July 2025 Quarterly Planning Spotlight
Welcome to the first post of the Inspiration Quarterly Planning Spotlight. I will touch on topics that are top of mind during the quarter that I think may be interesting/helpful to you.
The topics this quarter include Tax Changes from the OBBB, Investment Thoughts, and Estate Planning reminders.
Tax Changes
The key outcome from the tax changes signed into law on July 4 was that the previous temporary changes from 2017-18 are now "permanent". There will be no sunset of the TCJA provisions. Lower tax bracket % remain in place, higher standard deductions remain, and the estate tax and gift tax exemption amounts remain historically high.
The reason I put "permanent" in quotes is that I question the sustainability of these changes so they are only so until the laws are changed again.
There are a couple of items that actually come into play immediately in 2025 - standard deductions increase slightly under this new law, there is a(nother) new enhanced deduction for seniors (that may end up with less of their Social Security income being taxed), and the SALT deduction limit has been increased to $40,000 (with a phaseout) from $10,000.
There were also several changes to deductions for charitable contributions. Because of these changes, it may be better for those who itemize to consider making contributions this year instead of in future years. For those who take the standard deduction, they may benefit from waiting to donate until next year.
Finally, the AMT calculation has be updated in that there will be a lower threshhold for being affected by AMT starting in 2026.
There are LOTS of other changes contained in this bill. The reality is that it's not possible to "eyeball" whether some of them will affect your situation. That's why I do tax planning using a sophisticated software called Holistiplan. I can model how any of these changes will affect you - and how they interplay together - so you don't have surprises at tax time.
Investment Thoughts
It's been quite a year so far in the market. The first quarter brought negative returns to many client portolios, but since then, we've seen markets bounce back to near all-time highs. This is despite all the political uncertainty and tariff escalations.
The Fed has not changed interest rates, and inflation seems to have tamed. It will be interesting to see how companies earnings reports end up this quarter, and how that will affect the markets going into the fall. There will always be individual losers even if the market as a whole is up.
As an investment adviser, I never try and time the market or pick stocks. It's impossible to know what they will do from day-to-day. My philosophy is all about remaining invested over the long-term, in low-cost portfolios that are highly-diversified, taking only as much risk that you need to take in order to produce average returns that are enough to meet your goals.
Estate Planning Reminders
I've worked with several clients this year on their estate plannning tasks. Here are my top reminders for everyone, and I've also developed a detailed checklist you may find helpful - text “checklist” to 760-444-4547 and I’ll send it to you!
All retirement (and some other) accounts should have beneficiaries named - usually an individual unless they are under age (that's when it may be optimal to designate a trust as a beneficiary).
All other (taxable) investment accounts should be titled with planning in mind (single, TOD, joint, or trust-owned).
Parents of minor children REALLY need to have a guardianship designation spelling out who should take care of their children should both parents pass away.
Everyone needs financial and healthcare powers of attorney, and advanced healthcare directives/living wills to designate someone to manage their financial considerations and their healthcare decisions should they become incapacitated.
Understanding what needs to happen to avoid costly and lengthy probate in your state is important as well. Oftentimes, a revocable trust can accomplish this. Don't forget to actually fund the trust by changing the titles of accounts and the deed to your home.
Make sure that if your life changes (like getting a divorce, or family members passing away), that you revisit your estate planning choices and make updates as necessary!
I think this is enough for now!
Please reach out with questions or book time with me if I can help with your financial planning or investment managment needs!
