November 13, 2024 • 37 mins
Paul Lane and Marc Fandetti react to the CPI report that came in firm for the third month in a row and what that means for rate cuts in December. How will the next administration handle inflation? Why is the stock market reacting so strongly to Trump? Todd Lutsky joins the show to share his expertise on gifting assets.
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
The Financial Exchange is produced by Money Matters Radio and
is hosted by employees of the Armstrong Advisory Group, a
registered investment advisor. All opinions expressed are solely those of
the hosts. Do not reflect the opinions of Armstrong Advisory
or anyone else. Investments can lose money. This program does
not offer any specific financial or investment advice. Please consult
your own financial, tax, and estate planning advisors before making
(00:20):
any investment decisions. Armstrong Advisory and the advertisers heard on
this program do not endorse each other or their services.
Armstrong and Money Matters Radio do not compensate each other
for referrals and are not affiliated. This is the Financial
Exchange with Paul Lane and Mark vand Eddie, your exclusive
look at business and financial news affecting your day, your city,
(00:42):
your world. Stay informed and up to date about economic
and market trends plus breaking business news every day. The
Financial Exchange is a pround partner of the Disabled American
Veterans Department of Massachusetts. Help us support our great American
heroes by visiting DAV five k dot com and making
a donation today. The DAV five K Boston is presented
(01:04):
by Veterans Development Corporation. Face is The Financial Exchange with
Paul Lane and Mark Fandetti.
Speaker 2 (01:13):
Welcome to this Wednesday edition of The Financial Exchange. Paul Lane,
Mark Fndetti, and Tucker Silva here with you today and
this morning we kick off our show with a inflation
report that came out for the month of October. Certainly,
there has been a tremendous rally in the US markets
over the course of the last week or so, a
lot of news around President Trump and his potential economic policies.
(01:37):
But we'll kick off today's show with a little bit
of talk on some recent reports that came out on
the USCPI front. What we saw from the eight thirty
a m. Release this morning is US Consumer Price Index
data on month over month inflation increased point two percent.
That is now running at a year over year number
of two point six percent. So these were relatively in
(01:59):
line with expectations. If you look at a different metric
that was posted in this report, which is called core
CPI consumer Price Index data. When we use that CPI acronym,
that strips out the impacts of food and energy, those
numbers came in at point three percent month over month
in terms of the increase there and on a year
(02:20):
over year basis, the core CPI, again stripping out the
impacts of energy and food, came in at three point
three percent. So largely parsing through this data that we
received this morning, relatively in line with what economists had expected.
There are some points that we can hone in on,
such as energy that was relatively flat over the month
(02:42):
of October. Shelter continues to be an area of an
inflationary pressure. The costs for housing increased point four percent
month over month, and that's running about five percent on
an annual basis year over year. In terms of the
most immediate impacts on the interest rates side of things,
heading into this morning, there was about a sixty percent
(03:06):
likelihood if looking at the CME futures, which price out
whether or not the Federal Reserve will cut interest rates
at their next meeting on December eighteenth, sixty percent ahead
of this morning's data. That now sits at about eighty
percent in terms of the likelihood of a cut in
the next Fed meeting, and that will be the last
one for twenty twenty four, and as I speak at
(03:27):
the moment, that percentage is increased to eighty two percent,
So a pretty high likelihood in response to this inflation report,
that we will see another cut here in December. Mark
any of your major takeaways from the report. I kind
of highlighted some of the bigger numbers and the impact
on the Federal Reserve and potential interest rate cuts, but
anything that you glean from this October CPI report?
Speaker 3 (03:50):
So what are we trying to get at here? Where
where is the FED trying to get the economy to
You pointed out that core inflation, which is what I'll
use for the part of our conversation, Core increased three
and a half percent over the last year, and if
you annualize, as Mike Armstrong likes to do the last
few months, because that's better indicative perhaps of the of
(04:13):
the trend and inflation more indicative of recent experience, you
get something closer to three point seven percent. The Fed's
goal is two. The Fed follows a different The Fed's
Choice Index is different than the Consumer Price Index, the CPI,
as you explained that we're talking about today, but the
two move in tandem, though there is a structural difference
(04:34):
between the two that we don't have to get into.
So the bottom line is measures of the trend and inflation.
Forget about headline for a moment. The all Items index,
measures of the trend and inflation are running well above
the fed's goal. That shouldn't surprise us, is one takeaway.
Because GDP growth grows domestic product the only measure. There
(04:57):
are others like GDI, which measures the incomes out of
the equation. So I'm going to oversimplify a little bit here,
but GDP our primary measure of economic health. It's the
measures of the economy's heartbeat. It's not perfect, but it's
all we've got. GDP, we know in the last quarter
grew about two and a half percent. I'm rounding down
a little year over year, and at an annualized rate.
(05:20):
If instead you want to look ahead at about the
same clip, that's much faster than most economists think the
economy should grow given what I'll call structural forces, productivity,
labor force growth, the things that contribute to economic growth
in the long term. What I'm trying to say is
the economy is running faster than what most economists think
(05:40):
is it's speed limit. Speed limits not the best analogy.
Your tachometer might be a better analogy. We're in the
red zone on the tachometer, if you want to think about.
Speaker 1 (05:49):
It that way.
Speaker 3 (05:50):
So it's not surprising that inflation remains a little bit
elevated because it's not a function of what I'm going
to be a little bit flip here. It's not a
function of what energy price do month over month, even
though we know it is. I'm going to make a
broader point. It's not a function of whether shelter jumped
month over month, as it did, only in the immediate sense,
only in an accounting sense, is at a function of
(06:11):
those things. Inflation really happens when the FED puts too
much money into the economy, stoking too much demand given
the level of supply, and that pushes up prices, and
to me, core inflation. Will get other reads on the
trend in inflation today, like media, and we should get
that during the show. If I think of it, we'll
(06:32):
let you know what it is. They suggest that the
economy continues to run a little hot. I think that
the FED might. I'm not a monetary economist. I'm just
a generalist, and everybody's got an opinion on this stuff.
But I don't think it's disputable that the economy is
running a little bit above its speed limit, Paul.
Speaker 2 (06:48):
So I posit it to you Mark based on your
synopsis there. It seems to me, and I don't want
to put words in your mouth that you're you have
maybe a higher level of concern on where inflation stands
relative to where the Federal Reserve is, because for all
intentsive purposes, the Federal Reserve has more or less said
with their policy action and some of the sentiments made
(07:08):
by Chairman Drome Powell that they are no longer concerned
about inflation spiking up dramatically and that they feel as
if they have it relative under control, and their actions
echo that. We just talked about some of the rate
cuts that we've seen. We've seen seventy five basis points
of rate cuts so far, fifty the first time, another
quarter basis point in the early November meeting, and like
(07:28):
I just said, we're now sitting at an eighty two
percent likelihood of perhaps seeing another one come. Prior to
the year end meeting, the focus, largely from financial rhetoric
has been the labor market. So I do ask you
that question, do you feel as if it's something that
is being underlooked or under scrutinized during this period of time.
(07:50):
I don't know.
Speaker 3 (07:51):
I mean, they've got reams of PhD economists who do
nothing but augment and enhance these elaborate models of the economy.
And we may snicker when we hear models of the economy,
but it's a very complex phenomenon and you try to
approximate it with models. They're not perfect, obviously, but they're
(08:12):
the best we've got if you're in the business of
making monetary policy. So I'm not going to presume the
second guest the more claim to know better. My only
claim is that it should not be surprising that underlying
inflation remains elevated, given that the economy continues to operate
above potential. And I think it's useful to keep And
this is, by the way, I'm taking this from standard
macro economic theory. You'll find it in every textbook taught
(08:36):
in every virtually every university. So nothing about what I'm
saying is unique to me or original in any way.
The FED knows what I'm saying. Obviously, they're economists have
read the same books that I have, so presumably, Paul,
to your point, they know something that the rest of us,
don't they are more concerned about slackening in labor market
(08:58):
measures that you alluded to, then maybe a superficial look
that I give the data would suggest. So I'm willing
to admit that those folks should know better.
Speaker 2 (09:09):
But we all know that. No wonder that two percent
number is arbitrary in a sense right there? The Fed's
goal of two percent inflation is it? Is it really
problematic if it runs? If we see these numbers continue
to run at three percent over the course of twenty
twenty five, and the consumer remains resilient, which has been
really sure the largest folkrum for continued economic.
Speaker 3 (09:30):
Growth, Yeah, it's not inherently problematic to your point, though
they picked a target.
Speaker 2 (09:35):
Yep, the target's not that old.
Speaker 3 (09:37):
They only started articulating a target publicly in twenty twelve.
They always had one. Green Spans was somewhere in the threes.
But he wants Greenspan wants actually threatened. I wasn't there
to see it. This is written in a book by
a guy named Alan Blinder, who was vice chair at
the time. Green Span threatened the committee. You don't let
our goal get out because once it does, people anchor
(09:58):
to it and it reduces our maneuverability. So green Span
knew that you should keep your goal secret. The point
was to keep inflation low and stable. You don't have
to definitively state a target because then you're handcuffed potentially.
And yeah, Paul, I think only because they've articulate we'd
all be fine with three percent inflation. Yeah, Zada likes
(10:19):
to point out that was the rate in the nineties,
a little bit less than that. It was a little
bit more than that in the eighties. It was it
was not a nuisance. And that's where you want inflation
to the point where it's operating in the background, no.
Speaker 2 (10:31):
One's talking about it, and that's where it was really
for the last decade prior. That's actually shows like us
don't talk about it. That's really what you're aiming for
and what the Federal Reserves goal is to have that
price stability and so that people amongst just the regular
Americans stop talking about it on a daily basis, that
you're not saying, oh, gee, my grocery prices are so
(10:51):
much higher. The more time eclipses without seeing inflation tip
up than the more likely we are to see that
we're going to take a quick break here on the
Financial Exchange. But when we come back, we're going to
be talking about Donald Trump's win and what that means
for inflation. We just covered the October CPI report that
we had. What does Trump's win mean for inflation going forward?
When he takes office in January. We'll be covering that
(11:13):
right after this break.
Speaker 1 (11:15):
This is your home for the most comprehensive coverage of
the economy and the trends on Wall Street. This is
the Financial Exchange Radio Network. If you missed any of
today's show, catch up whenever you want on our YouTube page.
Find daily show segments and full shows. Just go to
YouTube dot com and search for the Financial Exchange. This
is your home for breaking business and financial news. This
(11:38):
is the Financial Exchange Radio Network.
Speaker 4 (11:43):
The segment of the Financial Change is brought to you
part by the US Virgin Islands Department of Tourism. The
US Virgin Islands are Saint Croix, Saint Thomas, and Saint John.
With fall in full swing, now's the time to start
looking at a fabulous holiday vacation. And there's no better
place than the US Virgin Islands. Enjoy perfect weather, world
class dining, incredible beaches, and a vibrant nightlife. No passport
(12:05):
is needed and there's no money to exchange. Take your
next vacation in America's Caribbean paradise the United States Virgin Islands.
Go to visit USVII dot com to book your trip.
That's visit USVII dot com.
Speaker 2 (12:19):
So Mark I talked about this with Mike and yesterday's show,
But many listeners know that I was out the last
week or so as we welcome my wife and I
our daughter, Lilah, my third child. So I was buried
in diapers and bottles. But I did hear during my
time out that there was an election and that President
Trump will be taken over. I wasn't too plugged into
(12:40):
to everything, but I certainly heard about that. And so
one of the things that we've been really focused on
now as ever turned back to the office. I'm sure
you guys spent a ton of time talking about it
last week is his potential policies and the impact on
inflation in the economy in general. And the word that's
been at the forefront of most financial publications has been
tariffs and the impact that that could have on the
(13:03):
US economy. And so there is a piece here done
by Time that is titled what Donald Trump's win means
for inflation and curious mark your thoughts on tariffs and
their potential impacts. Certainly, I do have concern that this
could lead to inflationary pressure if they were widespread. I
don't know, and no one seems to know really, if
(13:25):
this is gonna be a negotiating tactick that Tump Trump
employs like he did in his first term where it
was more to ruffle feathers to try and get other
countries to acquiesce to our pressure, or if it's going
to be something that is truly widespread. So curious your
thoughts because you and I haven't spoken on the show
about it.
Speaker 3 (13:41):
Yeah, the textbook answer to your question is, Yeah, tariffs
are inflation. Are their taxes They push up prices full stop.
Speaker 2 (13:47):
Yep.
Speaker 3 (13:48):
Whether the inflation persists, though, depends on how the Fed responds.
And that's true of any shock. It doesn't have to
be a tariff. It could be an increase in the
price of oil due to a geopolitical event. It could
be an earthquake in Japan that causes components and car
components of cars and cars to get more expensive. That
would qualify as a supply type shock. So the shock
(14:10):
could be of many different from many different sources. The
question is does the FED accommodate the shock and allow expectations,
which are an important part of the inflation process, to rise,
and that results in inflation getting dug in. So tariffs
as a national security tool, the merits of tariffs that
(14:34):
is a slightly different question. So that was a horrible sentence,
but you know what I'm getting at The national security
argument might be strong. The economic argument economists hate tariffs, right,
They distort production everybody. The producers that are now protected
raise their prices too, so profits accrue to domestic producers.
Just think of the car industry when we coddled it,
(14:55):
quality deteriorates because coddled producers don't face competition. If you
a Chevy Citation before the eighty five model, which I
think was more solid, but you know what I'm You
know what I'm getting at it. If you drove a
Chevy in the nineteen eighties, other than some of their trucks,
you know what I mean, weather stripping, flying off the windows,
and paint peeling unless you got the Rusty Jones treatment.
(15:16):
Those were not great. Those were not the golden era
for us. Cars competition helped them. We all, those of
us who lived through it, and those of us have
heard the stories, know this. So domestic producers charge more,
quality goes down. Consumers on average are worse off. I'll
say again, full stop, there's no denying it. Some are
better off. Massachusetts will be worse off, period, Michigan, Ohio,
(15:39):
parts of those states and will be better off. And
I think that explains the election results. Our GDP Massachuset.
I'm being Massachusetts centric here, but you could attribute this
to you could apply this to all of New England
has skyrocketed for the most part over the past thirty years.
We have been at the forefront of the information technology
and biomedical revolution. I'll say Massachusetts in particular. Our GDP
(16:02):
is sword while Ohio's has been. We were equal with
Ohio GDP per capita in nineteen eighty. Now we're fifty
percent higher. Interesting end of story, like now you know
why those people are disgruntled, right, So they want policies
from which they will be the winners. Many in Lordstown
and elsewhere will be We will be the losers, and
on average consumers lose from tariffs and in the short term, Paul,
(16:24):
to get back to the original part of your question, Yeah,
they'll push up prices. Some of you may say that's fine.
I don't want to import Chinese goods and help the
economy of what will almost surely be an adversary for
some time. That's a different argument. I'm actually very sympathetic.
But economically the verdict is clear. They're ineffective and they
(16:45):
generally hurt people.
Speaker 2 (16:46):
Yeah, I just hope that those people are willing to
pay the higher prices and put their money where their
mouse is if you're in favor of those teriffs for
on some items. To me, and Chuck always brings us
up too, it just doesn't seem like it's a national
security concern to have sketcher shoes or American eel apparel
or any type of apparel. And I thought there was
a good point made in this time piece that ninety
(17:07):
eight percent of your closet, you and I is likely
imported from overseas and perhaps China or many other countries
out there unless you're in the US military. So I
don't view it as a huge national security center to
have my T shirts made in China. Ultimately, we get
a better end price from it. When you're talking about
semiconductors and other types of materials that can be used
(17:30):
in military deployment and things like that for weapons, it's
certainly a different tone there. But again, all of this
is conjecture. I find it hard to really have a
thorough conversation about this because we don't know how these
tariffs are really going to shape take form. It's been
mentioned that there would be.
Speaker 3 (17:46):
A sixty go Sorry, Paul, you think you think there's
clarity on it, Yeah, but we got to have we
have to have this discuss. But I mean, I think
I think Donald Trump's dead serious about tariffs. He's been
talking I'm fifty two, He's been talking about it my
whole life, right, I think he's committed. If there's you
could say he's inconsistent in other ways, but he is.
It used to be Japan when I was a kid,
Japan was a boogeyman. They were gonna bury us. They
(18:07):
had the formula, and then Japan came to a stop. Basically,
growth did per capita in nineteen ninety and they've never
really it's not funny if you're Japanese. I guess they've
never really recovered. They're hardly languishing. They still have a
very high standard of living.
Speaker 2 (18:21):
So I think this is the one thing that in eighteen,
but in you know, sorry, twenty sixteen, wasn't this a
conversation as well? We spent so much time to secting
and and there were there were tariffs, to be clear,
but I don't know if the presidents used them. They're
as widespread as anticipated when he was.
Speaker 3 (18:36):
No, he's talking about tariffs on every import. Well, I
understand jd Vance, right, No, I know, I know you.
He and jd Vance want to make everything here. Jd
Vance famously said not one American job is worth five
million cheap toasters, which is honestly the stupidest thing I've
ever heard anybody say on an economic matter, Like you
take the savings that we get from cheaper toasters, which
(18:57):
by which don't conveniently don't burn your kitchen downund it
in the econ, you use it to retrain people who
may have been displaced. That's the answer. It's not to
keep out foreign toasters. So it's this sort of primitive
economic thinking that I thought we squashed decades. I thought
this argument was settled. It's like the argument over vaccines.
Like I thought that was settled. People don't die of
(19:17):
de theoria anymore, thank god, But apparently we're going to
have that discussion again.
Speaker 2 (19:22):
Taking a look at the markets here, we're in relatively
mixed territory throughout the early action, but we're going to
take a quick break here in the Financial Exchange. When
we come back, we're going to be having a lengthy
discussion with as TODs. So get those questions ready and
Wall Street watch. That's right after this break.
Speaker 1 (19:41):
Like us on Facebook and follow us on Twitter at
TFE show. Breaking business news is always first right here
on the Financial Exchange Radio Network. Time now for Wall
Street Watch a complete look at what's moving markets so
far today right here on the Financial Exchange Radio Network.
Speaker 4 (20:01):
Markets are mostly quiet and in a mixed territory as
Wall Street reacts to the Consumer Price Index unveiled this
morning for the latest gauge on inflation cam in line
with expectations, where consumer prices climb two point six percent
in October, slightly higher than two point four percent in September.
At the moment, the Dow is up by eighty points,
(20:21):
just under a quarter percent. SMP five hundred is edging
two points higher, and the Nasdaq is off by eighteen points.
Russell two thousand is up by two thirds of a percent.
Ten year Treasure reeled is flat at four point four
to two percent, and crude oil is down by nearly
one percent, trading its sixty seven dollars and fifty six
(20:43):
cents a barrel. Rivian Automotive shares jumping by eighteen percent
after the ev maker announced its joint venture with Volkswagen
in a deal worth five point eight billion dollars. The
first Volkswagen models to use Rivian software in electrical architecture
could arrive as early as twenty twenty seven. Meanwhile, Spotify
(21:05):
shares jumping by seven percent after the music and podcast
streaming platform posted a third straight quarterly profit as efforts
to control costs payoff. The company's fourth quarter profit forecasts
exceeded analyst estimates, and its monthly active users in the
third quarter climbed eleven percent from a year ago. Elsewhere,
(21:25):
fast casual Mediterranean restaurant chain Cava beat third quarter expectations
and also boosted its annual guidance. That stock up by
ten percent, and according to The Wall Street Journal, Spirit
Airlines reported that the struggling excuse me, Spirit Airlines. The
struggling airline was preparing to file for bankruptcy following the
(21:46):
breakdown of merger talks with Frontiers. Spirit shares are down
by fifty five percent. I'm Tucker Silva and that is
Wall Street Watch.
Speaker 1 (21:58):
This is ASK Time on the Financial Exchange Radio Network.
If you have an existing estate plan or in the
market for one, Todd Lutsky is here to answer your
questions and help you plan for later life. Ask Todd
is presented by Cushing and Dolan, serving Massachusetts and New
England for more than thirty five years, helping families with
a state and tax planning, Medicaid planning, and probate law.
(22:19):
Visit Cushingdolan dot com. Now here's Todd Lutsky.
Speaker 2 (22:24):
It is now time for our weekly segment with Todd
Lutsky from Cushion Dolan. If you have any type of
a state planning question, question about taxes, gifting, anything of
that nature, give our off our studio line a call
at eight eight eight to zero, five two two sixty three.
Again any of your estate planning questions, Todd is here
to answer them. That phone number eighty eight to zero
(22:46):
five two to six ' three, Todd. How we doing today?
I'm never better on you doing well, Todd. We're coming
up on year end here, and what's coming soon, particularly
around my house, is the holidays and the gift season,
and decorations are already going up this weekend for Christmas
at my home. My question to you, Todd is what
(23:07):
are some considerations that folks should have out there in
regards to gifting assets. Perhaps they're feeling generous around the holidays.
What are some considerations that folks should have head into
your end here.
Speaker 5 (23:17):
Yeah, people don't think much about gifting, and it happens
sometimes easily, sometimes without much thought, but it can have
a lot of tax consequences associated with it. And we
want to encourage gifting, but it's not always needed. So
some people say, well, I got a gift to get
assets out of my estate to reduce my estate taxes.
(23:39):
Maybe check is it over the federal Am I going
to be getting it out or save federal estate taxes?
Or am I getting it out of my estate only
to save state estate taxes? Big difference? Why if I'm
going to move assets out of my estate to save
a forty percent federal estate tax haircut, Well, that that
(24:01):
might be worth it. If I'm moving assets out of
my estate only because I want to reduce my state
death tax. Well, in Massachusetts anyway, I can't speak to
the other states, but in Massachusetts anyway, you're saving about
ten percent. Well, that that may not be enough to
do it. And why I say that is especially the
(24:23):
next thing you need to think about what kind of
assets might I gift if I'm going to gift. Right, Well,
if I'm going to gift, you know, cash is always
king Why because it's high basis. And why am I
talking about basis? Well, because when I make gifts, I
can consider saving on the estate tax front. But if
(24:44):
I give away assets that have a very low basis,
then I've got to remember I could be creating capital
gains tax problems even though I might be saving on
the estate tax front. It's doing example, perhaps let's say
you know you've got a house that you want, a
(25:05):
vacation home that you've had in the family, and you say,
you know what, I'm going to give that away, get
that out of my estate. It's worth a million dollars,
but you know we only paid two hundred thousand for it.
Long ago. Well, now there's an eight hundred thousand dollars
gain built into that property. So I might be moving
a million dollar asset out of my estate, and of
(25:27):
course how we do that as a whole conversation we
still have to have. But I might be moving that
out of my estate. So now my estate is a
million dollars lower in value. But that gain that I
gave to the kids, right, I gave them the vacation home,
I gave them my cost basis, and I gave them
(25:47):
that gain. So if they, after my death decide to
sell the property because they don't want to maintain it
or deal with it anymore, they're going to be paying,
you know, twenty eight point eight percent, call it thirty percent.
That's two hundred and forty thousand dollars in tax. I
just gave them a two hundred and forty thousand dollars
tax pill. Well, instead, maybe I should keep that asset
(26:11):
and consider other assets that I would give away, because
giving away a million dollars, if I'm only saving on
the estate tax front in this at the state level,
I saved maybe one hundred grand, but I incurred two
hundred and forty thousand in capital gains tax.
Speaker 2 (26:28):
Yeah, that's the kids. I'm not gonna love that.
Speaker 5 (26:30):
You got to think it through.
Speaker 2 (26:31):
We're talking here with Todd Lusky from Christian Dolan, going
over everything in the estate planning realm. If you have
any questions for Todd, give our studio line a call
at eighty eight to zero five two to sixty three.
Speaker 1 (26:44):
Again.
Speaker 2 (26:44):
That number for any of your estate planning questions is
eighty eight eight to zero five, two to six three.
We're gonna take a quick break here, but when we
come back your questions next with Todd Lutsky.
Speaker 1 (26:58):
Ask Todd with Todd Lutsky every Wednesday at ten thirty
only here on the Financial Exchange Radio Network. You're listening
to Ask Todd with Todd Lunsky on the Financial Exchange
Radio Network.
Speaker 2 (27:19):
We are back here with Todd Lutsky from Cushion Dolan.
If you have any questions in the estate planning world,
whether it be on taxes, gifting, trust wills, anything of
that nature, give our studio line a call at eight
eight eight to zero five two to two sixty three. Again.
That phone number here eighty eight eight to zero five
two two six y three for any questions that you
(27:40):
have for attorney Todd Lutsky. Here, Todd, I have a
question for you. There was a piece yesterday in the
Wall Street Journal that was titled estate planning priorities for
people without children. Certainly the majority of the focus on
the estate planning side is for those who do have kids.
You want to make sure that your kids inherit the
assets that you've worked hard for. But what considers would
someone have that maybe is not in as much of
(28:03):
a rus to do because they do not have children.
What would be some of the considerations that they'd want
to have in building on an estate plan or maybe
some of their basic planning documents like living will, power,
attorneys and things of that nature.
Speaker 5 (28:13):
Well, I think there's more to consider than just that,
even just and I think the fair question might be,
just because I don't have children, does that mean I
don't do estate planning. That's kind of what I'm hearing
right from this question, And a lot of people might
think that. They might say, well, just because I don't
have children, therefore I don't need to do a state planning.
Well maybe not. Maybe you know, it does change the dynamic,
(28:36):
right when I meet clients that are even if they're
married I meet clients that are married and don't have kids, right,
I go. That immediately changes the dynamic a little, but
doesn't mean we don't do planning because they still want
to take care of each other. So it could be
a single situation or a married couple with no kids.
So on a married couple with no kids, I still
want to make sure that you know, when one dies,
(28:58):
we make it easy for the other one. So we
still would want to avoid probate at a bare minimum.
So I would want to set up my trust simply
to do that. Now, I think if you're a married
couple with no kids, you're probably not as worried about
the nursing home. Why because there's just so many things
we can do last minute to protect assets for a spouse,
(29:21):
different than when you're single. But for a spouse, there's
things I can do last minute and make sure things
get over to a spouse. Now, remember, if you had kids,
just getting things to a spouse is not helpful because
then if the spouse gets sick, the kids aren't going
to get it right. But if we're not talking about
trying to preserve assets for children, then I'm thinking the
(29:42):
kind of trust they would do would be you know,
probably a revocable trust, so that would avoid the probate,
and that would also allow them to stay in complete
control of everything, which of course they would want. And
then you still have to ask them. Just because you
have no kids doesn't necessarily mean that you don't have
(30:03):
loved ones that you want to leave assets to. And
so maybe there are nieces and nephews right that if
you don't have kids, they feel like your kids, and
so I'd want to provide for them. Or maybe you
have siblings, or maybe you have cousins.
Speaker 1 (30:18):
I don't know.
Speaker 5 (30:19):
So even if you don't and you want to leave
things to charity, well then you might want to think
about how to do that. And the trust will allow
you to do all of those things, so how you
leave the assets to people can still be governed by
the trust. And again, lastly, and again, all these things
become either less important or depending on where they're where
(30:41):
the client's head's at. But you know, depending on how
much you're worth, why give the state even or the
federal government money tax money? If you don't have to,
you might say, well, why bother, we're taking care of
each other. We're not going to pay any taxes and
so what if the government gets it. Well, if that's
how you feel, that's asolutely right. I can't defend. I
(31:02):
can't try to, you know, tell you that's a bad idea,
But I can tell you. But it's up to you
whether it is or it isn't. But if you say,
you know what, I'd rather have more get to a
charity or I'd have to have more get to a
family member, well then you need to do the trust planning.
So that's the way to think about that. And you know,
gifting is something we can come back to. We can
(31:23):
talk about that in a minute, but that's exactly what
this guide is about. How would we gift assets? If
you're single, or if you're married, or if you have kids,
you need to really think about how you might want
to gift assets. If you're going to gift, we already
gave you the example of the type of asset to gift,
high basis assets better than low basis assets. But then
(31:44):
you need to think about how I might gift it.
So if I'm going to be moving a decent amount
of money out of my estate, I probably don't want
to dump it in a kid's hand. I probably want
to put it into an irrevocable gifting trust of some kind, right,
and so maybe consider using a gifting trust when you
give it to your kids. And please don't make the
(32:05):
mistake of just running around putting names on joint bank
accounts or and you also need to think about nursing homes.
If you make a gift, it's a five year waiting
period for Medicaid eligibility, even though you might not be
thinking about that when you want to make this gift.
So get this guide folks this month making the most
of gifting assets because there are pros and cons and
(32:25):
maybe most importantly do I gift at all? Maybe I
don't even gift, And there's examples in here with showing
you how the gifting works from a tax perspective, et cetera.
Get the guide eight six six eight four eight five
six nine nine or Legal Exchange Show dot com again
eight six six eight four eight five six nine nine
(32:48):
or Legal Exchange Show dot com.
Speaker 2 (32:51):
We're here with Todd Lusky from Cushion Dolan. If you
have any questions for Todd regarding anything in the estate planning,
realm taxes, gift as we come up on your end here,
feel free to give our studio I to call it
eighty eight two zero five two two six three Todd
you mentioned on the gifting front. You know, high basis
assets is the best thing to target, but there could
(33:13):
be scenarios where and we deal with this in planning
a little bit. If you're gifting to let's say a
grandchild who may not be earning a substantial wage and
finds themselves in a low income tax bracket where you
could have highly appreciated securities that it actually may be
to their benefit to take on that low basis asset
just because they find themselves in such a low income bracket.
(33:34):
Do you guys run into that at all from a
gifting perspective.
Speaker 5 (33:38):
Well, it could, I see what you're saying. That's more
of an income tax play right right where you're saying. Listen,
if I'm going to get something out of my estate,
but I'm giving it to a grandchild, again, do I
is a grandchild old enough to even have an account?
Speaker 2 (33:51):
Number one got to be over eighteen?
Speaker 5 (33:52):
Yeah, yeah, So let's make sure they are. And then
do I want to put it, you know, in their hands,
or do I want to put it in a trust
for the benefit where I can kind of control roll
it a little. All those things need to be considered.
But yeah, I mean to an extent, I guess what
you're what you're driving at is if they're if they
end up liquidating that account, maybe to pay for college.
Let's say, if you give it to them and they
(34:13):
liquidate it, they might be taxed on an income tax front.
I guess it's like zero to ten percent when you're
in a low bracket, and then it creeps up to
fifteen percent and then twenty percent exactly so on the
capital gains tax front, then then there is an income
tax play to come into effect you when you make
those kind of gifts. So yeah, that could work.
Speaker 2 (34:34):
Have you guys after the results of the election. I
know it's unclear what the estate tax is going to
look like going forward federally. That's still all to be determined.
But any changes are things that you have been monitoring
as a firm as we got the results from the
election last week. On the estate planning side.
Speaker 5 (34:49):
Of course, Yeah, I mean, I think we're all going
to have to keep an eye on this a little
closer than before. I think what we're what we're talking
about here is the estate tax exemption. Yes, right, So
that is state tax exemption is sitting at thirteen point
six million and is going to go to thirteen point
nine million in change, I believe on January one, which
(35:11):
is just because it's tied to an index and so
it indexes for inflation each each year, and so you
know it'll be about thirteen point nine call it fourteen million.
I mean, that's twenty eight million dollars with basic estate planning.
And so that's very helpful in terms of saying, well,
do I gift to save federal estate tax Well, not
(35:34):
as many people might need to gift to save federal
estate taxes at that level. Think about state, but again
got to balance it with capital gains issues. But yeah,
you got to keep an eye on that because that
may not come down as it's scheduled to come down.
It's still schedules come down January one, twenty twenty six,
but we're not sure now if it will. So maybe
(35:55):
we'll keep an eye on that and think about how
we're going to make gifts going forward. But for higher
or with people, getting things out of your estate will
always be better. So hope that helps a little.
Speaker 2 (36:06):
That is very helpful again talking with Todd Lusky from
Christian Dolan go over all your state planning questions. Todd,
I'll throw one last question your way anything ahead of
year end that you would encourage your clients to consider
prior to year end, just to make sure they have
their ducks in a row.
Speaker 5 (36:23):
Yeah, I mean, gifting obviously is important, so look at
it again. If you've not done any of your gift
and you always have that ability to gift your present
interest exclusion, you might as well use it. It's per year,
so you can give a way up to eighteen thousand
per year per person without ever having to file a
gift tax return, report anything to the US government nothing.
So that's always a helpful thing to think about. But
(36:44):
at the end of the year, when it come up
to year.
Speaker 2 (36:46):
End, do that and.
Speaker 5 (36:49):
No just other than that, basically, just get your estate
plan in order because at the end of the day
and everybody passes away and you need to make sure
you have your assets going where you want them to go.
Speaker 2 (37:02):
A lot of great information from Todd Lutsky from Cushion Dolan. Todd,
thanks so much for taking the time to speak with
us this week. Really appreciate it.
Speaker 5 (37:08):
Always a pleasure.
Speaker 1 (37:10):
This has been asked Todd on the Financial Exchange Radio network,
Ask Todd with Todd. Lutsky has been presented by Cushing
and Dolan, serving Massachusetts and New England for more than
thirty years, helping families with the state and tax planning,
Medicaid planning, and probate law. Call eight hundred three nine
three four thousand and one or visit Cushingdolan dot com.
The views expressed in this segment are solely those of
(37:31):
Cushing and Dolan. Armstrong Advisory does not provide any legal
or tax advice. Please consult with your illegal or tax
advisor on such matters. Cushing and Armstrong do not endorse
each other and are not affiliated
The Financial Exchange is produced by Money Matters Radio and
is hosted by employees of the Armstrong Advisory Group, a
registered investment advisor. All opinions expressed are solely those of
the hosts. Do not reflect the opinions of Armstrong Advisory
or anyone else. Investments can lose money. This program does
not offer any specific financial or investment advice. Please consult
your own financial, tax, and estate planning advisors before making
(00:20):
any investment decisions. Armstrong Advisory and the advertisers heard on
this program do not endorse each other or their services.
Armstrong and Money Matters Radio do not compensate each other
for referrals and are not affiliated. This is the Financial
Exchange with Paul Lane and Mark vand Eddie, your exclusive
look at business and financial news affecting your day, your city,
(00:42):
your world. Stay informed and up to date about economic
and market trends plus breaking business news every day. The
Financial Exchange is a pround partner of the Disabled American
Veterans Department of Massachusetts. Help us support our great American
heroes by visiting DAV five k dot com and making
a donation today. The DAV five K Boston is presented
(01:04):
by Veterans Development Corporation. Face is The Financial Exchange with
Paul Lane and Mark Fandetti.
Speaker 2 (01:13):
Welcome to this Wednesday edition of The Financial Exchange. Paul Lane,
Mark Fndetti, and Tucker Silva here with you today and
this morning we kick off our show with a inflation
report that came out for the month of October. Certainly,
there has been a tremendous rally in the US markets
over the course of the last week or so, a
lot of news around President Trump and his potential economic policies.
(01:37):
But we'll kick off today's show with a little bit
of talk on some recent reports that came out on
the USCPI front. What we saw from the eight thirty
a m. Release this morning is US Consumer Price Index
data on month over month inflation increased point two percent.
That is now running at a year over year number
of two point six percent. So these were relatively in
(01:59):
line with expectations. If you look at a different metric
that was posted in this report, which is called core
CPI consumer Price Index data. When we use that CPI acronym,
that strips out the impacts of food and energy, those
numbers came in at point three percent month over month
in terms of the increase there and on a year
(02:20):
over year basis, the core CPI, again stripping out the
impacts of energy and food, came in at three point
three percent. So largely parsing through this data that we
received this morning, relatively in line with what economists had expected.
There are some points that we can hone in on,
such as energy that was relatively flat over the month
(02:42):
of October. Shelter continues to be an area of an
inflationary pressure. The costs for housing increased point four percent
month over month, and that's running about five percent on
an annual basis year over year. In terms of the
most immediate impacts on the interest rates side of things,
heading into this morning, there was about a sixty percent
(03:06):
likelihood if looking at the CME futures, which price out
whether or not the Federal Reserve will cut interest rates
at their next meeting on December eighteenth, sixty percent ahead
of this morning's data. That now sits at about eighty
percent in terms of the likelihood of a cut in
the next Fed meeting, and that will be the last
one for twenty twenty four, and as I speak at
(03:27):
the moment, that percentage is increased to eighty two percent,
So a pretty high likelihood in response to this inflation report,
that we will see another cut here in December. Mark
any of your major takeaways from the report. I kind
of highlighted some of the bigger numbers and the impact
on the Federal Reserve and potential interest rate cuts, but
anything that you glean from this October CPI report?
Speaker 3 (03:50):
So what are we trying to get at here? Where
where is the FED trying to get the economy to
You pointed out that core inflation, which is what I'll
use for the part of our conversation, Core increased three
and a half percent over the last year, and if
you annualize, as Mike Armstrong likes to do the last
few months, because that's better indicative perhaps of the of
(04:13):
the trend and inflation more indicative of recent experience, you
get something closer to three point seven percent. The Fed's
goal is two. The Fed follows a different The Fed's
Choice Index is different than the Consumer Price Index, the CPI,
as you explained that we're talking about today, but the
two move in tandem, though there is a structural difference
(04:34):
between the two that we don't have to get into.
So the bottom line is measures of the trend and inflation.
Forget about headline for a moment. The all Items index,
measures of the trend and inflation are running well above
the fed's goal. That shouldn't surprise us, is one takeaway.
Because GDP growth grows domestic product the only measure. There
(04:57):
are others like GDI, which measures the incomes out of
the equation. So I'm going to oversimplify a little bit here,
but GDP our primary measure of economic health. It's the
measures of the economy's heartbeat. It's not perfect, but it's
all we've got. GDP, we know in the last quarter
grew about two and a half percent. I'm rounding down
a little year over year, and at an annualized rate.
(05:20):
If instead you want to look ahead at about the
same clip, that's much faster than most economists think the
economy should grow given what I'll call structural forces, productivity,
labor force growth, the things that contribute to economic growth
in the long term. What I'm trying to say is
the economy is running faster than what most economists think
(05:40):
is it's speed limit. Speed limits not the best analogy.
Your tachometer might be a better analogy. We're in the
red zone on the tachometer, if you want to think about.
Speaker 1 (05:49):
It that way.
Speaker 3 (05:50):
So it's not surprising that inflation remains a little bit
elevated because it's not a function of what I'm going
to be a little bit flip here. It's not a
function of what energy price do month over month, even
though we know it is. I'm going to make a
broader point. It's not a function of whether shelter jumped
month over month, as it did, only in the immediate sense,
only in an accounting sense, is at a function of
(06:11):
those things. Inflation really happens when the FED puts too
much money into the economy, stoking too much demand given
the level of supply, and that pushes up prices, and
to me, core inflation. Will get other reads on the
trend in inflation today, like media, and we should get
that during the show. If I think of it, we'll
(06:32):
let you know what it is. They suggest that the
economy continues to run a little hot. I think that
the FED might. I'm not a monetary economist. I'm just
a generalist, and everybody's got an opinion on this stuff.
But I don't think it's disputable that the economy is
running a little bit above its speed limit, Paul.
Speaker 2 (06:48):
So I posit it to you Mark based on your
synopsis there. It seems to me, and I don't want
to put words in your mouth that you're you have
maybe a higher level of concern on where inflation stands
relative to where the Federal Reserve is, because for all
intentsive purposes, the Federal Reserve has more or less said
with their policy action and some of the sentiments made
(07:08):
by Chairman Drome Powell that they are no longer concerned
about inflation spiking up dramatically and that they feel as
if they have it relative under control, and their actions
echo that. We just talked about some of the rate
cuts that we've seen. We've seen seventy five basis points
of rate cuts so far, fifty the first time, another
quarter basis point in the early November meeting, and like
(07:28):
I just said, we're now sitting at an eighty two
percent likelihood of perhaps seeing another one come. Prior to
the year end meeting, the focus, largely from financial rhetoric
has been the labor market. So I do ask you
that question, do you feel as if it's something that
is being underlooked or under scrutinized during this period of time.
(07:50):
I don't know.
Speaker 3 (07:51):
I mean, they've got reams of PhD economists who do
nothing but augment and enhance these elaborate models of the economy.
And we may snicker when we hear models of the economy,
but it's a very complex phenomenon and you try to
approximate it with models. They're not perfect, obviously, but they're
(08:12):
the best we've got if you're in the business of
making monetary policy. So I'm not going to presume the
second guest the more claim to know better. My only
claim is that it should not be surprising that underlying
inflation remains elevated, given that the economy continues to operate
above potential. And I think it's useful to keep And
this is, by the way, I'm taking this from standard
macro economic theory. You'll find it in every textbook taught
(08:36):
in every virtually every university. So nothing about what I'm
saying is unique to me or original in any way.
The FED knows what I'm saying. Obviously, they're economists have
read the same books that I have, so presumably, Paul,
to your point, they know something that the rest of us,
don't they are more concerned about slackening in labor market
(08:58):
measures that you alluded to, then maybe a superficial look
that I give the data would suggest. So I'm willing
to admit that those folks should know better.
Speaker 2 (09:09):
But we all know that. No wonder that two percent
number is arbitrary in a sense right there? The Fed's
goal of two percent inflation is it? Is it really
problematic if it runs? If we see these numbers continue
to run at three percent over the course of twenty
twenty five, and the consumer remains resilient, which has been
really sure the largest folkrum for continued economic.
Speaker 3 (09:30):
Growth, Yeah, it's not inherently problematic to your point, though
they picked a target.
Speaker 2 (09:35):
Yep, the target's not that old.
Speaker 3 (09:37):
They only started articulating a target publicly in twenty twelve.
They always had one. Green Spans was somewhere in the threes.
But he wants Greenspan wants actually threatened. I wasn't there
to see it. This is written in a book by
a guy named Alan Blinder, who was vice chair at
the time. Green Span threatened the committee. You don't let
our goal get out because once it does, people anchor
(09:58):
to it and it reduces our maneuverability. So green Span
knew that you should keep your goal secret. The point
was to keep inflation low and stable. You don't have
to definitively state a target because then you're handcuffed potentially.
And yeah, Paul, I think only because they've articulate we'd
all be fine with three percent inflation. Yeah, Zada likes
(10:19):
to point out that was the rate in the nineties,
a little bit less than that. It was a little
bit more than that in the eighties. It was it
was not a nuisance. And that's where you want inflation
to the point where it's operating in the background, no.
Speaker 2 (10:31):
One's talking about it, and that's where it was really
for the last decade prior. That's actually shows like us
don't talk about it. That's really what you're aiming for
and what the Federal Reserves goal is to have that
price stability and so that people amongst just the regular
Americans stop talking about it on a daily basis, that
you're not saying, oh, gee, my grocery prices are so
(10:51):
much higher. The more time eclipses without seeing inflation tip
up than the more likely we are to see that
we're going to take a quick break here on the
Financial Exchange. But when we come back, we're going to
be talking about Donald Trump's win and what that means
for inflation. We just covered the October CPI report that
we had. What does Trump's win mean for inflation going forward?
When he takes office in January. We'll be covering that
(11:13):
right after this break.
Speaker 1 (11:15):
This is your home for the most comprehensive coverage of
the economy and the trends on Wall Street. This is
the Financial Exchange Radio Network. If you missed any of
today's show, catch up whenever you want on our YouTube page.
Find daily show segments and full shows. Just go to
YouTube dot com and search for the Financial Exchange. This
is your home for breaking business and financial news. This
(11:38):
is the Financial Exchange Radio Network.
Speaker 4 (11:43):
The segment of the Financial Change is brought to you
part by the US Virgin Islands Department of Tourism. The
US Virgin Islands are Saint Croix, Saint Thomas, and Saint John.
With fall in full swing, now's the time to start
looking at a fabulous holiday vacation. And there's no better
place than the US Virgin Islands. Enjoy perfect weather, world
class dining, incredible beaches, and a vibrant nightlife. No passport
(12:05):
is needed and there's no money to exchange. Take your
next vacation in America's Caribbean paradise the United States Virgin Islands.
Go to visit USVII dot com to book your trip.
That's visit USVII dot com.
Speaker 2 (12:19):
So Mark I talked about this with Mike and yesterday's show,
But many listeners know that I was out the last
week or so as we welcome my wife and I
our daughter, Lilah, my third child. So I was buried
in diapers and bottles. But I did hear during my
time out that there was an election and that President
Trump will be taken over. I wasn't too plugged into
(12:40):
to everything, but I certainly heard about that. And so
one of the things that we've been really focused on
now as ever turned back to the office. I'm sure
you guys spent a ton of time talking about it
last week is his potential policies and the impact on
inflation in the economy in general. And the word that's
been at the forefront of most financial publications has been
tariffs and the impact that that could have on the
(13:03):
US economy. And so there is a piece here done
by Time that is titled what Donald Trump's win means
for inflation and curious mark your thoughts on tariffs and
their potential impacts. Certainly, I do have concern that this
could lead to inflationary pressure if they were widespread. I
don't know, and no one seems to know really, if
(13:25):
this is gonna be a negotiating tactick that Tump Trump
employs like he did in his first term where it
was more to ruffle feathers to try and get other
countries to acquiesce to our pressure, or if it's going
to be something that is truly widespread. So curious your
thoughts because you and I haven't spoken on the show
about it.
Speaker 3 (13:41):
Yeah, the textbook answer to your question is, Yeah, tariffs
are inflation. Are their taxes They push up prices full stop.
Speaker 2 (13:47):
Yep.
Speaker 3 (13:48):
Whether the inflation persists, though, depends on how the Fed responds.
And that's true of any shock. It doesn't have to
be a tariff. It could be an increase in the
price of oil due to a geopolitical event. It could
be an earthquake in Japan that causes components and car
components of cars and cars to get more expensive. That
would qualify as a supply type shock. So the shock
(14:10):
could be of many different from many different sources. The
question is does the FED accommodate the shock and allow expectations,
which are an important part of the inflation process, to rise,
and that results in inflation getting dug in. So tariffs
as a national security tool, the merits of tariffs that
(14:34):
is a slightly different question. So that was a horrible sentence,
but you know what I'm getting at The national security
argument might be strong. The economic argument economists hate tariffs, right,
They distort production everybody. The producers that are now protected
raise their prices too, so profits accrue to domestic producers.
Just think of the car industry when we coddled it,
(14:55):
quality deteriorates because coddled producers don't face competition. If you
a Chevy Citation before the eighty five model, which I
think was more solid, but you know what I'm You
know what I'm getting at it. If you drove a
Chevy in the nineteen eighties, other than some of their trucks,
you know what I mean, weather stripping, flying off the windows,
and paint peeling unless you got the Rusty Jones treatment.
(15:16):
Those were not great. Those were not the golden era
for us. Cars competition helped them. We all, those of
us who lived through it, and those of us have
heard the stories, know this. So domestic producers charge more,
quality goes down. Consumers on average are worse off. I'll
say again, full stop, there's no denying it. Some are
better off. Massachusetts will be worse off, period, Michigan, Ohio,
(15:39):
parts of those states and will be better off. And
I think that explains the election results. Our GDP Massachuset.
I'm being Massachusetts centric here, but you could attribute this
to you could apply this to all of New England
has skyrocketed for the most part over the past thirty years.
We have been at the forefront of the information technology
and biomedical revolution. I'll say Massachusetts in particular. Our GDP
(16:02):
is sword while Ohio's has been. We were equal with
Ohio GDP per capita in nineteen eighty. Now we're fifty
percent higher. Interesting end of story, like now you know
why those people are disgruntled, right, So they want policies
from which they will be the winners. Many in Lordstown
and elsewhere will be We will be the losers, and
on average consumers lose from tariffs and in the short term, Paul,
(16:24):
to get back to the original part of your question, Yeah,
they'll push up prices. Some of you may say that's fine.
I don't want to import Chinese goods and help the
economy of what will almost surely be an adversary for
some time. That's a different argument. I'm actually very sympathetic.
But economically the verdict is clear. They're ineffective and they
(16:45):
generally hurt people.
Speaker 2 (16:46):
Yeah, I just hope that those people are willing to
pay the higher prices and put their money where their
mouse is if you're in favor of those teriffs for
on some items. To me, and Chuck always brings us
up too, it just doesn't seem like it's a national
security concern to have sketcher shoes or American eel apparel
or any type of apparel. And I thought there was
a good point made in this time piece that ninety
(17:07):
eight percent of your closet, you and I is likely
imported from overseas and perhaps China or many other countries
out there unless you're in the US military. So I
don't view it as a huge national security center to
have my T shirts made in China. Ultimately, we get
a better end price from it. When you're talking about
semiconductors and other types of materials that can be used
(17:30):
in military deployment and things like that for weapons, it's
certainly a different tone there. But again, all of this
is conjecture. I find it hard to really have a
thorough conversation about this because we don't know how these
tariffs are really going to shape take form. It's been
mentioned that there would be.
Speaker 3 (17:46):
A sixty go Sorry, Paul, you think you think there's
clarity on it, Yeah, but we got to have we
have to have this discuss. But I mean, I think
I think Donald Trump's dead serious about tariffs. He's been
talking I'm fifty two, He's been talking about it my
whole life, right, I think he's committed. If there's you
could say he's inconsistent in other ways, but he is.
It used to be Japan when I was a kid,
Japan was a boogeyman. They were gonna bury us. They
(18:07):
had the formula, and then Japan came to a stop. Basically,
growth did per capita in nineteen ninety and they've never
really it's not funny if you're Japanese. I guess they've
never really recovered. They're hardly languishing. They still have a
very high standard of living.
Speaker 2 (18:21):
So I think this is the one thing that in eighteen,
but in you know, sorry, twenty sixteen, wasn't this a
conversation as well? We spent so much time to secting
and and there were there were tariffs, to be clear,
but I don't know if the presidents used them. They're
as widespread as anticipated when he was.
Speaker 3 (18:36):
No, he's talking about tariffs on every import. Well, I
understand jd Vance, right, No, I know, I know you.
He and jd Vance want to make everything here. Jd
Vance famously said not one American job is worth five
million cheap toasters, which is honestly the stupidest thing I've
ever heard anybody say on an economic matter, Like you
take the savings that we get from cheaper toasters, which
(18:57):
by which don't conveniently don't burn your kitchen downund it
in the econ, you use it to retrain people who
may have been displaced. That's the answer. It's not to
keep out foreign toasters. So it's this sort of primitive
economic thinking that I thought we squashed decades. I thought
this argument was settled. It's like the argument over vaccines.
Like I thought that was settled. People don't die of
(19:17):
de theoria anymore, thank god, But apparently we're going to
have that discussion again.
Speaker 2 (19:22):
Taking a look at the markets here, we're in relatively
mixed territory throughout the early action, but we're going to
take a quick break here in the Financial Exchange. When
we come back, we're going to be having a lengthy
discussion with as TODs. So get those questions ready and
Wall Street watch. That's right after this break.
Speaker 1 (19:41):
Like us on Facebook and follow us on Twitter at
TFE show. Breaking business news is always first right here
on the Financial Exchange Radio Network. Time now for Wall
Street Watch a complete look at what's moving markets so
far today right here on the Financial Exchange Radio Network.
Speaker 4 (20:01):
Markets are mostly quiet and in a mixed territory as
Wall Street reacts to the Consumer Price Index unveiled this
morning for the latest gauge on inflation cam in line
with expectations, where consumer prices climb two point six percent
in October, slightly higher than two point four percent in September.
At the moment, the Dow is up by eighty points,
(20:21):
just under a quarter percent. SMP five hundred is edging
two points higher, and the Nasdaq is off by eighteen points.
Russell two thousand is up by two thirds of a percent.
Ten year Treasure reeled is flat at four point four
to two percent, and crude oil is down by nearly
one percent, trading its sixty seven dollars and fifty six
(20:43):
cents a barrel. Rivian Automotive shares jumping by eighteen percent
after the ev maker announced its joint venture with Volkswagen
in a deal worth five point eight billion dollars. The
first Volkswagen models to use Rivian software in electrical architecture
could arrive as early as twenty twenty seven. Meanwhile, Spotify
(21:05):
shares jumping by seven percent after the music and podcast
streaming platform posted a third straight quarterly profit as efforts
to control costs payoff. The company's fourth quarter profit forecasts
exceeded analyst estimates, and its monthly active users in the
third quarter climbed eleven percent from a year ago. Elsewhere,
(21:25):
fast casual Mediterranean restaurant chain Cava beat third quarter expectations
and also boosted its annual guidance. That stock up by
ten percent, and according to The Wall Street Journal, Spirit
Airlines reported that the struggling excuse me, Spirit Airlines. The
struggling airline was preparing to file for bankruptcy following the
(21:46):
breakdown of merger talks with Frontiers. Spirit shares are down
by fifty five percent. I'm Tucker Silva and that is
Wall Street Watch.
Speaker 1 (21:58):
This is ASK Time on the Financial Exchange Radio Network.
If you have an existing estate plan or in the
market for one, Todd Lutsky is here to answer your
questions and help you plan for later life. Ask Todd
is presented by Cushing and Dolan, serving Massachusetts and New
England for more than thirty five years, helping families with
a state and tax planning, Medicaid planning, and probate law.
(22:19):
Visit Cushingdolan dot com. Now here's Todd Lutsky.
Speaker 2 (22:24):
It is now time for our weekly segment with Todd
Lutsky from Cushion Dolan. If you have any type of
a state planning question, question about taxes, gifting, anything of
that nature, give our off our studio line a call
at eight eight eight to zero, five two two sixty three.
Again any of your estate planning questions, Todd is here
to answer them. That phone number eighty eight to zero
(22:46):
five two to six ' three, Todd. How we doing today?
I'm never better on you doing well, Todd. We're coming
up on year end here, and what's coming soon, particularly
around my house, is the holidays and the gift season,
and decorations are already going up this weekend for Christmas
at my home. My question to you, Todd is what
(23:07):
are some considerations that folks should have out there in
regards to gifting assets. Perhaps they're feeling generous around the holidays.
What are some considerations that folks should have head into
your end here.
Speaker 5 (23:17):
Yeah, people don't think much about gifting, and it happens
sometimes easily, sometimes without much thought, but it can have
a lot of tax consequences associated with it. And we
want to encourage gifting, but it's not always needed. So
some people say, well, I got a gift to get
assets out of my estate to reduce my estate taxes.
(23:39):
Maybe check is it over the federal Am I going
to be getting it out or save federal estate taxes?
Or am I getting it out of my estate only
to save state estate taxes? Big difference? Why if I'm
going to move assets out of my estate to save
a forty percent federal estate tax haircut, Well, that that
(24:01):
might be worth it. If I'm moving assets out of
my estate only because I want to reduce my state
death tax. Well, in Massachusetts anyway, I can't speak to
the other states, but in Massachusetts anyway, you're saving about
ten percent. Well, that that may not be enough to
do it. And why I say that is especially the
(24:23):
next thing you need to think about what kind of
assets might I gift if I'm going to gift. Right, Well,
if I'm going to gift, you know, cash is always
king Why because it's high basis. And why am I
talking about basis? Well, because when I make gifts, I
can consider saving on the estate tax front. But if
(24:44):
I give away assets that have a very low basis,
then I've got to remember I could be creating capital
gains tax problems even though I might be saving on
the estate tax front. It's doing example, perhaps let's say
you know you've got a house that you want, a
(25:05):
vacation home that you've had in the family, and you say,
you know what, I'm going to give that away, get
that out of my estate. It's worth a million dollars,
but you know we only paid two hundred thousand for it.
Long ago. Well, now there's an eight hundred thousand dollars
gain built into that property. So I might be moving
a million dollar asset out of my estate, and of
(25:27):
course how we do that as a whole conversation we
still have to have. But I might be moving that
out of my estate. So now my estate is a
million dollars lower in value. But that gain that I
gave to the kids, right, I gave them the vacation home,
I gave them my cost basis, and I gave them
(25:47):
that gain. So if they, after my death decide to
sell the property because they don't want to maintain it
or deal with it anymore, they're going to be paying,
you know, twenty eight point eight percent, call it thirty percent.
That's two hundred and forty thousand dollars in tax. I
just gave them a two hundred and forty thousand dollars
tax pill. Well, instead, maybe I should keep that asset
(26:11):
and consider other assets that I would give away, because
giving away a million dollars, if I'm only saving on
the estate tax front in this at the state level,
I saved maybe one hundred grand, but I incurred two
hundred and forty thousand in capital gains tax.
Speaker 2 (26:28):
Yeah, that's the kids. I'm not gonna love that.
Speaker 5 (26:30):
You got to think it through.
Speaker 2 (26:31):
We're talking here with Todd Lusky from Christian Dolan, going
over everything in the estate planning realm. If you have
any questions for Todd, give our studio line a call
at eighty eight to zero five two to sixty three.
Speaker 1 (26:44):
Again.
Speaker 2 (26:44):
That number for any of your estate planning questions is
eighty eight eight to zero five, two to six three.
We're gonna take a quick break here, but when we
come back your questions next with Todd Lutsky.
Speaker 1 (26:58):
Ask Todd with Todd Lutsky every Wednesday at ten thirty
only here on the Financial Exchange Radio Network. You're listening
to Ask Todd with Todd Lunsky on the Financial Exchange
Radio Network.
Speaker 2 (27:19):
We are back here with Todd Lutsky from Cushion Dolan.
If you have any questions in the estate planning world,
whether it be on taxes, gifting, trust wills, anything of
that nature, give our studio line a call at eight
eight eight to zero five two to two sixty three. Again.
That phone number here eighty eight eight to zero five
two two six y three for any questions that you
(27:40):
have for attorney Todd Lutsky. Here, Todd, I have a
question for you. There was a piece yesterday in the
Wall Street Journal that was titled estate planning priorities for
people without children. Certainly the majority of the focus on
the estate planning side is for those who do have kids.
You want to make sure that your kids inherit the
assets that you've worked hard for. But what considers would
someone have that maybe is not in as much of
(28:03):
a rus to do because they do not have children.
What would be some of the considerations that they'd want
to have in building on an estate plan or maybe
some of their basic planning documents like living will, power,
attorneys and things of that nature.
Speaker 5 (28:13):
Well, I think there's more to consider than just that,
even just and I think the fair question might be,
just because I don't have children, does that mean I
don't do estate planning. That's kind of what I'm hearing
right from this question, And a lot of people might
think that. They might say, well, just because I don't
have children, therefore I don't need to do a state planning.
Well maybe not. Maybe you know, it does change the dynamic,
(28:36):
right when I meet clients that are even if they're
married I meet clients that are married and don't have kids, right,
I go. That immediately changes the dynamic a little, but
doesn't mean we don't do planning because they still want
to take care of each other. So it could be
a single situation or a married couple with no kids.
So on a married couple with no kids, I still
want to make sure that you know, when one dies,
(28:58):
we make it easy for the other one. So we
still would want to avoid probate at a bare minimum.
So I would want to set up my trust simply
to do that. Now, I think if you're a married
couple with no kids, you're probably not as worried about
the nursing home. Why because there's just so many things
we can do last minute to protect assets for a spouse,
(29:21):
different than when you're single. But for a spouse, there's
things I can do last minute and make sure things
get over to a spouse. Now, remember, if you had kids,
just getting things to a spouse is not helpful because
then if the spouse gets sick, the kids aren't going
to get it right. But if we're not talking about
trying to preserve assets for children, then I'm thinking the
(29:42):
kind of trust they would do would be you know,
probably a revocable trust, so that would avoid the probate,
and that would also allow them to stay in complete
control of everything, which of course they would want. And
then you still have to ask them. Just because you
have no kids doesn't necessarily mean that you don't have
(30:03):
loved ones that you want to leave assets to. And
so maybe there are nieces and nephews right that if
you don't have kids, they feel like your kids, and
so I'd want to provide for them. Or maybe you
have siblings, or maybe you have cousins.
Speaker 1 (30:18):
I don't know.
Speaker 5 (30:19):
So even if you don't and you want to leave
things to charity, well then you might want to think
about how to do that. And the trust will allow
you to do all of those things, so how you
leave the assets to people can still be governed by
the trust. And again, lastly, and again, all these things
become either less important or depending on where they're where
(30:41):
the client's head's at. But you know, depending on how
much you're worth, why give the state even or the
federal government money tax money? If you don't have to,
you might say, well, why bother, we're taking care of
each other. We're not going to pay any taxes and
so what if the government gets it. Well, if that's
how you feel, that's asolutely right. I can't defend. I
(31:02):
can't try to, you know, tell you that's a bad idea,
But I can tell you. But it's up to you
whether it is or it isn't. But if you say,
you know what, I'd rather have more get to a
charity or I'd have to have more get to a
family member, well then you need to do the trust planning.
So that's the way to think about that. And you know,
gifting is something we can come back to. We can
(31:23):
talk about that in a minute, but that's exactly what
this guide is about. How would we gift assets? If
you're single, or if you're married, or if you have kids,
you need to really think about how you might want
to gift assets. If you're going to gift, we already
gave you the example of the type of asset to gift,
high basis assets better than low basis assets. But then
(31:44):
you need to think about how I might gift it.
So if I'm going to be moving a decent amount
of money out of my estate, I probably don't want
to dump it in a kid's hand. I probably want
to put it into an irrevocable gifting trust of some kind, right,
and so maybe consider using a gifting trust when you
give it to your kids. And please don't make the
(32:05):
mistake of just running around putting names on joint bank
accounts or and you also need to think about nursing homes.
If you make a gift, it's a five year waiting
period for Medicaid eligibility, even though you might not be
thinking about that when you want to make this gift.
So get this guide folks this month making the most
of gifting assets because there are pros and cons and
(32:25):
maybe most importantly do I gift at all? Maybe I
don't even gift, And there's examples in here with showing
you how the gifting works from a tax perspective, et cetera.
Get the guide eight six six eight four eight five
six nine nine or Legal Exchange Show dot com again
eight six six eight four eight five six nine nine
(32:48):
or Legal Exchange Show dot com.
Speaker 2 (32:51):
We're here with Todd Lusky from Cushion Dolan. If you
have any questions for Todd regarding anything in the estate planning,
realm taxes, gift as we come up on your end here,
feel free to give our studio I to call it
eighty eight two zero five two two six three Todd
you mentioned on the gifting front. You know, high basis
assets is the best thing to target, but there could
(33:13):
be scenarios where and we deal with this in planning
a little bit. If you're gifting to let's say a
grandchild who may not be earning a substantial wage and
finds themselves in a low income tax bracket where you
could have highly appreciated securities that it actually may be
to their benefit to take on that low basis asset
just because they find themselves in such a low income bracket.
(33:34):
Do you guys run into that at all from a
gifting perspective.
Speaker 5 (33:38):
Well, it could, I see what you're saying. That's more
of an income tax play right right where you're saying. Listen,
if I'm going to get something out of my estate,
but I'm giving it to a grandchild, again, do I
is a grandchild old enough to even have an account?
Speaker 2 (33:51):
Number one got to be over eighteen?
Speaker 5 (33:52):
Yeah, yeah, So let's make sure they are. And then
do I want to put it, you know, in their hands,
or do I want to put it in a trust
for the benefit where I can kind of control roll
it a little. All those things need to be considered.
But yeah, I mean to an extent, I guess what
you're what you're driving at is if they're if they
end up liquidating that account, maybe to pay for college.
Let's say, if you give it to them and they
(34:13):
liquidate it, they might be taxed on an income tax front.
I guess it's like zero to ten percent when you're
in a low bracket, and then it creeps up to
fifteen percent and then twenty percent exactly so on the
capital gains tax front, then then there is an income
tax play to come into effect you when you make
those kind of gifts. So yeah, that could work.
Speaker 2 (34:34):
Have you guys after the results of the election. I
know it's unclear what the estate tax is going to
look like going forward federally. That's still all to be determined.
But any changes are things that you have been monitoring
as a firm as we got the results from the
election last week. On the estate planning side.
Speaker 5 (34:49):
Of course, Yeah, I mean, I think we're all going
to have to keep an eye on this a little
closer than before. I think what we're what we're talking
about here is the estate tax exemption. Yes, right, So
that is state tax exemption is sitting at thirteen point
six million and is going to go to thirteen point
nine million in change, I believe on January one, which
(35:11):
is just because it's tied to an index and so
it indexes for inflation each each year, and so you
know it'll be about thirteen point nine call it fourteen million.
I mean, that's twenty eight million dollars with basic estate planning.
And so that's very helpful in terms of saying, well,
do I gift to save federal estate tax Well, not
(35:34):
as many people might need to gift to save federal
estate taxes at that level. Think about state, but again
got to balance it with capital gains issues. But yeah,
you got to keep an eye on that because that
may not come down as it's scheduled to come down.
It's still schedules come down January one, twenty twenty six,
but we're not sure now if it will. So maybe
(35:55):
we'll keep an eye on that and think about how
we're going to make gifts going forward. But for higher
or with people, getting things out of your estate will
always be better. So hope that helps a little.
Speaker 2 (36:06):
That is very helpful again talking with Todd Lusky from
Christian Dolan go over all your state planning questions. Todd,
I'll throw one last question your way anything ahead of
year end that you would encourage your clients to consider
prior to year end, just to make sure they have
their ducks in a row.
Speaker 5 (36:23):
Yeah, I mean, gifting obviously is important, so look at
it again. If you've not done any of your gift
and you always have that ability to gift your present
interest exclusion, you might as well use it. It's per year,
so you can give a way up to eighteen thousand
per year per person without ever having to file a
gift tax return, report anything to the US government nothing.
So that's always a helpful thing to think about. But
(36:44):
at the end of the year, when it come up
to year.
Speaker 2 (36:46):
End, do that and.
Speaker 5 (36:49):
No just other than that, basically, just get your estate
plan in order because at the end of the day
and everybody passes away and you need to make sure
you have your assets going where you want them to go.
Speaker 2 (37:02):
A lot of great information from Todd Lutsky from Cushion Dolan. Todd,
thanks so much for taking the time to speak with
us this week. Really appreciate it.
Speaker 5 (37:08):
Always a pleasure.
Speaker 1 (37:10):
This has been asked Todd on the Financial Exchange Radio network,
Ask Todd with Todd. Lutsky has been presented by Cushing
and Dolan, serving Massachusetts and New England for more than
thirty years, helping families with the state and tax planning,
Medicaid planning, and probate law. Call eight hundred three nine
three four thousand and one or visit Cushingdolan dot com.
The views expressed in this segment are solely those of
(37:31):
Cushing and Dolan. Armstrong Advisory does not provide any legal
or tax advice. Please consult with your illegal or tax
advisor on such matters. Cushing and Armstrong do not endorse
each other and are not affiliated
Popular Podcasts
On Purpose with Jay Shetty
I’m Jay Shetty host of On Purpose the worlds #1 Mental Health podcast and I’m so grateful you found us. I started this podcast 5 years ago to invite you into conversations and workshops that are designed to help make you happier, healthier and more healed. I believe that when you (yes you) feel seen, heard and understood you’re able to deal with relationship struggles, work challenges and life’s ups and downs with more ease and grace. I interview experts, celebrities, thought leaders and athletes so that we can grow our mindset, build better habits and uncover a side of them we’ve never seen before. New episodes every Monday and Friday. Your support means the world to me and I don’t take it for granted — click the follow button and leave a review to help us spread the love with On Purpose. I can’t wait for you to listen to your first or 500th episode!
Stuff You Should Know
If you've ever wanted to know about champagne, satanism, the Stonewall Uprising, chaos theory, LSD, El Nino, true crime and Rosa Parks, then look no further. Josh and Chuck have you covered.
The Joe Rogan Experience
The official podcast of comedian Joe Rogan.