Episode Transcript
[00:00:00] Speaker A: In this episode, we talk about the ways that an incoming Trump administration could.
[00:00:03] Speaker B: Positively or negatively impact your finances.
[00:00:06] Speaker A: Let's get started.
[00:00:07] Speaker C: Let's get some money from New Money, New Problems. It's the New Money, New Problems, um, podcast. A show for successful professionals searching for the tools they need to navigate financial opportunities and obstacles they've never seen.
Negotiating compensation. Purchasing your first investment property. Helping your family with money. The highs and lows of entrepreneurship. New money brings new problems that require new solutions. Join us as we work through them together.
I'm Brenton Harrison and this is the New Money New Problems podcast.
[00:00:46] Speaker A: Hello, my name is Brenton Harrison of, uh, New Money, New Problems and your host for the New Money New Problems podcast. I, uh, think I told you election week that I needed a week, uh, before we did this episode, and it turned out I needed more than a week. So I appreciate you bearing with me. If this is an episode, uh, on which you've been waiting, um, I will say at the start of this podcast that to me, we're going to talk about some ways that the incoming administration will impact your finances. I want to, before we even get into that, acknowledge the fact that there are far more things that people are concerned about in these times, given their race, given whom they love, than just what's going on with money. So I am going to touch on that lightly. But I, uh, do want to make sure there's a connection to finance. This is not a political podcast, but I don't want to minimize some of.
[00:01:36] Speaker B: The concerns that people have.
[00:01:38] Speaker A: So we're going to talk about some.
[00:01:39] Speaker B: Of those concerns in terms of your.
[00:01:41] Speaker A: Rights under the law. So just bear with me as we get through some of these items that.
[00:01:46] Speaker B: Are more larger in scope in terms.
[00:01:48] Speaker A: Of the broader economy. So hopefully we do that in a way that's respectful. And if you're someone who is excited about the incoming administration, there may be.
[00:01:57] Speaker B: Some things that we highlight that benefit you.
[00:01:59] Speaker A: But I would ask you to have.
[00:02:00] Speaker B: Some sympathy for the fact that there are more factors at play, uh, and.
[00:02:04] Speaker A: That everyone will not feel that benefit equally. We're going to go category by category through some major items that I think.
[00:02:10] Speaker B: Will be impactful for the life of.
[00:02:12] Speaker A: A high income earner in this country. And when it comes to an incoming Trump administration, one of the biggest items.
[00:02:19] Speaker B: That is up for grabs in terms.
[00:02:21] Speaker A: Of the fate of this legislation is the Tax Cuts and Jobs Act. So if you've heard on this, uh, podcast before, we've talked about the Tax Cut and Jobs act, and it was.
[00:02:30] Speaker B: One of the key pieces of legislation of the first Trump administration. And it's something that if you are a high income earner, depending on where you live, there has been an outsized.
[00:02:41] Speaker A: Positive benefit to the Tax Cut and Jobs act as compared to a low income earner. So some of these things will benefit you. One of the first areas of this.
[00:02:49] Speaker B: Act that helped at least streamline the taxes of a high income earner was the standard deduction.
[00:02:55] Speaker A: So we've talked about the concept of.
[00:02:56] Speaker B: How taxes work in our country.
[00:02:58] Speaker A: You have an amount of money that.
[00:02:59] Speaker B: You earned in gross income, and then you have a certain amount, no matter how you file your taxes, that you can use to deduct and lower the.
[00:03:08] Speaker A: Amount of income on which you pay taxes.
[00:03:10] Speaker B: Those are called above the line deductions.
[00:03:13] Speaker A: They're things like the amount that you put into pre tax retirement accounts, the.
[00:03:16] Speaker B: Amount that you contribute to health savings accounts, dependent care, flex spending accounts and the like. And you arrive at a number called adjusted gross income. Now, after you come to adjusted gross income, you have to decide whether you're going to itemize your additional deductions, meaning you're going to actually write them out and list them in terms of health.
[00:03:36] Speaker A: Expenses, the amount that you pay in.
[00:03:37] Speaker B: Mortgage interest, so on and so forth, charitable contributions, or you're going to take the standard deduction that's available to any tax filer to lower your taxable income accordingly. Now, under the Tax Cut and Jobs.
[00:03:51] Speaker A: Act, they doubled it from where it was prior to the act.
[00:03:54] Speaker B: Now, this had a dual effect. Number one, it made it much less.
[00:03:59] Speaker A: Likely that you would itemize your taxes.
[00:04:02] Speaker B: Because there are a smaller group of people who have enough charitable contributions, mortgage.
[00:04:06] Speaker A: Interest, state and local taxes to actually.
[00:04:09] Speaker B: Exceed what was available in the standard deduction. So now the overwhelming majority of the.
[00:04:14] Speaker A: People in this country are going to.
[00:04:15] Speaker B: Most benefit from filing the standard deduction.
[00:04:18] Speaker A: And if the Tax Cut and Jobs act is extended, that would likely remain the case. The Tax Cut and Jobs act is due to expire at the end of 2025. I don't think that a Harris administration.
[00:04:28] Speaker B: Would have done away with all of.
[00:04:30] Speaker A: The act because there are some elements.
[00:04:31] Speaker B: Of it that are popular.
[00:04:33] Speaker A: But I do think that there are some tax loopholes and tax benefits to high income earners that they would have done away with. But as it stands now, that act will likely probably be extended, so the standard deduction increase will remain in place.
[00:04:46] Speaker B: Conversely, for people who itemize their taxes, there were a number of changes to.
[00:04:50] Speaker A: How you could take deductions. And the type of deductions you could.
[00:04:52] Speaker B: Take on that side of the ledger. One of the bigger ones is the.
[00:04:56] Speaker A: Limitation on SALT taxes, state and local taxes. So prior to, there was no limit on the deduction that you could take at the federal income tax level for taxes that you paid in your local area.
[00:05:07] Speaker B: That could be a city tax, it.
[00:05:08] Speaker A: Could be a state income tax.
[00:05:10] Speaker B: It could also be property taxes for your home.
[00:05:13] Speaker A: Whereas under the Tax Cut and Jobs act, there has been a cap placed.
[00:05:16] Speaker B: On that deduction at $10,000. Now, at its inception, this was seen.
[00:05:21] Speaker A: As kind of an attack on high income earnings. Heavily Democratic areas that typically lean away.
[00:05:27] Speaker B: From Trump, like the New Yorks of the world, the Californias of the world, but Republicans pay high state taxes too. And this is actually an area where.
[00:05:35] Speaker A: If that limitation were to stay in.
[00:05:37] Speaker B: Place, it would be a surprise to me. I think that we have had this.
[00:05:41] Speaker A: Act around long enough that I would think that the more likely scenario is.
[00:05:44] Speaker B: That there is some type of limitation that stays in place.
[00:05:47] Speaker A: But there may be some type of.
[00:05:49] Speaker B: Inflation adjustment or an increase to placate people who still itemize their taxes, who still own property and live in areas that may have high state or city.
[00:05:58] Speaker A: Taxes, who have been limited by this deduction. There are other areas that impact how you file your taxes based on the.
[00:06:04] Speaker B: Type of debts that you incur, such.
[00:06:06] Speaker A: As a home equity line of credit.
[00:06:08] Speaker B: Prior to the Tax Cut and Jobs.
[00:06:10] Speaker A: Act, the interest that you paid on.
[00:06:11] Speaker B: A home equity line of credit was something that you could deduct in full, no matter how the funds were used when you drew them from the line.
[00:06:18] Speaker A: Of credit in the Tax Cut and Jobs Act. There are different stipulations. So suffice it to say there is.
[00:06:24] Speaker B: A limitation on how much interest you.
[00:06:26] Speaker A: Can deduct from a line of credit.
[00:06:27] Speaker B: And you can only deduct it in the first place if those funds were used for the improvement or maintenance of the home.
[00:06:34] Speaker A: So, for example, if you have a.
[00:06:35] Speaker B: Home that's worth $300,000, and maybe you.
[00:06:38] Speaker A: Drew $25,000 off of a line of credit, if that $25,000 was used to.
[00:06:43] Speaker B: Just pay for basic living expenses, you can't deduct any of the interest.
[00:06:47] Speaker A: But let's say that you spent $1,000.
[00:06:49] Speaker B: In interest for funds that you withdrew.
[00:06:52] Speaker A: To improve your bathrooms or to maintain.
[00:06:54] Speaker B: The home itself, in that scenario, you would be able to list those as an itemized deduction.
[00:06:59] Speaker A: And there's several other big areas, but another one where I don't necessarily want to bury the Lead, because we're going to do a separate episode on this.
[00:07:05] Speaker B: Is the alternative minimum tax. To give you a brief summary, the.
[00:07:09] Speaker A: Alternative minimum tax is a tax that.
[00:07:12] Speaker B: Runs parallel to our tax code, and it's a code that exists to make.
[00:07:16] Speaker A: Sure that high income earners pay their.
[00:07:18] Speaker B: Fair share of taxes. So if, for example, under the normal.
[00:07:21] Speaker A: Tax code it says that you would.
[00:07:22] Speaker B: Have a refund, but under the alternative.
[00:07:25] Speaker A: Minimum tax, it says that you would.
[00:07:26] Speaker B: Owe $2,000, you have to pay the alternative minimum tax.
[00:07:31] Speaker A: Now the fact of the matter is.
[00:07:32] Speaker B: Even prior to the act, it wasn't.
[00:07:34] Speaker A: Something that impacted a lot of people.
[00:07:36] Speaker B: But it was definitely a larger amount.
[00:07:38] Speaker A: Of people then under the Tax Cut and Job act, which basically made it so that if you're not an individual.
[00:07:44] Speaker B: Making over 5, $600,000 or a couple earning over a million dollars, you are.
[00:07:49] Speaker A: Unlikely to be in a position where you have to pay alternative minimum tax. So this is an area that I.
[00:07:54] Speaker B: Would also expect to be extended.
[00:07:56] Speaker A: But if it were to go back to pre tax cut and job act levels, alternative minimum tax would definitively be that a high income earner would need.
[00:08:04] Speaker B: To be aware of in terms of the impact on their taxes year to year.
[00:08:08] Speaker A: Next up is childcare. And this is something that actually goes back to taxes. I will tell you that having a basic idea of how taxes work is.
[00:08:16] Speaker B: One of the fundamental building blocks of.
[00:08:19] Speaker A: Being financially literate because it impacts so much.
[00:08:22] Speaker B: But going back to the calculation of.
[00:08:24] Speaker A: Taxes, you have the amount of income.
[00:08:26] Speaker B: That you earn, you have certain deductions.
[00:08:28] Speaker A: That you can take to lower the.
[00:08:30] Speaker B: Income on which you pay taxes, then your taxable income. The lower number is applied to the different tax percentages and brackets that we've discussed.
[00:08:40] Speaker A: And after the tax is calculated, you can then use certain things like credits.
[00:08:45] Speaker B: To lower that tax that is owed.
[00:08:47] Speaker A: And one of the big tax credits.
[00:08:48] Speaker B: That a parent of a young child looks forward to is the child tax.
[00:08:52] Speaker A: Credit, literally just a credit that you.
[00:08:54] Speaker B: Can have for having a dependent in your house under the age of 17.
[00:08:58] Speaker A: Now, in 2024, the child tax credit.
[00:09:00] Speaker B: Is up to $2,000 per dependent child, and the refundable portion of that is up to 1,700.
[00:09:07] Speaker A: What does that mean?
[00:09:08] Speaker B: It means that let's say before you.
[00:09:10] Speaker A: Even apply the child tax credit, you.
[00:09:12] Speaker B: Were due to get a refund of, uh, $1,000. Well, if you have a $2,000 tax.
[00:09:17] Speaker A: Credit, you can't use it all because.
[00:09:19] Speaker B: All of it is not refundable. Only $1,700 of it is refundable. So instead of getting a $3,000 refund.
[00:09:27] Speaker A: The thousand that you were already due, plus the $2,000 tax credit, you will.
[00:09:30] Speaker B: Get a $2,700 refund, the thousand that you were already due, plus the portion.
[00:09:35] Speaker A: Of the child tax credit that was refundable.
[00:09:38] Speaker B: Now, under the Trump administration, they have talked about expanding the child tax credit to up to $5,000, which would be a significant increase.
[00:09:47] Speaker A: And if that's the case, that would.
[00:09:48] Speaker B: Be a positive for parents of young.
[00:09:50] Speaker A: Children under the age of 17, especially.
[00:09:52] Speaker B: If they decide to also increase the.
[00:09:54] Speaker A: Amount that is refundable. Next up, we have housing. And when people talk about housing, you have to understand some of the factors that are at play when it comes to determining things like interest rates and how the people who control them are appointed or nominated or elected.
[00:10:10] Speaker B: So the Federal Reserve is the entity that controls the flow of money through this country. And the chair of the Federal Reserve.
[00:10:16] Speaker A: Is actually an appointed position, is not an elected position. And when I say controlling the money.
[00:10:21] Speaker B: Supply, one of the ways that they do that is by setting the federal funds rate.
[00:10:25] Speaker A: So in periods that we went through.
[00:10:27] Speaker B: Like in the past couple years, where there was high inflation in 2023, it's.
[00:10:31] Speaker A: Actually come down in 2024.
[00:10:33] Speaker B: Increasing the federal funds rate was an.
[00:10:36] Speaker A: Effort to combat the effects of inflation.
[00:10:38] Speaker B: You' seeing periods where the Federal Reserve has, in multiple sessions, lowered the federal funds rate.
[00:10:44] Speaker A: And while that may have an impact.
[00:10:46] Speaker B: On corporate dollars, it has not led to the decrease in mortgage rates like.
[00:10:50] Speaker A: We would have expected.
[00:10:52] Speaker B: So for a period of time right after the first initial rate cut, mortgage.
[00:10:55] Speaker A: Rates went down, but in the period.
[00:10:57] Speaker B: Since, it has actually increased right back to where it was prior to the first rate cut.
[00:11:02] Speaker A: And that has to do with the fact that while a mortgage rate can.
[00:11:05] Speaker B: Be impacted by the federal funds rate.
[00:11:07] Speaker A: It is more heavily impacted by the.
[00:11:09] Speaker B: Yield of 10 year Treasur.
[00:11:11] Speaker A: And that will be too deep for this episode. But basically a Treasury bond is, uh.
[00:11:16] Speaker B: A debt that's issued by the federal government. There's a yield or an amount of money or interest rate that you receive.
[00:11:22] Speaker A: By owning that Bond over a 10 year period. And the status of those bond yields is the thing that has a more.
[00:11:29] Speaker B: Direct impact on the rate of mortgages. So over the past several months, because the yield in 10 year treasuries has increased, we have also seen an increase in mortgage rates.
[00:11:39] Speaker A: I say all that to say, if.
[00:11:40] Speaker B: You'Re looking at the Federal Reserve and.
[00:11:42] Speaker A: You'Re thinking because Trump nominated and could.
[00:11:45] Speaker B: Potentially remove the Federal Reserve chair that all of a sudden that's going to solve our housing woes. Number one, there's a legal debate of whether Trump could even remove the Federal Reserve chair.
[00:11:55] Speaker A: But number two, even if he were.
[00:11:57] Speaker B: To do so, and he has expressed dissatisfaction with the Federal Reserve Chair, it is not necessarily something that's going to have a huge impact on your housing.
[00:12:06] Speaker A: The more important thing to keep your.
[00:12:07] Speaker B: Eye on would be factors that influence the 10 year Treasury.
[00:12:13] Speaker D: This is the New Money New Problems podcast. Ah. A show for successful professionals searching for the tools they need to navigate financial opportunities and obstacles they've never seen. We'll be right back.
[00:12:31] Speaker C: Are you wondering what new money problems you might be overlooking in your financial life? If so, we've got great news. We've crafted the New Money New Problems gap finder to identify potential weaknesses in your finances in areas ranging from budgeting, investments, insurance, and even the threat your extended family's finances could pose to your household.
Please head to newmoneynewproblems.com Gapfinder to complete it today. Again, that's newmoneynewproblems.com gapfinder to take the assessment.
[00:13:10] Speaker D: You're m listening to the New Money New Problems podcast. Subscribe now at new money, new problems.com welcome back.
[00:13:20] Speaker A: Welcome back. The next area that we're going to talk about is one that we're going to do a simulcast. So you're familiar that we have our Escape Student Loan Debt podcast, which is not connected to our work as financial advisors at New Money New Problems. But there's so much going on in.
[00:13:34] Speaker B: The student loan space that we're going.
[00:13:36] Speaker A: To likely do an episode that we broadcast on both platforms and also a.
[00:13:40] Speaker B: Webinar that we host to both audiences in the coming weeks.
[00:13:44] Speaker A: So I'll keep it high level. The first thing that I would expect is that if you have student loans.
[00:13:50] Speaker B: That you're paying back under an income driven repayment plan, your status for those loans is likely to change in a major way over the next year. If you have the save plan that you're using to pay back your student.
[00:14:01] Speaker A: Loans, which many people signed up for when it was introduced, that plan is.
[00:14:05] Speaker B: Almost certainly going to go away. It was already, already under attack by a Republican attorneys general.
[00:14:11] Speaker A: Um, there were courts that were sympathetic to their argument. And it was something where I think.
[00:14:16] Speaker B: Even if we had a Harris administration.
[00:14:18] Speaker A: That save plan was on its last legs.
[00:14:21] Speaker B: Now, unfortunately, as a result of those.
[00:14:23] Speaker A: Cases, one of the things that has come out is that these attorneys general.
[00:14:27] Speaker B: Have challenged the authority of the way.
[00:14:30] Speaker A: That the plan was created in the first place. It was created by the Department of Education as compared to one of the.
[00:14:36] Speaker B: Other income driven repayment plans, the income.
[00:14:39] Speaker A: Based repayment plan that was created by Congress. And if the court decides that the.
[00:14:44] Speaker B: Way the plan was created was illegal, that potentially puts at risk all of the other plans that were created in the same way. And that would be the revised pay as you earn plan, which many people have said they might revert to if the save plan was canceled, the pay as you earn plan, and the income contingent repayment plan. So there is a chance, depending on that ruling and also the appetite of.
[00:15:06] Speaker A: The incoming administration to attack that line of creation, that not only could the save plan be at risk, but also the other plans created by the Department.
[00:15:15] Speaker B: Of Education, potentially leaving the only plans.
[00:15:17] Speaker A: Available under income driven repayment as the.
[00:15:20] Speaker B: Old and new versions of the income based repayment plan. Now, there are other programs that people.
[00:15:25] Speaker A: Are worried about when it comes to.
[00:15:26] Speaker B: Student loans that are safe. Public service loan forgiveness is almost certainly.
[00:15:30] Speaker A: Safe, not because the Trump administration wouldn't.
[00:15:33] Speaker B: Try to cancel it, because Republicans actually have tried to cancel the public service loan forgiveness program in the past. It just would take an extraordinary number of senators.
[00:15:43] Speaker A: And based on the numbers, you'd have.
[00:15:44] Speaker B: To have some swing state Republicans and some Democratic senators join with them in.
[00:15:49] Speaker A: Order to actually do away with that.
[00:15:51] Speaker B: So there's almost no chance that the.
[00:15:53] Speaker A: Public service loan forgiveness program is at risk. Now, there are certain smaller elements of, uh, things that have been going on.
[00:15:59] Speaker B: Relative to public service loan forgiveness, like.
[00:16:01] Speaker A: Public service loan forgiveness buyback programs or.
[00:16:04] Speaker B: The income driven repayment plan, one time.
[00:16:07] Speaker A: Account adjustment that may be impacted in some way.
[00:16:10] Speaker B: But for the most part, the bigger.
[00:16:11] Speaker A: Things I will be keeping my eye.
[00:16:13] Speaker B: On when it comes to federal student loans would be the status of income driven repayment plans. If you're pursuing public service loan forgiveness, making sure that you have put in all the information you need to verify your employment and your employers, and for the balance, we may just have to wait.
[00:16:28] Speaker A: Next up, I want to talk about the stock market.
[00:16:30] Speaker B: I have had people consistently reaching out.
[00:16:32] Speaker A: To me over the last couple of weeks, talking about the stock market, uh, being impacted by the incoming Trump administration.
[00:16:39] Speaker B: And tariffs that he's talking about and.
[00:16:40] Speaker A: All these things alike. And to be clear, I don't know.
[00:16:43] Speaker B: The future, and just having an idea of what has happened in the past doesn't necessarily give you a guarantee as.
[00:16:49] Speaker A: To what happens in the future. But one of the things that I would say when it comes to the stock market is you want to keep in mind perspective and time horizon.
[00:16:59] Speaker B: Time horizon is the length of period before you need the funds that are in question.
[00:17:04] Speaker A: So for sure, if I have funds that are in the market and I.
[00:17:07] Speaker B: Need them in two years or in six months, I might be very concerned.
[00:17:11] Speaker A: To the point that I decide to keep my money out of the market.
[00:17:14] Speaker B: Market due to fear of market volatility.
[00:17:16] Speaker A: But when you're talking about things like retirement assets and the like, if you're.
[00:17:20] Speaker B: Not planning to use those funds for 20, 25 years, then taking it out.
[00:17:24] Speaker A: Of the market or putting them in.
[00:17:26] Speaker B: Cash or putting them in bonds for.
[00:17:27] Speaker A: The next four years is something that to me is lacking in perspective.
[00:17:32] Speaker B: If anything, having periods of market volatility, if there is market volatility, could be an opportunity for you to consistently contribute.
[00:17:40] Speaker A: Money to the market while prices are low.
[00:17:43] Speaker B: And there are periods, as we've shown in prior episodes, where having consistent contributions to the market during periods where there.
[00:17:49] Speaker A: Have been some losses put you in a position where you can actually out.
[00:17:53] Speaker B: Earn the gains that you would have.
[00:17:54] Speaker A: Received with moderate but consistent returns.
[00:17:58] Speaker B: So I would argue that every long term investor wants a couple of periods of major volatility in their investment lifespan as long as during those periods they are making consistent contributions to their accounts.
[00:18:11] Speaker A: But also I would want you to.
[00:18:12] Speaker B: Have a historical perspective on what has.
[00:18:15] Speaker A: Happened in the market during some of.
[00:18:16] Speaker B: The darkest times in our country's history.
[00:18:18] Speaker A: So I went back and I looked at some of the periods to have.
[00:18:21] Speaker B: An idea for returns during some of these dark times.
[00:18:25] Speaker A: So from 1940 to 1945, which was.
[00:18:28] Speaker B: The thick of World War II, if you look at the Dow Jones Industrial average during that period, it actually had a positive return and averaged just over 5%. If you go forward several years to the first four years of the Vietnam War, the S P 500 at that.
[00:18:44] Speaker A: Time averaged almost 9%. And if you go back to 2020.
[00:18:48] Speaker B: Where we had Covid, since then we've.
[00:18:50] Speaker A: Had the Ukrainian invasion, we've had, uh.
[00:18:53] Speaker B: Trouble in the Middle east, The S&P.
[00:18:55] Speaker A: 500 since 2020 has averaged over 14%. So this is one of those areas.
[00:19:00] Speaker B: Where I would just say if you keep that perspective in mind and control the things that you control, which is the amount of money that you contribute to the market, having that long term perspect perspective will hopefully allay some of the fears as to what's going on in the market. If we do actually see some volatility, but also potentially position you for gangs down the line that you would not.
[00:19:21] Speaker A: Receive if you tried to time the market and figure out when the best time was to exit and re enter, because that's not something that the typical lay investor knows how to do. And lastly, I want to end talking about the civil liberties element to some of these financial implications. Um, I have a number of friends and clients who are in same sex.
[00:19:42] Speaker B: Relationships who are concerned about what's to.
[00:19:45] Speaker A: Come in terms of the recognition of.
[00:19:48] Speaker B: Their marriage at the federal level.
[00:19:49] Speaker A: And I first want to say that I very much understand and do not.
[00:19:53] Speaker B: Want to understate the level of that concern.
[00:19:56] Speaker A: But if it were to come to pass that that were somehow not recognized at the national level or federal level, let's talk about what it would actually mean in terms of your day to day. I will actually start with taxes. When comes to finances, if your marriage were not federally recognized, there's a possibility that you wouldn't be able to file.
[00:20:13] Speaker B: Your taxes married filing jointly.
[00:20:15] Speaker A: And if you go back to our episode on taxation, you know that for.
[00:20:18] Speaker B: Many filers who are married, filing jointly has a significantly lower tax burden than if they were to file single or married filing separately.
[00:20:26] Speaker A: For example, right now on screen you're looking at the 2025 federal tax brackets. If you are a single filer, then.
[00:20:31] Speaker B: The first $11,925 that you earn is taxed at 10%. But if you're married filing jointly, it is l double that number, $23,850.
[00:20:43] Speaker A: So if you have two people in.
[00:20:44] Speaker B: A household that are married, but it's not recognized at the federal level, then they could be subjecting the higher portions of their income to significantly higher taxes.
[00:20:53] Speaker A: Than if they were able to file married filing jointly. So that's something at the federal level that I would see would have a significant impact. And an additional element of that consideration, if you're talking about taxes, is also employee benefits.
[00:21:06] Speaker B: If you are in a same sex.
[00:21:07] Speaker A: Relationship, then you may be in a.
[00:21:09] Speaker B: Situation where you're utilizing, as most couples.
[00:21:12] Speaker A: Do, one of the people in the.
[00:21:14] Speaker B: Relationship'S healthcare or their employee benefits, all.
[00:21:16] Speaker A: Of those things are valid considerations. And thankfully there's an element of it that is regulated at the state level.
[00:21:23] Speaker B: So when it comes to things like employee benefits, there are some states that recognize even domestic partnerships where you are not considered legally married, but that person, based on the length of the relationship, is still able to do things like get health insurance through you. So while healthcare in particular is something.
[00:21:40] Speaker A: That can worry a lot of people, that is something that I See as a bit more protected, at least if.
[00:21:46] Speaker B: You'Re in a more progressive state, because of the likelihood that there is some element of that consideration that's regulated at the state level.
[00:21:53] Speaker A: Now, the other area is the ability.
[00:21:55] Speaker B: To share assets and pass assets to each other in that type of relationship. And unfortunately, the world in which we live.
[00:22:02] Speaker A: When I have a client with which I'm working that's a same sex couple.
[00:22:06] Speaker B: I have to ask them, how does.
[00:22:07] Speaker A: Your family feel about your relationship? Because one of my major concerns when it comes to same sex couples is.
[00:22:13] Speaker B: In the event that one of them passes, would their family contest a will.
[00:22:18] Speaker A: That leaves assets in a significant amount.
[00:22:21] Speaker B: To the surviving spouse.
[00:22:22] Speaker A: And if you're in a same sex relationship and your family on both sides.
[00:22:26] Speaker B: Has no qualms with your relationship, this may not be a concern.
[00:22:29] Speaker A: But if you are a person who's in a same sex relationship and you.
[00:22:32] Speaker B: Do think that there's a possibility that someone in your family might contest that will, then there's three ways that you can mitigate that risk. The first is appropriate titling of assets.
[00:22:41] Speaker A: So understanding, we'll put an article in.
[00:22:43] Speaker B: The show notes of this.
[00:22:44] Speaker A: The difference between things like having an.
[00:22:46] Speaker B: Individual individually owned account or an individual account that transfers on death with a.
[00:22:51] Speaker A: Named beneficiary, if you have joint accounts together, understanding the difference between things like joint tenants in common, where you would.
[00:22:59] Speaker B: Actually set percentages of ownership that wouldn't necessarily pass to your spouse in the event of your death, versus joint tenants with rights of survivorship where you are.
[00:23:07] Speaker A: Both equal owners of the account and if one of you were to pass.
[00:23:11] Speaker B: The other just retains the entire ownership of those assets. The second way is through naming your beneficiaries appropriately.
[00:23:18] Speaker A: You want to make sure sure that.
[00:23:19] Speaker B: For any account that can have a beneficiary that you name it as your spouse.
[00:23:23] Speaker A: And thankfully that's not something that can be contested. While a will can be contested.
[00:23:27] Speaker B: You naming your spouse the beneficiary of.
[00:23:30] Speaker A: Your retirement account is not something that can be contested because it's a direct.
[00:23:34] Speaker B: Beneficiary that bypasses probate.
[00:23:37] Speaker A: So if you have not done a.
[00:23:38] Speaker B: Good sweep of your accounts in your insurance policies to make sure that you have named your spouse, you want to go through the process of doing so.
[00:23:45] Speaker A: And then finally trust. So we haven't done a ton of estate planning talk on this podcast, we.
[00:23:50] Speaker B: Will down the line. But, uh, there's something called a revocable trust that bypasses probate. So essentially you have all of these things that are subject to probate, where the court's going to declare a will valid, or in the absence of a will, determine who uh, is assigned those assets. But you also have things like revocable trust where you can put assets inside.
[00:24:10] Speaker A: Of that trust and upon your death.
[00:24:12] Speaker B: They go directly to the beneficiaries of that trust.
[00:24:15] Speaker A: And when I have same sex couples.
[00:24:17] Speaker B: Who have some concern about how their.
[00:24:19] Speaker A: Family might treat their surviving spouse in the event of their death, having a revocable trust is something that I typically.
[00:24:25] Speaker B: Recommend so that you can put any of the assets about which you have concern into the trust as compared to leaving them subject to the probate process.
[00:24:33] Speaker A: So that was a whole lot to cover.
[00:24:35] Speaker B: I know this is a longer episode.
[00:24:36] Speaker A: Than we typically have, but it's a bigger circumstance than we typically cover on the week to week on this podcast. So I hope that you found some of this valuable. We'll be back next week. Um, but also we might post a couple episodes prior to the next episode to tell you about, uh, things like the upcoming student loan webinar or some off cycle episodes to talk about just student loan stuff.
[00:24:58] Speaker B: So join the email list if you.
[00:24:59] Speaker A: Haven'T already@newmoney, new problems.com subscribe. That's where we'll be communicating many of these things that are coming in the next several weeks. I hope to see you again then.
[00:25:11] Speaker C: Let's get some money from New Money, New Products Problems this was the New Money, New Problems podcast, a show for successful professionals searching for the tools they need to navigate financial opportunities and obstacles they've never seen.
