New President, New Changes | How Can I Protect My Net Worth?

Goosmann Law Firm : 0:01

Do complex legal issues hold you back? Let's get energized and bring clarity to your top legal questions. This is Law Talk with the Flock by Goosmann Law Firm.

Jeana Goosmann: 0:31

Hello, I'm your host, Jeana Goosmann, CEO, lawyer, author, and woman business owner here to help navigate you and your way through the law, your business and life as a leader. For today's episode, I have with me, Barry Sackett, my law partner. Barry is a business attorney at the Goosmann law firm. And today we're going to talk about the new administration and the presidential shift and what it means for your business and your financial future. Barry, welcome to the podcast.

Barry Sacket : 0:57

Thanks Jeana, for having me so much. It's an important topic, excited to talk to you.

Jeana Goosmann: 1:02

Excellent. And very, just to kick it off a little bit. Could you share with all the listeners a little bit about you and your law practice?

Barry Sacket : 1:09

Sure. Um, I've been practicing for 28 years. Uh, currently I'm officed in the Sioux falls area. Although I practice throughout the Midwest and all the Goosmann offices, I've done a lot of real estate work, taxation and, M and A work to just add and look at a couple of things that we're doing, but really excited to talk about what's happening in the world and what we should look at for our business and individual clients.

Jeana Goosmann: 1:42

Awesome. So, Barry, what are some of the proposed changes that can be expected in business this year?

Barry Sacket : 1:49

Well, if we look back to the campaign trail we can use that as our first view of what we might be looking at. And certainly there's an indication that corporate taxes will be raised. Individual taxes will be raised on those earning$400,000 or more. There will be probably a reduction in the exemption on a state tax and some other changes that we can talk about related to state tax planning and then some deductions related to renewable energy for companies and some personal deductions for individuals.

Jeana Goosmann: 2:33

Very good. So a lot of tax changes, and I think as we know when you make tax changes, it tends to influence people's behaviors somewhat. So what are some recommendations that you would give to a business owner and business leader in response to some of these changes that we're anticipating will be coming soon?

Barry Sacket : 2:51

The first thing I will tell them is to keep agile in what we're going through with COVID-19. There's been a lot of changes related to the stimulus packages that came out, the loans that are available, and make sure that you've taken advantage of those,, where they're applicable to you. But also tracked how you've taken advantage of those and how that's going to affect your tax situation in both 2020 and 2021. Next, you just want to be ready. We, we anticipate that there's going to be changes. We don't know what those changes are yet, or when those changes are going to happen. But having conversations with your tax repairs, your attorneys and understanding what those changes might mean, and some moves that you could make this year, can really put you in a much better place when those changes do come to pass.

Jeana Goosmann: 3:46

So you talked about some of the moves that people might be able to make this year. And I know firsthand that our trust law council our state planning group is busier than it has ever been. With that in mind, what are some of the recommendations as far as moves people might make?

Barry Sacket : 4:03

Well, right now they've got a large exemption, that is available to them. So a lot of the trust work that we're looking at is utilizing that exemption before it changes, to get assets out of an estate that may be subject to a state tax. So that certainly affects our larger clients that are looking at those kinds of changes. The other big change on the estate planning side is maybe a loss in the step-up in basis, which is, is fairly technical, but could really affect particularly our farming clients and our family owned businesses. And so we're having a lot of conversations with them about how to be ready if that change were to happen.

Jeana Goosmann: 4:47

All right. So when ever anybody brings out some legal terms, I always stop and pause and make sure that we explain them a little bit. Let's talk about what in the world does a step up in basis mean for our listeners?

Barry Sacket : 4:59

Well, I apologize. I shouldn't go into those legal ease, but really what it means is that when somebody passes away currently, if they are, they own an asset, their heirs will get a step-up in basis. So they, they will inherit that property at the value it had at the date of that person's death. And that can be very important if they sell that asset in the future, because they won't owe any tax on what the deceased person bought it for. They'll owe tax on whatever it's appreciated over that time. So if you've got a farm that your grandfather bought 1926, it's gone up a little bit in value. And if you were to pay tax on all of that increase in value, that would be a whole lot. But if you get a step up and basis of what it's worth today, then that tax is going to be greatly diminished.

Jeana Goosmann: 5:54

Excellent. Well, thank you for explaining that to all listeners Barry, and I think it is a huge impact. And me personally, I tend to think that the estate taxes and death taxes as we call them are one of the first places that if I wanted to raise taxes, that's where I'd probably look to go, because people don't think about them as much when they're dead. And a lot of these concepts are complicated. So it's really important for them to talk about these concepts with their legal professionals and how this could impact them. How about the effect on individuals in income taxes? What are you foreseeing there, Barry?

Barry Sacket : 6:30

Well, you know, they've certainly made proposals to change how they're going to treat people making over$400,000 now that doesn't affect a lot of people, but that certainly affects some of our clients, particularly business owners and business leaders, that are being compensated. So in talking to them, we look at how they are being compensated and ways that they may be compensated differently, as far as how that would be treated, on a tax basis. And then looking at other options for, for them to take advantage of new deductions that will become available with, renewable energy practices and how they're going to structure their businesses over the next couple of years. So it's really important for those business owners and business leaders to understand what changes may be coming, because they will be the ones that will be affected the most by this.

Jeana Goosmann: 7:29

I've heard a lot of talk with the trillions of dollars in stimulus that have been passed that everybody says the money has to come from somewhere. And so with that in mind, what are some last words of advice that you have for individuals and businesses as they try and navigate these upcoming administration changes?

Barry Sacket : 7:48

Well, you all will be going to, to meet with your tax preparers here in the next month or so, or unless you've already done that. And in that meeting, I think it's important to say what would these changes do to my tax return from 2020? And what changes could I make? So they don't affect me in 2021. It's not anticipated that these are going to be retroactive changes. I can't give you a guarantee that that won't happen. But the, the common thought is that that will not happen in 2021. So we've got a little time to prepare to think about what we might do. So this is an important time to get ahead of that. Make sure to talk to your tax professionals, your attorneys, your financial planners, to think about these things and be ready to make changes when necessary.

Jeana Goosmann: 8:36

And I loved it when you said we can't make any guarantees. I think after having lived through 2020, we all know there are no guarantees in life. Well, thank you very so much for sharing your insight and have a great day. Everyone go make it worth it. Goodbye.

: 8:53

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