Welcome to another episode of our special podcast seres with Mariner Wealth Advisors.

In today’s episode, we are featuring a special conversation that Mariner Wealth Advisors hosted for their advisors and clients. This special chat will cover how the election impacts the economy, estate planning, and some tips on changes you can make to your portfolio to increase tax savings.

In this episode you’ll hear from Mariner team members:

Brian Leitner
Head of Wealth Management

Bill Greiner
Chief Economist

Jodi Robinson
Managing Director, Tax Planning & Preparation

Patrick Shaw
Director & Senior Wealth Advisor

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Mariner Wealth Advisors
https://www.marinerwealthadvisors.com/

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https://www.marinerwealthadvisors.com/insights/

If you’d like to learn more about how ReAllocate + Mariner Wealth Advisors can help you build a roadmap for your real estate investments head to — BuildMyRoadmap.com.

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Transcript

RealCrowd (00:00:00):
All opinions expressed by Adam, Tyler and podcast guests are solely their own opinions, and do not reflect the opinion of RealCrowd.

RealCrowd (00:00:08):
This podcast is for informational purposes only, and should not be relied upon as a basis for investment decisions. To gain a better understanding of the risks associated with commercial real estate investing, please consult your advisors.

Adam Hooper (00:00:22):
Hey listeners, Adam here. Have you ever wondered if you’re investing in the right real estate deals? What about if you’re making the right decisions for your overall financial health? Over the last seven years of running RealCrowd, the number one question we received from investors is, “Should I invest in this deal?”

Adam Hooper (00:00:39):
Well, we’re excited to announce that we can now help you answer that question. Through our sister company, REAllocate and through REAllocate’s partnership with Mariner Wealth Advisors, you can now have access to teams dedicated to helping you build a real estate portfolio.

Adam Hooper (00:00:53):
Based on your personal investment roadmap and financial goals. If you’d like to learn more about how REAllocate can help you, head to buildmyroadmap.com. Again, that’s buildmyroadmap.com.

Adam Hooper (00:01:12):
Hey listeners. Welcome to another episode of Mariner Wealth Advisors special series. This is an ongoing series, where the team at Mariner Wealth Advisors joins us to discuss investing, wealth planning, estate planning, tax strategy and how to reach your financial goals.

Adam Hooper (00:01:28):
In today’s episode, we’re featuring a special conversation that Mariner Wealth Advisors hosted for their advisors and clients. This special chat will cover, how the election can impact the economy, estate planning and some tips on changes you can make to your portfolio to increase tax savings.

Adam Hooper (00:01:43):
In this episode, you’ll hear from Brian Leitner, Head of Wealth Management, Bill Greiner, Chief Economist, Jodi Robinson, Managing Director Tax and Planning and Preparation, and Patrick Shaw, Director and Senior Wealth Advisor. We hope you enjoy this episode.

Adam Hooper (00:01:57):
A big thank you to Mariner Wealth Advisors, for letting us share this conversation. Please let us know what you think of this unique format for the podcast, by sending us a note to podcast@realcrowd.com. With that, we’ll get to it.

Brian Leitner (00:02:19):
My name is Brian Leitner. I’m the Head of Wealth Management for Mariner Wealth Advisors. On behalf of all of Mariner, we want to thank everybody for joining today’s session. It’s a really exciting session. I think everyone’s going to get a lot out of it.

Brian Leitner (00:02:32):
These are interesting times we’re in. We’re living through a pandemic. Earlier this year, we had obviously significant losses in the market. Only to go straight up very soon after that, in some sort of V-recovery that we’re going to talk about. V-shaped recovery we’ll talk about.

Brian Leitner (00:02:50):
We have significant parts of the country that are on fire. We have an election taking place right now. Over the past few years, we’ve had significant changes in our tax law. There’s enough going on, to make your head spin. The reality is, as long-term investors, we focus on what we can control.

Brian Leitner (00:03:09):
We’re proactive where we need to be. We know that having a plan or those that have a plan, will be far better off than those that don’t. The next 45 minutes to an hour or so is… we’re really going to focus on key areas of the economy, the changes in tax law and give everyone things to think about as it relates to this.

Brian Leitner (00:03:33):
Before we get started, I just want to give a heartfelt thank you to all of our clients and all of our associates, for everything they do for the organization. For what our clients have done for us, and the trust that they put in us every day. Most recently, just a word on Mariner.

Brian Leitner (00:03:51):
Mariner Wealth Advisors was just ranked number five, amongst the registered investment RIAs in the business today, by Barron’s Magazine. Again, that’s a testament to the trust that our clients put in us every single day, so thank you. Mariner today, we have over 40 offices across the country, so we can serve families.

Brian Leitner (00:04:13):
Again, across the country and even in areas where we don’t have a local presence, based on new technologies, such like we’re using today. With that said, I’m really excited to introduce this panel to you. Let me go ahead and introduce the key players that you’re going to hear from tonight.

Brian Leitner (00:04:30):
We have Bill Greiner, Bill is Mariner’s Chief Economist. Bill has vast expertise in the financial markets, the economy and in history. Which plays a role I think in years like we have today, especially regarding the election. Jodi Robinson is our Managing Director, who oversees all things tax within the Mariner organization.

Brian Leitner (00:04:52):
As far as that goes, we have over 100 tax associates under Jodi’s leadership. We have Pat Shaw, a Senior Wealth Advisor and Director, an individual who runs our Michigan office. To the three of you, thank you very much guys for being here and lending some time in your expertise.

Bill Greiner (00:05:09):
Pleasure.

Patrick Shaw (00:05:11):
Thank you.

Jodi Robinson (00:05:12):
[inaudible 00:05:12].

Brian Leitner (00:05:13):
Before we get started, I wanted to let folks know that we’ve already received some questions from you, in advance of this session. We’re going to do our best to get to some of those questions and weave those in. If you have questions, you can use the chat functionality to go ahead and ask those questions.

Brian Leitner (00:05:30):
In addition, since there is a lot of people on this call, there are going to be questions that we can’t get to. I would encourage you to email your questions after this event, to qa@marinerwealthadvisors.com and we’ll be able to respond to those immediately.

Brian Leitner (00:05:49):
With that all said, one small disclaimer, we’re talking about a lot of personal issues. I mean, whether it’s, you’re on an investment plan, the economy, the markets, tax law, things of that nature. Obviously this is not individual tax advice.

Brian Leitner (00:06:05):
We would be more than happy to sit down with you after this conversation, if you’re not already a client today. Talk about your given situation and ways in which we can add value, or just a second opinion or something of that nature.

Brian Leitner (00:06:19):
To open it up with the questions, I’m going to jump around a little bit. It’s not just on one subject, but again, in the areas of the economy, tax and estate planning. Bill, we’ll start with you as our first question.

Bill Greiner (00:06:29):
Okay.

Brian Leitner (00:06:30):
Obviously there’s an election coming up, that a few of us are likely aware of. Based on historical information, is there one party that generally provides better market performance than another party? What are some of your thoughts?

Bill Greiner (00:06:44):
Yeah. I appreciate it, Brian and thanks everybody for tuning in today. I’m kind of shuffling some papers here to get to my notes, regarding one particular topic or the other. I think it’s interesting to try to answer that question in a thorough way, is to give folks some historical data based on just the last number of elections.

Bill Greiner (00:07:05):
The data I’m looking at goes back quite some period of time in the past, actually going back to 1965. This goes back to the LBJ election, back in the mid-1960s. The market is kind of interesting when you look at it. I’m going to answer that question by, are we going to have a split Congress or not?

Bill Greiner (00:07:31):
I’ll answer that, whether we’re in a Republican or Democratic White House also. Let’s see here, the split Congress, if we have a split Congress where Republicans let’s say retain control of the Senate and the Democrats retain control of the House.

Bill Greiner (00:07:51):
Historically going back in that kind of environment, if we have a Republican president, the stock market has generated average annualized returns of about 8.7%. Keep that number in mind. If we have a Democrat in the White House, with a split Congress, the stock market has generated returns of 13.6%.

Bill Greiner (00:08:14):
The stock market has done very well… historically going back over the last number of years, we had a split Congress and a Democrat in the White House. Now the best possibility of that at least historically, the best possibility we have, is when we don’t have a split Congress. When we have what’s known as a unified Congress.

Bill Greiner (00:08:34):
One part of the other controls of the Congress. Under that situation, if you look at periods where we’ve had a Republican president and a unified Congress, whether that unification is Democrat or Republican either way, the average return for the stock market has been only 3.1%. That’s about the worst combination we can have.

Bill Greiner (00:08:58):
Indeed, that was what we had ironically speaking, the first two years of Trump’s presidency, but the stock market did pretty well. That was two years. The best combination we can have, is we have a unified Congress and a Democrat in the White House.

Bill Greiner (00:09:13):
The stock market historically going back since 1965, generated an average annualized return of 16.2%. That’s a big number. Generally speaking, to answer your question, Brian.

Bill Greiner (00:09:24):
It doesn’t really matter whether we have a split Congress or a unified Congress. If we have a Democrat in the White House, the stock market by and large has done better in that environment than if we have a Republican in the White House.

Brian Leitner (00:09:37):
That’s great, Bill. Thank you. Another question then to follow up with that, we’re long-term investors. We’re not necessarily trying to play games one versus the other.

Brian Leitner (00:09:48):
There are opportunities as it relates to overweighting certain sectors and things of that nature. Based upon the outcome of this election, depending upon who wins, can you talk to maybe the sectors that might do well under one party versus another?

Bill Greiner (00:10:02):
No, I’ll be happy to do that. I think to kind of set the stage on that issue though, it’s probably good for me to emphasize going back over that same period of time, following the election, what normally is… like you said, we’re not short-term people.

Bill Greiner (00:10:15):
What has the six month rate of return been in the stock market, when one party or the other has won the White House, or when the incumbent party has won or lost? The answer is, over a one-year period of time, the stock market does better if the incumbent party has won the elections, than if we have a new party coming on.

Bill Greiner (00:10:37):
Power, just because of the uncertainty that that tends to raise, when we have a new leader in the White House. It’s also interesting to note going back, since Ronald Reagan’s win in 1980.

Bill Greiner (00:10:53):
If you look at the average return of the stock market in real time, going back, can be broken down between Regan, G. H. W. Bush, George Bush, Trump. Then looking at the democratic side when Clinton was president, also when President Obama was president, what’s the average annualized return of stocks for each party during those periods?

Bill Greiner (00:11:14):
Between Clinton and Obama, the stock market was up 15.8% per year. With the four Republican presidents, I mentioned the stock market was up 8.4. That’s further evidence that it really makes sense I’d say, or at least historically, the market has tended to favor a Democrat in the White House.

Bill Greiner (00:11:32):
To answer your question, what industries do we see…? Let’s say Joe Biden wins the election. Even particularly, if we have a suite where the Democrats also take control of the Senate and the House. It seems like that possibility is gaining some real traction over the last few week.

Bill Greiner (00:11:53):
The punters over in London are suggesting, the probability of that happening is now better than 50%. What do they know? Probably not a lot, but that’s kind of where the betting line is right now.

Bill Greiner (00:12:03):
We think if that happens, the industries that will probably do pretty well going forward, are some of the industries you’d probably guess. Infrastructure for example, Joe Biden has talked about a significant infrastructure bill coming forward.

Bill Greiner (00:12:17):
We think companies that do well in an infrastructure environment, companies that basically fit into that kind of theme will probably do pretty well. Renewable energy companies, be them solar companies or people that were involved in turbine, wind turbines, will probably do very, very well in that environment.

Bill Greiner (00:12:33):
Battery companies will probably do very well in that environment. Interestingly enough… and this is more of a broad brush push, are companies that are very sensitive to export growth rates.

Bill Greiner (00:12:47):
Multinational corporations for example, that do a lot of business outside the United States, because we feel under a Biden administration, you’re probably going to see a lessening of trade tensions, than it’s perhaps been the case over the last four year period of time.

Bill Greiner (00:13:00):
Companies that do a lot of business outside the US, might see an acceleration in their growth rates over the next four years or so. Marijuana legalization, they’re talking about that happening, who knows? Companies that are involved with that, most of them I think now are Canadian companies.

Bill Greiner (00:13:17):
Most of them will probably do okay with that, and have a kind of tongue-in-cheek. There’s probably some truth in this, if Biden becomes elected, you’ll probably see a push on the upside in gun sales. Be that good or bad, or indifferent, whatever.

Bill Greiner (00:13:29):
Companies that are involved with manufacturer of ammunition and firearms, will probably do pretty well if Biden becomes president. On the other hand, on the Republican side, we kind of know again, is under Donald Trump.

Bill Greiner (00:13:41):
Energy companies, these would be… a Democrat being in the White House, would probably do well. Healthcare companies on a broad brush level will probably do pretty well. Defense and aerospace companies will see probably a pop on the upside of those names.

Bill Greiner (00:13:56):
Financial service organizations will be under probably less of a microscope, than perhaps it would be under a Biden administration. We think financial services will probably be okay. Last, material companies.

Bill Greiner (00:14:06):
Companies that manufacture chemicals and mining companies, and so on and so forth, will probably do well under a Republican banner in the White House. That’s kind of a breakdown, as far as what we’re seeing.

Brian Leitner (00:14:19):
Thanks, Bill. I appreciate it. With that, I’m going to turn it over to both Jodi and Patrick. I mean, the reality is, tax planning, investment management, financial planning really go hand in hand. I’m going to ask both of you several different questions and you can play off each other.

Brian Leitner (00:14:37):
Before I do, I think sometimes we make the assumption as advisors, that everybody understands what the tax plans look like. There’s been a lot of talk with, what happens if Joe Biden wins? Things of that nature. Just a very basic review. I mean, right now our top tax bracket is about 37%.

Brian Leitner (00:14:54):
Joe Biden’s talked about those earners that are earning over a certain threshold. That’ll back itself up to roughly about 40% long-term. Qualified dividends, long-term capital gains could be recognized as ordinary income for those that are earning over $400,000.

Brian Leitner (00:15:10):
There’s also the payroll issue, which again, for those earning over $400,000, they’ll pay more into social security tax. Then there’s the corporate tax issue, going from 21%, back up to 28%, what it just was. Then there’re some changes to the federal estate tax, and what those exemptions look like.

Brian Leitner (00:15:30):
As of right now, everybody has an exemption amount of about 11 and a half million dollars, at the federal estate tax level. You can double that around to $23 million, if you’re married. The tax rate on that is about 40%.

Brian Leitner (00:15:46):
Regardless of what happens, the way it’s written today… in just a few years, in 2025, those exemptions are going to come back down to $5 million per individual. That’s the way the law is written today. It may stay that way.

Brian Leitner (00:15:59):
It may not. If Joe Biden’s elected, there’s some conversation about reducing that even further, and then there’s this idea of a step-up in basis. The best example of that is if I own a security that I’ve done really well in, and I’ve owned it for maybe for many years.

Brian Leitner (00:16:15):
When I pass, that my children might inherit that. Well, with the step-up in basis, they basically get to inherit that. Their basis is the fair market value, so they can sell it the next day. Even what might be a huge capital gain, that gets sort of washed away and there is no capital gain on that.

Brian Leitner (00:16:32):
If they get rid of that step up effectively, that gain will then be transferred to that beneficiary. That will be built-in gain, but they’ve been talking about doing away with that for some time, to be clear. I know that’s top of the conversation.

Brian Leitner (00:16:48):
To open this up, Jodi, I’ll start with you, as we talk about some of this new tax planning. If there is a Democrat in the White House, if Joe does win, what should folks be thinking about as it relates to their tax situation, their portfolio, things they want to start thinking about right now?

Jodi Robinson (00:17:04):
Sure. One of the things that you’re going to hear us say a lot, is that you don’t want to let the tax tail wag the investment and planning dogs. Yes, there are still things that you can do to put yourself in a better position to be able to act.

Jodi Robinson (00:17:23):
I mean, clearly we’re not going to know until after sometime, after the election, what may or may not happen. That doesn’t mean that you can’t be thinking about putting yourself in a position to where you can act pretty quickly, as we get closer to the end of the year.

Jodi Robinson (00:17:42):
Some of those things, thinking about the potential for the capital gains rate to go up, I mean, we would still want you to be looking at your portfolio, to see if there are potential gains that you could take now. If you’ve got some losses out there, you can offset them against those.

Jodi Robinson (00:18:01):
If there is a stock that you really want to maintain, if you sell it for a gain, you can still go back and buy it. I think we’ve all heard about the wash-sale rules. The wash-sale rules don’t apply, if you sell it for a gain. You could sell it and then go buy it again.

Jodi Robinson (00:18:21):
Certainly thinking about your investment portfolio, there are some situations as well, where you may have a potential transaction for a small business owner. Where you may want to think about not doing a 1031 exchange, to defer the gain to a future year.

Jodi Robinson (00:18:43):
You may want to say, “Okay, I’m going to bite the bullet and pay the tax on it now, when I know what the rates are.” We want to try and accelerate a sale transaction, if you’ve got one that may be lagging over the end of the year.

Jodi Robinson (00:18:58):
First of the year, see what you can do to work with them, to try and get that accelerated. There are a number of things that you can do, particularly to be thinking about planning around a potential increase in long-term capital gains rates.

Brian Leitner (00:19:13):
Thanks, Jodi. Patrick, I know we’ve talked about this as recently as early this week. You’re having conversations with clients obviously on a regular basis. I’ll ask you that same question. I mean, what should folks be thinking about?

Brian Leitner (00:19:24):
What are some of the conversations that you’re having with clients today, as it relates to potentially Joe winning and the impact on the portfolio and things of that nature?

Patrick Shaw (00:19:32):
Yeah, sure. Brian, so I think Jodi touched on a lot of things. You’ve probably heard her mention the term plan and planning. Listen, I think it’s really easy to get really concerned when you hear such things as a proposed tax increase. Those are things that generally aren’t a positive.

Patrick Shaw (00:19:53):
That tax increase is really only relative to the extent of where your income reaches those tax thresholds. Really sitting down and understanding, “Hey, my plan, my individual plan as a client, what is it do I really need? What am I trying to accomplish with this money? What do I want it to do for me and my family?”

Patrick Shaw (00:20:12):
That planning frankly, is a perpetual exercise. It’s not a one and done type of situation, just for these reasons. I mean, we’ve probably seen three, maybe four tax code changes just in 2020. These things are perpetually changing. It doesn’t mean that you should go do something dramatic, but you should be proactive.

Patrick Shaw (00:20:33):
While we don’t know exactly where these things go, I would encourage and I encourage clients and prospects, and all those alike to take a look at the data and the information you have today and base your decisions on that. Sure, I think it’s easy to assume the taxes are going to increase.

Patrick Shaw (00:20:49):
We know, you already alluded to it, Brian. Come 2026, we go back to a lot of the old things, income taxes, estate taxes, there’s already some tax increases that are coming, but we should be proactively looking at these things. Let’s look at our income projections for future years, and start making some decisions there.

Patrick Shaw (00:21:08):
Let’s take a look at those things inside of our portfolio. Do we have losses? There’s been a lot of volatility this year. There is a great opportunity probably to harvest some losses. I think if you dissected the S&P 500, you may have… about half of the companies may still be negative for the year.

Patrick Shaw (00:21:25):
There’s certainly an opportunity there. Those losses would certainly be worth more, if taxes were to increase. I think sitting down potentially with a professional or your CPA, whatever it might be and being proactive here. Don’t just sit and wait for the changes to come.

Patrick Shaw (00:21:41):
There’s going to be an opportunity I think, to put yourself in a position to make decisions where you can keep more of your hard earned money. Regardless of what happens. I think that’s what we always encourage, and the way we want clients and frankly, any prospective client, to think about things as being proactive.

Patrick Shaw (00:21:59):
We don’t want these external factors… whether that’s the stock market or tax code, to dictate what happens to our client’s wealth. Let’s be proactive and start looking at things we can do today, to maximize our opportunities within our portfolio, so forth and so on. Being proactive and having a plan are two key considerations there.

Brian Leitner (00:22:18):
Pat, that’s terrific. You must have said the word proactive as many times as I do on one of these calls. I appreciate that. Just to highlight that, especially as it relates to taxes, I know that a lot of folks are proactive as it relates to their portfolio.

Brian Leitner (00:22:33):
“How can I make a couple of tweaks and changes, and take advantage of some sort of dislocation?” Or things of that nature. Very few people are proactive as it relates to taxes. Obviously it’s a major component of where we spend our time, because regardless, clients have to deal with their tax situation.

Brian Leitner (00:22:49):
To be proactive with it and truly understand, “Okay. It’s not necessarily, what am I going to pay in tax this year? Over the longer term, what can I do to minimize the amount of taxes that I’m paying?

Brian Leitner (00:22:59):
Put myself at a really good spot, so that later on, whether it’s through required minimum distributions, or just traditional income planning, where I pull assets from, that I’m going to get the best bang for the buck and pay the least amount I can possibly have in taxes.”

Brian Leitner (00:23:15):
What I also think some folks miss, is how your income integrates with your tax situation, which could integrate with Medicare taxes and other taxes that people don’t necessarily think about, net investment income. By making tweaks to the portfolio, you can easily save a decent amount in taxes.

Brian Leitner (00:23:34):
A lot of folks think… they say, “I pay too much in taxes.” We have a conversation with them, “Look over that tax return. A lot of times you do, and you are paying too much. Let’s have a conversation about that.”

Brian Leitner (00:23:45):
Jodi, just to bounce back to you. There’s the idea of converting your IRA, your traditional IRA to a Roth IRA, using Roth assets and why now? That seems to be a topic of conversation.

Brian Leitner (00:23:59):
I know there is a lot of misinformation that’s out there. Can you explain that strategy, and why folks may want to consider doing that today versus potentially even a few years from now?

Jodi Robinson (00:24:10):
Sure. I mean, you talked about ways that you can plan around taxes and your long-term goals. Roth conversions is absolutely one of those. It’s really sitting down with your advisor and doing what’s appropriate for you at that point in time, based upon what tax brackets you’re in.

Jodi Robinson (00:24:32):
You don’t have to convert the entire balance of an IRA. You can do portions of it. The certain things that you need to keep in mind, certainly are that if you’re going to do a Roth conversion, you need to make sure that you have cash available outside of that IRA, to actually pay the taxes on it.

Jodi Robinson (00:24:51):
That’s one place where people sometimes get tripped up, is that they think that they can convert the net amount to a Roth and then pay the taxes out of the Roth, and you can’t do that. Just make sure that whatever you’re converting, you’re prepared with the cash outside of that to pay it.

Jodi Robinson (00:25:11):
Another thing to remember is that Roth conversions are permanent decisions now. A few years ago, you could re-characterize… you could have an oops moment and say, “I didn’t really mean to do that.”

Jodi Robinson (00:25:25):
These are permanent decisions now, which is why it’s really, really important that you do the planning around it. Don’t just make a decision one day, that you’re going to convert X dollar amount, without actually doing the math on it.

Brian Leitner (00:25:41):
Patrick, I’ll come back to you for just a second. You’re having conversations with clients, and I know you’re helping clients convert their IRAs to Roth IRAs. I know the topic comes up, “We’ll have to pay a bunch of taxes now.”

Brian Leitner (00:25:53):
What does that conversation look like? Nobody really wants to pay taxes now. What should I do? What are some of your thoughts, and how do you have those conversations?

Patrick Shaw (00:26:03):
Yeah, you’re exactly right, Brian. It seems counter intuitive. If you think about it fundamentally, “Hey, Mr./Mrs. Client. I’m asking you to accelerate some of your tax payments.” That’s where… and again, not a cliche, but using that term proactive, a couple of things I think that are important.

Patrick Shaw (00:26:21):
One, is understanding your different sources of income and how they’re taxed. Again, our tax code, while it’s been simplified maybe, it’s the worlds [inaudible 00:26:31] complex. Understanding your different sources of income and the equivalent tax you pay, dividends are taxed differently than ordinary income.

Patrick Shaw (00:26:40):
Pensions are different than capital gains, so forth and so on. Getting a good inventory of that, understanding those concepts and how our tax brackets work is really, really important. Just going out and making a blanket statement saying, “Hey, taxes are going to go up into the future. I should move all my IRAs to Roth.”

Patrick Shaw (00:26:57):
That’s probably not an educated decision, to do it that way. It should be very, very calculated. Some of those things you might consider looking out. You mentioned required minimum distributions. We’ve been granted a little bit of a reprieve. That age has been pushed back a little bit to age 72.

Patrick Shaw (00:27:13):
If you think about our whole lives, most of our parents and grandparents, they were taught, “Hey, safe for a rainy day and maximize all your employer-sponsored programs.” Well, listen, a lot of those programs were developed in the years of the depression. Taxes were slightly higher then.

Patrick Shaw (00:27:30):
You go, “Look, and all of that is future tax liability.” Eventually it gets forced to you. You can look at it and say, “Hey, I’ve got an expected required minimum distribution of $100,000.” That may be great, but what happens if you don’t necessarily need all that money? It’s additional forced taxation.

Patrick Shaw (00:27:47):
Starting to look and be proactive. Look into the future, and where your sources of income are going to be relative to today. Being calculative, run some projections, see how much room do you have? I mean, frankly, the current tax code is extremely favorable.

Patrick Shaw (00:28:02):
I mean, the reality is, a married couple could have $350,000 roughly of ordinary income and stay on the marginal 24% tax bracket. That’s pretty phenomenal. I’m not telling everybody to go convert to the 24% tax bracket, but you may never see those rates again in your lifetime.

Patrick Shaw (00:28:20):
You also got to be cognizant of other things. What are your other goals and wishes? If my goal… if I don’t have any heirs and I just want to leave all my money to charity, maybe I shouldn’t do a Roth conversion. Maybe that doesn’t make a whole lot of sense.

Patrick Shaw (00:28:35):
Factoring, where do I want my wealth to ultimately go? What is the impact? You mentioned Medicare taxes, Medicare surcharges. A lot of folks don’t really think about that. It’s kind of a silent tax, that you can get a surprise, “Hey, your income two years ago was too high. Your premiums are going up.”

Patrick Shaw (00:28:50):
It’s kind of a silent tax that people don’t necessarily think about. Understanding the impact at a state level. Some states have a graduated income tax, some states don’t tax retirement income. These are all considerations I think you want to take a look at, and factor in when making some of these decisions.

Patrick Shaw (00:29:07):
I think it is a tremendous opportunity for folks to consider, for a wide variety of reasons. Listen, much like we don’t know what the best stock is going to be for the next 12 months, we try, but we don’t know.

Patrick Shaw (00:29:19):
The same thing with taxes, we don’t know where exactly these things end up. Why wouldn’t we want to diversify our situation a little bit? Do a calculated and really make educated decisions when you’re going down that path.

Brian Leitner (00:29:32):
Yeah, that’s terrific.

Jodi Robinson (00:29:33):
I think-

Brian Leitner (00:29:33):
Go ahead, Jodi.

Jodi Robinson (00:29:36):
I was just going to say, I think Roth conversions this year, are a thing to definitely look at. A couple of reasons. One, your other sources of income may be down, because it’s 2020. Two, they did away with the required minimum distributions this year.

Jodi Robinson (00:29:59):
You may find that you’ve got some room in your taxable income or your bracket, to do a conversion this year. Just a couple of reasons why that might be good to think about, or do some analysis this year.

Brian Leitner (00:30:15):
Thank you both. I mean, I think there’s probably a lot of us on this call, that remember or were alive during a time when the highest tax bracket was 70%. It wasn’t that long ago. Those are interesting things to think about. If you think about it from that perspective, well, then taxes are actually on sale.

Brian Leitner (00:30:32):
Much like the market, when the market goes down, there are some people that view it as an opportunity. There are other people that head for the hills. It is something to think about. Jodi brought up a great point.

Brian Leitner (00:30:42):
You don’t have to convert all at once. Patrick, when you’re talking about maybe playing with those tax brackets and filling those up, maybe doing a certain amount, so that it doesn’t kick you into a higher tax bracket, those are all excellent points. Thank you very much for that.

Brian Leitner (00:30:56):
Lastly, what I might mention on the Roth conversion and just maybe bring this point home, Patrick was something that you had said, is if I pay the tax now, everything going forward is going to be income tax free to my heirs. If I am looking at an estate tax that’s coming back, that’s going to impact a lot more people.

Brian Leitner (00:31:14):
Well, that onto itself, I’m looking at it as, I’m paying the taxes, almost a future gift to some degree, because these folks, my beneficiaries aren’t going to inherit that liability. Different things to think about from that perspective. To your point, it all comes down to what your goals are.

Brian Leitner (00:31:29):
With that said, let’s bounce back to the market. Bill, come back to you. Something that I think a lot of people are interested in, is what is your outlook for the rest of the year and even moving into 2021, as it relates to the financial markets?

Bill Greiner (00:31:44):
Okay. Well, I think to have this conversation, we need to start off with just a fundamental understanding of what the highest probability outcome of economic activity, is probably going to be going forward.

Bill Greiner (00:31:55):
Frankly, we’re constructive on economy over the next 12 months, so much though, resides on whether we get injectable cures for the coronavirus issue. Some kind of a serum of some kind. If we do, then things will probably accelerate more rapidly than what we’re calling for right now.

Bill Greiner (00:32:19):
Our anticipation or expectation, is we’ll probably see some kind of effective treatment be launched here in the US, sometime in the first half of next year. That being said, I think it’s really interesting to think about this cycle we’re in right now, this economic cycle.

Bill Greiner (00:32:37):
I’ve been in the business for a little more than 40 years now, and I’ve gone through a lot of different cycles. This is the first time I’ve seen a recession actually occur due to an event.

Bill Greiner (00:32:49):
I mean, you can look back in history and usually a recession is a grinding process, where eventually the economy gives up and moves into a contractionary mode. This time around, it basically just happened on one day or one week. Where the actual GDP could contract here in the US, by a little bit more than a quarter.

Bill Greiner (00:33:12):
When you think about a 20 or a $5 trillion reduction in GDP over a period of 30 days, it’s just phenomenal, what happened here. The dig out, if you will, we’re digging ourselves out of this hole. There is a process, like the end of any recession. Businesses find their footing. They start to retire people.

Bill Greiner (00:33:31):
They start to make investments, but that’s a process where final demand has to start accelerating in one degree or the other. I think we’re starting to see some very positive results regarding this process. First, for example, is ISM surveys. The ISM surveys are surveys of businesses, how business is going and so on and so forth.

Bill Greiner (00:33:52):
Then you read of those surveys above a registration of 50, which suggests an expansion in both services and manufacturing here in the US. That number now is a little bit North of 55. Businesses are starting to lift themselves out of a hole that they found themselves in during the second quarter of this year.

Bill Greiner (00:34:13):
The consumer side of the equation is still a mixed bag. It’s still a mixed bag. 70% of our economy of course, is consumption activity. That’s the 800 pound gorilla on the porch. How that goes then, basically goes to the economy. Retail sales recently were up 6%, a good number, a solid number. That’s fairly robust actually.

Bill Greiner (00:34:33):
At the same time, initial unemployment claims are still running above 800,000 a week. Normally speaking, back the first part of this year, to give a frame of reference, those numbers were about 250,000 on a weekly basis. Some felt that the employment picture is still very, very dicey.

Bill Greiner (00:34:52):
Now in the face of it, the housing market is absolutely gangbusters and has been for the last few months. I think everybody knows that. Recent housing stats data, suggests 1.4 million new units on an annualized basis, which is a big, big number.

Bill Greiner (00:35:06):
That’s up from about 950,000, a couple of three months ago. You’re starting to see the housing market. We accelerate activity hard on the upside. The reason I look at housing stats rather than housing sales, when somebody buys a house from somebody else, an existing home, that really doesn’t add a lot to GDP.

Bill Greiner (00:35:23):
Whereas if you’re looking at an actual sale or the construction of a new home, that is meaningful to overall economic activity. In general, I think things are going along pretty well as far as the economy. Now the last thing, I’ll mention the economy before I flip over to the market, is the Fed activity.

Bill Greiner (00:35:41):
The Fed has been absolutely flooding the financial system with cash, and M3 growth rates are running at historically high rates. This isn’t just in comparison to past recessions. This is just outright, numbers are just huge.

Bill Greiner (00:35:55):
Now, when I look at my monetary policy, there’re a lot of ways of looking at monetary policy. As far as how it affects the capital markets, I think one of the best measures is looking at M2 growth, which is money growth, money supply growth, as compared to GDP growth.

Bill Greiner (00:36:10):
The economy doesn’t need the money and the money is growing more rapidly than the economy, that money tends to flow into the capital markets. Over the last 12 months, M2 growth has been 11.3%. Whereas the nominal GDP growth rate in the US has been 0.4. That spread is the widest I’ve seen since the 1950s.

Bill Greiner (00:36:29):
It’s a big, big number, and then that money is flowing into the market. I would suggest going forward, the first key to understanding what’s been going on in the dislocation, the seemingly dislocation between the stock market on one hand and the economy on the other, has to do with Fed policy.

Bill Greiner (00:36:47):
If the Fed continues down this path, it looks like… by [inaudible 00:36:51] voice, that yes, indeed if we continue down this path, then there is a lot of ammunition. There is a lot of firepower behind the stock market, continuing to potentially move higher, as we move forward over the next 6 to 12 month period of time.

Bill Greiner (00:37:04):
Now that being said, the other three factors that myself and the other fellows, Jeff and so on in the firm look at, we look at a lot of different factors. That’s the three that I’ll mention real quickly here. Investor sentiment, what people feel about the market. How many [inaudible 00:37:18]?

Bill Greiner (00:37:20):
Right now, it’s fairly neutral. There is a lot of people that are worried about the stock market. Then again, there are people that are trying to take advantage of these moves on the upside.

Bill Greiner (00:37:28):
That’s sort of a neutral. Earning flow and my talk about GDP growth, and things starting to accelerate and so on. We’re looking for about a 25% improvement in corporate profits next year, as compared to this year, for the S&P 500.

Bill Greiner (00:37:42):
Well, that’s a big number. Historically, going back in time, that average number is about 7%. We think corporate profits over the next four quarters, are probably going to grow at almost four times the rate that we normally see on just a regular year basis.

Bill Greiner (00:37:57):
I would suggest that that’s another reason the stock market has done well over the last few months, is that the people understand that that growth rate is sitting out there. We’re probably going to see it come through in a fairly decent way.

Bill Greiner (00:38:09):
Lastly… and I’ll talk about something of a negative here, is valuation. Stock marketing sheet, if you look at trailing earnings or if you look at projected earnings, the stock market is just flat out cheap, but on balance.

Bill Greiner (00:38:21):
We’re suggesting that the stock market should probably do fairly well over the next 6 to 12 month period of time. Historically, coming back to this presidential cycle business that we were talking about a little earlier, traditionally, the first six months following an election, the stock market has tended to do pretty well.

Bill Greiner (00:38:39):
If we have a new president, usually the second half of that first year, things get a little dicier. By that time, we realize of course, we’ve elected another bomb that’s full of all sorts of problems.

Bill Greiner (00:38:52):
The stock market tends to correct it, but so far so good. We think that going forward, over the next 3, 6… let’s call it 12 month period of time, the stock market should probably [inaudible 00:39:01].

Brian Leitner (00:39:03):
Thanks, Bill. I appreciate it, and that’s great news. You guys, I’ll again, encourage you, if you have questions, please go ahead and use that chat functionality. We’ve had a couple that have come in, that I’ve been reading.

Brian Leitner (00:39:15):
One of them has to do with the required minimum distributions. Pat, you mentioned, we had some reprieve on that this year. Maybe, Jodi I’ll ask you and then maybe Patrick, to weigh in on this.

Brian Leitner (00:39:26):
No one has a crystal ball, but have you seen anything or are you anticipating next year, having another reprieve or some sort of optionality. Maybe this is wishful thinking from one of the viewers here today, but I’d ask you that question.

Brian Leitner (00:39:41):
(silence)

Brian Leitner (00:39:51):
Hey, Jodi. I don’t know if you’re on mute, or-

Jodi Robinson (00:39:56):
Oh, sorry.

Brian Leitner (00:39:57):
There you go.

Jodi Robinson (00:39:57):
I got it now.

Patrick Shaw (00:39:58):
There we go.

Jodi Robinson (00:40:00):
I was just saying, I’ve seen nothing. I haven’t seen any kind of indication that that would be extended beyond 2020. I don’t know whether, Pat you’ve seen or heard anything out there, but I really haven’t heard people talking about that. They’re focused on a lot of other things right now.

Patrick Shaw (00:40:19):
Yeah. I also, I have not seen anything. The naysayer in me is, listen, our deficit isn’t shrinking. One of the ways to plug some of those holes is tax revenue. I would be surprised if it did continue into 2021, but you never say never. Like I said, these things perpetually change.

Patrick Shaw (00:40:41):
I would just be quite surprised if they did waive them for 2021 as well. That’s a decent chunk of tax revenue that they’re foregoing. If you really think about solving the deficit problem. Not that it’s going to be solved next year, but it certainly doesn’t help.

Brian Leitner (00:40:58):
Jodi, we had another question that came in again. This isn’t necessarily crystal ball, but have you heard of the idea on the dividends, on the qualified dividends and reinvesting those dividends within a period of time?

Brian Leitner (00:41:12):
For those individuals that are potentially going to pay more in taxes under the Biden administration, have you heard of anything like that? Maybe reinvesting that within a period of time, to get around the increase.

Jodi Robinson (00:41:27):
No.

Brian Leitner (00:41:27):
Okay.

Jodi Robinson (00:41:27):
Again, not really anything. Usually in the tax world, if they feel like something is going to stick, it gets out there and it gets a lot of [inaudible 00:41:38]. I have not heard anything coming at me from any kind of tax sources about that.

Brian Leitner (00:41:44):
Yeah. I think there’s just a lot of talk that’s out there, and to Pat’s point, wishful thinking. I appreciate it. Pat, maybe back to you, there is the question that came in regarding… they said it was a recent tax legislation. I think what they’re really referring to is the SECURE Act.

Brian Leitner (00:42:00):
The past few years, and the changes to the way in which non-spouse beneficiaries might inherit these accounts. Maybe just to level set for everybody, just a quick example, you have mom and dad and Junior. Generally, dad dies first. We’ll use that example.

Brian Leitner (00:42:20):
Dad dies first, those assets go to his partner, his spouse. Then ultimately, those assets are his or hers. Then they go to Junior. Then junior can ultimately take out… when mom does. Junior can ultimately take those distributions out over the course of their life.

Brian Leitner (00:42:38):
If they’re 40, 50 years old, they can take that out over an extended period of time. It mitigates some of the tax issues and so forth. The SECURE Act changed that. Now going through that same example, it goes from dad to mom. Well, Junior only has 10 years to take those funds out.

Brian Leitner (00:42:55):
The question that’s coming in is, is there anything I can do around dealing with that? We know that there are some exceptions that are out there. In terms of strategies, are there things that you’re talking to folks about right now?

Patrick Shaw (00:43:09):
Yeah, so a couple of things come to mind. Again, not to beat a dead horse here, but coming back to that Roth conversion conversation, it’s an important one. Not so much when money passes on to Junior.

Patrick Shaw (00:43:22):
Think about the situation you just described, Brian. If husband passes away, money now is left with mom. Mom is now a single tax filer, maybe still having the same required minimum distribution.

Patrick Shaw (00:43:34):
Income stays the same, but now I’m a single tax filer. That alone could raise mom’s tax rate. Again, it’s not just looking at Roth conversions, because we’re fearful about taxes in the future or leaving more money to Junior. That’s a consideration to be thinking about as well.

Patrick Shaw (00:43:50):
Then you start to look at other strategies. Evaluating beneficiary designations, so hey, God forbid, dad passes away first. Maybe if at dad’s death, what if we thought about having Junior be a partial beneficiary? Maybe he’s 50/50 with mom, and maybe mom lives another 10 or 15 years.

Patrick Shaw (00:44:09):
Now we’ve taken that 10-year window, and we’ve stretched it out to maybe even a 20-year window. Giving consideration to charitable intent. Naming a charity as a beneficiary for a retirement account, if you have charitable intent, is a great strategy.

Patrick Shaw (00:44:25):
Yeah, it’s certainly worth looking at and evaluating. There’s also some different planning that… you might hit on it. Folks ask a lot, “Should we have our trust as our beneficiary?” Generally speaking, probably not. There are some situations where that could make sense as well.

Patrick Shaw (00:44:43):
A child that has a dependency problem or an issue, and you’re really looking at it as a way to protect some of these assets. Yeah, the SECURE Act, which should be noted, was just enacted January 1st. Literally, it just changed in 2020. That’s what we’re speaking about.

Patrick Shaw (00:45:00):
Coming back and revisiting some of these things, certainly can make sense to evaluate. Again, you don’t have a crystal ball, but just trying to think through some of these scenarios and ultimately maximize how much money stays in the family.

Brian Leitner (00:45:14):
Thanks, Patrick. Yeah, I would also highlight that if folks do have their trust as the contingent beneficiary of their IRA, the way that this was written back in the day, ultimately, I mean, they really need to review their estate plan immediately.

Brian Leitner (00:45:30):
Ultimately, the way it’s written is, they’re likely not going to take it out over that 10 year period of time. They take it out all in the 10th year, which is likely the way their trust document works.

Brian Leitner (00:45:39):
If there was a million or $2 million in that IRA and they have to take it all out within that one year, that’s problematic. Yeah, I was part of a conversation about two weeks ago, with a family who was in great shape, great health.

Brian Leitner (00:45:53):
The conversation they were having was actually, instead of trying to pass on the IRA, which in general, isn’t a great asset to inherit, just because of the tax nature of that account. They were looking at taking money out today or over a period of years, and replacing that, that wealth replacement, buying insurance.

Brian Leitner (00:46:14):
Setting that up actually potentially inside of a trust or even outside of a trust, because those proceeds would then be income tax free. You really have to look at the economics of that, does that make sense? Are the folks in good shape? What are you paying for that?

Brian Leitner (00:46:29):
There are a variety of different strategies that I know that you and others are having, as it relates to these conversations and strategies. Jodi, is there anything that you wanted to add to that, as it relates to the SECURE Act?

Jodi Robinson (00:46:42):
No, I think that covers it.

Brian Leitner (00:46:45):
Okay, so we had another question that came in. Jodi, this is probably a good one for you. We have an individual who lives in the State of New Jersey, and they work in New York City or they were working in New York City, but now they’re working remotely from home.

Brian Leitner (00:47:01):
They want to know about their tax. Do they still owe tax to the City of New York? What does that look like? Again, they’re not going there anymore. They’re working from home. Any advice you can lend?

Jodi Robinson (00:47:15):
Right.

Brian Leitner (00:47:15):
Any good news?

Jodi Robinson (00:47:16):
Yeah. Well, unfortunately, no news yet. That probably means that New York and New York City are not communicating their decision on it, because it’s probably not going to be taxpayer friendly. Most of the state and local entities or localities around the country, are really… most of them are broke right now.

Jodi Robinson (00:47:45):
The fact that they would give some taxpayer’s reprieves in some of these situations, is really not likely. Some of them… because I’m hearing Kansas city and St. Louis also has earnings taxes. They are a little different.

Jodi Robinson (00:48:07):
They’re different than New York in that, you can actually count your days that you worked outside of Kansas City and St. Louis, and apply for a refund of the earnings tax that was withheld. New York and New York City are not conceding to that at this point in time, so no news on that front.

Brian Leitner (00:48:28):
Okay, keep us updated. Thank you. Patrick, moving over back over to you, regarding the estate tax. For I think a while now, there are a lot of folks that were out there that said the exemption is so high.

Brian Leitner (00:48:40):
I really either don’t necessarily need to worry about that right now, but you know what? Look, the market’s done really well. Maybe there are folks that are in a much better situation than they were certainly, from February, March.

Brian Leitner (00:48:51):
The estate tax may continue to come down, and I now may be faced with an estate tax. What should folks be thinking about right now, as it relates to their own situation? If that in fact is potentially the case.

Patrick Shaw (00:49:04):
Yeah, it’s an excellent question. Again, it comes back to listen, I think you want to make decisions based upon what you know today. What we know today is, to your point, a married couple, you’re talking North of $23 million.

Patrick Shaw (00:49:19):
We haven’t seen the exemption that high. With the exception of the year George Steinbrenner passed away, there was no estate tax, right?

Brian Leitner (00:49:26):
Yeah, well done. Well done.

Patrick Shaw (00:49:30):
Listen, but the reality is that, it’s something that impacts very few people today. It has the probability to start impacting a lot more. I mean, I know I’m dating myself here a little bit, but if you go all the way back to 2000, I mean, exemption was below a million dollars.

Patrick Shaw (00:49:46):
A million dollars isn’t quite what it used to be. The reality is again, we know if nothing else happens with future administration, that the exemption does get cut in half. Still adjusted for inflation, so maybe you got about five and a half, 6 million per individual.

Patrick Shaw (00:50:02):
If you’re not impacted today, you should absolutely be looking at strategies to do this. There is a lot of really complicated strategies, with some trust planning and gifting. Or there’re some pretty straight forward strategies.

Patrick Shaw (00:50:17):
Again, sitting down with somebody… and again, there is a lot of great of estate planning attorneys out there. There is a lot of great CPAs, but very rarely do they kind of work together.

Patrick Shaw (00:50:27):
I think that’s where we have a pretty interesting perch that we sit on as advisors and practitioners, is we really get to see both sides of that equation. I’ve seen clients, they talk about their estate plan, but the estate planner has no idea really of their net worth.

Patrick Shaw (00:50:44):
It’s like, how can you really build a constructive estate plan if you’re leaving out some of those details? Yeah, I do think there’s great opportunities. There are strategies, we talked about the interest rate environment. No, it’s not great if you’re a saver or you’re saving in cash.

Patrick Shaw (00:50:58):
It does provide tremendous… the low interest rate environment, are sometimes referred to the 75, 20 rate environment for estate planning. That’s very attractive today, to implement certain strategies where you may not even have to use any exemptions.

Patrick Shaw (00:51:12):
I think sitting down with a professional… and again, getting back to your financial plan and seeing, “How much may I have leftover? What are the ramifications? What’s the impact to my kids?” I talk to folks and they don’t realize that, hey, anything above those exemptions, 40% of that, it’s probably going to uncle Sam.

Patrick Shaw (00:51:30):
I don’t know if that’s really what they want or they intended. Taking a look and looking at ways today to utilize your exemptions. Kind of freeze those, if you will, lock them in. You may have heard of intentionally defective grant or trust, grantor retained annuity trust, family LLCs.

Patrick Shaw (00:51:48):
There is a wide variety of different types of strategies that can be used to accomplish this. I think… and a lot of people don’t understand that they can actually make gifts today, prior to passing away. You don’t have to do all this planning a year before you pass away.

Patrick Shaw (00:52:03):
I think you look at the situation today, and take a look at the facts, what we know, and you start making some decisions and looking at strategies to maximize this today. These are real dollars we’re talking about. I mean, if I’m a client, I got $20 million today.

Patrick Shaw (00:52:19):
The exemption gets cut to let’s say $12 million, my heirs are facing a $4 million tax bill. The other thing I would say is, listen, this is only at the federal level. You also need to take a look at your state. There is a handful of states that also have their own estate tax, which the exemptions are not the same.

Patrick Shaw (00:52:39):
This gets pretty complicated. When you talk about the ability to transition wealth to the next generation or multiple generations, this can be a significant impact today, that certainly garners some attention.

Patrick Shaw (00:52:51):
Don’t just turn a blind eye, because it doesn’t impact you today. The reality is, we don’t know when it could, but it might. I think evaluating these… sitting down with your advisor, and talking through this makes a lot of sense today.

Brian Leitner (00:53:03):
Yeah. Patrick, thanks again. A couple of things you said, I mean, sitting down and trying to understand and forecasting. Running different scenarios, because even what your wealth is today, is likely going to be different, either positive or negative in the future years.

Brian Leitner (00:53:18):
Marrying that, where you think ultimately the tax bill is going to end up, and maybe leveraging some of the ability to gift, or even frankly, make loans to loved ones now, in this low interest rate environment. That’s sort of the low-hanging fruit and a variety of different things to think about.

Brian Leitner (00:53:32):
Finally, this should go without saying, but it’s one thing to transfer your wealth from a tax efficient perspective. It’s a whole other thing to make sure that your beneficiaries are ready to receive that wealth.

Brian Leitner (00:53:43):
That’s a conversation for a completely different webinar, but it’s worth mentioning. We’re going to start wrapping up here in just a minute, but we had another question that just came in. It has to do with the estate tax and the estate plan.

Brian Leitner (00:53:56):
This individual was saying… it’s a note that I was just reading is, “I had my estate plan done about five years ago. Am I due for another review? How often should I do this? What does that look like?” Patrick, I’ll go back to you with that question.

Patrick Shaw (00:54:12):
Yeah. Listen, a general rule of thumb, we would encourage folks, anytime there is a big life change, obviously you want to review these things. I would say broadly speaking, at a minimum, every probably three to five years, at a minimum. Unless there is a substantial tax code change, or another estate planning change.

Patrick Shaw (00:54:30):
It’s certainly worth looking. We’ve found a lot of clients that say, “Oh yeah, I did my plan 20 years ago. It’s been sitting in my safe deposit box ever since.” Probably garner some attention, and that could be as simple as beneficiary reviews, taking a look at your powers of attorney.

Patrick Shaw (00:54:45):
It’s not just this trust and the wealth transfer, but hey, are your documents still relevant today? Has anybody pre-deceased you, God forbid, that was named as your financial power of attorney. Do you have a financial power of attorney, a healthcare power of attorney? Who’s going to make decisions maybe while you’re still alive?

Patrick Shaw (00:55:04):
We think about estate planning as what happens after we pass away, but there is a lot of important components here that are relevant even as we’re living. Yeah, generally I would say every three to five years. If you haven’t reviewed it in the past… we’re in October, 10 months, it’s probably worth taking a look at.

Patrick Shaw (00:55:23):
Just due to the nature of the SECURE Act. Brian, you mentioned earlier, a lot of trust documents, when they refer to retirement accounts, they mention required minimum distributions.

Patrick Shaw (00:55:33):
Frankly, now with the SECURE Act, anybody that inherits money after 2020, there was no such thing as a required minimum distribution. At the 10-year window, they could take money out whenever they want over that 10 years.

Patrick Shaw (00:55:46):
Just going back and looking at some of those things. Again, frankly, I think at the end of the day, again, there is a lot of great estate planning attorneys out there that do a tremendous job of drafting documents.

Patrick Shaw (00:55:56):
How are they going to be enacted? I think is an important component. Do these documents…? Most clients get their binder, it’s three inches thick and they don’t really know what it says.

Patrick Shaw (00:56:08):
You should know what it says and understand, when do my heirs get money? How is it protected? We live in a very litigious society today. When do they receive money? How is it going to be protected for them?

Patrick Shaw (00:56:19):
Making sure those things are buttoned up, and your wishes are going to be carried out. There’s no one right or wrong way that’s clear. What do you ultimately want to have happen to your wealth, Mr. and Mrs. Client? That’s an important component of that.

Brian Leitner (00:56:33):
Yeah. Patrick, you made this… maybe somewhat jokingly, but when was the last time you reviewed this? Has it been as early as this year? The reality is, with COVID too, which presents a whole other set of potential things to be thinking about.

Brian Leitner (00:56:49):
A lot of folks have living wills where they don’t want to be kept alive on ventilator, or the use of ventilator. We know that a lot of cases, a lot of lives have been saved as it relates to that. Other times, depending upon your location, spouses were not allowed inside the hospital.

Brian Leitner (00:57:04):
They’ve required a signature, do your estate planning documents enable you to do that? Those are different things to think about. Obviously, excellent points. Guys, as we wrap up, there’s just a couple of minutes left. I’ll start with, Bill. I’ll ask you, if you’ve any parting thoughts before we shut this down?

Bill Greiner (00:57:25):
Yeah, real quickly. I think it’s probably wise for investors to start thinking about diversification levels in their portfolios. Now, I’m not saying the stock market is going to crash or anything like that, over the next three to six months or anything along those lines.

Bill Greiner (00:57:40):
I think available returns are probably going to start broadening out, in other asset classes that may not have been the case for the last three or four years. Last three or four years has been a one decision kind of environment, where the only question is, how much money do you have in the US equity market?

Bill Greiner (00:57:54):
Pretty much drove your return in your portfolio. I’m getting a sense that that’s just not going to be the case going forward. Work directly with your wealth advisor on this issue of allocation.

Bill Greiner (00:58:07):
Take that on an active level. Perhaps be a little bit more active, and rebalancing your portfolio on a regular basis, than perhaps has been the case for the last two or three years.

Brian Leitner (00:58:17):
Thanks, Bill. Jodi, any comments?

Jodi Robinson (00:58:23):
I think my battery has just died. [inaudible 00:58:25].

Brian Leitner (00:58:29):
We can hear you.

Jodi Robinson (00:58:29):
I was saying, we have talked a lot today about ways to avoid taxation on certain types of income. One thing that I always encourage people to do, [inaudible 00:58:39] charity is part of your short-term or long-term plan, this is a really good time to evaluate it.

Jodi Robinson (00:58:47):
Sort of Biden’s plan has posed some potential limitations on itemized deductions. In 2020, you can make charitable contributions about, to 100% of your AGI. Think about charitable donations in 2020, maybe much more valuable from a tax perspective than they could be in 2021.

Jodi Robinson (00:59:10):
That’s not necessarily an income planning point. It’s certainly a charity is part of your annual consideration and longterm consideration, that’d be something I would zero in on.

Brian Leitner (00:59:24):
Thank you. Patrick.

Patrick Shaw (00:59:28):
Yeah. Listen, I think again, on just proactive. I think having a plan and being disciplined, whether it’s investing in the stock market, your tax strategy, your estate plan and instilling some discipline for whatever reason.

Patrick Shaw (00:59:46):
I think we all get emotional as it relates to politics, or taxes or investments, or whatever might be. That’s where folks may have the tendency to make poor decisions. This year has been a tremendous example, being disciplined.

Patrick Shaw (01:00:01):
I think in March, you look at the week of March 16th, you got three days where the market’s down 1,000 points. I think it’s real easy in that moment to capitulate. Then you miss the following Monday, Tuesday, Wednesday, where the market recovers 20%.

Patrick Shaw (01:00:18):
Having a plan in these periods of what may be perceived as extreme volatility or something of that nature, having a plan is what ultimately allows you to make good discipline, grounded decisions. Taking a look at the data and the facts, as they are relevant to you and your family is the most critical thing I think that you can do.

Patrick Shaw (01:00:39):
Don’t just listen to what’s going on, but how does it impact me and my family, and our wealth? Make your decisions based upon that. In terms of, what are your desired outcomes?

Patrick Shaw (01:00:50):
You need to formulate your decisions based upon that. Whether it’s portfolio related tax estate, whatever it might be, let’s sit down and customize what that looks like and make some good, solid decisions.

Brian Leitner (01:01:02):
That’s terrific. I’ll simply add maybe just a couple of points, really important. If you’re watching this right now, I would encourage you, make sure that you have access or can get your hands on all the key documents that we’re talking about now. Whether it’s your estate planning, your insurance docs, your broker statements, everything.

Brian Leitner (01:01:20):
At some point in time, you’re going to need to get your hands on that. Sometimes it’s in a state of grief. If you don’t have a plan for that, if you can’t get your hands on that within 30 minutes, you’ll likely have a problem. Maybe that’s some homework or some takeaway.

Brian Leitner (01:01:33):
Something else to think about, is we see a lot of folks that, there’s maybe one financial spouse in the relationship or one non-financial spouse. I mean, use this as an opportunity to get on the same page. We can play a resource in that, in educating that non-financial spouse, because it’s critically.

Brian Leitner (01:01:53):
I mean, this isn’t your plan versus their plan. This is, if you’re married, you’re together on this. You should both have a voice and you should be aligned at least to some degree, so thinking that through. Lastly, which is a little morbid… but look, we’ve been dealing with a lot of morbidity throughout the entire year.

Brian Leitner (01:02:12):
What I would strongly encourage folks to do, is run a couple of… what I’ll refer to as lifeboat drills. That could be, “Hey, the market goes down by X tomorrow morning, what’s your reaction?” Maybe re-evaluating your risk tolerance.

Brian Leitner (01:02:26):
Or God forbid, one spouse doesn’t come home. Does the other one…? Maybe the non-financial spouse, do they know what to do? What does that look like? Things of that nature.

Brian Leitner (01:02:36):
Again, there were some other questions that we ran at a time with, we’ll get back to those individuals and if they send the email to qa@marinerwealthadvisors.com. If you have any feedback regarding this webinar, we’d like to see others. We’d like to share ideas on what future broadcast might look like. We would love to hear from you.

Brian Leitner (01:02:56):
I want to thank everybody for joining today, and being proactive. Obviously I want to thank my panelists, especially Jodi, who is right smacked in the middle or towards the tail end I should say, of tax season. We really appreciate you taking the time. Thank you very much, guys. Thanks for watching.

Bill Greiner (01:03:12):
Thank you.

Jodi Robinson (01:03:13):
Thank you. Pleasure.

Patrick Shaw (01:03:15):
Thanks so much, stay well.

Adam Hooper (01:03:17):
All right, listeners. That’s all we’ve got for today. If you’d like to learn about how REAllocate and our partnership with Mariner Wealth Advisors can help you build a real estate portfolio, that meets your risk tolerance and financial goals, head to buildmyroadmap.com.

Adam Hooper (01:03:32):
Stay tuned for more special episodes with our friends at Mariner Wealth Advisors. Again, head to buildmyroadmap.com. With that, we’ll catch you in the next one.