Legal, Financial and Tax Planning in Scary Times

Estate Attorney and Investment Advisor, Christopher J. Berry, JD, CELA of Castle Wealth Group shares key legal, financial and tax planning opportunities during these scary times and market volatility.


Estate Attorney and Advisor Chris Berry of Castle Wealth Group answers questions on retirement and estate planning every Wednesday at 1pm. Register via this link 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.

Castle Wealth Group helps families with their legal, financial, and tax planning for their retirement and legacy.

With the use of legal structures like revocable living trusts, Castle Trusts (asset protection trusts), Chris Berry and Castle Wealth Group can help your family plan, protect, and preserve what is important through their Retirement and Legacy Blueprint Process.


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Episode Transcript

Understanding Mindset

Hey everyone. This is Chris Berry with another episode of Berry’s Bites. And today we’re going to talk about legal, financial, and tax planning in scary times. And first what we’re going to talk about is the mindset you need to have right now, then we’ll talk about some legal things that you need to think about, some financial concepts you need to think about, and a tax strategy you need to think about. So, this one’s going to be chock full of information.

And the first thing we need to understand is we need to get calm. We can’t control the events. We can only control our responses. And a mentor of mine, his name’s Dan Sullivan, he laid out some concepts to think about during scary times, and I want to share a few of those.

And the first one is forget about yourself. Focus on others. This is something that I’ve really had to internalize as I worry about all the things going on with my family. I’m really focusing on others, focusing on helping others. What can I do to help you? Second thing is forget about the difficulties. Focus on your progress. So, this last week, as we’re quarantined at home inside, didn’t have a lot of things to do, we ended up doing our spring cleaning. So, I can focus on the fact that we can’t go out and do the things we normally do, or I can focus on the things that I can do, the things I wanted to do that now I can do. Focus on the progress, not on your difficulties. Forget about your future self. Focus on today. So, I think with all of this going on, we had an idea of what 2020 was going to be like. And for a lot of people, myself included, it doesn’t look like what I thought it was going to look like. So, I need to give up that idea of what I thought of as a future self and just focus on what I can do to make the next best step today. What is my next best action that I can control that I can do today?

Forget about who you were. Focus on who you can be. Similar concept here. I think as I was goal setting for 2020, I had some certain goals that were pretty lofty. Well, guess what? Due to events outside of my control, I’m going to have to readjust that and focus now on what can I be now in the future, given the events that have happened.

This is a big one. And this is one that I’ve been saying daily since this has been going on. Forget about the events. Focus on your response. This is something that I’ve been basically writing as almost a mantra every morning. This is something that I’ve been having conversation with clients all about is we can’t control the events. We can’t control what the markets did. What we can do is we can control our responses. Very important, very good advice.


Listing 3 Things

And then forget about complaints. Focus on gratitude. This is something that I’ve always worked on. In fact, my daily practice involves writing out three things that I’m grateful for every morning, and as I wrap up for bed, writing out three things that I’m grateful that happens throughout the day. And we can be scared or frightened or angry or frustrated, or we can focus on gratitude and love. And it sounds kind of wishy-washy especially coming from an attorney and advisor, but understand that we need to make rational decisions, and with all the fear and the 24-hour news cycle out there, we need to be calm as we’re making decisions that can affect the rest of our life.

So, once we’ve gotten to that calm place to make rational decisions, now we need to think about what from a legal perspective do we have to have in place. And there’s a couple of key documents, very important documents that we need to have in place because we can’t rely on the government’s rule book right now. The government, they’re wrapped up in their own things right now. What we need to worry about is creating our own rule book.

And the most important legal document, number one right now is what’s called a medical power of attorney. A medical power of attorney. In Michigan, we call this the patient advocate designation. And what this document does is gives instructions to someone you’ve appointed to be able to make medical decisions for you. And I’ve had a couple stories or incidents even within the last couple of weeks of people calling in, discussions with other attorneys where we had one situation with a husband and wife. The husband was incapacitated. The wife wanted to make decisions for the husband. She had a financial power of attorney, but she didn’t have a medical power of attorney. And normally, they would have to go to courts to get what’s called a guardianship. With the court shutting down, she’s basically in limbo. She can’t make the necessary medical decisions for her spouse right now.

A lot of people assume that just because you’re married or you have some type of family affiliation, you can make decisions for your loved one. That’s not the case. It has to be in writing. If you remember Terri Schiavo down in Florida, she was in a vegetative state. Her husband wanted to remove her from life support. Her family wanted her to remain on life support. Became a big court battle that lasted over eight years. So, the number one thing right now to have is that medical power of attorney. If you don’t have one or if it’s older, give our office a call, (844) 885-4200. We’re still helping our clients put these in place. We have strategies with the shutdown and everything where we can work remotely, virtually. We can still get documents signed. We are an essential business, obviously.

The second key legal document is that financial power of attorney, that document appointing someone to make financial decisions if you’re unable to. Just this past week, had someone reach out to us. They’re trying to make decisions for a loved one who’s in a nursing home. They’re running out of money in the checking account, and they want to be able to access the retirement account to help pay for the medical bills. But the financial institution that’s managing the retirement account won’t even talk to that person because they don’t have a financial power of attorney in place. And normally right, now we would have to go get a guardianship for this incapacitated person, go to court, but because of courts are shut down, we’re in, again, a state of limbo where the financial institution won’t talk to this individual. And now the question is how are they going to pay for the nursing home, which is a whole nother concern with everything that’s going on in nursing homes right now in terms of the lockdowns and shutdowns.



And then the third thing to think about from a legal perspective is right now probate avoidance should be one of those number one goals. And we talked about how to avoid the living probates by having that financial and medical power of attorney. Third thing we need to think about is probate upon death. How do we avoid probate upon death? Because unfortunately, especially with what’s going on right now, people still pass away even during this shutdown or crisis time. So, if someone, a loved one were to pass away and their assets would end up going into probate, instead of taking five months to a year, we don’t even know when the probate courts are going to open up again. So, it’s vitally important to have a plan to avoid probate. And that’s really all about understanding estate administration. How do assets transfer upon death? Joint ownership, beneficiary designation, trust. If it doesn’t pass one of the first three ways, then it ends up going into probate.

Now, what did I not mention? I did not mention a will. Remember, a will does not avoid probate. A will is your ticket to the probate court. So, if you want to avoid probate, don’t rely upon a will to avoid probate. You need to rely upon joint ownership, beneficiary designations, or trusts, and we can have a whole another conversation on what’s the best of those to utilize. But right now, just understand, avoid probate at all costs. You’re going to take a very difficult crisis-filled situation and make it even worse if things end up trying to go to probate while you’re alive or probate upon death. So, from a legal perspective, three things to think about, having that medical power of attorney, vitally important right now, having that financial power of attorney, avoiding probate upon death.

Now, now that we understand the legal things we need to have in place, let’s talk about some financial and tax planning concepts because again, we can’t control the events that have happened or transpired, but we can control our responses. And there’s some logical things that we should think about in terms of our planning.

And the first thing I would say is, and this is something that we’ve talked about, is not to over panic. Don’t make rash, emotional decisions. Look at your portfolio overall. And I like to make the analogy of like a football team. You’re going to have your offensive players and you’re going to have your defensive players, and you need to have both. And too often, I think with the market run we’ve been on, too many people had just offense players where when the markets are good, yeah, let’s take on the risk and volatility. And over the last 12 years, those offensive players have really outperformed the defensive players. But now, years like this, this is where we need some defensive players. And understand, investments are typically either offensive, defensive, or some combination of the both. So, if you’re just focusing on how the offensive players have done and ignoring your defensive players, then you’re getting a little maybe more emotional than you need to.

And so, one of the things that we’ve had conversations with clients where we thought 2020 was going to be a volatile year because of the presidential election and a 12-year bull run. We didn’t think this. No one predicted this. But we had a lot of clients as we’re talking about them moving into retirement is we shifted some of their investments from offensive to defensive, putting together a comprehensive plan. And so, if you feel like your offensive and defensive players are out of whack, give us a call and we can reanalyze that for you.

Next, so second financial thing to think about is maybe now it’s time for a risk realignment. So, I had a lot of people in the last 12 years, they were overly weighted to aggressive because you couldn’t go wrong. The markets were on a 12-year run. But now that we’ve got that gut-punch of this is what risk and volatility really looks like, maybe we should reanalyze that. And we have a tool called a risk score that can figure out how much risk are you really willing to take on versus what’s in your portfolio. So, we could do a risk realignment.


Fortified Income Score

And third financial thing to think about is what I call the fortified income score. Okay? So, everything in life has a score. Right? I played sports growing up. Everything has a score. Well, we have a process where we figure out what is your fortified income score. So, what we do is we look at your expenses and your income, and based on that, there’s a percentage. So, we’ll add up your lifetime income from guaranteed sources and your lifetime expenses or projected expenses. And a lot of times, there’ll be a gap.

So, let’s say we do this and it turns out you have $2 million of guaranteed lifetime income from things like social security, pensions, annuities. And then we add up your projected expenses and it’s $4 million over a lifetime from say 65 to a hundred. Right? Well, what we do is we divide the income by the expenses and that might be 50%. Right? So, that’s your score is a 50%. But think of this as like school. Right? We want to be 80%, 90, maybe even 100%. And it really depends on every individual. But that’s something that I’d invite you to figure out for yourself or we’re happy to work with you to figure out what is your fortified income score. And maybe it should be around 80%, at least 80%.

And now the fourth thing from a financial and tax planning standpoint is to look at tax-deferred accounts right now. So, this is a perfect storm with the tax cuts and JOBS Act of 2018 to 2025 where taxes are on sale, understanding we’re now 23, now $25 trillion in debt. Most people think taxes have to go up in the future. But then if that’s the case, we need to look at tax buckets. And you have your taxable bucket which is your checking, savings, CDs, brokerage accounts. You have capital gains, long-term capital gains on there. You have your tax-deferred bucket. This is your 401ks, IRAs, 403(b)s. And a lot of people were overly weighted in that tax-deferred bucket. And then you have your tax-free bucket, which is your Roths, Roth 401(k)s, Roth IRAs, HSAs, 529s, permanent life insurance, indexed universal life.

Now is an opportune time to look at maybe moving money out of those tax-deferred accounts to the taxable bucket, or better yet, the tax-free bucket because taxes are going up 2025. They’re scheduled to go up. We’re $25 trillion in debt. And now with this market volatility, if that tax-deferred bucket money just went down, let’s move that money over so that it can grow in the tax-free bucket.

So, those are some ideas to think about. And again, it first starts with mindset. We need to not make emotional decisions. Forget about the events. Let’s focus on our responses. And then from there, understand the three key legal concepts right now. Having that medical power of attorney, the financial power of attorney, avoiding probate upon death. And then from a financial and tax standpoint, don’t panic. Look at the overall portfolio. Think about your offensive and defensive players. Second, maybe now it’s time for a risk realignment, something we can help you with. And then third, focus on that fortified income score. What is your score? Are you in the 80%? Are you getting at least a B? And then last, look at those tax buckets, especially with the market volatility. If your IRA has just dropped, maybe now we go to a tax-free or a taxable account.

And if you want any help on any one of these areas, we’re here for you. We’re doing virtual calls. We’re doing video conferences right now. We can still get things signed and executed. So, we’re here for you. Again, this has been Chris Berry. If you need any assistance, just reach out to us. Phone number is (844) 885-4200. Email us at I hope you and your family are staying safe and healthy. Take care.



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