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Where Tax Strategy Meets Real Life · Money In Motion with Klaas Financial

• 0:00
  Speaker 1: At our phone lines. They are open for you right now.
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• 0:15
  Speaker 2: with CJ.
• 0:15
  Speaker 1: Closs and Eric Schwartz. Again.
• 0:17
  Speaker 2: They are our retirement planning professionals. They come to us
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  Speaker 2: from Class Financial. I mentioned the website Coss Financial dot com.
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  Speaker 2: their number six oh eight to four four two, five,
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  Speaker 2: six three seven enjoyed us this morning from Class Financial
• 1:01
  Speaker 2: our CJ Closs and Eric Schwartz.
• 1:03
  Speaker 1: CJ. How you doing this morning.
• 1:06
  Speaker 3: I'm doing great, Sean.
• 1:07
  Speaker 1: It's a beautiful day.
• 1:08
  Speaker 2: It is a fantastic day. Great to talk with you,
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  Speaker 2: my friend and Eric, how have you been?
• 1:13
  Speaker 4: I am doing great, Sean. It is a good today.
• 1:15
  Speaker 2: We do have an absolutely amazing show. We're going to
• 1:17
  Speaker 2: be talking about where a tax strategy meets real life.
• 1:20
  Speaker 2: Again important program is always going to be. I had
• 1:23
  Speaker 2: a chance to kind of preview some of the notes
• 1:25
  Speaker 2: and some of the things we're gonna touch on. There's
• 1:26
  Speaker 2: gonna be a lot of information, so you're gonna want
• 1:28
  Speaker 2: to pay close attention. Don't forget if you miss any
• 1:30
  Speaker 2: part of the program, you can always listen back at
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  Speaker 2: classfinancial dot com.
• 1:33
  Speaker 1: Speaking up paying close attention to the program.
• 1:35
  Speaker 2: Great opportunity for you to win a fantastic prize from
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  Speaker 2: our friends at class Financial this week. Chance for you
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  Speaker 2: to win a twenty five dollars gift card to Amazon
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  Speaker 2: with the class quiz question the weak little tip. Listen
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  Speaker 2: closely to the program because just about every show, the
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  Speaker 2: question answer comes up during that program. And before we
• 1:50
  Speaker 2: start this week's topic, let's actually look back at last
• 1:53
  Speaker 2: week's show and get the class quiz question and answer
• 1:55
  Speaker 2: there as well.
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  Speaker 4: Eric, absolutely so thank you to everybody as allways for
• 2:00
  Speaker 4: listening and congratulations to our winner from last week. And
• 2:04
  Speaker 4: last week's question was a true or false question, so
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  Speaker 4: it was true or false. According to Coss Financial, the
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  Speaker 4: most dangerous thought an investor can have is quote. But
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  Speaker 4: this time is different and I can very very confidently
• 2:19
  Speaker 4: answer that as true.
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  Speaker 2: Sean, And that's and that was a fantastic show as well,
• 2:24
  Speaker 2: So don't forget listen back and subscribe Redd at class
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  Speaker 2: financial dot com. That's class financial dot com have a
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  Speaker 2: chance for you to win as well to this week
• 2:31
  Speaker 2: with that Class quis question week a little bit later
• 2:34
  Speaker 2: on in the program. Yeah, that was a great absolutely
• 2:36
  Speaker 2: a really good show for sure. As we talked this
• 2:38
  Speaker 2: morning with Eric Schwartz and CJ Closs talking this week
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  Speaker 2: about where tax strategy meets real life and CJ today
• 2:45
  Speaker 2: we're talking taxes but not really thinking about like that.
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  Speaker 2: I think a lot of folks automatically think, well, let's
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  Speaker 2: talk about filing returns or meeting deadlines. We're actually going
• 2:54
  Speaker 2: to be focusing in on tax strategy and how that
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  Speaker 2: fits into everyday financial decisions. So why this is such
• 3:00
  Speaker 2: an important conversation for folks.
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  Speaker 3: Yeah, good question. So this is one of those areas
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  Speaker 3: that kind of quietly impacts almost every part of a
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  Speaker 3: financial plan, yet it often does not get the attention
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  Speaker 3: it deserves, at least from our perspective. Most people think
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  Speaker 3: of taxes as a once a year event. You gather documents,
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  Speaker 3: file a return, and then you kind of move on
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  Speaker 3: with your life. But the reality is that taxes influence
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  Speaker 3: what you earn, what you keep, how your investments grow,
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  Speaker 3: and what ultimately gets passed on to the next generation.
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  Speaker 3: So if you're not thinking about taxes along the way
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  Speaker 3: kind of throughout the year, it is very easy to
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  Speaker 3: lose efficiency without realizing it. On the flip side, when
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  Speaker 3: tax strategy is coordinated with your financial plan, it can
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  Speaker 3: create a meaningfully kind of like long term benefit without
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  Speaker 3: adding additional risk.
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  Speaker 2: Sounds like we're talking planning to exactly righte sean overall
• 3:57
  Speaker 2: topics to this entire program as imports of planning. As
• 4:00
  Speaker 2: we talk with CJ Class and Eric Schwartz of Class Financial.
• 4:03
  Speaker 1: Great day to make that appointment. So I can do
• 4:05
  Speaker 1: is give a.
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  Speaker 2: Call six so eight four four two five six three seven.
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  Speaker 2: No charts that initial get to know you conversation that appointment,
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  Speaker 2: it will be complimentary to you.
• 4:12
  Speaker 1: Again.
• 4:12
  Speaker 2: They are number six O eight four four two five
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  Speaker 2: six three seven. If you've got a question for Eric
• 4:16
  Speaker 2: and CJ, we'd love to get you on the airtel
• 4:18
  Speaker 2: well number six oh eight three two one thirteen ten.
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  Speaker 2: That's six oh eight three two one thirteen ten and ericout,
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  Speaker 2: let's bring you in on this conversation. When you get
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  Speaker 2: a chance, you're sitting down with clients, how do you
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  Speaker 2: kind of approach and bring up tax strategy into the
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  Speaker 2: broader conversation.
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  Speaker 4: Yeah, this really has to be a mindset shift when
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  Speaker 4: we're working with clients on this. We have to go
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  Speaker 4: from the sort of short term thinking to getting folks
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  Speaker 4: to focus on long term coordination. I think consumers, as
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  Speaker 4: as mentioned there in the first section, are generally focused on, Okay,
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  Speaker 4: what's my tax return look like this? Here? Do I
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  Speaker 4: have everything in on time? And it's it's hard to
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  Speaker 4: say or to get yourself to think, you know, how
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  Speaker 4: do we manage taxes over the course of my lifetime
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  Speaker 4: rather than just how do we reduce taxes taxes this year,
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  Speaker 4: because that's where we can really make a meaningful impact
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  Speaker 4: on client outcomes, is if we're really thinking about how
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  Speaker 4: we strategize around reducing the amount of taxes people need
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  Speaker 4: to pay over time. So we'll typically organize the conversation
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  Speaker 4: into three main areas. So the first would be income planning.
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  Speaker 4: And you know the taxes that you pay when when
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  Speaker 4: you draw income, the investment structure that you have, and
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  Speaker 4: the impact that your investment portfolio has on your tax
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  Speaker 4: return and legacy in a state consideration, So how much
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  Speaker 4: how do we tax efficiently leave money to the next generation.
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  Speaker 4: And each of these areas has its own tax rules,
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  Speaker 4: but the real value comes from bringing them all together.
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  Speaker 4: When everything is aligned here, you can often smooth out
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  Speaker 4: taxes over time and that helps to avoid paying more
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  Speaker 4: than you need to while also helping you avoid any
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  Speaker 4: sort of under payment penalties or increased medicare premiums. So
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  Speaker 4: it kind of all works together with your with your
• 6:07
  Speaker 4: financial plan.
• 6:08
  Speaker 2: Really interesting stuff this morning as we talk with our
• 6:10
  Speaker 2: retirement planning professionals from Class Financial CJ Closs and Eric Schwartz,
• 6:14
  Speaker 2: don't forget and learn more about Class Financial on their website.
• 6:17
  Speaker 1: It's a good one.
• 6:18
  Speaker 2: Cossfinancial dot com. That's colss k l aa S financial
• 6:22
  Speaker 2: dot com. You can learn about the team, you can
• 6:23
  Speaker 2: learn about the separate divisions as mentioned. You can also
• 6:25
  Speaker 2: listen back to this in previous shows podcasts. You can
• 6:28
  Speaker 2: also schedule a complementary conversation that right online at cossfinancial
• 6:32
  Speaker 2: dot com.
• 6:33
  Speaker 1: That's coss k l a a s Financial dot com.
• 6:35
  Speaker 2: Great opportunity as well. If you've got a question for
• 6:38
  Speaker 2: CJ and Eric, we'd love to have you join us
• 6:40
  Speaker 2: this morning. Got a phone line open just for you
• 6:42
  Speaker 2: at six oh eight three two one thirteen ten. That's
• 6:45
  Speaker 2: six oh eight three two one thirteen ten. Anything related
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  Speaker 2: to retirement planning. CJ and Eric are here for you
• 6:51
  Speaker 2: and they'd love to talk with you again. The number
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• 6:54
  Speaker 2: two one thirteen ten. That's six oh eight three two
• 6:57
  Speaker 2: one thirteen ten. Talk a little bit about income planning
• 6:59
  Speaker 2: and some other aspects of tax strategy. We'll talk with
• 7:03
  Speaker 2: c Jen. Eric will take your call. Next has money
• 7:05
  Speaker 2: in Motion with COSS Financial continues next right here on
• 7:08
  Speaker 2: thirteen ten, do w UiB i looking with our retirement
• 7:11
  Speaker 2: planning professionals from Class Financial, CJ Closs and Eric Schwartz.
• 7:15
  Speaker 2: You can learn more about CJ, Eric and the whole
• 7:17
  Speaker 2: team at Loss Financial on their website Coss Financial dot
• 7:20
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• 7:24
  Speaker 2: Mentioned all the great stuff there. Not only an opportunity
• 7:26
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• 7:27
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  Speaker 2: help you or if you're an employer, some great options
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  Speaker 2: there for you as well. That all at cossfinancial dot com.
• 7:35
  Speaker 2: That's coss k l aa s financial dot com. You
• 7:38
  Speaker 2: can also schedule a complementary chat right from the website
• 7:41
  Speaker 2: or you can pick up phone call the office six
• 7:43
  Speaker 2: oh eight four four two five six three seven. That's
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  Speaker 2: tech Loss Financial. It will be complementary to you again
• 7:53
  Speaker 2: their number six oh eight four four two five six
• 7:56
  Speaker 2: three seven. Talking this week with Cjan Eric about tax
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  Speaker 2: strategy where it meets real life, coordinating income investments and
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  Speaker 2: legacy planning to keep more of what you've built and CEJ,
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  Speaker 2: let's kind of get to that first one, which is
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  Speaker 2: income planning. How exactly do taxes shaped the way folks
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  Speaker 2: should think about income, especially in retirement.
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  Speaker 3: Yeah, So, as we've said, I mean, often people think
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  Speaker 3: of tax planning as this kind of one and done
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  Speaker 3: at the end of the year. But as we've talked
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  Speaker 3: about before on the show, income planning especially becomes much
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  Speaker 3: more complex once you move beyond a traditional paycheck. So
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  Speaker 3: think more like in retirement. Right, So, in retirement, income
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  Speaker 3: often comes from multiple sources, and each one is treated
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  Speaker 3: differently from a tax standpoint. You might have things like
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  Speaker 3: Social Security which can be partially taxable depending upon your
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  Speaker 3: total income, withdrawals from your traditional retirement accounts which are
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  Speaker 3: generally fully incomes taxible, and then Roth distributions, which may
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  Speaker 3: be tax free if it's structured properly. And then finally,
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  Speaker 3: investment income that's not coming from a retirement account, which
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  Speaker 3: could be subject to capital gains or dividends taxes or
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  Speaker 3: could be mostly tax free depending upon if your withdrawing
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  Speaker 3: basis or gain. So the challenge is that these income
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  Speaker 3: sources do not operate independently. They actually interact with each
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  Speaker 3: other and can affect your overall tax bracket. But the
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  Speaker 3: key here is just to recognize, like, oh, that's that's true.
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  Speaker 3: When I get into retirement, I could potentially, in any
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  Speaker 3: given year not draw Social Security. I could draw all
• 9:30
  Speaker 3: of my needed income to live off of from my
• 9:33
  Speaker 3: taxable investment account. I could draw it all from retirement,
• 9:36
  Speaker 3: my pre tax retirement account, or all for my wrath account.
• 9:39
  Speaker 3: I actually have options, and those options can control the
• 9:44
  Speaker 3: taxability of your income, which can control your adjusted gross income.
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  Speaker 3: And for any of our accountants listening out there, AGI
• 9:50
  Speaker 3: or something known as MAGI, modified adjusted gross income is
• 9:54
  Speaker 3: the primary tool that is used by the IRS for
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  Speaker 3: tax benefits.
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  Speaker 4: Oh.
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  Speaker 1: All of this goes to say.
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  Speaker 3: It becomes that this notion of like tax planning relative
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  Speaker 3: to income sources becomes crucially important when you start thinking
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  Speaker 3: about retirement and retirement planning.
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  Speaker 1: It's pretty amazing. I guess you're talking there, CJ.
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  Speaker 2: I'm just picturing like a like a nice wristwatch when
• 10:19
  Speaker 2: you take the back off and you see the gears
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  Speaker 2: and mechanisms and they're all working in beautiful coordination, and
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  Speaker 2: just like it's like, wow, it's amazing how this stuff works.
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  Speaker 2: You look at the front side looks beautiful and perfect.
• 10:29
  Speaker 2: You look at the back. So they're like, oh my goodness,
• 10:30
  Speaker 2: how does that all come together? For sure when it
• 10:33
  Speaker 2: comes to planning and of coordination as well. As we
• 10:35
  Speaker 2: talk with cjan Erica Costs Financial, don't forget you can
• 10:38
  Speaker 2: learn more online coss.
• 10:39
  Speaker 1: Financial dot com.
• 10:40
  Speaker 2: That's Claus k l a A S Financial dot com
• 10:43
  Speaker 2: and their telephone number six so eight four four two
• 10:45
  Speaker 2: five six three seven. So Eric, can you walk us
• 10:48
  Speaker 2: through a little bit about that about coordination, what that
• 10:50
  Speaker 2: looks like in practice and in real life.
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  Speaker 4: Yeah, I think the best way to do this is
• 10:55
  Speaker 4: to look at a few examples. So let's let's just
• 10:59
  Speaker 4: look at first here. If you were to take all
• 11:04
  Speaker 4: of your income in retirement in a given year from
• 11:07
  Speaker 4: your traditional IRA or your four oh one K pre
• 11:10
  Speaker 4: tax dollars, right, so dollars that have never been taxed
• 11:13
  Speaker 4: before and they're deferred until you take withdrawals. So if
• 11:17
  Speaker 4: you were to draw all of your income in one
• 11:20
  Speaker 4: year from those sources, this could actually push you into
• 11:23
  Speaker 4: a higher tax bracket. But if instead you blend that
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  Speaker 4: with for example, withdrawals from a roth IRA or even
• 11:31
  Speaker 4: distributions from an after tax investment account that are mostly
• 11:35
  Speaker 4: not taxable. You can at that point then keep your
• 11:39
  Speaker 4: overall tax rate more consistent, and you can avoid pushing
• 11:44
  Speaker 4: your income high enough that you have to pay higher
• 11:48
  Speaker 4: Medicare premiums or just higher taxes in general. Another common
• 11:53
  Speaker 4: scenario involves planning around required minimum distributions or rmds. We've
• 11:58
  Speaker 4: talked about these a lot on different shows, but later
• 12:03
  Speaker 4: on in retirement, these these can cause some tax issues
• 12:06
  Speaker 4: for folks. So if all of your savings are in
• 12:09
  Speaker 4: tax deferred accounts, those required minimum distributions can create a
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  Speaker 4: spike in your taxable income down the road that again
• 12:17
  Speaker 4: can push you into those higher tax brackets, might put
• 12:19
  Speaker 4: your income at a level where you have to pay
• 12:22
  Speaker 4: more for your Medicare Part B in Part D premiums.
• 12:26
  Speaker 4: So sometimes what we'll do with folks early in retirement
• 12:29
  Speaker 4: is we'll look at gradually shifting income to reduce those
• 12:33
  Speaker 4: future those future spikes. So these are these are called
• 12:36
  Speaker 4: WROTH conversions, and they can reduce your taxation in two ways.
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  Speaker 4: Number One, you're reducing your future required minimum distributions by
• 12:45
  Speaker 4: moving money from your pre tax bucket to your WROTH bucket.
• 12:50
  Speaker 4: And the second way that it helps reduce your taxation
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  Speaker 4: is it allows more of your assets to grow tax
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  Speaker 4: free rather than tax deferred. So it's really about creating
• 12:59
  Speaker 4: a smoother, more controlled tax outcome over time.
• 13:03
  Speaker 1: Fascinating stuff this morning.
• 13:04
  Speaker 2: As you heard Eric mentioned as well, we've talked in
• 13:06
  Speaker 2: the past about our mds and a whole variety of
• 13:09
  Speaker 2: other things related to retirement. And I'll tell you what
• 13:12
  Speaker 2: if you don't subscribe to the podcast, you definitely want
• 13:14
  Speaker 2: to do that today, head on over to class financial
• 13:16
  Speaker 2: dot com. That's closs k l a a s Financial
• 13:19
  Speaker 2: dot com. You can listen back to this show. You
• 13:21
  Speaker 2: can also listen back to the previous programs. Great website
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  Speaker 2: Class financial dot com. You can subscribe right to the
• 13:26
  Speaker 2: website also to the podcast right at the website. You
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• 13:33
  Speaker 2: dot com. That's colss k l a a s Financial
• 13:36
  Speaker 2: dot com and CJ. Let's move over to the investment sides.
• 13:39
  Speaker 2: Where do taxes show up? Then when it comes to
• 13:42
  Speaker 2: investment conversion or that conversation.
• 13:44
  Speaker 1: Excuse me, yeah.
• 13:47
  Speaker 3: No worries. Yeah, Eric was talking about roth conversion, so
• 13:50
  Speaker 3: there you Yeah, so taxes show up in both what
• 13:55
  Speaker 3: you invest in and where those investments are actually held.
• 13:58
  Speaker 3: So many investors focus prime merely on performance, which is understandable,
• 14:03
  Speaker 3: but what ultimately matters is the return you keep after taxes,
• 14:07
  Speaker 3: and that can vary based on how investments are structured
• 14:10
  Speaker 3: or what kind of account they're held within.
• 14:12
  Speaker 1: There are a few key.
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  Speaker 3: Factors we look at, you know, number one, how frequently
• 14:16
  Speaker 3: investments generate taxable events. Number two, whether those gains are
• 14:20
  Speaker 3: short term or long term gains, how dividends are treated,
• 14:24
  Speaker 3: and how portfolios are rebalanced over time. Even small differences
• 14:29
  Speaker 3: in tax treatment can compound over time and lead to
• 14:32
  Speaker 3: noticeably different outcomes. So I mentioned like, what account these
• 14:36
  Speaker 3: these investments sit inside of? So listen, we've done this
• 14:39
  Speaker 3: for so many years for Eric or I we You know,
• 14:42
  Speaker 3: we talk about this as though it's just plain English.
• 14:45
  Speaker 3: But I'll be frank with you. For for both Eric
• 14:47
  Speaker 3: and I, we it took us a long time to
• 14:51
  Speaker 3: get our brains around how different account types impact the
• 14:55
  Speaker 3: tax ability of earnings inside it that account, depending upon
• 15:01
  Speaker 3: when you pull money out. So you know, we talked
• 15:03
  Speaker 3: about it a little bit, but a pre tax retirement
• 15:05
  Speaker 3: account you pay no tax on the growth until you
• 15:08
  Speaker 3: pull money out a roth account, you may never pay
• 15:12
  Speaker 3: any tax, any income tax on the growth. And then finally,
• 15:16
  Speaker 3: what we call a quote unquote taxable account. This would
• 15:19
  Speaker 3: be an individual account, a joint account, a trust account.
• 15:22
  Speaker 3: Assuming it is not held inside of an annuity. You
• 15:26
  Speaker 3: pay pay tax on those gains as you realize them.
• 15:30
  Speaker 3: So dividends and interest are taxable in the year in
• 15:32
  Speaker 3: which you receive them, but capital gain is only taxed
• 15:36
  Speaker 3: as you realize it, which would be selling that security.
• 15:40
  Speaker 3: So you know, we'll have people sell a stock inside
• 15:42
  Speaker 3: of a taxable account, not pull any of that money
• 15:45
  Speaker 3: out of the account, and then get to the end
• 15:46
  Speaker 3: of the year and have a really large tax bill
• 15:49
  Speaker 3: and they go, what the heck, right, because they don't
• 15:51
  Speaker 3: understand that different accounts have different treatment of gain or
• 15:56
  Speaker 3: dividends or interest depending upon what account it's held inside.
• 16:00
  Speaker 3: So this is where this becomes like tetris.
• 16:03
  Speaker 1: Right.
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  Speaker 3: You're trying to figure out what account do I draw
• 16:06
  Speaker 3: from and when? And I've got this one stock with
• 16:08
  Speaker 3: a bunch of gain, but can I sell it? And
• 16:10
  Speaker 3: if I do, what's that's going to do to my magi?
• 16:12
  Speaker 3: And what does that do to my Affordable Care Act
• 16:14
  Speaker 3: premiums and my Medicare penalty or my Medicare ermas. Listen,
• 16:18
  Speaker 3: this is why we have a job. I don't didn't
• 16:20
  Speaker 3: make the rules. We're just here to help you, you know,
• 16:22
  Speaker 3: abide by those rules and try to be tax smart.
• 16:25
  Speaker 3: But I can just say to you we often help
• 16:28
  Speaker 3: people just say boatloads in taxes alone. We're not even
• 16:32
  Speaker 3: talking about the value of the investments we help them
• 16:34
  Speaker 3: buy just in taxes alone, by being smart in where
• 16:37
  Speaker 3: you draw income from in retirement.
• 16:39
  Speaker 2: Really great stuff this morning from CJ. Closs and Eric Schwartz,
• 16:42
  Speaker 2: our retirement planning professionals from Class Financial. Learn more online
• 16:45
  Speaker 2: Coss Financial dot com. That's Closs k l a A
• 16:48
  Speaker 2: S Financial dot com and Eric kind of using those
• 16:51
  Speaker 2: things that CJ just laid out, let's talk then about
• 16:54
  Speaker 2: how you help clients make some practical adjustments in those areas.
• 16:59
  Speaker 4: This is where concept that we call asset location becomes
• 17:02
  Speaker 4: really valuable. So we're, as CJ was just saying there,
• 17:05
  Speaker 4: we're not just asking, okay, what should we be investing in,
• 17:09
  Speaker 4: but where should we place each of the investments that
• 17:11
  Speaker 4: make up the whole portfolio. So, for example, more tax
• 17:15
  Speaker 4: efficient investments, So investments that don't kick off a lot
• 17:19
  Speaker 4: of dividends or or get bought and sold frequently, they
• 17:24
  Speaker 4: may be better suited for a taxable account. And on
• 17:29
  Speaker 4: the other hand, investments that generate more ordinary income they
• 17:32
  Speaker 4: may fit better in tax deferred accounts because with a
• 17:35
  Speaker 4: tax deferred account, you're not going to pay income taxes
• 17:38
  Speaker 4: on an annual basis unless you are actually taking withdrawals,
• 17:42
  Speaker 4: so the goals to reduce any unnecessary tax drag on
• 17:45
  Speaker 4: the portfolio. We also look at opportunities to manage gains
• 17:49
  Speaker 4: and losses throughout the years. So in some cases, realized
• 17:53
  Speaker 4: losses can actually help us offset gains and in other
• 17:56
  Speaker 4: cases we may be more intentional about when we actually
• 17:59
  Speaker 4: recognize is capital gains within a portfolio. Now, these are
• 18:03
  Speaker 4: not dramatic dramatic changes by any means, but they are
• 18:07
  Speaker 4: really thoughtful adjustments that do have a a well, they
• 18:12
  Speaker 4: have a pretty pretty solid impact on after tax outcomes
• 18:15
  Speaker 4: for clients over time.
• 18:17
  Speaker 2: Really amazing stuff that you guys are able to do.
• 18:19
  Speaker 2: And it's a great day to start that conversation with
• 18:20
  Speaker 2: our friends at Class Financial. They make it real easy
• 18:22
  Speaker 2: to do. Head on over to the website class financial
• 18:24
  Speaker 2: dot com. That's class k l aas financial dot com.
• 18:28
  Speaker 2: You can schedule that complementary conversation right from the website
• 18:31
  Speaker 2: class financial dot com, or you can pick a phone
• 18:33
  Speaker 2: give a call six oh eight four four two five
• 18:35
  Speaker 2: six three seven. Don't forget that initial get to know
• 18:37
  Speaker 2: your appoyment dech loss Financial. It is complementary to you
• 18:40
  Speaker 2: again their number six oh eight four four two five
• 18:43
  Speaker 2: six three seven. We're going to talk with Cjen Eric
• 18:45
  Speaker 2: about legacy planning and we'll wrap the conversation up as
• 18:48
  Speaker 2: well as do our Closs quiz question week that coming
• 18:51
  Speaker 2: up next in the next segment, Class Financial Money in
• 18:54
  Speaker 2: Motion Here on thirteen ten, doll w Uiba talking with
• 18:57
  Speaker 2: our retirement planning professionals CJ.
• 18:59
  Speaker 1: Closs and Eric Swarz.
• 19:00
  Speaker 2: Of course they come to us from class Financial the
• 19:02
  Speaker 2: website colss financial dot com. That's clos k l aa
• 19:05
  Speaker 2: s financial dot com. There's telf a number six so
• 19:07
  Speaker 2: eight four four two five six three seven talking this
• 19:10
  Speaker 2: week about tax strategy where it meets real life and CJ.
• 19:15
  Speaker 2: Let's talk legacy planning and how does your tax strategy
• 19:18
  Speaker 2: play a role when when with what people are leaving behind.
• 19:23
  Speaker 3: Yeah, good questions. So again everybody today we're talking about
• 19:26
  Speaker 3: how tax planning is more than just a year end
• 19:29
  Speaker 3: or beginning of the year kind of like oh, I
• 19:30
  Speaker 3: got to file my incomes access. We're saying, actually, tax
• 19:33
  Speaker 3: planning should be happening all over the place inside of
• 19:36
  Speaker 3: your financial planning, which got done talking about retirement income
• 19:39
  Speaker 3: sources and how critical it is to be doing tax
• 19:41
  Speaker 3: planning throughout the year. But yes, now we kind of
• 19:44
  Speaker 3: shift to where how does tax planning come into play
• 19:48
  Speaker 3: when you think of legacy planning or your eventual death,
• 19:52
  Speaker 3: or even even now as it relates to kind of
• 19:54
  Speaker 3: gifting to children or gifting to charities. So this is
• 19:58
  Speaker 3: where planning becomes very personal. It's not just about what
• 20:01
  Speaker 3: you've built, but how efficiently it transfers to the next
• 20:04
  Speaker 3: generation or to causes that you care about. So different
• 20:08
  Speaker 3: types of assets are treated very differently differently when they're
• 20:11
  Speaker 3: passed on, some of those assets may receive favorable tax treatment,
• 20:15
  Speaker 3: while others can create taxable income for beneficiaries. For example,
• 20:20
  Speaker 3: dollars left to qualified charitable organizations are not subject to taxation,
• 20:27
  Speaker 3: so it would likely make sense to leave tax deferred
• 20:30
  Speaker 3: assets to charitable organizations to avoid the tax hit. Right,
• 20:34
  Speaker 3: So think about this. I leave pre tax money to
• 20:38
  Speaker 3: my child. They have to pay income taxes on that
• 20:41
  Speaker 3: because it's never been taxed and they're an individual. However,
• 20:44
  Speaker 3: I leave that same pre tax retirement account to my charity,
• 20:48
  Speaker 3: and the charity liquidates the entire thing and pays no
• 20:50
  Speaker 3: income taxes. Well that's kind of a big deal. That
• 20:53
  Speaker 3: means I should be thoughtful and considerate about what beneficiaries
• 20:59
  Speaker 3: I list on what accounts, depending upon what my ultimate
• 21:02
  Speaker 3: goal is.
• 21:03
  Speaker 1: Now.
• 21:03
  Speaker 3: On the other hand, taxable assets currently receive something called
• 21:06
  Speaker 3: a step up and basis at death, meaning that any
• 21:09
  Speaker 3: accumulated capital gains are essentially erased when they're inherited inherited.
• 21:14
  Speaker 3: This makes taxable assets very attractive to lead to the
• 21:18
  Speaker 3: individuals who would otherwise be responsible for paying taxes on
• 21:22
  Speaker 3: tax deferred assets. So listen, everybody, this is this is
• 21:25
  Speaker 3: where it gets our job gets tricky. Let's say that
• 21:27
  Speaker 3: you have a stock account, and it's not a retirement account,
• 21:31
  Speaker 3: it's a joint account, an individual account, a trust account
• 21:34
  Speaker 3: that we call taxable. And inside of that stock account,
• 21:38
  Speaker 3: maybe you get some dividends and interests that you get
• 21:40
  Speaker 3: a ten ninety nine on every year, but it's not significant.
• 21:42
  Speaker 3: Most of the value of that account is the gain
• 21:46
  Speaker 3: of the stocks you have. Let's say you bought Apple
• 21:48
  Speaker 3: or Facebook or Microsoft or some stock that's just grown
• 21:52
  Speaker 3: a lot in value. Now, if it represents too much risk,
• 21:55
  Speaker 3: we may suggest diversification and sales and paying some income tax.
• 21:59
  Speaker 3: But let's say it's not representing that much risk and
• 22:01
  Speaker 3: you're older in your years. Often Eric and I might
• 22:04
  Speaker 3: sit there and go, you know, why don't you go
• 22:07
  Speaker 3: ahead and hang on to that because it's not consequential
• 22:11
  Speaker 3: to your life and lifestyle, and it's diversified enough that
• 22:15
  Speaker 3: it shouldn't, you know, go to zero necessarily. And by
• 22:19
  Speaker 3: the way, we're going to do this because when you die,
• 22:21
  Speaker 3: your children will pay no tax, but if you sold
• 22:24
  Speaker 3: that exact same stock today, you might pay fifteen to
• 22:26
  Speaker 3: twenty percent in tax.
• 22:28
  Speaker 1: So you see the idea.
• 22:29
  Speaker 3: It's actually thinking beyond just you. It's thinking about your
• 22:32
  Speaker 3: legacy planning and your age and risk and diversification relative
• 22:37
  Speaker 3: to what you're trying to accomplish in the long run
• 22:39
  Speaker 3: with your estate planning. So without coordination, we often see
• 22:44
  Speaker 3: unintended consequences. For example, airs may be forced to take
• 22:48
  Speaker 3: distributions from certain accounts on a timeline that increases their
• 22:51
  Speaker 3: tax burden. So without thoughtful planning, there may be ways
• 22:55
  Speaker 3: to align asset types with specific goals. I said without
• 22:59
  Speaker 3: I meant with thoughtful planning. So whether that's providing for
• 23:02
  Speaker 3: a family members, supporting charities, or simplifying the overall structure,
• 23:06
  Speaker 3: tax planning ahead of time can make a huge difference.
• 23:11
  Speaker 2: Great perspective this morning, and Eric, let's wind this watch here.
• 23:14
  Speaker 2: Let's bring all these elements together. How do you guys
• 23:17
  Speaker 2: do that when it comes to putting it together into
• 23:18
  Speaker 2: one cohesive strategy.
• 23:21
  Speaker 4: Yeah, we're not making isolated decisions here, right, We're not
• 23:23
  Speaker 4: just thinking about income or investments or state planning. We
• 23:27
  Speaker 4: have to really bring all of these things together and
• 23:29
  Speaker 4: understand how the each decision affects affects the other factors
• 23:32
  Speaker 4: we're looking at. So, for example, an income decision today
• 23:36
  Speaker 4: might affect your tax bracket and impact your future planning opportunities.
• 23:40
  Speaker 4: An investment decision might influence how much tax you pay
• 23:44
  Speaker 4: each year, and a legacy decision might shape how efficiently
• 23:47
  Speaker 4: assets can actually transfer down the line to your airs.
• 23:51
  Speaker 4: So our job is to connect those dots and help
• 23:53
  Speaker 4: clients make decisions that are aligned not just for today,
• 23:56
  Speaker 4: but for the long term. And I think this is
• 23:59
  Speaker 4: where we can really show the value of working with
• 24:01
  Speaker 4: with a a good financial planner, because you know, there's
• 24:05
  Speaker 4: there's so many different moving pieces in a financial plan,
• 24:07
  Speaker 4: and for consumers, even if they can, you know, grasp
• 24:11
  Speaker 4: a really good understanding of one or two of these factors,
• 24:15
  Speaker 4: there is so much more value in bringing it all
• 24:18
  Speaker 4: together and understanding each each piece of it. And when
• 24:22
  Speaker 4: that when that coordination is actually in place, people often
• 24:25
  Speaker 4: find that they're able to keep more of what they've
• 24:28
  Speaker 4: built while also feeling much much more confident in their
• 24:31
  Speaker 4: financial plan.
• 24:32
  Speaker 1: Really important stuff this morning, and CJ.
• 24:34
  Speaker 2: Before we wrap, let's uh, let's get a big kind
• 24:37
  Speaker 2: of the big takeaways for this week's program for folks.
• 24:41
  Speaker 3: Yeah, so, the big takeaway, which we've mentioned a few
• 24:43
  Speaker 3: times throughout the show, is that taxes are not a
• 24:45
  Speaker 3: one time event. They're an ongoing part of your financial
• 24:49
  Speaker 3: life that should be considered alongside every major decision. And
• 24:53
  Speaker 3: when you coordinate across income investments legacy planning, you create
• 24:57
  Speaker 3: opportunities for greater efficiency over time. It's not about perfection.
• 25:02
  Speaker 3: It's about being intentional and thoughtful with the decisions that
• 25:06
  Speaker 3: you make.
• 25:07
  Speaker 2: Perfectly said, and of course, if you miss any part
• 25:09
  Speaker 2: of today's program, a lot of quality information has always
• 25:12
  Speaker 2: just head on over to colssfinancial dot com. That's colss
• 25:14
  Speaker 2: klaas Financial dot com because it is back to this
• 25:17
  Speaker 2: in previous shows, podcasts, as well as subscribe right online
• 25:20
  Speaker 2: Class Financial dot Com telephon number six oh eight four
• 25:23
  Speaker 2: four two five six three seven. No charge for the
• 25:25
  Speaker 2: initial get to know you appointment at Loss Financial. It
• 25:27
  Speaker 2: will beat Complimentary Tube again their number six oh eight
• 25:30
  Speaker 2: four four two five six three seven. Want hold on
• 25:32
  Speaker 2: to that telephone number as well. It's time now for
• 25:34
  Speaker 2: the Class Quiz question of the week. It works like this.
• 25:36
  Speaker 2: In just a moment, I'll ask you the class quiz
• 25:38
  Speaker 2: question of the week. You will then have thirty minutes
• 25:39
  Speaker 2: from the today's program to call the Class Financial office
• 25:41
  Speaker 2: right here in Madison at six oh eight four four
• 25:44
  Speaker 2: two five six three seven. If you are the first
• 25:46
  Speaker 2: call correct answer, we win this week's prize, which is
• 25:49
  Speaker 2: a twenty five dollars gift card to Amazon. This week's
• 25:52
  Speaker 2: class quiz question of the week is this true or false?
• 25:55
  Speaker 1: Assets?
• 25:56
  Speaker 2: Left to charitable organizations are not subject to MC taxation.
• 26:01
  Speaker 2: Is that true or is that false? Telephe number six
• 26:03
  Speaker 2: oh eight four four two, five, six three seven First
• 26:06
  Speaker 2: Growth correct answer, Win the twenty five dollars gift card Amazon.
• 26:08
  Speaker 2: No Forgod as well. That's Class Financials office right here
• 26:10
  Speaker 2: in Madison. That number six oh eight four four two
• 26:13
  Speaker 2: five six three seven.
• 26:15
  Speaker 1: CJ.
• 26:15
  Speaker 4: Eric.
• 26:16
  Speaker 2: It's always great chatting with both of you, guys. Enjoy
• 26:18
  Speaker 2: this great day and we'll do it all again real soon.
• 26:20
  Speaker 2: Thanks Sean, Sean, take care guys. Uh let's new stub
• 26:23
  Speaker 2: you right next here on thirteen ten wiv I. This
• 26:27
  Speaker 2: is Money in Motion with Coss Financial Asset Advisors LLC,
• 26:31
  Speaker 2: a registered investment advisor registered with the SEC.