Retirement and Legacy Blueprint Webinar – Episode #12

Estate Attorney and Advisor Chris Berry of Castle Wealth Group answers questions on retirement and estate planning every Wednesday at 1pm to register or give our office a call at 844-885-4200.

Castle Wealth Group and Christopher Berry help families with estate planning, elder law, retirement planning, and tax planning from their offices in Brighton, Ann Arbor, Livonia, Bloomfield Hills, and Novi.



On this week’s webinar, attorney and advisor Chris Berry of answers questions regarding Why legal financial and tax planning is important, minimizing taxes Roth conversion, and a lot more!

In this episode, you’ll learn…

  • Chris’ positive focus for the week
  • Why legal financial and tax planning is important
  • Minimizing taxes in a specific year versus minimizing taxes over a lifetime
  • Income plan as you move into retirement
  • How do you invest with all the volatility and everything going on?
  • Legacy and Healthcare plan
  • Possible devaluation of currency and confiscation of funds from saving counts or IRAs
  • State of the country and the economy
  • The five-year rule tied to Roth conversion
  • Tax Cuts and Jobs Act

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Episode Transcript:

Hello, everyone. My name is Chris Berry. Hopefully, you knew that at this point, with Castle Wealth Group. We do these weekly webinars every week at Wednesday at 1:00. If you do have questions, feel free to put it in the question and answer section and I’ll make sure to try to answer those on the fly. We do have a couple of questions that were submitted ahead of time and we have another question coming in now. So let me just try to capture that for my list of questions.

All right. And so I would like to start with a positive focus, something positive that happened within the last week or so and I’ll share just something personally. The last couple of weeks, we just had a slew of holidays and family birthdays between, my dad had a birthday, my mom had a birthday, my daughter had a birthday, my wife had her 40th birthday. We had Christmas, we had Thanksgiving, we had New Year’s. And I have a small family but we want to make sure, especially with my kids being back in school, social distancing from my parents, but we’re able to spend all these holidays together where we met in the garage, we turned on the space heaters, we opened up the garage. And so we were still able to spend family time together even though through all this pandemic and everything that’s going on.

So that’s my positive focus. And I like to start each one of these off with a positive focus, just like we start off our team meetings. And then another positive focus, we’re into 2021. We’re still here, we’re still hanging on, so that’s also good. So again, if you do have questions, feel free to put those into the question and answer section and I will try to go ahead and get those questions answered. And with that, I’m going to go ahead and share my screens. Give me just a moment. We don’t have a lot of questions this week, so if you do have something, feel free to put it into the question and answer. Let me share my screen. Give me just a second here. There we go. Yep, there we go.

All right. So again, we do these webinars once a week. If you do have questions or want to see how this applies to your situation, you can always book time on my calendar at to see how this applies to your specific situation. But it is going to be general advice so don’t run out and start doing things without talking to a professional, namely me, potentially.

All right. So first question I had, and this is something that really wasn’t a question that was submitted. It was just, I was quoted in a US news and money article, talked about legal financial and tax planning, and why is it so important. Really, it’s all about having a unified plan where I’ve dealt with or worked with clients on just the legal side and then they have a financial person, and then a tax person. And just trying to get everyone on board with one unified plan that’s in the best interest of a client can be really a pain in the butt.

Dealing with this now where we’re making financial recommendations. They have their old CPA that they’ve been working with for a number of years and the CPA is just focused on this one piece of minimizing taxes in a specific year versus minimizing taxes over a lifetime. Looking at taxes through a micro lens versus a macro lens. And so, I think one of the big things of having legal financial and tax planning all under one roof is that one unified plan that gives you a peace of mind. I understand with our team, with the CPA that we have affiliated with us and a team of over eight people, nine people right now, we can help you with a piece of the puzzle or we can help you with the whole puzzle. And really, we think there’s five key areas that everyone needs to focus on and we can help you with all of these areas.

First one is having an income plan as you move into retirement. How do you replace those wages? The second thing is having an investment plan. Like I met with clients today laid off due to the pandemic and she’s rolling over $250,000 and she’s concerned, “How do I invest with all the volatility and everything going on?” Third is having a tax plan. And we’ve been banging this drum since really 2018. And then with the pandemic and everything, not just tax preparation of looking at what happened last year in terms of taxes but moving forward, how do you minimize taxes over your lifetime and what you leave to the next generation? Fifth is having a healthcare plan. So this is things like Medicare as well as long-term care costs. And then a fifth is the legacy plan. So if you were to pass away, how do we make sure everything goes as efficiently and effectively to the next generation?

And so we call this all together having a retirement and legacy blueprint. And that’s why it’s important to have all these things coordinated. Not to say that you can’t have certain professionals helping you with different pieces of it, but really at the end of the day, you want to have a unified plan where all the pieces fit together. And that’s something we can help you with. We can help you with a piece of the puzzle, or we can help you with just one part of the puzzle. But in part of the US news article that I was quoted in, it really gets to the idea is that even if we’re just doing a piece of this, we need to see how all these pieces fit together. So if we’re recommending a certain legal structure, then we need to take into account how that affects your taxes, how should you invest inside of that?

And so part of it was just getting tired of educating other professionals on understanding what our overall holistic plan is, especially on the CPA side or on the financial side where we would get pushed back from other financial advisors on naming trusts as beneficiaries of IRAs and that type of thing. But whenever we got on a conference call, it almost always went in the way that we recommended. So understand that we can help you with just the legal piece or we can help you with the investment piece or the tax piece, but really it should all be a unified plan. Whether you’re the one that’s putting it together and managing it or you’re having a professional help you with it. So again, legal, financial and tax planning, it all should be unified in your best interest to put together a plan that handles your retirement’s [inaudible 00:07:00], your accumulation and then your retirement, and then what you’re leaving to the next generation.

And we sent out the article that was part of that interview in US news. So I was happy to be quoted in that by a reporter. Number two; this came in and was submitted again. “What is your take on the possible devaluation of currency and confiscation of funds from saving counts or IRAs?” So, really what this is getting to is just a couple of things. I’ve had a lot of people reaching out about the state of the country and the economy and I would say I lean a little towards the doom and gloom, worst case scenario side. But where I see this really becoming an issue isn’t so much on them say confiscating accounts or devaluing money, though inflation could be an issue. Really, the big thing I see is with regards to taxes, and we’re going to see two types of taxes.

I think we’re going to see, first of all, taxes going up across the board. And this is when the Tax Cuts and Jobs Act ends either in 2025 or if Biden repeals it, which he certainly could sooner now that the Senate has also flipped. So taxes are going up across the board. I think this is a given and it was something that we’ve been talking about since 2018 due to the passage of the Tax Cuts and Jobs Act where we knew from 2018 to 2025, we’re going to be at this artificially low marginal tax bracket. And so Biden ran on a proposal of getting rid of the Tax Cuts and Jobs Act, which means that if you are at right now, say the 22% tax bracket, that’s going up to 25% whenever the Tax Cuts and Jobs Act ends. And this applies even if you have less than $400,000 worth of assets or income. So that campaign pledge of not raising taxes for people making less than 400,000, well, once he repeals the Tax Cuts and Jobs Acts, guess what? Your taxes are going up.

So first, we’re going to see, I think taxes going up just on its face. And then second, we’re going to see more and more of these stealth taxes. So stealth taxes would be like, I think it was ’83, now, all of a sudden your social security gets taxed. Stealth taxes would be in 2020, we had the SECURE Act that says that when you leave money to the next generation IRAs pretax, they have to pay all the taxes within 10 years. We have what we call the widow’s penalty where we go from, when we’re married, we have a married filing jointly tax bracket to now a single filing. And so that shrinks the tax brackets. So I think it’s not going to be like the government… I guess I’m not so doom and gloom to say the government’s going to start taking bank accounts or inflation’s going to get out of control. That could be a possibility. But really, what I’m foreseeing is taxes going up.

Also, we see the estate tax coming down. The estate tax exemption right now is at 11 million dollars. When the Tax Cuts and Jobs Act is repealed, it’s going to be at five million. Biden’s ran on putting it at three and a half million. And another stealth tax is they’ve talked about getting rid of the step-up in basis as well. So I think with the pandemic, the fact that we’re now 30 trillion dollars in debt coming out of this. Plus, Biden’s talked about another round of coronavirus relief in this new year. I think you’re going to see two things; taxes going up and then a lot of these little stealth taxes that if you’re not really paying attention, government’s taken other swipes of your assets.

So I don’t see them necessarily confiscating assets per se, but I am really, really, really concerned about where taxes are going. And so that’s where really there’s with regards to taxes. And again, I’ve been banging this drum, there’s a window of opportunity where this might be the last year where we can operate under this current tax regime. So there are certain plays that you should be looking at this year, whether it’s Roth conversions, whether it’s gifting strategies, maybe gifting to a trust, moving money from IRA money to tax-free life insurance. There’s different things that can be done from a tax perspective right now.

All right. And then third question that came in, this came in through question and answer. So Roth conversions, and we have a five-year rule tied to those and we’ll talk about what that means again. “If you died, does that apply it to your spouse?” So, pass away. So I’ll restate the question. So let’s say you do a Roth conversion, there’s a five-year rule tied to that where when you do the conversion, you’re not supposed to take the money out for a period of five years otherwise you’ll have to pay tax on the gains. And it happens every year you do a conversion. So if we do a conversion in 2020, then you shouldn’t touch that conversion or that Roth money till 2025. Likewise, if you do one in 2021, that has its own five-year clock tied to it. So every year you do a conversion, it has its own five-year clock, with the idea that if you pull the money out, you’d have to pay income tax on the gains. So it defeats the purpose of the five-year rule.

But then what happens if you pass away? And I actually had to confirm with our CPA on this. The five-year rule still stays in effect even if you pass away. So if it’s an inherited Roth IRA, it still stays in effect. So you still have to worry about that five-year rule even when someone passes away. So hopefully that was a good answer for you. And that’s really all the questions that I had submitted this week. I didn’t have a lot of questions. I had a lot the previous week, but no other questions submitted. So if you do have anything you want me to cover or talk about, please put that into the question and answer. I see comments here. [Nikhil 00:13:49], “Will taxes go up only on people earning over $400,000?”

To answer that question, that is a hard no. It’s not just people earning over $400,000. I know that was part of the campaign promise. And again, not to get political, but Biden has ran on the proposal of getting rid of the Tax Cuts and Jobs Act, where if you’re making $80,000, 160,000, 80,000 as a married couple, you might be at the 12% tax bracket. Guess what? When he repeals the Tax Cuts and Jobs Act, that’s going to 15%. So even if you’re only making $800,000, your taxes are going up because now your marginal tax rate’s going from 12% to 15. If you’re a married couple making roughly 160, I think this year it’s 172,000, that puts you in the 22% tax bracket. Well, guess what? When he repeals the Tax Cuts and Jobs Act, your 22% is going up to 25%. So that whole statement about not raising taxes for people making less than $400,000, I don’t know how else you can classify that, but that’s not accurate.

Because when you repeal the Tax Cuts and Jobs Act, it’s affecting people who are making 80,000, making 160. Did you mean 80,000? I said 800,000. No, I meant 80,000. So if you’re a married couple making $80,000 worth of income, you’re at roughly the 12% tax bracket. Not 800, 80,000. So if you’re making $80,000 as a married couple, you’re going to be at roughly the 12% tax bracket. And by repealing the Tax Cuts and Jobs Act, that 12% is now going to 15%. So that’s going to raise your taxes. There’s no ifs, ands or buts. It’s raising your taxes. Likewise, your 22% is going to 25. So that’s why we have a lot of people who are looking at their tax brackets, and we’re helping them, looking at their tax brackets.

And if you’re at the 22% tax bracket right now, let’s say a married couple with 160,000 of income, maybe you should look at things like Roth conversions or moving money to tax-free bucket like Indexed Universal Life. Paying the tax now and getting yourself up to the 22% tax bracket or getting yourself up to the 24% tax bracket because 24% would allow you to move another hundred thousand dollars out of these tax-deferred accounts, and still it would be less than the 25% tax bracket, which is what it’s going to be either in 2025 or when he repeals the Tax Cuts and Jobs Act, which he has said he’s ran on doing.

So again, I saw… And the other thing is he’s talked about getting rid of step-up in basis, which is going to affect people who have less than $400,000 worth of AGI as well. Where if your family bought a house or a second piece of property or a farm valued at a $100,000 and then you die and it’s 200,000 and your kids sell it for 210, right now they get step-up in basis where the basis would just be the 200 to the 210 meaning $10,000 worth the gains. Well, he ran on the promise of getting rid of the step-up in basis regardless of your adjusted gross income. So now that same situation if the property was bought for a hundred thousand and sold for 210 after death, you don’t get the step-up in basis. Now the kids have to worry about $110,000 worth of gains. So again, those are the stealth taxes that are going to affect people less than $400,000 worth of adjusted gross income.

A question I have, “Was this recorded?” The answer is yes. I did remember to hit the record button this time. So all of these will go up on our YouTube channel. And if you haven’t, I do invite you to subscribe to our YouTube channel because once we get to a hundred subscribers, then we can give it a nice URL to go to, but I’ll put the YouTube channel into the chat. So we always upload previous episodes to our YouTube channel. And you can go ahead and subscribe if you want. And that’s our YouTube channel. So yes, this is recorded. Any other questions or anything else you want me to cover? Otherwise, it’s a little bit of a light day. I know we have the inauguration going on. It seems like every Wednesday there’s something exciting going on while I’m doing this. And let me just make sure. All right.

So that’s all I have this week. Again, if you do have questions, feel free to email me those questions ahead of time, or we can do these on the question and answer. The only other thing I’ll share is I was looking at what Biden’s proposal for next hundred days is. One of the big things he wants to get out is another stimulus package talking about another $1,400 a month going out to individuals as well as some additional unemployment benefits, another I think $400. But looking at his proposal would be another 1.9 trillion dollars to the deficit. I’m not saying he should or shouldn’t do it. Again, I’m just looking at this from the future from a tax perspective. But that’s something that he’s talked about doing within the next hundred days, is another COVID relief bill. So we’re watching it, and then obviously, next couple of weeks should be interesting and we’ll have more to talk about. But with that, we’ll go ahead and wrap up.

I want to say thank you, everyone. If you do get a chance, make sure to subscribe to that YouTube channel so you can catch up on our previous shows. Or if you miss one of our Wisdom Webinars, you can go ahead and do that. And then also, we’re trying to put out daily content on that YouTube channel, short little three to four minutes. It’s not in the chats. So I just got a question saying that it’s not in the chat. I’m showing that it’s showing up to all panelists. Make sure to hit the chat button and then I’ll put it in the question and answer section. Worst case you can just Google “Castle Wealth Legal YouTube” and you should be able to get there. Or shoot me an email contact at Castle Wealth Group and I can email it over to you.

It’s got to go to the attending list panelists, all panelists. Sorry. All panelists and attendees. Thanks, Mark. Here we go. Now you should be able to see it. Technology, it’s great when it works. And then if you do have questions, feel free to go to, and then now you should be able to see the YouTube channel. So with that, thank you, everyone. Make it a great week. We’ll be on next week. And again, if you do have questions, feel free to submit them ahead of time. Look forward to seeing you next week. Take care, everyone. Thank you.

Castle Wealth Group Legal in Media

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