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Estate Tax

Finishing Well / Hans Scheil
The Truth Network Radio
June 11, 2022 8:30 am

Estate Tax

Finishing Well / Hans Scheil

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June 11, 2022 8:30 am

Hans and Robby are back again this week with a brand new episode! This week's show is all about Estate Tax. Hans and Robby go over the details you need to help get your house in order.

Don’t forget to get your copy of “The Complete Cardinal Guide to Planning for and Living in Retirement” on Amazon or on for free!

You can contact Hans and Cardinal by emailing or calling 919-535-8261. Learn more at  Find us on YouTube: Cardinal Advisors.


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Enjoyed sure it but most of all, thank you for listening and for choosing The Truth Podcast Network. This is the Truth Network welcome to finishing well brought to you by Cardinal guy, certified financial planner belongs agile, best-selling author and financial planners helping families finish well for over 40 years of finishing well will examine both biblical and practical knowledge to assist families in finishing well, including discussions on managing Medicare IRA long-term care life insurance and investments and taxes. Now let's get started with finishing well, finishing well is a general discussion and education issues facing retirees are no advisors upon trial CFP some insurance this show does not offer investment products or investment advice or welcome to finishing well and certified financial planner Honshu Island today show may sound a little bit intimidating estate tax, but I think that it will be worth listening to you as you find it has so much to do so many different things that you may not thought about and along those lines itemize you've ever considered because a lot of what's going on within the state. Is your land and your life.

Just saying. Okay secco you might remember Jesus told us that you know in John chapter 10 when he was given a Shepherd training that you have the good shepherd lays down his life for his sheep and a lot of them are connected at the 23rd Psalm because you might remember that in that verse where it says he makes his sheep lay down in green pastures. We might even now in the song of Solomon in the first chapter, the beloved bride of Christ is asking her beloved, you know, where do you feed your 540 make them lay down at noon. Well, as we lay down our lives, literally. What's going on there.

This is what Jesus ask us to do is to essentially lay down our lives for our family, for friends. Essentially, for God to use this stuff like our estate for eternal purposes. Stuff that goes on and on and on and on and it seems really intimidating then that Hans but it's not.

If you just talk about it. I came back a few weeks ago and I know we talked about him last Saturday and were talking about him again today and this whole thing came from a presentation of the speaker, other than it Jeffrey Levine and Jeffrey is an estate planner and he's a CPA, CFP he works with a lot of wealthy people or even the financial planners for these wealthy people come to him for consultation on how to get around the estate and he put a slide up on the screen that I have on my video which you are getting ready for the show showed you the side of the exemption for the estate tax and the point of this whole thing is that the estate tax right now and 2022 doesn't affect very many people and tell you why in the year 2000, the estate tax exemption was $675,000 a person and if you are a husband and wife. That meant that she could take 1,350,000 and pretty much have it except exempt from the estate tax.

So back in the 90s and in the year to and the 2000 early 2003 in your estate plan.

Like me, you were planning that anybody call that had a net worth over a million bags or it could grow into something substantially more. These people were in their 50s 60s 70s we had to do estate planning around the estate tax and we did a lot of what I find even today is that people are still working with these old numbers when they're unschooled about estate taxes on people command and they have a net worth that I could be 1/2 a million. It could be 2 million hour more, and they start paying on what can I give my kids, you know Giving away money, whether alive. I think at 15,000 a year and that right and you know the answer to that is yeah you can give 15,000 a year and it will count toward your state tax credit but did you know that the estate tax credit in 2022 is 12 million person you know and I'm a people will like what and so when their parents were talking about this stuff, 20, 25 years ago there were people that you might call their above average because their millionaires are there millionaires or three quarter million years but there was certainly a lot more of them subject to the estate tax and so their parents would be living by the collar number and in 2022.

The only way the estate taxes cannot apply to you or to your estate is here. If you're worth more than 12 million. And when you got a married couple if they set up things properly.

That's 24 and when I say set up things properly. Note this is definitely don't try at home meet his numbers and that they need to hire some people send, I do this kind of work with consultation with others to properly set up well so that we can at least minimize this estate tax. But when you start getting numbers of 12,000,020 4 million.

A lot of people in the United States of America and so you had commented wryly that that when you watch the video in preparation for this videos on YouTube. How the first five minutes of video I really went over the estate tax think I just went over and I have this chart out there and then I said. I flipped over the board and I said so what is estate planning for the rest of and that you'd made a comment about that you thought it was good and I was tracking with a presentation that I saw and listened to because it really made sense is that because the limits are so high on the estate tax people that you know about that. You need to worry about that. Outside of their probability estate plan in his town like no we we suggest an estate going to do Around different stop in the estate consists still is, way to get their handout's. Oh yeah, and you know a lot of people look at this and they say will dad what I care.

Now I'm people that say that are usually just trying to distance themselves with that they can think you pass away and you get just about anything and that you have an interest in leaving that your spouse and/or your children for charity work which is most people, you do have an interest in that than the government is to get a check of that one where another and what I want really want to do on the show today is focusing in on estate planning for the rest and you know that would be people that have 200,000 2,800,000 you know 65,000 you know I'm just people all over the board and then we talked a little bit is one of these people that have a lot of millions calling I'm an expert in this stuff and I'll get you with some other expert but for the rest of the numbers are recall and then you have an interest in seeing that your children get the your spouse gets this and you're interested in doing some planning to make sure that Uncle Sam is you something and get some of it but everyone minimize that amount that we want to talk about okay where is the biggest place that the government get estate taxes or income taxes after a person dies gets from the accumulated IRA account that that is the number one spot that was certainly the case in my father's estate that you know he thought by taking minimum distributions and all that kind of plan that he had that he was really doing a great benefit to his family and so he was laying on his life from his standpoint, but the planning one center below because creating a tax liability for your children when you have been better off taking more of how even before minimum distributions during minimum distributions. You don't have to spend everything you take out of the IRA. You can take more than the minimum distributions and you can pay the taxes and then say so, why can I do that, why not pay taxes now when I can pay them later. Well, the reason you want to pay him now instead of later is that when you die, your kids are going to be the beneficiaries of this and Dan. There is no money that this is not something maybe that they even knew about coming to them with a tax lien if they want to draw one dollar out of their pay taxes on that one dollar and many of them want to draw it all out right away and do something with. And when they do that can be all scrunched up in one tax year is spent driving mid to high tech bracket and half of it can be wiped out with tax because it is not enough to manage others in ways plan around that rented out but I'm telling you, most beneficiaries they're not there.

They just want to know how can I get the money how much tax I have to pay to pay it and give me the net amount of money and so that the government is collecting an estate tax. Essentially, on middle-class people is because it's you know they have accumulated IRA money they've been real good about leaving it there, knowing taken the minimum and growing. It they name their kids as beneficiaries.

Their kids get it to the kids that okay so how do I get this money and you say well you don't take it all at once because you have to pay taxes on all at once say well how much will that be well, you get $200,000, and if you take it all at once that can be tacked on top of your income so probably you better put aside 80,000 for taxes so you get 120,000 and you know the kids say semi Jack and so that the estate tax that the federal government getting in the state government when a middle-class person dies while you can see there some planning that we gonna talk about summer looking forward to doing that when you go to a break, but we want to remind you that shows brought to my carnal where you can get conscious book, the complete cardinal guide to planning for and living in retirement as well as contact times if you want to get involved in some of this planning it's right so we come back to work and I have a lot more on some simple things that have to do with this plan that you Lily everybody needs to just take advantage of so you know something for us average folks we come back thanks you listed Hans and I would love to take our show on the road to your church and Sunday school Christian or civic room. There's a chance for you to advance the kingdom through financial resources by leveraging Hahn's expertise and qualified charitable contributions veterans aid and attendance IRA Social Security care and long-term care.

Just go to cardinal and contact times to schedule a live recording of finishing well at your church, Sunday school or civic contact times I cardinal guide back that's cardinal welcome back to finishing well certified financial planner. Hahn's silence today which I met estate planning around estate taxes but all kinds of taxes and so you know when it comes to this IRA thing, eat it, but you know the other simple thing people need to do is just get the beneficiaries right.

I mean, there's a real planet that a lot of people miss out on so I can hand out the simplest form of the state planning is make sure all your beneficiaries are in order. What we were really talking about is estate planning for the rest of us middle-class people upper-middle-class people lower middle-class people wherever you whatever your number is you get money in an IRA when you die and you have a beneficiary. The only way they can touch any of the money Arrive is there and have for taxes and unfortunately a lot of beneficiaries. They need the money coming. That's what beneficiaries do they need the money and its new money there middle-aged terrible past middle age.

They have bills their kids educate and have things to do and they a lot of them will, and they'll say how much I get. And then you know if you load up a beneficiary or IRA distribution right after death all in one tax year. The taxes are high, so let's just siliceous put the IRAs aside for a minute and just know that we can develop a plan if you feel so inclined to develop a plan to reduce that taxation to your beneficiaries. There's lots of things we can do with that. And let's move over talk about capital asset so people that own capital asset for solid rich people that have capital asset talking about a farm. Even a small piece of land for a rental house for maybe the largest farm a small business person's primary residence of the child. That type of thing is people are out worried bears are when they all of a sudden come into this and mom or dad has left them. These water big assets and rethinking the elements of taxes and capital assets are probably some of the best things to inherit because they get a stepup in basis. Knowing what that means is the date that the person died the day to mother father died whenever the property was worth on that day is your basis for tax purposes. If you later sell so if you sold that beach house that was worth $800,000 and you sold it for $850,000 year only, can pay taxes on $50,000. Even though your parent may have paid the parent may pay $100,000 for that 30 years ago all that growth up to the time they guide is tax-free is called stepup in basis, time of that word. I had never heard that word up until maybe a couple three years ago when you start talking about that, but what a wonderful idea. The other thing on that oh my goodness, how many people about house houses, you know, 40, 50 years ago in the if you were to pay tax on all those capital gains at be crazy but here is a way for you to pass that over and the person immediately is getting it at the value of the time and with the way the houses are going up right now that's huge why you may not like, give things to your kid what you're alive like a beach house. You may want to hold it until your death and then give it to them at the request inherit that without much higher tax basis. Rental properties same thing is true with the business you know a lot of businesses you know you see the old guys, like me, to be in this business run amok and get out of here till running out here take out here in a box in just in some of that is just whatever this business is worth when I die, and whoever inherited is going to not have anything taxes. If they subsequently sell on all of the value that I've added this business over my lifetime and it's a huge tax break that wealthy people are really aware of this but middle-class people or people that have you have something in the family that's in the past they they have no idea what we can do this. The first thing to do is go back to the beginning of the credit station say okay are we in this category. Of the people that have value that you know multi-multi-multi-multi million 70 not even through four 5 million doesn't qualify an answer for most people is not, but unfortunately I hear a lot of people in there and conversations with her parents. There still thinking that there is an estate tax looming out there that's going to come in via and they cannot make decisions that way so that that would be the first thing I want to get on this is Carl even subject to the estate tax, and that's probably no then how can you benefit from planning your own estate and get away from estate taxes unless you're in that category and start thinking about where do you have most of your money.

You know, like money, money. It's an IRA or 401(k) origin in that account for the taxes that and if you're like a lot of retirees hold that money close to the vest and not spend it. You want to pay taxes you will and accumulate for your kids and to some degree, that's the worst thing you can do because you're creating attacks so how can you use this in your own situation is.

Go ahead. That joy then or at the very least convert to a raw some of your IRA money are all of that over time and little bits paying taxes and little bits in smallish amounts so that by the time you reach a natural death that you'll be able to transfer assets that the taxes and argument.

Since, like that simple. So when I can help you with all that thinks this cursed me is that it steers it's his money and SRA and and I know for certain.

The reason I got this money and this is the plan as I'm laying down my life for my kids or for my church would make perfect sense of the ideas of them. I bequeath that money to buy life insurance with that because if I die quicker. That really pays off in it at the worst case scenario, there still get more than I put in writing what we do for people that can really see the light was that as we can make small distributions may be small to medium distributions that don't have a huge tax effect everything the years that were winding that thing down after getting older and we take those distributions. We pay the income taxes and the net amount we used to buy life insurance and then the life insurance goes to your heirs, tax-free, and then you also can use two CDs when you mentioned the church so IRA assets are perfect assets to lead to the church so and they're also perfect assets to when you're making distributions during your life. If you're over 70 and it's not there. Now you get there and at that point you can start leaving substantial amounts each year to the church under QC be a qualified charitable distribution and then you can make the ultimate beneficiary.

The church and you could buy life insurance with distributions like a spoke of earlier so that your kids get a tax-free and air assets and on my mind because the way of thinking. I was like okay what can I buy half $1 million life insurance policy on pan so much. I'm IRA every month and two years later I pass away. We I left my kids is big tax bomb, but now they got the life insurance pay the text so that I could be so quick to take the money out right and they can they can take 10 years or so my got to get it out what you like. You can leave the church writers sucking panic taxes on date they receive money tax-free. So yeah, I mean there's there's all kinds of options so and then we take this attorney to your parents. I would bet you that many of you have parents that have IRAs are still alive and they're just taken the minimum and you are the beneficiary of that money you and your brothers and sisters and that money is just sitting there and there's a tax bomb right in the placement.

You can sit right down to getting this at least talk about this play in the show like on the podcast or play it again for yourself and get on the phone with me and I'll explain or explain itself.

All three of us will have a conversation and there are some smart moves you can make the people that are even a very large productivity, life insurance, but they can certainly do things to lessen the tax bill for you and they could increase the gifts to the church which is we all want to be able to do that and then I want to talk about holding assets is a lot of people when they get up in years. They want to start selling their stuff and they want to start making it simple for their kids, and that's a worthy thing and a lot of times the taxes are not acute deal. Depending on the size of their income their state that Catholics are not even saying that's a bad, but it can be a bad thing when people sell stuff when they're up there in years and I got to capital gains taxes is a sellout whether alive when they could've held that asset until their death and then requested to their beneficiaries or their children, and then their children will avoid the capital gains taxes. Let them sell and that's true with with stocks which we haven't talked about either right you get a stepup in basis on those if somebody bought some you know whatever Microsoft you know stock back in the 50s or some if that's what it the capital gains would be on something like that. But if they hold it till they pass away right then they begin to get the stepup in basis on wanted outside an IRA is correct it inside an IRA. Capital gains taxes and stepup in basis don't apply. Yeah you you you if you're holding the stock inside the IRA. What most people have their IRAs stocks and bonds that ordinary income taxes all the way and we do on the whole amount. So we're talking about socks.

This on. That's a wonderful thing if you want stock. Her parents own stock, and it's outside of an IRA is the brokerage account is substantially increased in value in the new die and that your kids inherit that stock. They inherit that Its value. The basis of what it was when you die just like Bishop Mills, so you making a true statement. But if it's inside an IRA. That's not your contacts and what we talked about this before but is usually from autonomy for grandma to show it's it's it's good to have these talks right and not be intimidated by him, but just actually enter into the discussion and so you know, again it just contact Hans a Cardinal even get his book the complete cardinal guide to planning for and living in retirement. It's all there. Cardinal as well as a whole video on the subject.

It's there at Cardinal advisors on YouTube and so again thank you so much for listening and thank you nonscriptural thank you finishing well is a general discussion and education of the issues facing retirees Cardinal Cardinal advisors upon trial CFP some insurance this show does not offer investment products or investment advice. We hope you enjoyed finishing well brought you by Cardinal is a Cardinal. for free downloads of the show previous shows on topics such as Social Security, Medicare, IRAs, long-term care, life insurance, investments and taxes as well as constant best-selling book, the complete cardinal guide to planning for and living in retirement and the workbook once again for dozens of free resources past shows to get Hans book go to if you have a question, comment or suggestion for future shows. Click on the finishing well radio show on the website and send us a word. Once again that's Cardinal Cardinal This is the Truth Network

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