New Job Onboarding: Set Up Your 401(k) with Intention!

The Perks of Credit Cards and Points Using credit cards offers more than just convenience—it's a way to earn points that can be redeemed for rewards like flights, gift cards, or cash back. These points feel like “free money” for cardholders who use their cards regularly. However, the value of these accumulated points is not static, and inflation has started to chip away at their worth. As prices rise, the purchasing power of your points declines. It's crucial to be strategic about how and when you redeem them to maximize their value. How Inflation Impacts Your Points Although inflation has been trending down in recent months, prices remain elevated compared to just a few years ago. This means that while one point may still technically be worth about 1 cent, the purchasing power of that cent has diminished. According to personal finance experts, a cent has lost roughly 20% of its value since 2019. In the same way, credit card points have lost value as well, making it harder to redeem them for the same amount of goods or services as in the past. In 2023, cardholders accumulated an impressive $34 billion worth of points, a 70% increase from 2019, largely due to increased spending during inflationary periods. But despite accumulating more points, cardholders are finding that they need more points to redeem for rewards like flights or hotel stays because of inflation-driven price increases. This “earn more, spend more” cycle can be a frustrating reality for those trying to maximize their points’ value. Be Strategic with Your Points Given that credit card points are losing value over time, it's important to approach spending them thoughtfully. If you’ve been stockpiling points, now may be the time to start spending them. Experts recommend the “earn and burn” approach—use your points relatively soon after you accumulate them to avoid further devaluation. Here are a few strategies to help make the most of your points: Redeem Early: Don’t let your points sit too long. As inflation erodes their value, holding onto points indefinitely can be a losing game. Shop Around: When redeeming points, especially for travel, take the time to compare options. Some airlines or frequent flyer programs might offer better deals than others. Dynamic pricing means that the number of points needed for a flight can vary depending on timing and demand. Consider Transferring Points: Many credit card issuers allow you to transfer points to airline or hotel loyalty programs. Sometimes, transferring points can provide better value than redeeming them directly through your credit card's rewards portal. Points and Dynamic Pricing Another factor to consider is that some airlines have shifted from a flat-fee model to dynamic pricing for points-based redemptions. This means that the points required for a flight may fluctuate based on demand, timing, and other factors—making it harder to predict how far your points will go. For example, a flight you might have booked for 20,000 points last year could cost you 30,000 points today due to higher demand or increased costs for airlines. With the ongoing changes in the way points are valued, staying informed and flexible is key to getting the most out of your credit card rewards. Maximize Your Points Before They Lose More Value Inflation’s impact on your credit card points means you need to be proactive about how you use them. Waiting too long could cost you, as each year those points buy less than they did the year before. By spending wisely and strategically, you can still take advantage of the rewards you've earned without letting inflation eat away at their value. Follow and like our social media accounts to stay updated on financial tips and strategies for managing your wealth in today's economy.

As the Federal Reserve prepares for its September meeting, much attention is focused on the possibility of an interest rate cut. Economic data has been signaling the potential for policy changes, and many investors and economists are trying to forecast what may come next. This blog delves into the historical context of interest rates, examines the present economic landscape, and discusses the implications of the potential rate cuts by the Fed. Post-World War II to the 1980s: A Rollercoaster of Rates Historically, interest rates have fluctuated significantly in response to inflationary pressures, economic cycles, and Federal Reserve policy decisions. 1950s and 1960s: In the years following World War II, the United States experienced relatively low interest rates, with the federal funds rate averaging between 1-2%. This period was characterized by stable growth and moderate inflation. 1970s: Inflation began to rise in the late 1960s, leading to higher interest rates. By the mid-1970s, the federal funds rate had climbed to 5-6% as the Fed tried to manage growing inflationary concerns. 1980s: One of the most memorable periods in interest rate history occurred during the early 1980s under Federal Reserve Chairman Paul Volcker. To combat inflation, Volcker dramatically increased the federal funds rate, which peaked at 21.5% in 1981. This sharp rise in rates successfully tamed inflation but also led to a recession. 1990s to 2008: Stability and Gradual Adjustments The 1990s marked a period of relative calm in terms of interest rate policy. Under the leadership of Alan Greenspan, the Federal Reserve adopted a more measured approach. 1990s: Rates typically fluctuated between 3-6% during this decade, with the Fed making gradual adjustments to accommodate economic expansion while keeping inflation in check. Early 2000s: After the dot-com bust and the September 11 attacks, the Federal Reserve cut rates significantly, with the federal funds rate hitting a low of 1% in 2003. This was followed by gradual increases in the mid-2000s until the global financial crisis of 2008. Post-2008 Crisis to Today: Low Rates and Gradual Recovery The 2008 financial crisis ushered in a new era of historically low interest rates. The Federal Reserve slashed the federal funds rate to near zero (0-0.25%) to stimulate economic activity and prevent further economic collapse. This policy remained in place for several years. 2015-2018: As the economy recovered, the Fed began increasing interest rates again, with the rate reaching around 2.25-2.50% by 2018. 2020 Pandemic: In response to the economic fallout from the COVID-19 pandemic, the Federal Reserve once again cut rates to near zero, which continued until inflation concerns prompted the Fed to start raising rates in 2022 and 2023. Current Economic Landscape and Expectations for Rate Cuts As we approach the September 2024 meeting, the economic indicators are mixed, but many economists and traders anticipate a rate cut. According to a Reuters poll, a majority of economists expect the Fed to reduce rates by 25 basis points during each of its remaining meetings this year, bringing the federal funds rate to a range of 4.50%-4.75% by the end of 2024. Several factors support this prediction: Weaker-than-expected jobs report: A weaker July U.S. jobs report has raised expectations for rate cuts, as the labor market shows signs of cooling. Inflation: While inflation is easing, it remains above the Fed’s target of 2%, leading some experts to believe the cuts will be modest rather than aggressive. Stable economic growth: Despite concerns, the U.S. economy grew by 2.8% in Q2 of 2024, which indicates resilience even as inflation and rate hikes have slowed some sectors. Charts to Consider As we explore the relationship between interest rates and other economic indicators, consider two key charts: Interest Rates vs. Inflation: This chart will show how closely the federal funds rate has tracked inflation over the past several decades, highlighting key moments when rate changes were used to combat inflation. 

Given the volatility of the U.S. stock market, I wanted to revisit an age-old investing principle that seems to have been overshadowed by the latest news and advice. When it comes to investing in the stock market, time, not timing, matters most. Here’s why the smartest investors stick with the stock market for the long haul: Emerging Market Indices: Emerging market indices offer some of the highest return potentials. For instance, the Nasdaq 100 Index, which includes 100 of the largest and most innovative non-financial companies listed on the Nasdaq Stock Market, has shown an attractive annualized return potential. From December 31, 2007, to June 28, 2019, it averaged approximately 13%. However, this index can also carry a higher degree of risk and volatility compared to others. The S&P 500: Widely regarded as the best single gauge of large-cap U.S. equities, the S&P 500 includes 500 leading companies and covers approximately 80% of available market capitalization. While its annualized return of about 9% over the same period (December 31, 2007, to June 28, 2019) is lower than that of the Nasdaq 100, it comes with less volatility. Long-Term Investing: Investing for the long term helps you avoid the pitfalls of emotional trading, which can negatively impact investor returns. Consider this: despite significant market downturns such as the Great Depression in 1929, Black Monday in 1987, the tech bubble in 2000, and the financial crisis in 2008, investors who maintained their investments in the S&P 500 or Nasdaq 100 would have experienced gains over the long term. If you have questions or need guidance, please reach out. I’d love to discuss your plans and help you make the most of your investing years. Hope to hear from you soon.

How do you feel about the state of the economy? In more contemporary terms, what are your "vibes" telling you? Are you feeling confident and comfortable? Or are you feeling a nagging worry that things aren't going well? If you're experiencing a disconnect between official economic data and your personal perception, you're not alone. This phenomenon has recently been dubbed a "vibecession" in popular media - a term that captures the gap between economic indicators and public sentiment. Officially, the economy is in pretty good shape. ✅ Recent data suggests that inflation is still cooling.1 ✅ The jobs market is still steaming ahead, with both wages and hiring up in May.2 ✅ Markets have been on a tear, and the S&P 500 has hit 30+ record closes this year.3 By most measures, economic prospects are solid. ❌ But many Americans are still feeling pessimistic about the economy. In a June survey, 70% of Americans reported that the economy was doing badly.4 Even when 61% said that their own personal financial situation was good or excellent. That gap between data and opinion? That’s the "vibecession." And the challenge is that it can become a self-fulfilling prophecy. If too many people believe that the economy is floundering and a recession is imminent, it can absolutely drag on economic growth. What’s contributing to the gap in perception? It could be a lot of things. Many Americans have been left out of the recent boom, and they're struggling with high prices. Housing prices remain high and home ownership has become out of reach for many (especially young Americans). We also have a 24-hour news cycle hammering us with gloomy headlines. Bottom line: Though the vibes are weird, the economy is still doing well. What's most important is that we don't let vibes push us away from the goals and plans we've created. A recession may be on the horizon, but there's no way to know if or when it could arrive. If you have any questions or concerns, please don’t hesitate to reach out. Sources: 1. https://apnews.com/article/inflation-prices-rates-economy-federal-reserve-biden-8e1d14563d83f55e1773bcddd622bb2b 2. https://apnews.com/article/jobs-hiring-unemployment-economy-inflation-federal-reserve-d1d73005dbc40b081a555850a44e73d1 3. https://www.cnbc.com/2024/06/23/stock-market-today-live-updates.html 4. https://poll.qu.edu/poll-release?releaseid=3899#economy Risk Disclosure: Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. Past performance does not guarantee future results. This material is for information purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security. The content is developed from sources believed to be providing accurate information; no warranty, expressed or implied, is made regarding accuracy, adequacy, completeness, legality, reliability, or usefulness of any information. Consult your financial professional before making any investment decision. For illustrative use only.

A Helpful Guide on the Different Types of Powers of Attorney A power of attorney (POA) can grant you certain authority and specific responsibilities. While the extent and limitations of POAs can vary based on many factors, stepping into the role of power of attorney can be unlike anything else. That’s because it puts you in the driver’s seat to make key decisions and oversee vital needs for someone else. That doesn’t mean that POAs come with carte-blanche powers or that one power of attorney will mirror another. Explaining how POAs work, this guide shares more fundamentals, detailing some common types of powers of attorney and the responsibilities you may have as an agent of one of these devices. What Is a Power of Attorney (POA)? A power of attorney is a legal instrument through which one individual (the principal) can name another person (the agent or attorney-in-fact) to act on their behalf: Under certain circumstances: Generally, powers of attorney are set up to take effect when the principal is not capable of making certain decisions or taking certain actions independently. For instance, many POAs are devised to activate in the event of an accident, certain diagnoses, or a severely incapacitating injury. As such, powers of attorney tend to come up in incapacity planning and estate planning. With certain restrictions: Powers of attorney define the extent and limits of the powers being granted. For example, while some POAs are designed to focus solely on finances and financial needs, others are centered on health, medical needs, and healthcare choices. Like many other legal documents and devices, powers of attorney are fully customizable to the wishes of the individual creating the POA, offering the ability to grant wide-sweeping or very limited powers, based on the principal's preferences. Types of Powers of Attorney POAs can be adapted to fit various needs, with certain types of powers of attorney better suited for distinct situations and objectives. That said, the most common types of POAs tend to include: General POAs: Providing broader powers, general POAs usually grant the authority to manage finances, sign legal documents on another person’s behalf, and make decisions for them. Durable POAs: Taking effect with incapacity, durable powers of attorney give you the right to make decisions for another party when they can’t make choices for themselves. Durable POAs can be limited or broad, with specific terms tailored to the principal’s wishes. Springing POAs: Tied to a specific event, springing powers of attorney are only activated, “springing” into effect, when that event occurs. While these POAs can be used for incapacity planning, they can also come into play during an absence, like travel, work engagements abroad, or even incarceration. Medical POAs: Focused on healthcare decisions, medical powers of attorney give someone the authority to make healthcare choices for you when you can’t. Also called healthcare powers of attorney, medical POAs can define the medications, procedures, healthcare providers, and/or facilities someone does — and does not — want to be exposed to. These powers of attorney can also detail end-of-life care preferences, so there’s zero question about what the principal would want in this scenario. Limited POAs: With a very specific scope, limited powers of attorney only convey a narrow amount of authority to the agent in question. As such, these POAs can be handy for one-off occasions, like granting someone the power to sign a contract with a designated party on a specific date. Keep in mind that powers of attorney can be different in different states because these devices are largely governed by state law. Still, many states offer very similar POA options, and many will accept powers of attorney created in other states, as long as those other POAs meet the legal requirements of the origin state. Power of Attorney Responsibilities When you’re named an agent or attorney-in-fact in a POA, your responsibilities could include one or more of the following duties. 1. Manage Finances. When powers of attorney have a financial component or focus, you could be responsible for: Paying bills and taxes Managing income and deposits Handling all banking needs Overseeing investments and/or business matters Holding the purse strings for the principal, making prudent choices with their money when they can’t. 2. Make Insurance Decisions. Some POAs will authorize you to shop for new insurance coverage, pay premiums, and handle any claim needs. Depending on the principal and how the power of attorney is structured, that could mean you’re responsible for managing the ins and outs of a principal’s: Life insurance Health insurance Property insurance Other coverage(s). 3. Handle Tax Obligations. General to limited POAs — and many of those in between — can also require you to manage all things taxes for the principal. That could mean: Filing tax returns for the principal and/or their business Paying quarterly or annual income tax bills Overseeing corporate tax obligations for any business holdings Taking other measures to ensure full compliance with any applicable tax laws. 4. Access Safe Deposit Boxes. Attorneys-in-fact can be authorized to open and retrieve items from safe deposit boxes when needed. They could also be specifically prohibited from doing this, depending on how the power of attorney is structured and the circumstances at hand. 5. Handle Real Estate Transactions. Some powers of attorney can confer the authority to buy, sell, or lease real estate. Whether that’s residential or commercial property, these POAs may also require an agent to seek appraisals, take certain steps during negotiations, or work with certain professionals, for instance. 6. Keep Detailed Records. This responsibility typically follows financial powers of attorney, with the paper trail of the agent’s actions usually important to retain. That can mean keeping records like (and not exclusive to): Receipts, sales slips; and expenditure records Banking statements Tax records Inventory lists Asset performance reports. What a POA Cannot Do While a POA can grant substantial authority, that power isn’t unlimited. There are some “built-in” guardrails with POAs, creating some natural limits to what powers of attorney and agents can do. Here are some of the general limits associated with POAs and the role of attorney-in fact. 1. Create or Modify Estate Plans. An attorney-in-fact may have far-reaching (or limited) authority to handle finances and/or medical decisions, but they cannot devise or change an estate plan on behalf of the principal. Only the principal can create and modify their estate plan, and they usually have to be “of sound mind” — and operating of their own free will (rather than coercion) — for those estate plans to be legal. 2. Vote for the Principal. Voting rights don’t come with powers of attorney. If the principal can’t make it to the voting booth, you can’t go for them. 3. Self Deal. As an agent, you may need to move money around and make various payments. None of that should involve the following unless it’s been specifically authorized in the power-of-attorney documents: Transfer the principal’s money into your accounts. Borrow money from the principal. Invest the principal’s assets into your ventures. Otherwise self deal out of the principal’s finances. 4. Control Out-of-Scope Items. Anything not specifically stated in powers of attorney documents is NOT typically authorized. So, don’t assume more than is laid out in the POA documents, and check in with an expert if you’re unsure about anything. Final Thoughts When you’re named an attorney-in-fact in POA, someone’s handing you the reins to key matters in their life. However a power of attorney takes effect, the more you know about your role as an agent, the better. And the more help you have in your corner, the more sure-footed you can be as you get started — and as you move forward to fulfill your role.  This guide provides a general overview of powers of attorney and the roles and responsibilities associated with them. It is not exhaustive and does not include state-specific details, which can vary significantly. This information is intended to introduce you to the basic concepts and types of powers of attorney available, but it is not a substitute for professional legal advice. For questions or to address specific circumstances, please consult with a qualified legal professional.

Do you remember the year when a gallon of gas cost just $0.63? Depending on your age, you might not! That year was 1978. When the prices of goods and services rise in an economy, inflation is often a contributing factor. Inflation can present various challenges, particularly for savers who see their purchasing power diminish, leading to a decreased incentive to save money. Those on fixed incomes can be especially hard-hit. Fortunately, there are strategies to protect yourself against inflation. Here are five methods to consider: Treasury Inflation-Protected Securities (TIPS): TIPS offer a safeguard against inflation. The principal of a TIPS adjusts with inflation and deflation, as determined by the Consumer Price Index. When a TIPS matures, you receive the greater of the adjusted principal or the original principal. Interest is paid semiannually at a fixed rate. TIPS can be held until maturity or sold earlier on the secondary market, although you may receive less than the principal amount invested if sold before maturity. Precious Metals Funds: Historically, gold prices tend to rise during inflationary periods as the purchasing power of the dollar falls. As more dollars are needed to buy an ounce of gold, the price typically increases. There are many precious metals funds that invest in gold and silver, with some also including platinum and palladium. Commodity Mutual Funds: Generally, commodity prices increase during inflationary periods. Consider the corn and wheat that go into making a box of cereal—the rising cost of these raw materials often leads to higher prices for the finished product. Numerous mutual funds invest in agricultural and energy commodities, potentially benefiting from increased commodity prices. Equities / Equity Mutual Funds: Companies in sectors sensitive to inflation, such as industrials and materials, can potentially benefit in a higher inflation environment. If a company's operations involve producing a commodity, inflation could improve its bottom line. There are specialized mutual funds that include these types of equities in their portfolios. Real Estate / REITs (Real Estate Investment Trusts): REITs can provide protection against inflation. Real estate values and rental incomes tend to rise when prices increase. For REITs, dividends can be a significant advantage. According to Nareit/October 2019, REIT dividends have outpaced inflation as measured by the Consumer Price Index in nearly every year over the past two decades. It's always wise to be proactive and have strategies in place for when inflation hits. These assets, among others, can offer diversified protection against the erosion of purchasing power. However, a diversified portfolio does not guarantee a profit or protect against loss in a declining market. All investments carry risks, including the possible loss of principal. There is no assurance that any investment strategy will be successful. Mutual funds are sold by prospectus. Investors should consider the investment objectives, risks, and charges and expenses of the funds carefully before investing. The prospectus contains this and other information about the funds. Contact your financial professional to obtain a prospectus, and read it carefully before investing or sending money. If inflation concerns you, please feel free to reach out. I would be delighted to discuss a personalized plan tailored to your individual investment objectives and needs.

Goal-setting. It's the bread and butter of success across so many domains. But are you only scratching the surface? Dive deeper. A financial professional doesn't just help connect the dots; they can help you reveal additional possibilities you hadn’t even considered!  Let's explore why. 1. Goals You Never Knew You Had Uncover the Hidden Treasures We all have dreams tucked away. But what about the dreams you haven't dreamt yet? Think Big: Getting outside of your head and speaking with a professional can help unearth those big goals you never knew were buried inside you. Get Specific: According to recent research, 73% of individuals discover new financial priorities when presented with a master list of goals.1 It's not just about wealth; it's what wealth can do. A dream vacation, a secure retirement, or even a spaceship to Mars (okay, maybe not that last one, but you get the idea). 2. Prioritizing and Refining Goals: The Golden Touch Find Your True North Once the goals are out in the open, it's time to prioritize. Sort Them Out: What's urgent? What's important? A professional can help you prioritize what’s important. When you’re up close and emotionally involved in the planning process, it can be hard to account for hidden biases. Refine, Refine, Refine: Like sculpting a masterpiece, chisel away the excess to reveal a clearer vision of what’s possible and right for you. 3. The Power of Possibilities: Why Limit Yourself? Expand Your Horizons The exposure to new ideas and possibilities is like a gust of fresh air in a stuffy room. New Perspectives: It’s important to have a conversation with someone who has been exposed to many different perspectives, scenarios, goals, and strategies. A financial professional can help you see your financial landscape from angles you have yet to consider. Endless Opportunities: What if you're limiting yourself without even knowing it? How would you know what’s possible with a little more forethought and planning? A financial professional can help you see beyond the obvious, encouraging you to explore and define a plan that works for you. Don't Go It Alone Setting financial goals is an essential step in achieving success, but it doesn't have to be a solitary journey. Engaging with a financial professional can help you discover and clarify hidden or unrefined financial aspirations you may have. It's more than just crunching numbers; it's about understanding your unique financial landscape and turning those numbers into actionable plans. Partner with a professional, and take a thoughtful, informed approach to your financial future. After all, finance is not just about numbers; it's about making those numbers work for you. Sources 1. https://www.financialplanningassociation.org/sites/default/files/2020-07/Sin_Murphy_Lamas_July2019.pdf

How often do you set new financial goals? How often do you achieve them? Most of us aren’t very successful with our goals, even when we have the best intentions and strong willpower.1 Sometimes, that’s because we’re setting unattainable goals. Other times, we’re missing the big picture and setting our goals with blinders on.2 Either way, many of us get tripped up with our goals right out of the gate simply because of how we set them — and because we don’t realize there’s a better way to do it.1 And the better way isn’t complicated or time-consuming. It involves a simple strategy you probably already use in some other area of your life.2 So, let’s take a look at a goal-setting exercise to see: Where we can go wrong How to set better goals for ourselves How we can stop being our own worst enemies with goal setting Top 3 Financial Goals: Self-Reported Goals What is your number one financial goal right now? What do you want to be able to achieve more than anything else financially (and in life)? Retirement? That’s what most folks say when they list their number one financial goal off the top of their heads.2 In fact, retirement is the top financial goal by far, beating out any other self-reported goals by at least three times.2 And that’s true across practically every generation, background, and earnings bracket.2 Now, what about your second and third financial goals? What would you say those are? Again, most folks stick with similar answers off the cuff, saying their second and third top financial goals are to: Buy a house.2 Feel more secure about their finances now.2 Those all seem like decent goals, and they may even be some of the ones you’ve set for yourself. Whether or not they are, here are the real questions to ask: Have you set the best goals for yourself, based on where you want to be in the next 5, 10, or even 25 years? Is setting goals off the top of your head the best approach? How could better goals give you better chances of success? Top 3 Financial Goals: List-Generated Goals Now, let’s look at this from a different angle. Instead of coming up with goals out of thin air, check out the short list of “options” below. To be better off than my peers To pay for personal self-improvement (e.g., go back to school or learn a new skill) To experience the excitement of investing To start a new business To buy a house To help pay for my kids’ college educations To stop working and do something I love To go on a dream vacation Now that you have, is “retirement” still your top goal? Would you change any of your top three goals? Believe it or not, most folks change at least one of their top three financial goals after looking at a longer list of options. And at least half change their first or second financial goal.2 This change alone is remarkable because it highlights how lists can influence us. But here’s what may be even more fascinating — those goals were not swapped out for objectives of “equal value.” Instead, folks replaced their original, top-of-mind goals with new objectives that were clearer, more precise, and far more value-based.2 In other words, lists can unlock better choices and show us all of the options when we’re setting goals.2 Why Lists Matter in & Outside of Financial Goal Setting Pop quiz — If you had $1 million to give away to any charities of your choice, however you wanted to, how would you divide that up? Would you rather dive in and just start giving willy-nilly? Or would you prefer to look at a list of 100 charities first and make some thoughtful choices? Recognizing the true value of lists can be a little easier in a different light, outside of goal setting. That doesn’t make lists any less powerful in helping us make smarter choices, however.2 On the contrary, lists detail our options and make things clear for us all the time . They give us a way to see past those familiar choices we gravitate towards, and they can do wonders to help us identify better choices, especially when we’re making big decisions about finances and our futures.2 That’s true no matter what we want in the future or where we are in life.2 How to Set Better Goals for Your Finances & Your Life Goal setting isn’t a one-and-done, set-it-and-forget-it task. It’s also not something you want to do on the fly if you’re serious about setting better goals and really achieving them. The reality is that any of us can struggle with setting goals in finance and life, and we may be fighting a losing battle with ourselves if we haven’t set good enough goals. It doesn’t have to be a battle, though, and we can WIN. By simply having the right tools and perspective, we can really hone our ability to set the right goals for ourselves. And that can be one key to staying on track, remaining motivated, and achieving real progress and success with any goals in both finance and life.2,3 Sources: https://hbr.org/2021/01/why-we-set-unattainable-goals https://www.financialplanningassociation.org/sites/default/files/2020-07/Sin_Murphy_Lamas_July2019.pdf https://www.frontiersin.org/articles/10.3389/fpsyg.2021.704790/full 

The IRS recently updated some rules about trusts that could make your heirs accidentally liable for capital gains taxes.1 It's another quiet change that could severely impact families trying to maximize their legacies.  What Changed Under the New IRS Rules? Under New IRS Rules, assets inside irrevocable trusts may not receive a step-up in basis unless those assets are included in the taxable estate upon death. If your estate strategy includes an irrevocable grantor trust, you should work with an attorney and review your trust to avoid saddling heirs with unexpected tax bills. Typically, assets inherited at death receive a step-up in cost basis to the current fair market value, which eliminates any capital gains achieved during the giver's lifetime. However, under the updated rules, any assets held in irrevocable grantor trusts (used by many to limit estate taxes and protect assets from judgments or creditors) will not receive that step-up in basis unless they are included in the taxable estate.1 Your loved ones could accidentally inherit a massive tax bill depending on how the trust is set up. Why It's Essential to Review Your Estate Plan Changes like this make it critical to review your estate plan regularly. This 2023 change is just one of many that are likely coming in the years ahead. For example, current estate tax exemption amounts ($12.92 million per person and $25.84 million for a couple in 2023) will expire at the end of 2025.2 That means that if the government doesn't extend the current rules, the estate tax exemption reverts to the 2017 amount of about half of today's limit. Many more families could suddenly become exposed to massive tax bills. If leaving a legacy to your loved ones is important to you, reviewing your estate strategy for red flags is vital. Given the fluid nature of tax regulations, taking proactive measures now can safeguard your family's financial future. Sources: https://www.kiplinger.com/retirement/irs-changed-rules-on-your-childrens-inheritance https://www.fidelity.com/learning-center/wealth-management-insights/TCJA-sunset-strategies