A complex pension question, confusing life insurance products, estate planning insights, and wealth strategies.
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Would you like an opinion on a financial matter you're dealing with, whether it's about retirement investments, taxes or four? One case, Scott hand and pat mclain would d like to help you by answering your call to join all words money matters call now at eight three, three ninety nine wars. That's eight three, three ninety nine W O R T H.

Welcome to all worst money matters scot hands. Glad you are here with this and hope everybody had. I think we passed off last week as thanksgiving ving.

We are back in the subtle working, but myself and my partner here of both financial advisors, and we've got some calls out again. So we're going to get right to the calls today if you want to join us, a exit email questions at money matters dot com. And that's prety simple way questions at money matters to com, or call us at eight, three, three, ninety nine worth. We started up with bill, bill you, with hours, money matters.

voice mails that will be retiring, so with a one point two main dollar pension. And I was made aware that I, when I can take the lump song that I never wanted a check, written my name because have to be attack is on a right away. So what i'd like to know is, what ever account is the best one to roll IT til in? How to do that?

okay. So let's .

step back a couple of um steps. You're seventy two, seven.

seventy, seventy.

you're retiring. And do you have a choice between a penchant and love song or do you have a choice between a monthly income and lumsden? Well, yes.

I do. But I was also made aware since i'm not married, I cannot leave IT to my children. So so I was taking a monthly some, and then if I were to die there, we keeps the rest or I I really forced them to take.

No, no, no, no, no, no, no, no. That's so what you you stepped ahead and you may or may not be appropriate. So let's just try to determine whether you should take the pensioner the long song, right? That's the first question .

because yeah and you don't like the idea of the pension because you say, look, I die and there's nothing left for my eyes.

but maybe the pension is the equivalent to and eight or ten percent return and you decide to live with that. Or maybe the pension is the equivalent of a two percent return, right? So pension is determined. This is how they determine the size, the lives up. They use a life expectancy and the means that .

all do you get, the short your life expect.

right? And therefore the larger of the love sun. And then they use an interest rate.

i'm ry. Aller.

the love some you get. And then they use an interest rate to determine the size, the lumps mg. The lower the interest rate, the bigger the lump sum, the higher the interest rate that they use.

And there's all kinds of different interest rates. So if you worked in a phone company, they use the U. P.

thousand. And eighty four, some use an IOS expectancy table. There's all kinds of difference.

So let's understand whether we should take the pension or the lumpsum. And then if we decide the lump sum is appropriate, then we go forward. So what other money do have outside of this pension or lamson? N I .

have two new. And um what are those words? There was about two thousand. I have two hundred each year.

or two hundred between the two.

between the two. O, K, I, I have the four one. Okay, it's about three hundred thousand.

And I got money in the bank. 不确定。 Figuring what to do with IT about about one hundred fifty thousand。

And you own anyone, any money?

yeah. I still on in my house and fortunate. I still, every time share.

What do you own on your.

Home three hundred thousand.

What's the interest .

a two point five percent.

And what's value the.

Home, about six, six.

Does anyone have a claim? Ed, dear.

pension like an next wife for anything like that? Um share, share. We receive their part.

yeah. OK, yes. And when did you retire?

I am gonna be retiring soon. I was taking beginning and next year.

And what is your anal income now works from work.

About one seventeen.

And what's the monthly income you would receive from a pension if you decided to take the monthly pension?

I looked at the customers, of course, there's different you to look .

at the single life only.

The single life only and is five year, ten year, twenty year is about eight thousand a one .

eight thousand a months. So so here's let's explain what that five year, ten year, fifteen, twenty years is. And so the longer you get, you'll see that, that pension drops, correct?

right?

So that is actually a guarantee to a beneficiary, but you can name. It's a or beneficiaries or beneficiaries. So you said earlier that if you died, if you took the pension and you died, that your children would receive none of that. That's not true. That is not true because if you had a life with a twenty year guarantee and you retire today and go out and get run over by an amazon van, your family or the beneficiaries would receive that that that pension that remained pension for the next twenty years.

See, that's what I was confused about because they kept matching spouse and anything about anything else if you didn't have spouse deliver to then um you I am fine. The the .

people the pension company told you that we know .

that um the I did a print out and from the pension and they are saying only for spouses so that's .

what IT morally IT would be .

a spouse but IT doesn't have to be a spouse.

That's the whole point of the five.

ten or twenty years. By the way, they have other options that if you were married, IT would actually cover the spouse at a full benefit. So benefit there's probably about eight or nine .

different choices should be like a single life with guarantee twenty years. So if you died the next day, IT would continue to pay for twenty years to you .

calculate the hurdle rate on it's about .

whilst eight percent. So in order if you took the one point two million and you wanted to generate eight thousand dollars a month of those dollars, you would need to earn eight percent.

And what this means, this is how you determine if I start with one point two million dollars, and I use a Normal life expectancy for bill, I used an ice backup before we get.

what's your health like?

Uh, I have it's other than that been having diabetes. It's, it's, it's good at times to work. They able the world.

you have any habits that would a lesson you do you think of a Normal life .

expectation 是 if you take one hundred random seven year olds to put him in the room.

you think of you think you're Normal.

I think so. A my mom lived to ninety .

four OK.

okay? Siblings, how long .

they live? Yes, I they're .

Younger than I saw.

Okay, right. So what happens is so we'll go back to to to how they determine this. So if I took you bill, when I said, look, bill, give me that one point two million dollars i'm going to actually invested in, it's going to return eight percent.

I would then look at a life expectancy table of bill, and I would actually figure out the day you were gonna die, in that one point, two million dollars would be empty if we would have used, assume IT returned, eight percent iran did, against your life expectancy, or assumed life. At the end of you of the day you die. There be zero money in the pot. Actually.

the eight percent figure was a hurdle ate of maintaining the principle.

Oh god, IT got that was maintaining so IT IT probably six, one, sixty. Um I think that you should really explore.

Here's our concern. We've been that we've seen this movie a lot, right? If you're sixty, it's much easier because the lump s some would be that much greater, right?

Because the longer the life expectancy, the more money the pension pension plan needs to set aside to pay that a grand a month. The close you get to your death, the less money IT is. So the order we get, the harder is to make a lump s some work.

Um you're seventy and you're single. So is now now the chAllenge. Here's what my concern is and pat would have certainly agree with me.

You take this one point two million dollars, you roll IT over, we need to get eight, eight, somehow produce eight percent year. That's maybe realistic over ten year period, not over one year. Who knows what's gonna en on a one year, right? So we put together a nice baLanced portfolio based upon bunch of different things.

And the first year the markets, let's say it's flat. You took about ninety six grand. You're one point two is now one point one million or worse case markets down specifically ten percent, ten percent.

You're portfolio ten percent plus you pulled out eight percent. Now you put flows down. You've lost almost your countdown, almost tony grand.

So psychologically, here's what we've seen happen. There's just the movie have seen people like I can handle this. This is terrible. I can't deal deal with this. And so the end that becoming much more conservative then the pension plan ever would have been that's right to generate that eight thousand dollars .

because the pension plan isn't worry about IT the pencil ant you have investigate professionals that understand and they have the the benefit of the pool large of employees in order to spread their risk. So in this situation, I think that that I would actually probably, you know, you're going to have to take a reduction. So the life in twenty years certain would that payout seven one. And what 什么？

Yes.

is that is that them out? I am just guessing.

yes yeah because the ten the five year was eight thousand. No, was nine thousand. And every then every time we extending years that goes down and about seventy five hundred.

okay. So you need .

we don't know. I mean, based upon what you've told us thus far, I don't know anything else about had you said you had two million dollars in your floor and k, that you've been invest in all these years and that you were any experience our seventy percent and stocks, then we're probably say lean for the lumps sum. But the biggest risk going for is not the financial markets. The biggest rist going forward would be how react to the financial cycles. So and the older we get.

the more chAllenging .

is to have that long term. Well, particularly when is your live savings and the tape of pension that you've taken a lump someone.

So this situation you need, if you don't go to the bank and higher wealth manager, find a independent fiduciary advisor at emits size firm. And i'm not talking about the biggest firms and i'm not talking about the small west firms are talking about a bit size firm.

And and my guess is that you're going end up without life in twenty years, certain that that's where I would go with IT because that IT teeth that benefit that if you die in the next twenty years, the kids get the money. Um and then these annuities in the four one k in the bank I R over the bank money, then you decide whether the appropriate direction is for that at the same time. But I wouldn't take the lumpsum yeah I wouldn't .

based on your situation that was really enlightening .

because I kept thank you long I have do a some going to have to do the long sum I yeah that makes a lot of science.

I went the life in twenty. By the way, when you talk to financial advisor, even if it's fido, sure there's a conflict of interest. So that advice typically gets paid by managing money.

So an advise your talky is like him, if bill takes a lump sum, I have one point two million dollars that I can manage. I can earn fees on those dollars. Bill takes the monthly pension. I don't have that money to manage skype.

I'm going to .

share this .

would kill you. Thank you. Appreciated, bill. The life in twenty years is how i'd go, but I get the rest of IT wrapped up the I.

D. Coin years ago. Wanted to take the love some, and I was explaining to them why they shouldn't take the loom.

So and the majority time back in the those days you were time there was you are taking people to take myself. But every situation different.

His penchant, plan and his friends are all taken. But he works at a different company. It's just the internal calculate yeah and I argued with him for about a half hours like you told him and him to take the lump a member.

You're not them. This is a different calculation. You have a different pension plane. You returned from a different company.

And he said, why wants to take IT the lumpsum? And I said, dom, you know, I get paid the man in his money. You know what I do for a living? You give me that, lump some. I make more money because i'm going to charge you an annual freedom and ended IT and .

i'm begin you not and .

i'm begging you not to and he looked at me and he said, I don't understand why, but that make sense to me.

We had in the missouri talking to Carry, Carrying with all words money matters.

Hi, thank you for taking my call.

I can hi um I .

have um I was wondering how does one go about advising, helping and eating relative with very limited means decide what to do with a vacant house .

in this repair on a city walk wow, where is the house .

is an for that and when you .

say this repair in vacant, how long has that been vacant?

A about.

Twenty years?

No, no, cannot anything.

But then I checked on like you like eyes on IT.

What's the value of .

the property approximately? You guess I do not. How about is that?

Is that a thirty thousand? Three hundred thousand?

Oh, with the house being in good condition OK today. So 哦， i'm sorry. I mean.

it's essentially worth the land, right?

That's what i'm thinking.

Yeah yeah. So at the middle of a swamp land, florida, words worth nothing or is no.

no isn't a city light.

So if I looked at this house today, what I say .

like a crack.

no right when I tell if .

I would to buy what I tear IT down and rebuild .

her down .

and rebuild oth the land. And you have no idea .

what that's worth. Well, it's about close to three hundred, with the house in good, good condition of ido. How much the land would be because if there's no vacantly lanes in the area?

And why do you feel the need to actually fix the house? Are you getting .

just a question?

okay. I I would worry about IT like .

what decision plates must be made before actions are taken and then what kind of tax is to be expected with the sale of IT?

That's a different question. So the value, the houses or the lane is always determined by the buyer, never by the solar or .

eminent domain.

by eman domain.

which is the government agencies thinks it's worth.

which is therefore the buyer.

And is that you're concerned that are you getting letters going to take IT over?

Are you getting letters from the city or county? No, no. perfect. Now, do you need to sell this or do you want to sell this?

Well, it's an aging relatives that do.

Do they need the money?

okay.

Um do you know what they hate first or are they married in .

single and where they married .

in to in the ownership of this property?

no.

Do you know what they paid for the property?

It's it's um it's probably about sixty years old or fifty five years old, so i'm not sure how much they pay. Not very much.

And does this agent relative have any other assets?

no. And are you are you considering the sale to generate some cash to help pay for further expenses? We're trying .

to figure.

Well, then you're going to take the capital .

gains hit magine. They've voted for sixty years. There will be some cap, but but some capital gain, there's no tax on in anyway because the income.

So that's right. But you may want to do a structured IT depends on what IT sells for .

and looks looking at the capital gain thing, but there's so much capital gain that can get excluded.

understand? But IT depends on what they sell IT for. If I were you, I wouldn't worry about the capital again right now or the step up in basis.

I would worry about getting into the money to care for the age relative. That's what I would worry about. You're not able to financially, are you able to take care of the eighteen relative with your resources?

I don't live by them. But um when you .

say by them, are there more than one?

No by by him?

no. okay. okay. I capital .

gain rates zero. If you're single in your taxable income as forty seven thousand and less, it's taxable after .

your standard. That's right. So I i'd saw IT .

you have power of returning.

no.

Does the relative have you talk to the relative .

about this a little? Yeah.

I wouldn't. I wouldn't put a single penny into trying to fix IT. No way.

okay. In fact, I might actually tear IT down before I listed IT. But i'd listed at first.

I did you talk a couple .

of real I list, have a couple of real state agents I D interview and say, we need to sell this. What's IT worth? Is IT worth more if we tear the house down? Is there infill or they building around? IT is one of these transitions in neighborhoods.

All there's homes all around the people are maintaining their properties.

Are they tearing down homes and building .

new ones like my .

son or my son, denver, a third of their houses on the street where he .

bought my daughter three.

ninety five percent further along in the neighborhood.

right? As he says, there's one crack house left on the street. perfect. There are these grow houses. So IT depends .

on where that neighborhoods in transition. So I I would absolutely sell IT. I needed the resources to take care of the relative. I'd walk up a real state age.

And if you're finding that the relative if if it's the situation where you're concerned about the person's health are not making wise choices, you could petition the court and get a guardianship and then act in his behalf.

okay. All right.

there's all that's when he say, look, he's not making .

rational decisions. I'm concerned about his health. He's not if that's the .

situation but but if he is actually able to, you can ask him to do the documents that allow you to do IT anyway, the power of maturity.

then you should take care of all, and then you take care of IT all. And I would just sell the couple games. I can't imagine that would be with more than fifty grand of .

the four in houses were three hundred. I have no idea. Not a club. That's what I would do.

And then what could do? He easily sell out by owner?

No, you know, no, no, no, no, no. You could. You're going to save a couple thousand hours. I wouldn't. I'd want to professional, especially something like, I guess I would do that, some research I found out who sold the most houses in that particular, and then contact that person and say.

this is the lot of a couple I would know way what I sell this by, you know.

different area. Lose your forms. Yeah, your different area, different state.

appreciate. got. We're talking now with carla. Carla, with always .

money matters. Hi guys. Love your show. Listen to IT every saturday.

So my question is actually i'm speaking and half of my husband, it's regarding I U. S. And what do I think about him? good? bad?

What's an eel index? Universal life?

universal? yeah.

Like, I A is an indexation.

This is an I U L. I've never recommended him. I don't own one.

I would not purchase one.

You would not purchase one now. And what the reason? Like what what are the reasons why .

you would I think they're c first.

First of all, the first question you should ask yourself is do you need permanent insurance or not permanent insurance, right? Let's let's not even talk about whether it's I U L R U L or whole life or variable universal of life V U L, that will leave that all behind. Let's just say that was greatest product.

IT was the permanent product. That was the greatest product in the world. The first question you ask is, do I need permanent life insurance, which means, do I need life insurance for my whole entire life? Do I need IT from now, twenty years, thirty years? Forty years? You need that. So what are you trying to ensure against you have children at home?

No, they're all adult.

okay. And so are you retired at close to retirement age?

My husson just retired from from his main job, and he's working out like a part time job now. So one of our friends or family friend, uh, was talking to him about maybe thinking about doing an I U L. Just for saving on taxes when he starts to withdraw the money.

okay. And so here's the pitch behind this. Is this I U L?

no. So what is up happening? There's a lot of people I didn't take much to get an insurance license and all of you could deal. We class gara and you go down to take the test and your an insurance license and now you can go out and go to your friends to, hey, i've got this great product. Let me tell you all the wonderful things it's going to do, which they believe, yes, what they don't know are the other ninety nine other products that exist out there that maybe are even Better because they haven't really been trained on like the alternatives .

like a raya first right or or A S M P five hundred fund, right. So that's why you start with the premise of do you need insurance at all? And if you do need insurance, how long you need IT for? So in your situation, the kids are at the house, your husband's retire. Did he retire with a penchant? Yeah.

okay. Is is other survivor benefits .

on the pension? So this is the money goes.

So said, no we like i'm sorry .

he actually took alarm from and invested and has rolled IT over into an ira so there you beneath there you go right .

so that all that money has been learned um you .

didn't invest with the friends whose sell on the equity .

indexed no no. But their pitch of that, he can withdraw that money.

And if he puts .

IT in the R U L, but you get to pay tax.

to get IT out of you, to pay text, get out yeah ah .

you would never use money from the I R. A and put IT you can't I guess you could you could pull IT all out, pay taxes on and put IT there.

Yes, that would just be .

idiotic IT worth, maybe worth .

that malpractice.

yeah. So there is there is no conceivable world, but I live in financially where you would even you would even try to make that argument.

So and I could see time when a variable life insurance might make some sense, or fixed life insurance, but the index, you makes no sense to me.

Well.

that's because of understand the mathematics, understand how all works.

The market cycles the whole bit. So what their selling is what they're selling, cora, to you is how life insurance policies are structured, which is they go in five o and they come out five o which is first in, first out in which means that you put your your deposits and you draw those out. Then any amount remaining there you can borrow against the policy contracts is always the contracts in place on the data. Death, it's magic. It's all tax free.

How about the cost .

of insurance that without, if you've lived in a world without cost, right, then would make sense, then that would make, much like IT would make sense for us, all of my travel private yet, if IT wasn't for the cost, that a Better knowledge?

Yes, I think IT is.

So I get IT.

though I get the point, but you have no need .

for this is most people not flown flat. Rather, most people don't know anyone who flies bright and must they have a little sesame?

Something I .

watched, I watched .

the the ching too much neths X I watch. So, and you would never use the money in the iron, never ever o so in your husband's s portfolio, ably be sixty percent, equally forty percent bonds and cash and then a monthly distribution set up so you can retire comfortably.

All you need to know already.

Thank you.

I, lad.

take care. You know, funny pad. I was I think I think in this was earlier today. I don't know why i'm talking about these these silly products that insurance company comes up chance instate like in this situation, if the if haven't like an index on the security market works so well, why wouldn't insurance company do that with the important right? You think .

they're taking .

any of their portfolio, say we're going to spend this on options in case the markets do well to head? No, no, because that long time is you're not .

going to make money that way and said at some point I just ended, ignores dividends that are paid in the underlying index though the .

way they are structure the .

fact that they create their own their nexus. Now this is really amazing.

but i'm just thinking if that strategy, I understand how they go to invest for once for that pool, but have worked so well, why when they do .

IT in .

their own .

in their .

own table yeah the rest right.

I understand all that.

Yeah well, you do, but I think you're doing that for the .

benefit of the listeners.

But this time that was pitch that you'll take your money out of an ira, pay taxes and put IT into an index. Universal life just shows what IT chose, this lack of experience, or of the person trying to sell the product.

I remember in a school student, I went to, uh, A L. Williams did the coat. Yeah.

IT was .

multi level marketing. IT was my pasture for my church. And somehow I left the church and became a multilevel marketing guy with the al illian s and I went, and I said that basically how you can be a part time financial adviser.

And I goes a gardener sitting next to me and somebody else, right? And they are pitching me. And being a on a financial .

plane decided to .

finish college. And IT was on a part time basis. But I member my past looked me. He's trying to get us all pumped up. And it's kind if you could drive any kind of car, what kind of car would you drive and never look at my in my past, you just I help me to go to think about those things. Those come naturally.

Not like last .

of the eyes. I don't need help with that. I was born with that is my first boss.

So I guess you .

say we're going to talk now with Simon devi, and she's she's doing a webinar with us on high net worth wealth strategies for twenty twenty five and beyond. And so glad to have you spend a few minutes here. First, give us a little bit about your background.

sure. Thanks so much for having me. So I spent about last twenty five years working with clients around all things related to estate planning, started off as a tacks in a state tourney. And then also on investment. They are really looking at holistic financial planning and wealth management from estate planning perspective, the tax planning perspective and everything else that would be important to a to a client.

So what are some of the things that like high income, high network investors should be considering next year? What what's actually different? I mean, I know one thing with the trump tax laws were set to expire, there's a chance they won't to expire, but that's still can say, well, yeah highly .

unlikely though. yeah. I think, you know.

whenever we think about planning, we can't predict the future, although we wish we had a crazy. But what we can do is work with the current laws that we have and think about the best ways to take advantage of opportunities that exist right now. So whether they're going to change again, uh, in the future or not, we don't know for certain. But what we do know is there are plenty of things that investors can be thinking about in terms of you know how to take advantage of the moment that we're in, whether that means you know tax optimization of portfolios, things like roth conversion, how to incorporate they're charitable giving uh to enhance their afterlife x um you know performance, things like that. And this is really what we help client sort of navigate even with .

the uncertain yeah so so you start out as a tax attorney, right? Correct in your early and I see went to boston coach is where my son went. So good for you. That's only one reason why I like you so on and those party hard stuff heard all work.

So how do you think about? Because one of things that as financial advice, where I talk with client, like you've got one big partner, the tax man, and we know what the tax laws are today, and we try to put some probability of what taxes could be in the future because of you. You've got to do some sort of planning, right with planning. You've got some assumptions and some probability. So how in your career with as attacks attorney, how do you think about that?

Well, again, I think what we really want to do is think about, okay, there is always possibility that things are going to change. Um we we take into account sort of the unlikelihood of of clawbacks or the opportunities for grandfathering things like that. And so we really plan using the current environment that we have right now, we have to have a very favorable environment, certainly from an for an estate planning perspective around taxes.

And so what we're doing now is in gergen clients to really think about using this very favorable able um the favorable wind that would say i'm to to make sure that they are getting things in place that are going to be effective irrespective of how those world might change. So again, great time to be thinking about planning with what we know now and planning for the eventual possibility of change, but getting things in place now that may not be impacted by that change. So and that's what we've really tried to navigate.

So so when you kind of give our listeners the little history, when you mention the estate text, I assume you happen to talk about the unified credit or the exemption amount because I I was explaining this .

to my twenty eight doctor just over thanksgiving. She's like, what you mean to tell me that takes you when you die? SHE was like, blown away.

Why get away from me?

But but you know, so i've been doing this a little bit longer than you. But when I first started, right.

the number was about six hundred .

thousand dollars. Give us a dm nail for the restless. And why when you said this is a favor wheal time historically, well, probably till the great robber barons was a Better time. But give us a kind of the history of that, if you were a robber burn.

if you were one, ninety, ninety percent of the rest of violation.

maybe not so good course, I would have been a robber.

Better come on. Well, you've been doing this a little bit long, and me, but i've also been doing this quite a long time. I am not as Young as you're twenty eight year old daughter, sadly.

And I can tell you back when I was at boston college in the late nineties in law school, the exemption was about six hundred and seventy five thousand dollars. And by exemption, you know, we talk about, uh, what you can give away as a gift or when you die or some combination, right? So six hundred and seventy five thousand dollars. And then anything over that would be tax, the very high right? Right now we're looking at a forty percent tax rate but that six hundred and seventy five thousand dollars is the number that keeps moving and it's what keeps the state planning atterley in business.

Okay because essentially what's happened um since the late nineties is that has moved all over the place um always moving up uh except in two thousand when I went to zero but then in that of course we lost the step up in basis which is the whole separate conversation we can have but but I think that you know so you know when I was practicing long early in my career, IT was in the one million dollar or five million dollars know all over the place. But ultimately today, and this is where the opportunity is today, is that thirteen point six one million dollars per person that means the couples got you know double that. Now we have point six one.

The region for that is because this was originally a ten million dollar number that was index for inflation. So it's just sort of moving along and and growing at the the rate inflation. So next year, we still expect that, that is going to ride.

However, um this very high exemption and this is one of the things we talk about, is that to sunset or you know go back down to roughly you seven million dollars per person in the january first of twenty twenty six. So this really summarized in sort of where the great planning opportunity exists right now for high networks, investors and high net clients. Um to to start doing some planning, knowing what we know now utilizing that very high current .

exams and what the exemption what that means for the listeners as you can use any or all of IT while you're living and move IT to the next generation rather than wait till you die. And it's a great planning technique. One of the downsides to IT is that in doing that, no longer your asset. It's no log asset and you will lose a step up in basis that, that growth after the gift because .

is not your answer because it's take .

your great point. That's a great point. However, this is where the fun comes in. There are a lot of really neat techniques that existing sort of modern and trust planning um where you can actually do things like use things like substitution or swap powers.

So working with your advisor, you can really look at optimizing uh, the assets that you are transparent. So for example, if you gave away, let's call IT a low basis asset to one of these trust, you could eventually swap that out for cash or for a high basis. That said, taking IT back and getting that step up. And I know that may sound more complicated, but we can certainly simplify IT when we have more time, but really excelled planning opportunities around that as well.

Yes, you'll be covering some of these issues in the web and are I know because you'll be with Victoria gardeners well and you're going to be talking about some interest strates and what kind outlook, what do you guys can be delving into there?

Yeah so Victoria's fantastic and he gives a really great overview of the yield curve. Know we hear a lot about what is this inverted yellow curve and what does that mean and what does that mean for the economy? Um what does that mean for bonds? You know how should we uh understand the portfolio zit relates to the current state of the yellow curve. So that is something really interesting that he goes into great detail on.

And before we go and we'll get the dates here in a second, can you explain to me why we have a step up in basis and never made any sense to me? What's the story behind this step up in basis?

Uh, well, that's that's fantastic. So the step up in basis is actually it's funny. So what is the step up in basis? But step up in basis means if I buy a share of stock for a dollar or a house for a dollar, okay, and I hold IT until I die.

When I died for a hundred dollars, my errors will inherit IT. That and their new cost basis is not the one dollar. It's a hundred dollars. So they sell at the day I die, they won't pay any capital games tag, right? yes. Now the origins of the step up in basis actually have more to do with a sort of Operational chAllenges, meaning that is so IT was so chAllenging for people to go back and try to figure out cost spaces over a lifetime that eventually they just made IT. So you know what, we're going to step IT up and and just let IT go to the air was called the date of death basis.

Oh, thank you so much. I always wondered .

that silly .

thing, by the way, if you were in charge of the world and you wanted to create liquidity, where that where the capital would move to the most efficient places, if you believe in of economic environment that allowed for that, you would get rid of the step up in basis .

they've threatened at many times. Theyve threatened at many times. In fact, in fact, very recently um there were there were some rulings that came out that have threatened and in fact probably done away with that step up in basis with some irrevocable trust.

So IT used to be that we thought we could we can plan around that that that has changed. So yes, IT is sort of um the perversion al low hanging fruit, if you will. Um so we we should certainly be taking advantage .

of this step up. Thanks for a little to talk with this. And so Simon is going to be doing this web on r with Victoria bogor, who's guessed on this broken periodically.

And for full details for this webinar, it's going to be wednesday, december eleven at noon pacific. So three eastern noon pacific as A. December level saturday, december fourteen and nine emma ifc, noon eastern. So those two times and to sign up or more formation, simply go to all worth financial that com ford slash workshops.

Thanks so much for having me and really appreciated and I think lan.

wonderful holiday today. So thank you for being part of the old world team. You are much value. Appreciate IT.

Ah it's my pleasure. I'm grateful to be here. Thanks so much. Take care. Good bye.

Well, that was I wish I would later that before about why we have that step up in basis, but that make sense. And thinking many times.

you've had clients right and i've sold security over the years. I I know what the cost spaces in part because I mean, the industry, I know how to make sure we track those things, but i'll give an example. So wouldn't we started in this industry in the nineties, we did a lot of work with retiracy from the phone company.

And the phone company back in the day was there was one main phone company. A, T, N, T. Was broken up in the eighties and eight .

different companies .

because seven, eight plus eight and seven regional .

bell Operating companies.

And so if you own shares and att, suddenly you own shares in these seven regional ilog ating companies. And then then you had divided reinvestment. You had stock splits. Z, and people would say, I have no idea what my cost.

and after time, they would have actually hold the certificate. And then some of them. And then but then the companies, we'll started merging back together again .

because because .

IT was a IT was being a monopoly at one point time. And the political environment changed. And then these people said, oh, we can try to build monopoly again, but that we would never know the cost spaces on that there was IT was impossible. And so what the kinds would do if they wanted to sell IT, we'd say, look, we can't give taxi eyes. Go talk to the counts and accounts would say, hey, I could research IT but it's gonna uh X Y than or you could .

guess because the bird of proof on for a taxpayer, it's on you to prove your cost spaces, whether it's a security or property. Like if you claim IT on your taxi ure and and your auditor and the auditor says, hey, you said your cost spaces with three dollars share, show me if that's true, then it's you're up to you to do IT look. And I think a lot of people's process, if you're trying to be honest here and you're doing your best guess.

And i've never seen anyone picked off and at all, I never either never, ever. But that's interesting. That which is actually how lots of our modern economy actually exist today is because the things that took place years and years ago that were procedural procedure six anyway. But IT is this workout with cement, as is worth attending, if you're interested in these types of subjects at all. Because I have never every time I ever talk to someone or Victoria, I learned something every time, and i've been doing this a long time.

And they'll have q and a, even the b structural swap.

Yeah, I didn't know that neither, which is why we actually .

have which is why we have a whole team. I know we have a whole tax department and the little department at all worth because it's all very complicated and that tend to be the higher your net worth, the more unless you plan to leave in one hundred percent to charity when you die.

there's issues that you going to do with this. T this is this obviously so serving, but over thanksgiving, a relative said, so how many firms have joined you and I think forty, forty, forty one, forty two um and they said, why would they join you? And I said, because the marketplaces becoming progressively more competitive, because the demands of the quiet are going up, and the reality is, what a client ultimately wants is a one stop shop with wealth and finance. Al alth, my management, finance, or my engagement, which is your management, ask to give me financial guidance, tax and state planning, all in one shop. And that's where .

the industry is, where the .

firms that join us are typically anywhere between five employees and forty five employees. And they have a hard time getting the scale. And we have a had a hard time getting the scale without those farmers joining us because someone like Simona vi, you go.

t you go, go. These people aren't looking for jobs. The best for his advisers aren't looking for jobs.

And someone like Simon, who is got years and years of experience in a state tax, demands a lot of money. And you have to spread that, that cost over a large number of clients and advisers. so. If you're with the adviser today. Don't be surprised if their firm gets integrated into a large of firm just because that's where the marketplaces go on.

That is where the marketplace was going on.

This so I came, I came across this article, which I felt really bad for this gentlemen. This was in the wall street journal a couple weeks ago, and IT was by Jason's week, who, by the way.

I always, they come up friday afternoon. His opinion piece is in the great. And he took a sbta. I didn't know what happened, was done for like a year. And then he came, came back.

yes, but I do in a red, this stuff for years and years. He didn't. His family used to own an asset management firm. I have no idea anyway.

that is writing for the world .

journal for for years and years, years. So this is an opinion piece and the title of this, I don't know where to turn or what to do. His sick seven hundred and sixty three thousand and ninety four dollar retirement fund .

is in limbo. And Jason's weg writes a lot about his articles, are called the intelligent investors. And it's often about mistakes, scams out there, unscripted advisors.

And Scott says the kinds sticks with our thesis. One of the most important things we do for a clients, not only providing them good advice, attempting to provide them good advice around their financial situation, is trying to stop them from making decisions that are completely irrevocable that would ruin their financial situation forever.

So this gentlemen ran into some life problems, and he was having a hard time getting back and think he lost his job anyway. Through a friend, he heard about a firm called yield ld wealth that guarantee a fifteen point two five percent return. And IT was offering investors on its products fifteen point two five.

And so when that was explained to him, he looked at, he said, well, this is one hundred thousand dollars a year. We could go wrong. And you know the rest of the story.

well, any sort of investment that claims they're going to be guarantee you fifteen percent to five percent of return?

Yes, you know the rest .

of the course.

you know and IT goes on and on and on. But this is the thing that he .

was sixty years old.

Yes, he took, he was in his forewing. K, took the money out of his foreign, as I were to do this.

This company was called next level. Next level scm is what I should be. Yes.

but. When I read this, I think I have seen this, and I was in .

an retirement account. He moved as four one k to an ira. Use some some obscure ure I R A custody for IT. Then when I looked like the next level was a scm or could be a scam, the ira custodian said we're not going to be the custody and they .

kicked off the .

back through the shit through the certificates back to him. So now he's got the certificates. Tes, what are they worth and their worth anything? It's a taxable distribution to him.

And no, no idea is that.

But this is something .

that this reminded me, is anything that is guaranteed over treasure bill, a treasury bill? So think about whatever the one year treasury bill is, is, is that inherent risk and OK what IT is. IT could be a municipal bond, IT could be a high u corporate bond, and IT can be an annual ity.

IT can be anything but any time where the risk that they stay or the return that they state is guaranteed if it's over a treasure. In fact, if it's anything buta bank, cdr treasury, it's got risk. And even those have risk, right? They have risk of governmental default.

And you a seemingly bright people, people will fall .

into this or desperate or desperate because he was in a life situation, or he thought he couldn't return.

Retire.

didn't have enough. retire. I to take the long shot.

know is sixty, that he lost his job and he's plan to work in several more years before retired. yes. And and what he could fix this problem if he gets a high and of return?

yes. And that was his thought, thinking, will this .

is found? I found .

that this is IT. So um interesting. Anything just remember that these and I see I hear these ads on the radio this cycle, we often between twelve and fifteen percent.

I'll take the twee. Lf, yeah. I always think, why would you take the fifteen of you offering fifteen 这 一波？ Why a guaranteed to the fifty percent returns? They're getting interesting.

Yeah but I I mean, i've when I read these articles, I feel bad for the people on one hand. but. Some point time.

Well.

it's got you can't regulate. You can't get rid of all bad actors in the world that people still packages of your porch. They're bad people.

Yes, you are bad person to do that. We don't care about that anymore, apparently. But that's right.

Anyway, a quick side story. I almost had an amazon truck in my drive way yesterday out I was out. He in my vate property .

in the .

stream of bright were like in the middle of so I come out of my drink. I see in the morning it's dark .

IT was like you're there, had lamps down the road .

come out there and that .

would be pretty. What is the running I truck IT for the rose.

Almost worth worth the story. Anyway.

that's all the time we ve got ten this week's program, we will see you again next week. This has been scotland and pack of all words, money matter.

This program has been brought to you by all our financial a registered investment advisor reform. Any ideas presented during this program are not intended to provide specific financial advice. You should consult your own financial advice, tax consulting or estate planning attorney to conduct your own due dilly gent.