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How are markets reacting to the return of President Trump? · The Financial Exchange Show

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Speaker 2: Chuck, Mark and Tucker with you here on the day
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after the US presidential election. Despite concerns that, hey, this
1:21
thing might linger for days on end and we might
1:24
not know the winner for weeks, Hey polls close and
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four or five hours later, pretty obvious what was happening,
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I believe was called by the APU. Somewhere around two
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or three AM. I had gone to bed. I just
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I can't stay up all night. Just I got to
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sleep a little bit. So ultimately, where we think things
1:46
are at the moment, and I say think just because
1:50
you still don't have all the votes counted, it's it
1:53
takes a while in certain places, not in Florida, which,
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by the way, Florida count's like fifteen million votes in
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like two hours. They got really good after at it
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after two thousand, which was a little bit embarrassing for
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Florida in terms of, you know, things drawing out a
2:08
couple months. But ultimately, where we stand right now is
2:14
that Donald Trump is set to return as president of
2:18
the United States, and so he is going to be
2:22
coming in basically the only outstanding questions that are out
2:28
there right now, and I think they're probably going to
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be answered in his favor over the course of the
2:33
day today are Arizona and Michigan, and so basically a
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clean sweep by Donald Trump of the battleground states, likely
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taking Michigan in Arizona in addition to Wisconsin, Pennsylvania, North Carolina,
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and Georgia. Uh so you've got all those and Nevada.
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Sorry I left if there's any Nevaden's or Nevaden's, Nevadian's, Nevadidians,
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if any of you are listening from Nevada, sorry for
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not including you originally. So this is what we're seeing
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is Donald Trump is going to be the next president,
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the forty seventh president of the United States. In terms
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of what he is going to be working with, the
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Senate is going to be Republican, probably with anywhere between
3:22
fifty three and fifty five seats in the majority. We
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still do have a number that are outstanding where it
3:29
looks like Pennsylvania and Nevada both have the potential to
3:34
be Republican pickups. Michigan as well, Arizona looking like it
3:39
might stay Democrat in that seat. But it's unclear if
3:43
it does so. Again, somewhere between fifty three and fifty
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five seats in the Senate for Republicans, so not a
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filibuster proof majority, but not one that is a one
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seat majority as well. The bigger question that is still
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outstanding right now is the House of Representatives, which at
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the moment, and I'm just quoting from Decision Desk HQ,
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just because they have been pretty consistently kind of the
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first on all of these calls over the last twelve
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to fourteen hours. Right now they are projecting and again
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this is their project. I have no insight into this,
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so don't think that I have any idea, you know,
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how any of this is actually going to turn out,
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because they're still counting votes. They are projecting right now
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the slimmest of slim Republican majorities, which is a two
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hundred and eighteen to two hundred and seventeen seat majority
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in the Senate. Obviously that can still be skewed by
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you know, several seats either way. We don't know at
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this point, but it looks like there is a possibility
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that Republicans end up with a trifecta, though a very
4:49
narrow one in the House. And so the question that
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we all have, and the reason why you're tuning into
4:55
us is Okay, what does this mean gnomically and market wise?
5:02
That's why you listen to our shows. It's not to
5:04
hear our political opinions because we're not particularly good at them.
5:07
Like it's it's not what we do. But let's talk
5:09
about how If we're going to talk about where Trump
5:12
is going to go with the economy, I think we
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ultimately need to talk about how we got here. And
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I think Mark it stems from again, if you look
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at exit polling and basically any polling you know over
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the last year or two, continued broad dissatisfaction with the
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current state of the economy. And you know, we can
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talk all we want about hey, unemployments at you know,
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four point one percent and inflations back into like the
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two and a half to three range. You know that
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this looks like a good economy on the surface. The
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point that I've made a few times and that I
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think is important And sorry, Mark, I'll let you talk.
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Speaker 3: Oh no, that was I was email from a salesperson
5:54
who won't take no for an answer. So I'm sort
5:56
of shaking my head at my looking at my computer, screamage,
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I shouldn't just I apologies, No, no, you should just respond
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No I did twice yesterday, Oh didn't. God bless him
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he keeps well. You know, the lesson we can all
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take away from the election last night.
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Speaker 2: Is don't give up.
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Speaker 3: Comebacks are possible. Trump lost a billion dollars. He came
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back and made five or six. He lost the presidency,
6:17
came back all the second guy in history.
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Speaker 2: To win it.
6:19
Speaker 3: This is a remarkable American story that I think everybody
6:23
can appreciate that. That's my too political sense, and I'll
6:27
leave that at that.
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Speaker 2: And so I think in terms of, you know, again,
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how did we get here? The last five years have
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been exhausting economically for a lot of families. And so
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you go back to twenty twenty when the COVID nineteen
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pandemic hit, and think about all the fear that was
6:46
there in March of twenty twenty, when you've got things
6:51
closing down, you know, the NCAA basketball tournament shuddering, you know,
6:54
fights are being canceled, like everything's going wrong. And just
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what came after that that the high on it employment
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and then the concern about Hey, are these jobs ever
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gonna come back? What's it gonna look like? You know,
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there was a lot of fear at that point in time.
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Twenty twenty one, you still have high unemployment for the
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first two thirds, three quarters of the year. You know,
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unemployment was above five and a half percent through I
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think either August or September, and it was only towards
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the back part of the year that it got down
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into a you know, relatively low range. And twenty twenty
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one was also the year of, Hey, I'm trying to
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order all this stuff and no one has it. Everything
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was delayed. Mike ordered mirrors that are still in transit
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from somewhere and it's five years later at this point. Uh,
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you know, like everything was taking months. You're trying to
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build a house and hey, we can't get a gas
7:46
meter to finish construction. Like everything was delayed.
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Speaker 3: I don't think his mirror experience is reflective of supply
7:53
chain issues elsewhere.
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Speaker 1: Though.
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Speaker 4: That was a pun.
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Speaker 2: So that's good, that's good. You you normally do the puns.
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I do.
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Speaker 5: I do.
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Speaker 2: I appreciate you chiming in though, Uh, twenty twenty two,
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inflation peaks at over nine percent. You know, Russia invades Ukraine.
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Gas prices go through the roof. Everyone's complaining about prices, rightly.
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So it's just it's it's a tough year because prices
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are going up faster than wages. Twenty twenty three, Silicon
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Valley Bank blows up. People get you know, nervous about
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banks in the first half of the year. Inflation is
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still too high for the bulk of the year, and
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unemployment is down to you know, a really low level,
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but inflation is still high. And finally this year you
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get to a point where you're like, okay, inflation is
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back down. It's not perfect, it's not two percent, it's
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two and a half to three. And unemployment's still low.
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But unemployment's been rising all year, and the labor market
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has been slowing. We've been seeing signs of you know,
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the labor markets slowing all year, and so there's concerns about, hey,
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is it still easy to get a job? You know,
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you know, what's the economy look like. So I think
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despite the headline numbers of hey, CPI is at two
9:07
and a half percent and unemployment is at four point one,
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it's felt really hard to get here.
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Speaker 3: I hope this experience changes the way the economics profession
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thinks about the big three inflation, unemployment, and GDP. We
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have just learned, as if we needed to learn it
9:25
again after the experience of the nineteen seventies.
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Speaker 2: That inflation sucks because.
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Speaker 3: Inflation is the thing that everybody feels. I don't always
9:31
feel it when unemployment goes up, thank.
9:32
Speaker 2: God, right, because you might. Unemployment's binary. You lose your
9:36
job or you don't.
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Speaker 3: Or your neighbor maybe. But still even though it's not,
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it doesn't hit home literally, even if.
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Speaker 2: Your neighbor loses their job. Ultimately, there's a huge party.
9:46
The majority of you is a party is like oh,
9:48
I'm sorry, Like that's too bad. There's a huge part
9:51
of it. It's like, well, thankfully it wasn't me.
9:54
Speaker 3: So we don't feel unemployment necessarily directly. We don't feel
9:57
GDP when it slows down necessarily directly. Everybody experiences the
10:02
pain of inflation. Economists struggle with this. If you open
10:05
any undergraduate or graduate textbook, there's always part of the
10:08
chapter on inflation on why.
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Speaker 1: Is it bad?
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Speaker 3: And economists are sort of puzzled, well, why doesn't everybody
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just why doesn't everybodys salary just go up with prices,
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and so you're paying twice as much but making twice
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as much. In theory, it shouldn't do any real harm.
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In theory, I'm oversimplifying a little bit. They're not that naive,
10:24
but this should hit home, especially for policymakers at the FED,
10:27
that inflation, above all else is the thing people hate.
10:30
And I view yesterday's startling result in part a verdict
10:35
on the Fed's mismanagement of this situation, which Biden gets
10:38
tagged for because he was there when it happened.
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Speaker 2: And to be fair, the Biden administration also did the
10:44
last round of stimulus. Y said, well, yes they did.
10:46
That was it was superfluous.
10:48
Speaker 3: As it turns out, it was fuel on the fire.
10:50
Trump did the ironically, Trump did the first two handed
10:53
this on fire.
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Speaker 2: You know this, I say it was right.
10:58
Speaker 3: He started the process of inflation.
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Speaker 2: Story.
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Speaker 3: If you don't believe me, that's right now. If you
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don't believe me, go look at month over monk changes inflation.
11:06
They started to go up before or as Biden was
11:08
taking office. But Biden fueled the flames. It was excessive
11:12
and unnecessary, and again he was in the office. He
11:15
was in office at the time it happened, so he
11:17
gets blamed with the lesson for me is guy's inflation above.
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When I say guys, I'm talking to the Federal Reserve
11:22
of the men and women there inflation above all. Else
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is what's on the minds of people at any given time.
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Speaker 2: There's a believe that there's a really interesting question to
11:30
ask here as well. So let's take a quick break.
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But when we come back, two things first, I think
11:35
a really interesting question in terms of how does this
11:39
election then affect the type of response will get to
11:44
downturns in the future. Yes, And then we'll talk a
11:49
little bit about what the Trump win means for the
11:53
economy and what we think is coming in twenty twenty five.
11:57
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Speaker 2: So at the end of the last segment, I said, look,
14:04
there's gonna be a really interesting question that I think
14:09
we're gonna ask about future potential downturns. And that question is, hey,
14:16
if a downturn happens in the future, not if when
14:19
a downturn, because there's there's always gonna be one that
14:21
happens in the future at some point. How does this
14:26
election impact how Congress the president, whoever's in charge, will
14:34
respond to it. And the place that I get to is,
14:39
ultimately they are going to be much more willing to
14:45
aim too small on the recovery package than too large.
14:49
And here's how I get there. In twenty twenty, twenty
14:54
twenty one, the US economy needed some kind of boost
14:58
because of the huge slowdown from COVID, the boost was
15:02
too large, and coupled with you know, Russia's invasion of Ukraine. Again, ultimately,
15:07
regardless of that, you still were gonna have inflation in
15:09
the six to seven percent. At least it might not
15:12
have gotten to nine, but you know, at least six
15:14
to seven That inflation and the subsequent way that we've
15:21
tried to deal with it, I think ultimately was the
15:25
end of the Harris campaign. And I contrast that to
15:30
coming out of two thousand and eight, the Great Financial Crisis,
15:33
the biggest you know, economic calamity that we've seen in
15:37
almost one hundred years, and we all remember, like the
15:42
really tepid economic recovery afterwards, how unemployment didn't get back
15:47
down below five percent, Like you look at the numbers
15:51
on unemployment after the Great Financial Crisis, and unemployment didn't
15:57
get back down below five percent until January of twenty sixteen.
16:02
You know, it took eight years to get back there.
16:06
And ultimately, remember there was there was an election in
16:08
twenty twelve. It was Barack Obama against Mitt Romney, and
16:13
Obama beat Romney soundly. It was like last night, we
16:16
knew by like ten thirty or eleven that night, like
16:19
how things were going to go. And ultimately, if so,
16:23
if you are a president or a member of Congress
16:27
or whatever it might be, and you're looking at you know, hey,
16:32
there's a recession in twenty twenty five, twenty twenty seven,
16:35
twenty twenty, whenever it might be, you know, like again,
16:38
you never know when these are gonna pop up. If
16:42
you're looking out for your political career, isn't the instinct
16:47
going to be, Hey, I saw what inflation did to
16:52
Harrison Democrats in twenty twenty four. We're not going to
16:56
go too big because ultimately you had a tepid response
17:01
and a tepid recovery in the early two thousands or
17:05
the early twenty tens, and it didn't end up costing
17:08
the president's job done.
17:10
Speaker 3: The problem was the size of the package in this
17:12
case relative to the size of the stimulus package relative
17:15
to supply. There was a huge supply demanded balance that
17:19
characterized the early stages of COVID. And if you think
17:23
about supply shifting causing prices to rise, which it will
17:27
all LSEQL, and then pushing demand out, you get higher
17:30
price level and higher output. And many economists, I'm doing
17:33
this thing with curves with my hand. You can't see it.
17:36
That's why I'm speaking haltingly. But you do have to
17:38
think it through in terms of the frameworks framework of
17:41
basic economics. But I do you think that's what Congress does,
17:45
because yeah, it's what their advisors tell them. What they
17:49
knew supply was constrained. So the problem here was that
17:52
they disregarded the warnings about the degree to which supply
17:56
was being constrained by COVID. We all saw the stories
17:59
about cargo container ships piling up at ports and stuff.
18:02
It was well known in their indices with measure it.
18:05
They disregarded that and said, you know, damn the supply constraints.
18:08
Full speed ahead.
18:09
Speaker 2: This is what I'm getting. But they still they said, Okay,
18:13
you might be thinking this, but we're gonna do it anyway. Yeah,
18:16
this is where I'm going with this is ultimately their
18:20
instincts were, Hey, we need to do this because if
18:22
we do this, it's going to help with our political
18:25
survival in the future.
18:26
Speaker 3: Well, they're also being told that if we don't do this,
18:29
run a hype. They were using the expression high pressure economy.
18:32
That expression comes out of the thirties when we had
18:35
the exact opposite. For example, in the thirties, we had
18:38
huge overhang of supply. You couldn't stimulate demand enough. That's
18:41
where canes and economics comes from. Kines observed and others
18:44
who completed his work observed that we had a demand shortfall,
18:47
and the prescription for virtually any recession since then, no
18:50
matter the depth or proximate cause, has been stimulate demand.
18:56
That you've heard the expression aggregate demand, that's where it
18:58
comes from.
18:59
Speaker 4: In this very.
19:00
Speaker 3: Unique case, we had aggregate supply because there is another
19:03
part of that relationship that was going in the opposite
19:06
direction of aggregate demand, which caused this unique surgeon inflation,
19:10
which was foreseeable. Plenty of economists warned about it. Congress
19:14
and Biden chose to disregard the warnings.
19:17
Speaker 2: And I guess my question is if they disregard those
19:21
then would they do it again? Would they do it
19:22
again the other way? Because they saw the chase the
19:25
responsible shouldn't you were always fighting the last battle? Yeah,
19:29
because part of the reason I think this happened is
19:31
because we went too small before quick break here Wall
19:35
Street Watch and asked Todd are next?
19:41
Speaker 1: Like us on Facebook and follow us on Twitter at
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TFE show. Breaking business news is always first right here
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on the Financial Exchange Radio Network. Time now for Wall
19:54
Street Watch a complete look and what's moving markets so
19:57
far today? Right here on the Financial Exchange Change Radio Network.
20:01
Speaker 6: Well, markets are surging in reaction to Donald Trump's presidential
20:05
election win. Investors are also ready for the fed's decision
20:08
on interest rates tomorrow afternoon at the conclusion of their meeting.
20:13
Right now, the Dow is up by three and a
20:15
quarter percent over thirteen hundred points, s and P five
20:19
hundred is up over two percent or one hundred and
20:21
eighteen points, and the NASDAC is up nearly two and
20:24
a half percent higher, or four hundred and forty eight points.
20:28
Russ A two thousand up nearly five percent or one
20:31
hundred and eight points. Ten year treas reeled up by
20:34
fifteen basis points at four point four to four percent,
20:38
and crude oil is mostly flat, trading just below seventy
20:41
two dollars a barrel. Numerous stocks are making big moves
20:47
in reaction to the outcome of the presidential election, including
20:50
Trump Media and Technology stock. That stock is up by
20:54
six percent, while Tesla is seeing a twelve percent jump
20:57
with Elon Musky and Trump's on one of his biggest backers.
21:01
Bank stocks including JP Morgan, Chase, Bank of America, and
21:04
Goldman Sachs are rallying on hopes of lighter touch regulation
21:08
and higher interest income under President Trump. Bank of America
21:11
up by six percent, JP Morgan up by nine percent,
21:14
and Goldman is up by twelve percent. Several crypto stocks,
21:18
including coinbas and MicroStrategy, are seeing gains, and clean energy
21:22
companies are seeing losses and worries that Trump could try
21:25
to repeal a key climate law, including Plug Power, Sun
21:28
Run for Solar, and in Phase Energy all down on
21:31
the day. Meanwhile, CBS Health posted mixed third quarter results,
21:35
citing higher medical costs that weighed on net income. The
21:39
company held off and providing a formal outlook as it
21:42
expects elevated medical costs to continue to pressure its performance
21:46
this year, CBS jumping by eleven percent. Elsewhere, shares a
21:51
Novo Nordisk down by one percent after the pharmaceutical company
21:54
posted higher sales of its weight loss drug WeGo V
21:57
than expected, and shares in super microcomputer continue to trade
22:03
downward now down twenty three percent today after the AI
22:07
server maker guided for lower quarterly sales on Tucker Silva.
22:12
And that's Wall Street Watch.
22:14
Speaker 1: This is Ask Todd on the Financial Exchange Radio Network.
22:18
If you have an existing estate plan or in the
22:20
market for one, Todd Letsky is here to answer your
22:23
questions and help you plan for a later life. Ask
22:25
Todd is presented by Cushing and Dolan, serving Massachusetts and
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New England for more than thirty five years, helping families
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with the state and tax planning, medicaid planning, and probate law.
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Visit Cushingdolan dot com. Now here's Todd.
22:39
Speaker 2: Lutsky as problems. We've got Todd Lutsky from the law
22:43
firm of Cushing and Dolan with us. Now the segment
22:47
here is called Ask Todd because it is your chance
22:50
to ask Todd your estate planning questions. I'm sure you
22:54
might have some with the Trump election. Hey, what does
22:57
the estate planning landscape look like for the future? How
23:00
might it change? Gives a call it eight eight eight
23:03
to zero five two two six three. That is the
23:07
number to call in order to speak with Todd about
23:10
your state planning questions. We got the phone lines open
23:13
again at eight eight eight to zero five two two
23:17
six three. Mister Lutsky, how are you doing today?
23:22
Speaker 4: I am doing great.
23:23
Speaker 2: You I'm good. Do you know why the lifeguard didn't
23:27
rescue the hippie?
23:30
Speaker 3: No?
23:30
Speaker 2: Cause he's too far out man.
23:34
Speaker 4: That's good.
23:35
Speaker 2: Todd, I want to talk to you a little bit
23:37
about gifting. We're getting towards the end of the year
23:39
right now, and when it comes to the current state
23:44
of being able to make gifts to individuals, what's the.
23:48
Speaker 7: Law of the land today, the current landscape for making
23:53
just it doesn't matter the size of the gift.
23:54
Speaker 4: Are we talking about smaller, bigger gifts?
23:56
Speaker 2: How much is allowed without having to pay tax?
23:58
Speaker 8: Like?
23:58
Speaker 2: How what that's the law of the land today.
24:01
Speaker 7: That's that's fair because that really covers two questions. We'll
24:04
try to take care of both of them. So one,
24:07
many folks who don't really you can don't really care
24:10
about the impact of the gift, right, So if it's
24:13
if it's a present interest exclusion gift. Today it's eighteen
24:16
thousand dollars per year per person. January one tax law change,
24:23
nineteen thousand per year per person. I say these are
24:26
the simple gifts and the freebies because they require no
24:30
filing of a seven h nine gift tax return, no
24:33
reporting to the irs of any kind. You simply write
24:36
to check and it's tax free to the giver and
24:40
of course, as always, tax free to the recipient. However,
24:45
people say, well, what if I have a lot more
24:47
money I want to give. What if I want to
24:49
give away one hundred thousand, or if I want to
24:51
give away a million, can I Yeah, Now you move
24:55
to what is called a taxable gift. So let's use
24:59
a million million dollars as an example. If I had
25:02
a million dollars and I wanted to get it out
25:03
of my estate. Maybe it's going to bring my estate
25:05
down to reduce my state estate tax. Maybe it's going
25:08
to help reduce my federal estate tax. So I want
25:11
to make this gift, and let's just say it's cash
25:14
for now, if I move a million dollars out of
25:17
the estate. Now I've made a taxable gift, call it
25:20
a million, eighteen thousand, So I can bring back in
25:22
the present interest exclusion for you. If I give away
25:25
a million eighteen thousand dollars, the first eighteen I just
25:29
said was a freebie. Now you back that out and
25:32
the taxable gift is a million dollars, and that gets
25:36
reported on the seven h nine gift tax return that
25:39
the giver files, not the recipient. Okay, now I've made
25:43
a million dollar gift. I don't want to pay tax
25:45
on that. What's that bottom line tax do on that
25:49
million dollar transfer?
25:51
Speaker 4: Well, it's going to be zero.
25:52
Speaker 7: But why because we now shift over to what is
25:55
known as a federal gift tax exemption, which happens to
25:59
mirror the federal estate tax exemption of thirteen million, six
26:03
hundred thousand and change roughly today. Now that's going up
26:08
January one as well. But today that's so much I
26:10
can give away. So if I have thirteen point six
26:13
and I give away a million, I just eat into
26:15
that thirteen point six by one million, leaving me an
26:18
exemption of twelve point six and zeroing out my tax
26:22
liability on that gift, so pretty.
26:24
Speaker 4: Easy to do. Can you give away more than a million? Sure?
26:27
Can the whole thirteen six?
26:28
Speaker 2: If you like talking with Todd Lutski from the law
26:31
firm of Cushing and Dole, And if you've got questions
26:33
for Todd about your estate plan, we got the phone
26:36
lines open here at eight eight eight two zero five
26:39
two two six three. That number again is eight eight
26:42
eight to zero five two two six three. Still got
26:47
some room on the phone line, so again that number
26:50
is eight eight eight to zero five two two six three.
26:54
Speaker 4: Todd.
26:55
Speaker 2: If someone is trying to incorporate a gifting strategy into
27:00
their estate plan, what are some of the constructions that
27:03
you've seen that could potentially be successful?
27:05
Speaker 7: So the first there's so many things to think about, though, Chuck,
27:09
but I'll just try and give you a quick heads up. Right,
27:12
think about what you're gifting.
27:14
Speaker 4: Is it cash?
27:16
Speaker 7: Is it low basis stock that I bought years and
27:18
years ago and I'm going to have a huge built
27:20
in gain. Is it rental property that I have had
27:24
and depreciated the basis to zero with a huge built
27:27
in gain. So you want to think about the type
27:30
of asset I gift gifting away high basis assets is
27:35
better than low basis assets. So to the extent you
27:38
can do that, do that like what cash or stock
27:42
that I just bought that has a high basis That
27:44
way you're getting it out of your estate without incurring
27:49
or trapping. I should say a built in capital gain
27:53
because remember, folks, the capital gains tax that you're building
27:56
in could be higher than the estate tax you're trying
28:00
to avoid.
28:01
Speaker 4: Lots to think about, folks, for sure.
28:03
Speaker 2: Talking with Todd Lutsky from the law firm of Cushing
28:05
and Dolan. If you've got a question for Todd, We've
28:08
got the phone lines open at eight eight eight to
28:11
zero five two two six three. That number again is
28:15
eight eight eight to zero five two two six three.
28:19
We're going to take a quick break here, but when
28:23
we come back, it's going to be right to your
28:26
questions with Todd again, still a little bit of room
28:29
on the phone lines at eight eight eight to zero
28:33
five two two sixty three. Quick break, then your questions
28:36
with Todd.
28:38
Speaker 1: Ask Todd with Todd Lutsky every Wednesday at ten thirty
28:42
only here on the Financial Exchange Radio Network. You're listening
28:47
to Ask Todd with Todd Lutsky. On the Financial Exchange
28:51
Radio Network.
28:56
Speaker 2: All right, let's get right to the callers here. We
28:58
got ed in Newberry ed. What's your question for Todd Lunsky.
29:02
Speaker 8: Well, maybe I'm misunderstanding what you just said, but we
29:06
have five kids. If I each give each of them
29:09
a nineteen thousand dollars gift or ninety five thousand dollars,
29:13
I understand it's tax free for them. But won't I
29:17
have to pay taxes on that money when I pull
29:19
it out with my account.
29:20
Speaker 7: Well, if you pull it out of an IRA, yes,
29:23
But if it's sitting in your investment brokerage account, no, right,
29:27
because distributions out of your brokerage account are not taxable. Now,
29:30
if you have to sell something to liquidate the investment
29:33
to generate cash, well, sure you have a capital gain
29:36
if you sell something, or a capital loss depending on
29:38
what you sell. But no, there's no tax on withdrawing
29:42
money from your non IRA account. It's just whatever you incur.
29:46
So if you've got a core account with cash sitting
29:48
in it, you can give And by the way, the
29:50
nineteen is next year, eighteen is this year, So yeah,
29:54
you can give away eighteen thousand per year per person. No,
29:58
tax for you, no filing for you, no gift tax
30:01
for you, no filing for you, and no income tax
30:04
or gift tax to the recipient at all. So hope
30:08
that helps. Definitely have at that. But folks, you know,
30:13
gifting is not easy. We're starting to learn this right now,
30:16
just as we start to touch the tip of the
30:17
gifting iceberg. If you will, we'll be exploring these all
30:20
month long. But you can get ahead of the curve
30:22
by getting the guide making the most of gifting your assets.
30:25
Don't make mistakes like, oh, I added a joint name
30:28
to an account.
30:29
Speaker 4: That's easy. Was that a problem?
30:31
Speaker 2: I don't know.
30:32
Speaker 7: Well, I put a joint name on a rental property
30:35
with my kid. I decided to put my kid's name
30:37
on the property. Oh my gosh, did I make a
30:39
completed gift?
30:40
Speaker 4: Do I have.
30:40
Speaker 7: Income tax problems? Did I expose assets to creditors unnecessarily?
30:45
So many things can happen when you make simple moves
30:48
or simple things that you think are simple, like gifting.
30:52
Please learn how to gift the right way. Get the
30:55
guide eight six six eight four eight five six nine
30:59
nine or Legal Exchange show dot com. Making the most
31:03
of gifting your assets eight six six eight four eight
31:07
five six nine nine or Legal Exchange Show dot Com.
31:11
Speaker 2: Tod, I've got another one here for you. We've got
31:12
Carol in Old Orchard Beach. Carol, what's your question for Todd?
31:17
Speaker 5: Well, it's fairly similar, but I don't have a million
31:21
to gift someone. I'm probably gonna have about that much
31:23
sluv on myself as I go into retirement. Hopefully that'll
31:27
take me through. But my question is a smaller amount.
31:30
If I want to give like one of my kids,
31:33
let's say ten thousand dollars, how do I do it
31:36
so that I'm not taxed on that ten thousand and
31:39
when I give it to him, he doesn't you know,
31:42
it doesn't add to his income and therefore he gets
31:44
taxed so on it.
31:45
Speaker 7: You're right, it was very similar to the last question, Carol.
31:48
But that's okay, So let me do it this way.
31:50
The ten thousand you're giving, is it cash?
31:54
Speaker 5: Well, okay, let's I guess I've got to make myself clear.
31:57
What if I write a check? I mean yes, I.
31:58
Speaker 7: Can go out catch yeah, absolutely, So all you need
32:01
to do to accomplish your goal of getting that ten
32:04
thousand dollars to your beneficiary is simply go to your bank,
32:09
write a check, pay to the order of hand it
32:12
to him. You do not need to file any federal
32:16
gift tax return. You are not required to do it,
32:18
nor do you have to. Secondly, so that means there's
32:21
no gift tax for you. Your child who receives the
32:24
money does not have an income tax liability because gifts
32:30
are never an income taxable event, So does it matter
32:35
how much they receive. The recipient has no gift tax,
32:38
and the recipient has no income tax. Simply write the
32:42
check and you can do that. So great question. I
32:45
hope that helps, Todd.
32:47
Speaker 2: We'll keep the train moving here. We've got Tom in
32:51
Charlestown with a question for you. Tom, you're on with
32:54
Todd Lutsky.
32:55
Speaker 9: Thank you, Good morning, Todd. Last week you spoke about
33:00
leaving your IRA to your state, and I have two
33:03
questions about that. One is is it subject to probate
33:09
in order to get it out of the estate. And secondly,
33:12
since it is subject to probate, if you find yourself
33:15
in a situation where you qualify for medicaid but medicaid
33:20
is going to have a lean, will that lean attached
33:23
to that IRA that you've left.
33:24
Speaker 10: To your estate.
33:25
Speaker 4: Great question.
33:26
Speaker 7: So two answers, one in order to name the estate
33:30
the beneficiary. Yes, you are going to go to probate,
33:34
no way to avoid it for that one item, then
33:37
that item, and again that only happens when you die,
33:40
so you have to be married. Let's say you pass away, Tom,
33:43
you never went to the nursing home. The asset flows
33:46
through probate into your testamentary trust. So yes, you have
33:50
to have a testamentary trust in place as well to
33:52
receive the money through probate. But then it is in
33:57
trust for the benefit of your spouse who can enjoy
34:00
the income and the principle. And the next day gets
34:03
sick and go to a nursing home and it is
34:06
immediately protected from the nursing home. And lastly, there will
34:11
be no lean on that money. So it really is
34:14
a home run for the one bad part. I got
34:18
to go to probate. But the pros in my mind
34:21
generally outweigh the cons here, so hopefully that helps.
34:24
Speaker 4: Todd.
34:24
Speaker 2: I've got another one for you here. Let's go to
34:26
Steve in Maine. Steve, what's your question for Todd?
34:31
Speaker 8: Yeah, Hi, Todd, I.
34:32
Speaker 10: Have a question for you. So, my mom has owned
34:34
that beach home for about thirty years. It's not her
34:36
primary residence. It's worth a little under a million dollars,
34:40
and after she passes, she's giving it to my brother
34:43
and I, but she just wants us to sell it
34:47
just so we don't have to share it, which is challenging.
34:49
Would it be better taxes if she were to sell
34:52
it before she passes, or would it make any difference.
34:55
Speaker 7: Yeah, it'll be horrible, horrible to sell it before she passes.
34:58
So please, folks, this is exactly what we talk about.
35:02
Thirty years ago, she bought this property. I don't know,
35:05
maybe she paid one hundred grand for it. Maybe she
35:07
paid fifty grand for it, say one hundred grand. We've
35:10
got nine hundred thousand dollars of built in gain here.
35:14
You give away an asset like this. When I talked
35:16
earlier about high basis and low basis, right, this is
35:19
low basis. You give this away, you're trapping nine hundred
35:22
thousand dollars of gain during life. Don't give it away.
35:26
Don't sell it during life because you got the nine
35:28
hundred thousand dollars of built in gain to pay tax
35:31
on instead. Hang on to it right, plan for it,
35:34
put it in a trust, whatever you want, die owning it,
35:38
and when you dine it passes to you kids. You
35:41
kids will now get it with a brand new basis
35:44
of a million dollars fair market value. Date of death
35:47
eliminates the built in gain. Sell it you guys, pay
35:50
no capital gains tax, or if one of you want it,
35:53
buy out the interest of the other one. You have
35:55
every option available to you. Don't just sell it.
36:00
Speaker 2: Give it away now, Todd, any other final thoughts on gifting.
36:05
We got a little bit of time here, and any
36:07
last thoughts before we wrap up.
36:09
Speaker 7: Yeah, I think I just want to spend a little
36:11
more time on Steve's question, just because I didn't know
36:14
if there was another caller. But on Steve's question again,
36:16
folks this, if you have the time, right, you should
36:19
not just not give it away but stick it into
36:22
an irrevocable medicaid trust. I don't know how old she is,
36:26
or she didn't mention anything about her health. Right, if
36:28
we have time, I would put that into an irrevocable
36:32
medicaid trust so that I can get a clock running
36:34
so that yes, I'm keeping it, but I also don't
36:37
want to lose it in case she needs long term
36:39
care before she dies. This kind of irrevocable trust, unlike
36:43
gifting trusts, will allow the asset to be protected and
36:47
included in the estate when you pass away, therefore still
36:51
preserving that step up in basis I just talked about
36:54
for the kids who then can sell it with no
36:58
capital gains tax.
37:00
Speaker 2: Through Lutsky, Thank you so much for joining us today.
37:02
We appreciate the time.
37:03
Speaker 4: It's always a pleasure. Thank you.
37:11
Speaker 1: This has been Asked Odd on the Financial Exchange Radio network.
37:14
Ask Todd with Todd. Lutsky has been presented by Cushing
37:17
and Dolan, serving Massachusetts and New England for more than
37:20
thirty years, helping families with the state and tax planning,
37:23
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37:29
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37:31
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37:34
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