perhaps there's an expense coming up
that we need to cover. Maybe there's a mortgage or
some other kind of debt out there that we could
(15:34):
use to.
Speaker 5 (15:34):
Blow it all up. At once.
Speaker 4 (15:35):
Perhaps we keep it liquid to wait for that period
of time when you between when you retire and you
turn on your social securities. Bigots to use that cash
to do wroth conversions when you are in the lowest
bracket that you have been in in decades. There are
other things to do than invest it before, you know,
before we just officially decide that.
Speaker 3 (15:52):
Yeah, because to make those wroth conversions really work and
really sing and hums, so to speak, you got to
pay the taxes. And it's great to have some cash
sitting there.
Speaker 2 (16:01):
All right.
Speaker 3 (16:01):
Well, let's get into a second risk of holding too
much cash for too long, and that's just missed growth.
For example, over the last twenty years, a basic sixty
percent stock forty percent bond portfolio has returned roughly seven
percent annually. Holding large amounts of cash means you're just
flat out missing out on that opportunity to grow and
(16:24):
compound your wealth at a rate higher than inflation on
an after tax basis.
Speaker 5 (16:29):
It's a missed opportunity.
Speaker 4 (16:31):
Yeah, And the way compounding works, the way that snowball
effect really kicks in those early years when I'm speaking
early in retirement, right, there's different phases in life, just
like the first dollar you put into your four oh
one K when you were in your twenties, that's the
most valuable dollar you'll ever own because it has spawned
many many more dollars over the forty years that it grew. Well,
you're in the same situation even if you're retired, because
we're still looking for twenty five thirty years for this
(16:52):
money to grow. So don't take a time out for
three years to decide what to do with that pile
of cash. Come up with a plan, prioritize your goals,
and then execute.
Speaker 3 (17:01):
And then the final risk we want to cover here
in this segment is just emotional decision making, making basic
financial decisions purely on emotion. And we see this sometimes
with families who have built a significant amount of wealth
or inherited a large amount of money. They get very,
very conservative after a market pullback or correction, say two
(17:23):
thousand and eight or shoot even in twenty twenty two,
and they just stayed in cash. It's like, again, I
got this big pile of money. I never want to
see that dollar amount drop at any time for any reason.
And that's not because of logic, it's because of fear.
And again, if your financial plan will support a boatload
of cash and everything's going to work out, fine, We're
(17:45):
not going to talk you into taking risk you don't
need to take. But oftentimes we find things, Brian the
fine time that the opposite opposite is true. Sitting there,
you can feel comfortable in the short term, but when
you project that plan out long term without earning any
rate of return on that cash, you could see some
dangerous things happen later on in lifeb.
Speaker 4 (18:06):
I'm gonna throw a baseball analogy at you.
Speaker 5 (18:09):
You're a baseball fan, you're a huge baseball flight on.
Speaker 4 (18:12):
You know, you're watching a game and you're in between
pitches or new batter up to the plate and you
see the outfielders pull that little card out of their pocket.
Speaker 5 (18:20):
What are they doing.
Speaker 4 (18:21):
They are reading the notes that they have on that
batter so that they can anticipate what the play might be.
And they know, if I get a fly ball, I
got to go to this base for this runner or
the guy on second is pretty quick, so I may
not be able to They're thinking ahead of time. Financial
planning is absolutely no different. If I find myself with
an abundance of cash at some point, here are the
five things that I would like to do with it
in order that I will accomplish them. In other words, first,
(18:43):
my emergency fund is x amount of dollars. Once I've
got that goal, you know, check the box. That goal
is done. Now any dollar amount over that emergency fund
amount can be applied to anything else. Maybe it's the mortgage,
it could be roth conversions, it could be helping your kids.
Speaker 5 (18:55):
Whatever.
Speaker 4 (18:55):
But once, if you have a plan put in place first,
then you can easily execute on your goals as you
already prioritize them.
Speaker 3 (19:01):
Yeah, and in the few minutes we got less left
than this segment. There are some great alternatives that we
can use here to not take a bunch of risk
with that money sitting in cash, but still earn a healthy,
respectable rate of return. Things like ladder treasuries, you know,
where you're getting yields way above what you're going to
get in a checking account or save these account, or
(19:22):
money market account things like buffer ETFs or structured notes
where you can get a piece of participation in the
market and have that downside covered. There's ways to blend
strategies to still kind of be in the game, get
a healthy rate of return and not be subject to
you know, big market decline impacting your portfolio.
Speaker 5 (19:43):
Yeah.
Speaker 4 (19:43):
I think a lot of people get confused by the
term ladder. What that means is you're spreading the time out,
so I'll have five bonds coming to one in one
year than two years, three years, four years, five years.
That way, you've kind of locked in an interest rate.
Always have fresh cash coming due to be reinvested.
Speaker 5 (19:57):
Yeah.
Speaker 3 (19:57):
In other words, you can be conservative without being one
hundred percent idol. Cash has its place, but you know
it's it's about where and when you deploy that.
Speaker 5 (20:06):
Here's the all Worth advice.
Speaker 3 (20:08):
Holding too much cash without a plan might feel safe,
but over time you could be just going broke safely.
Coming up next, some great advice from our estate planning expert,
Dan Perry from the law firm of Wooden Lamping. You're
listening to Simply Money, presented by all Worth Financial on
fifty five KRC the talk station.
Speaker 8 (20:30):
The threat of Iran, the end of the twelve day War,
to cease fire, the latest news, I gotta get Israel
to calm down now.
Speaker 5 (20:38):
And your latest opinions.
Speaker 1 (20:39):
We should not be involved, we have to be involved.
I trust what President Trump is doing and will never act.
Speaker 6 (20:44):
Fifty five KRC the talk station, an iHeartRadio station.
Speaker 3 (20:55):
You're listening to Simply Money, presented by all Worth Financial.
I'm Bob's fond seller along with Brian and James, joined
tonight by our state planning expert, Dan Perry from the
law firm of Wooden Lamping. Dan, first of all, thanks
for making time for us today, and I know you
want to talk today about estate planning, the importance of
having one, and then maybe even debunking some of the
(21:17):
more common myths out there when it comes to estate planning.
Speaker 2 (21:20):
Yeah, that's right again, thanks for having me. Happy to
be here. You know what I say is estate planning
is just real, simply is about making a plan for
what happens to your property, whether that's you know, your money,
your home, your car, even your pets after you pass
away or if you can't make decisions for yourself. It's
(21:41):
not just the wealthy, and it's really for everyone over
the age of eighteen who wants to protect their family
and ensure their wishes are followed. And I like to
think of estate planning encompassing four key pieces, the first
being a last will and testament, and that's just a
document that says who at your assets and who takes
(22:01):
care of your kids if they happen to be mad
to be minors at the time of your death, and
without a will, a court is going to decide, which
can of course lead to delays and disputes. Another key
piece is a trust, and I like to explain trust
as containers that hold your assets and are managed by
someone you choose to avoid a court process called probate.
(22:24):
Trust can also save on taxes or protect money.
Speaker 5 (22:27):
For your kids.
Speaker 2 (22:29):
A third key piece would be a power of attorney
and that names someone to handle your finances if you're incapacitated,
such as after an accident, for example. And a final
key piece would be a healthcare directive, and that says
who makes medical decisions for you and what care you
want if you can't speak for yourself, such as if
(22:50):
you're in a coma.
Speaker 5 (22:51):
Dan, thanks for breaking it down like that.
Speaker 4 (22:52):
That Really this topic can get overwhelming and Bob and
I are of course not attorneys, so we don't draft
documents or anything like that, but as certify financial planners,
these topics come up all the time and we help
people understand exactly how to arrange it. I want to
drill into one comment you made about trust, because I
think every other day I have this conversation with people
who had a trust written up, and it would makes
(23:14):
logical sense. I have a trust, I paid money for
it to exist. I should now name it as the
beneficiary of everything or the owner of everything, and.
Speaker 5 (23:21):
So that the objectives of the trust to be carried out.
Speaker 4 (23:24):
Where this comes up as an issue sometimes is when
we kind of knee jerk name the trust as the
beneficiary of iras or four oh one k's tax advantage money.
And that can sometimes make a mess in terms of denying,
in worst case scenario, denying beneficiaries their right to spread
that tax impact of liquidating that pre tax IRA or
four O one K over ten years.
Speaker 5 (23:45):
How do you address that?
Speaker 4 (23:46):
How can we safely make sure a trust can serve
its purpose as well as protect that benefit.
Speaker 2 (23:53):
Sure absolutely so. As you may know, as you probably know,
that the tax laws change significantly in this regard a
few years ago, and a spouse named as a beneficiary
in IRA has the ability to stretch that benefit out
over their lifetime upon them reaching age seventy two. But
(24:15):
a non spouse beneficiary doesn't have that right, and when
a lot of clients want to name their trust as
a beneficiary, and the problem with that is if it
doesn't have special language in the trust document self, what
we lawyers call it as see through language. If it's
not seen through the trust agreement to the specific name beneficiaries,
(24:38):
it can create a situation where the non spouse beneficiary
such as an adult child, can't withdraw that benefit over
a ten year period, and it can create a much
larger tax bull event when they inherit that account.
Speaker 5 (24:53):
So see through is the keyword. I appreciate that.
Speaker 4 (24:55):
Is there a way obviously, you know, somebody who's concerned
about this should check with the attorney who draft did
the document. But is there are they literally looking for
the word c through in the document or is there
a special section where is this language hidden?
Speaker 2 (25:07):
Usually so the language is usually hidden in a article
or a paragraph that describes that says retirement accounts, and
the language is going to usually reference a section of
the Internal Revenue Code on how the trustee is going
to view these retirement benefits. So, if you're listening this
(25:29):
and wondering if there's c through language in your trust.
Try to find a section titled retirement accounts and it
almost always will have the see through language and we'll
say see through to the individual beneficiaryes something along those lines.
Speaker 3 (25:45):
Hey, Dan, I know you see all kinds of situations
come past your desk, you know, as part of your practice.
I know probably most of the listeners out there are
thinking of themselves, Hey, I've got some kind of a
state plan in some way, shape or form.
Speaker 5 (25:58):
I got this covered. What are some of the things.
Speaker 3 (26:01):
There are situations you come across every day in your practice,
some of the land minds out there that people might
not be aware of, you know, due to the fact
that they just didn't cross all the t's and dot
all the ey's, you know, in terms of actually implementing
a good estate planning strategy.
Speaker 2 (26:17):
So the one I see the most is people that
believe that they're done when they complete their plan because
you know, as we all know, life changes. You know,
there's marriage, perhaps divorce, kids, starting a new business, and
your plan needs to keep up with those changes.
Speaker 8 (26:34):
You know.
Speaker 2 (26:34):
For example, I had a client who wrote a will
in his thirties and he named his wife as a
beneficiary of that will, and after their divorce. He never
updated it. However, in Ohio, divorce operates is what's called
a revocation of any provision going to the x YF.
But it can also create a situation of ambiguity and
(26:54):
the will on who is to receive the property that
was to go to the why when they were married,
and that can create some problems.
Speaker 4 (27:03):
So that would send it back through probate, wouldn't it
wouldn't that result in them saying there's no beneficiary.
Speaker 2 (27:08):
Therefore it would either get it would either go back
to there's no beneficiary or this falls through what's called
the residuary cause of the will. But again that's ambiguity
that a court has to has to weigh out.
Speaker 5 (27:21):
Hey, one more question that comes up very frequently.
Speaker 4 (27:23):
A lot of times we have we have clients come in,
they bring, you know, there, they bring their their stack
of papers and statements and trust documents, and they'll kind
of casually throw out, well, we set up this trust, uh,
you know, because it's going to protect us in the
event of long term care needs or if we ever
need to be on Medicaid or something like that. That's
almost like the just just thrown out there, and I
know it is not that not nearly that simple, if
(27:43):
it's even possible at all. Can you weigh in a
little bit on how a trust and whether a trust
can truly protect in the situation like.
Speaker 2 (27:49):
That, So trust can be designed to protect for medicaid
Medicaid planning purposes, in general, those trusts have to be
what's called irrevocable trusts, and the person who set up
the trust, such as a set lore is what they're called,
cannot act as the trustee of that trust. And more importantly,
(28:13):
for trust to really protect for medicaid planning purposes, the
trust has to be funded with the person's assets at
least five years prior to applying for Medicaid. So I
hear that a lot from clients as well, and it's
I always say, well, slow down, let's take a look
at what the trust actually says and what assets have
you funded to this trust?
Speaker 5 (28:34):
Okay, one more quick one in the last few seconds here,
what about nursing homes.
Speaker 4 (28:37):
What if it's not a case where we're trying to
impoverish to get to medicaid stage.
Speaker 2 (28:42):
If we're not trying to impoverish a person to get
to a medicaid stage, there's really no benefit for an
irrevocable trust for medicaid purposes. There could be a benefit
for irrevocable trust for tax planning if their estate is
valued over thirteen point nine million, for example, but if
it's for if we're just if we're not looking at
(29:03):
those two issues or any kind of asset protection an
era vocal trust, in my experience, just as in providing
that benefit, a.
Speaker 3 (29:12):
Lot of good things to think about and consider as
we review our estate plan, you know, And I think
the key point is is review it at a minimum
of every three to five years. Great stuff from Dan Perry,
are a state planning expert with the law firm of
Wood and Lamping. You're listening to Simply Money, presented by
all Worth Financial on fifty five KRC the talk station
(29:34):
Mark Levin.
Speaker 9 (29:35):
Let me tell you, so, the Internet is breeding evil,
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And TikTok is the main culprit.
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The company needs to clean it up because this is
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people put on this stuff.
Speaker 1 (29:58):
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Your opinions are welcome to here.
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You're listening to Simply Money, presented by all Worth Financial
Umbop sponseller along with Brian James.
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When we talk to families who've done a great job
building wealth, one of the most common things we hear
is this something like, hey, we don't want to spoil
the kids, but we do want to help them enter
the family mission statement, or what some like to call
a wealth letter. Brian, this is an excellent topic that
I want to get into, and I'm anxious to hear
(31:00):
your perspectives on this because I have some as well, so.
Speaker 4 (31:03):
Yeah, the wealth letter is just really sitting down and
figuring out what does money mean to me? And a
lot of times it's most impactful in a situation where
maybe you are the first generation who had a significant
amount of wealth over and above what you needed to
pay the bills. Mom and dad might have done a
great job, you know, raising you and getting you off
on your feet and everything, such a great job that
(31:23):
you are in a position to have more than you need,
and therefore you have to prioritize how you're going to
spend it. Some people like the creature comforts and they
choose to spend on that, and then there's nothing wrong
with that, you know, Free country. Our only concern is
that the financial plan work. Other people think very differently
about it. I have obligations to families, to charities and
other things. I've been given so much I need to
give back a little more. Lots of people are solidly
(31:46):
in the middle, and there's no right, wrong, or indifferent
to any of it. But those are the kind of
values that you would pass along, you know, via something
like a wealth letter, which essentially is just really documenting
here's what I believe and here's how we got in
this position, and here's what I want to pass on
to you children, as opposed to, uh, here's a big
pile of money.
Speaker 3 (32:03):
I think this is an excellent idea to go through
and a lot of families don't do this, and I
think it's a potential miss. Here's what we mean by
that wealth letter. Here's a couple questions that you could
just sit down think about with your spouse. And it
doesn't have to be a one time thing. This can
be a letter that evolves over the over time. But
here's some of the big questions to write down. Answers
(32:24):
to what does money mean to our family? What are
our responsibilities with money as a family. What legacy do
we want to leave behind, not just in dollars, but
in character.
Speaker 4 (32:38):
You know, Bob, we often hear about situations where a
significant amount of wealth was passed from one generation to
the next. And you know, sometimes that includes a business,
for example, and a lot of times that second and
third generation, you know, maybe perfectly well meaning people, but
they did not have to put in the same blood,
sweat and tears and elbow grease into building that business
that the original generation did.
Speaker 5 (32:58):
And that's not their.
Speaker 4 (32:58):
Fault, but they to view it a little bit differently,
and it can be tough to pass that to pass
that drive on to someone who didn't have to do
it in order to survive. So it can be very
very important to make sure that everybody knows the history
of the family, where did this come from, and what
is their obligation in keeping it moving forward. So let's
talk about a local example here, Bob. We know a
(33:19):
family from Hyde Park. They put a whole letter together
that went all the way through their entrepreneurial story. And
this starts with an old shoe store down and over
the Rhine, and now they go through it every Thanksgiving
to remind everybody of where it all came from. And
again this goes back four and five generations. It's a
great story, and I think that's a great place to
Thanksgiving is a great time to come together not only
be thankful for the situation that you're in, but also
(33:40):
remind everybody how you got there in the first place.
Speaker 3 (33:42):
Well, and the key thing I love about that story
and that example from the family in Cincinnati is they're
not waiting for them to die to leave a piece
of paper behind. They're talking about it at the Thanksgiving
dinner table. In other words, they're living it out now
talking about their family history and their value now when
(34:03):
everyone's seated at the table and they can hear mom
and dad and grandma and grandpa talk about it today,
that is a powerful way to actually pass down these
values and live them out instead of just leaving a
document behind that says basically, it might be like, hey,
do what I say, not what I necessarily did. That
tends to sometimes fall on deaf ears.
Speaker 4 (34:24):
Yeah, and a lot of you might be hearing this going, Okay,
do I need another Documentarity got to worry about my
will and my trust and all these other things. Those
estate planning documents are about how. Those are the the
instruction manual for how your assets are to be distributed
according to whatever you have and whatever the goals are whatever.
This one is about the why. There is no legal
requirement that you put it together, but it will help
(34:45):
your descendants understand exactly why you made the decisions you did.
Speaker 3 (34:50):
You're listening to simply Money presented by all Worth Financial.
I'm Bob Sponseller along with Brian James. Brian talk about
what you've seen. Have you seen actual clients of yours
go through anything like this, either in written form or
conversation with family or both. You know, can you cite
maybe an example that you've seen your clients do that
(35:11):
have really warmed your heart and made you feel real
good about the future of a family based on this
kind of planning.
Speaker 4 (35:19):
You know, when you ask me that question, the one
that comes to mind immediately. I have a family who
every year they get together and they do they do
a state planning gifts. This is a fairly common type
of situation. If you know, an elderly couple has more
than they need and what they're concerned about a state taxes,
then what they'll do is they'll use what's called the
annual gift exclusion. You can give anybody you know a
(35:39):
certain amount. I'm thinking of a family that does annual
gift exclusions, meaning they use the annually available mount that
they can give to their families without any repercussions for taxes,
gift taxes, anything like that. And a lot of families
do this, but a lot of times it's just a
check in the mail, which just means it's money that
falls from the sky and the recipients simply stick in
the bank or blow it on something or whatever and
(36:00):
have no appreciation for it. But the family I'm thinking
of makes a production in the Over the holidays, everybody
sits down for holiday thank you, Thanksgiving or possibly Christmas dinner,
and they will talk.
Speaker 5 (36:10):
About again, as many do.
Speaker 4 (36:12):
They'll talk about why they're thankful to the situation, what
it is about the their situation that they're truly grateful for,
and then what they are going to do with that
money that's coming from the generations above. And that is
a tradition that will continue on in this family, it
already has for several generations.
Speaker 5 (36:26):
Great stuff. Here's the all Worth advice.
Speaker 3 (36:27):
A family mission statement won't show up on a balance sheet,
but it may be the most valuable document you ever create.
Coming up next, we've got Brian's bottom line. Brian's going
to spend a few minutes talking to us about Wroth
conversions and he does a wonderful job counseling clients through this.
I'm excited to hear his take on the whole Wroth
(36:48):
conversion topic. You're listening to Simply Money, presented by all
Worth Financial on fifty five KRC, the Talk station.
Speaker 8 (36:56):
The Threat of Iran the end of the twelve day war,
the latest news. I gotta get Israel to calm down.
Speaker 1 (37:03):
Now we're on the verge at real peace in the
Middle East. And your latest o Ginians, 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. Hear about it, the constantly changing narrative. More
news out of the Middle East. Talk about it.
Speaker 5 (37:18):
I have thoughts and questions.
Speaker 1 (37:19):
There's a lot of news in the world right now.
Speaker 3 (37:21):
Our team is always here to answer your questions.
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Fifty five KRC the talk station. Hey, it's Malegger with
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Widow Worried that next month I have to choose between
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Talk about it here fifty five KRC the talk station.
Speaker 3 (37:41):
Moment you're listening to simply money for some of my
all were financial Lumpbop spun seller along with Brian James,
and it's time for Brian's bottom line. Brian Phillip give
us some wisdom about roth conversions as seen through the
eyes of Brian James rob Well.
Speaker 4 (37:58):
Roth conversions are an amazingly powerful tool that not a
lot of people understand.
Speaker 5 (38:02):
You know, the pros and cons too.
Speaker 4 (38:04):
But what we're talking about, of course, for a long time,
if you have had a job with the last several
decades and you had a four oh one k, most
likely that was a traditional or pre tax four oh
one k, because it's just what you did, and so
it was the only choice for a very long time.
ROTH came to be in the early two thousands, literally
the year two thousand that was IRAS, and then eventually
it found its way into four to oh one case. Now, ROTH,
(38:25):
of course means that you are paying taxes upfront. This
doesn't mean more tax You're not going to get an
extra tax bill. You're simply just not getting it deducted,
you know, getting it deducted from your income at the
payroll level. But you'll pay taxes on it now, and
you'll invest it in something and it'll grow to whatever
it grows to over time. You're going to pull it
out completely tax free. That means that there are no
(38:47):
capital gains, no dividends, no kind of ordinary income tax
at all, and there are no required minimum distributions. So
when you are seventy three or seventy five, depending on
your year of birth, you're not going to have to
deal with those kinds of things, with being forced to
take money out and pay taxes on it, and most beneficially,
your kids will inherit a tax free Not only that,
(39:08):
when they inherit wroth iras or wroth foural one k's
are subject to the same ten year rule, meaning it
has to be completely liquidated for anybody who passes after
twenty twenty, the airs have ten years to totally liquidate
that wroth ira or four one k. But what that means, though,
if you think about it, that means those errors can
let it grow an additional ten years completely tax free,
(39:29):
because they don't have to empty that bucket until then.
Speaker 3 (39:32):
The benefits of all this are obviously, you know, many,
and it's lucrative. But walk us through how do you
actually guide somebody through this process of saying, Brian, this
all sounds great, How do I do this? How do
I decide the amount to do when to do it?
Speaker 4 (39:48):
Walk us through your So, first of all, acknowledge the
fact that you are voluntarily writing a fact check to
the irs that is often sometimes in the mid to
high five digits, depending on what we're trying to accomplish.
So I'm thinking of somebody who of course that you know,
had a lucrative career, maybe thirty four years, forty years
of work, the end of which was in the higher
tax brackets. And then they retire and we've got cash
(40:09):
set aside to pay the bills for a while, and
now all of a sudden they're in a really, really
low tax bracket because they literally have no income. This
is before you turn on social Security and other income streams.
You know, maybe you can hold off as well if
there's a benefit to it, but take advantage of those
low tax brackets. Don't just be happy paying no taxes.
Turn that around. Pay low taxes, not no, but low
(40:29):
taxes to get those roth conversions done now, and then
you can turn the ship around with all the growth
that will happen inside the count from then on out
will be tax free. But again, you are definitely sacrificing
a good chunk up front. That is a sacrifice. There's
a break even point out into the future. But in
the right situation, it can be an extremely powerful tool
to control the income taxation of your hard earned assets.
Speaker 3 (40:51):
Good stuff, Brian, thanks for listening. You've been listening to
Simply Money present up by all Worth Financial on fifty
five KRCV talk station.
Speaker 1 (41:00):
Of an emergency, you should have a plan. Here is
the plan. When events are happening.
Speaker 8 (41:05):
The events of today, you should plan on listening.
Speaker 4 (41:08):
This is a great plan for big trade deal India
and Pakistan.
Speaker 1 (41:12):
Potential to get out of control the pulp.
Speaker 2 (41:14):
That it did.
Speaker 1 (41:15):
Pieces of that being beautiful Bill done. People that are
here illegally need to go home. Weave our policy, interest
rate unchanged.
Speaker 5 (41:22):
In any event. If we know something was going to happen,
check in, do it.
Speaker 1 (41:25):
Off fifty five krc the talk station. We're entering some
very uncertain
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