The Life Planning 101 Podcast

Thinking About Gifting to Your Children?

This week Angela discusses the complexities and risks involved in gifting significant assets to children, such as land or businesses. She emphasizes the importance of proper planning and professional advice to avoid costly tax consequences and unintended liabilities. The episode focuses particularly on the tax implications of gifting versus inheriting assets and the importance of understanding cost basis.
Key Takeaways 💡
Many parents consider gifting significant assets like land, money, or business interests to their children as they age, but often do so without seeking comprehensive advice, which can lead to costly mistakes. Even when advice is sought, it is frequently from professionals who may not have a holistic understanding of estate and tax planning, resulting in overlooked risks.
Gifting assets without proper planning can expose the family to various risks including lawsuits, creditor claims, divorce risks affecting gifted assets, business liabilities of the recipient, and strained family relationships. Additionally, gifting can unintentionally disinherit grandchildren or transfer assets to unintended parties, such as a new spouse of a child’s widow(er).
One of the most significant and common financial pitfalls of gifting assets is the increase in taxes, particularly due to the transfer of the original cost basis to the recipient. When a gifted asset is sold, the recipient pays capital gains tax based on the original purchase price, which can be much higher than if the asset was inherited.
Cost basis is the original value of an asset for tax purposes, usually the purchase price minus any depreciation taken. When an asset is gifted, the recipient inherits the donor’s cost basis, meaning they may face large capital gains taxes upon sale. In contrast, if the asset is inherited after the donor’s death, the cost basis is stepped up to the asset’s fair market value at the time of death, potentially eliminating capital gains tax if sold immediately.
This difference in cost basis treatment between gifting and inheritance can result in significant tax savings if assets are held until death rather than gifted during life. For example, land purchased decades ago often has a very low cost basis compared to its current market value, so gifting it can trigger large capital gains taxes for the recipient upon sale.
Even if the family does not plan to sell the gifted assets, the cost basis remains important for other reasons, such as depreciation recapture on inherited rental properties or equipment. Inherited assets receive a stepped-up basis, allowing heirs to depreciate the asset anew, which can provide substantial income tax savings over time.
Farmers and ranchers may not realize they can depreciate certain components of their land, such as nutrients, which can offer additional tax benefits. This is an often-overlooked opportunity that can improve cash flow and reduce tax burdens across generations.
Angela stresses the importance of not making gifting decisions alone or without thorough professional guidance. While gifting can be beneficial in some cases, it must be done strategically to avoid unintended tax consequences and other risks. There are creative planning strategies available to mitigate these issues, especially in states like Texas.
The podcast concludes with a reminder that tax laws are complex and constantly changing, and that even accountants and tax professionals may not have complete knowledge of all relevant details. Therefore, a holistic life planning approach involving multiple professionals is essential to protect family wealth and minimize tax liabilities.

Your Next Vacation - Retirement

This week Angela discusses the importance of intentional retirement planning compared to the time people spend planning vacations. She highlights the irony that people often invest far more time planning short vacations than their entire retirement, emphasizing the need for early and purposeful retirement preparation beyond just finances.
Key Takeaways 💡
Travelers spend an average of 303 minutes per day on travel content during the 45 days before booking a vacation, totaling about 227 hours or over five and a half work weeks. This highlights how much time people invest in planning short-term leisure activities compared to retirement planning.
Most people spend little to no time planning for retirement, which can last decades, despite its critical importance. Retirement requires intentional planning not only financially but also in terms of physical, spiritual, intellectual, and social purpose to avoid depression and health issues.
Retirement should be viewed as a lifelong journey requiring a clear purpose beyond just leisure activities like golf or travel. Purposeful engagement such as mentoring, volunteering, or community involvement is essential to maintain fulfillment and mental health during retirement.
Without a clear retirement plan, including lifestyle and financial goals, it is impossible to accurately determine the amount of money needed for retirement. Budgeting in retirement should be practiced well in advance to ensure financial freedom rather than restriction.
Most retirement planning occurs too late, often within a year of retirement or after retirement, which limits options and increases risks such as tax liabilities and insufficient savings. Early planning, ideally five years or more before retirement, is crucial to maximize benefits and avoid compromises.
Last-minute retirement planning often results in the realization that 'something has to give,' meaning people may not achieve their desired retirement lifestyle due to lack of preparation. This can lead to reduced lifestyle, increased financial stress, and missed opportunities for tax and asset optimization.
Angela challenges listeners to treat retirement planning like vacation planning by dedicating 227 hours over a year to prepare for retirement. This approach is more manageable as it requires only about 30 minutes a day and can ultimately save money and provide peace of mind.
Angela emphasizes the importance of setting priorities and making time for retirement planning despite busy schedules, noting that failing to do so can lead to significant financial and emotional consequences for individuals and their families.

Life After Graduation - What Your Kids Should Know

This week we discuss essential life planning advice for parents and graduates facing the transition after high school or college. The episode covers practical financial knowledge, legal considerations, and ongoing parental support to help young adults successfully launch and sustain their independence.

This Week in the Market - Episode 75 (4/25/25)

This episode we discuss recent financial market trends, we focus on interest rates, market rebounds, and international trade dynamics. We analyze the implications of fluctuating interest rates on investments and consumer behavior, the role of Bitcoin and gold in global finance, and the ongoing trade negotiations with China. We also touch on the impact of tariffs, consumer spending power, and the importance of staying active in volatile markets.

Faith Over Fear

This week, Angela discusses the current financial market volatility in April 2025, emphasizing the theme 'Faith Over Fear.' She explores how investors can navigate uncertainty by understanding the nature of investing, the composition of financial markets, and the importance of having a solid financial plan.
Key Takeaways 💡
The current financial markets are experiencing significant volatility due to factors like tariffs, interest rates, and political noise, which understandably creates fear among investors. However, such turbulence is part of the economic cycle, and historically, crises have presented investment opportunities rather than just risks. Angela cautions against simply hiding from the market and encourages looking for opportunities amid the chaos.
Investing is fundamentally about the future—whether five, ten, or thirty years ahead—and requires a belief that the world will continue to advance with new technologies, efficiencies, and comforts. Without faith in a stable and growing future, investing loses its purpose. Angela urges listeners to consider their long-term outlook on the world and economy as a foundational step in overcoming fear.
The financial markets are not just abstract numbers or symbols on Wall Street; they represent real companies producing everyday goods and services that people rely on, such as toothpaste, clothing, and transportation. These businesses operate under supply and demand principles similar to local businesses, and their success depends on meeting consumer needs despite market noise or political disruptions. Understanding this can help investors see beyond market volatility to the underlying economic realities.
Much of the fear in the markets stems from uncertainty about whether investments will meet current and future financial needs, often due to a lack of a clear financial plan or insufficient cash reserves. Angela stresses the importance of 'cash confidence'—having enough liquid assets to weather market downturns without panic. She advises listeners to develop a plan that buckets cash appropriately to maintain stability and take advantage of market opportunities when they arise.
Emotions, especially fear, can undermine even the best investment strategies and analytics. While data and expert management are critical, they are insufficient if fear causes poor decision-making. Angela encourages investors to have faith in their future outlook, understand the business sense behind investments, and maintain a comprehensive plan that aligns with market opportunities. This mindset allows investors to act confidently rather than react fearfully during market volatility.

The Griever's To-Do List (Rebroadcast)

This episode focuses on the importance of life planning to prepare for unforeseen circumstances like illness or death. Through the story of Maria and her husband Tom, the episode highlights the emotional, financial, and logistical challenges faced by families without proper planning.
Key Takeaways 💡
The episode emphasizes the importance of taking action to prepare for unforeseen life events, such as illness or death, to reduce the burden on loved ones. Angela encourages listeners to reflect on their responsibilities and take proactive steps to care for their families.
Maria's story illustrates the challenges of navigating life after her husband Tom suffered a severe stroke, which left him physically impaired and behaviorally changed. Their retirement dreams were disrupted, and Maria had to manage alone, highlighting the unpredictability of life.
Maria faced a steep learning curve in managing financial and estate matters after Tom's passing, despite having a financial cushion from selling their business. This underscores the need for a comprehensive retirement and estate plan.
The episode discusses the limitations of Medicare and health insurance, which often do not cover long-term care needs. Maria had to navigate the complexities of Medicare, Medicaid, and out-of-pocket expenses during a health crisis.
Financial planning challenges included managing the proceeds from their business sale, understanding tax implications, and dealing with inflation's impact on savings. Maria also had to make difficult decisions about social security and her late husband's belongings.
The emotional and logistical burden of funeral planning and addressing her own future needs led Maria to realize the importance of having a plan in place. The episode stresses that planning is a gift that provides peace and allows survivors to thrive.
Angela encourages listeners to consider what should be on their 'griever's to-do list' to avoid placing unnecessary burdens on family members during difficult times. Proactive planning can ease the challenges faced by survivors.

This Week in the Market - Episode 74 (4/11/25)

About the Podcast 🎙
This episode discusses recent market volatility, interest rate changes, and their implications on investments and global markets. The KFS Team analyzes historical market patterns, the role of the Federal Reserve, and the impact of political and economic factors on market behavior.
Key Takeaways 💡
The 10-year Treasury yield has risen to 4.5%, marking a significant increase and causing ripple effects across other asset classes. Such large percentage moves in interest rates are uncommon and have led to shifts in the bond market and investor behavior.
During COVID, the Federal Reserve intervened by purchasing bonds to stabilize prices and lower yields. In contrast, the current rise in yields is driven by significant selling, highlighting a shift in market dynamics.
The unwinding of the basis trade, where hedge funds buy treasuries and sell futures, has caused massive financial movements, raising concerns about further market instability.
China's potential selling of treasuries could destabilize its currency and have broader implications for global markets, adding to the uncertainty.
Historical data shows that significant declines in the S&P 500, such as the recent 12.1% drop, often lead to substantial gains in the following year, with an average return of 32.5%. This pattern suggests potential for recovery despite current volatility.
The volatility index (VIX) is a key measure of market uncertainty, with spikes often followed by market recoveries. Trading during volatile periods becomes more expensive due to wider spreads and increased costs.
Retail investors tend to react emotionally during market downturns, while institutional investors adopt more strategic approaches. This difference in behavior influences market dynamics.
Interest rates play a critical role in market behavior, with lower rates encouraging investment and leveraging. However, the Federal Reserve has indicated it does not plan to lower rates despite global trends.
The Bloomberg Financial Conditions Index has shifted from expansion to contraction, reflecting tighter financial conditions. The Federal Reserve's delayed response to these changes has raised concerns about potential liquidity crises.
Despite recent market volatility, there is optimism about future recovery and significant investment opportunities. Patience and a proactive approach are encouraged, as upcoming earnings reports may provide positive signals.

Finding Peace in Turbulent Times (Rebroadcast)

The water in life gets rough from time to time. When we take our eyes off of the horizon, we tend to suffer. And like being sea sick, you may feel that you probably aren’t going to recover until your feet hit dry land. This week we share some tips to help you find peace during turbulent times.

This Week in the Market - Episode 73 (4/4/25)

Got a few minutes? This week Aaron, Sam, Brent, and Henry talk about what's going on in the market, tariffs, interest rates, and more.

Paralyzed by Estate Planning

This episode focuses on estate and legacy planning. Angela discusses the challenges of estate planning, including procrastination and complexity, and provides actionable steps to simplify the process using a structured approach.
Key Takeaways 💡
Angela highlights that 68% of Americans lack a valid Will, with procrastination being a major factor, especially among those earning over $80,000 annually. She emphasizes the importance of addressing this issue to avoid leaving loved ones unprepared.
The concept of a legacy planning process is introduced to help individuals navigate the complexities of estate planning. Angela stresses that taking the first step and engaging actively in the process is key to overcoming procrastination.
Angela presents the acronym W.W.T.C. (Who Gets What, When, and Under What Terms and Conditions) as a simple framework for estate planning. She encourages listeners to jot down their thoughts without overthinking to make the process less intimidating.
Listeners are advised to start estate planning by identifying 'who' they want to include in their estate.
The next step is determining 'what' each person or cause will receive. Angela advises being specific about allocations without worrying about equal distribution at this stage.
Angela discusses the importance of deciding 'when' beneficiaries will have access to their inheritance, distinguishing between access and outright ownership. She also addresses common fears about how beneficiaries might use their inheritance.
The 'terms and conditions' for each beneficiary are explored, with Angela acknowledging that family dynamics can complicate these decisions. She encourages listeners to document their concerns and wishes to ensure clarity.
Angela shares a story about Sister Mary to illustrate the importance of taking action in estate planning, even if the approach is unconventional. This underscores the need to prioritize planning to avoid future complications.
The episode concludes with Angela emphasizing that estate planning is an act of love for those left behind. She encourages listeners to use the provided tools to ensure their wishes are honored and family conflicts are minimized.

This Week in the Market - Episode 72 (3/28/25)

This episode delves into financial topics such as market volatility, private investments, and portfolio diversification. Aaron, Sam, Brent, and Henry discuss current market conditions, inflation, private equity, and debt, offering insights into investment strategies and opportunities in private markets.
Key Takeaways 💡
The market has experienced significant volatility, with short-term interest rates fluctuating and inflation readings showing a month-over-month increase of 0.3%. Despite these numbers, everyday costs for essentials like food and fuel remain high, creating a disconnect between market reactions and public sentiment.
Volatility in the market can present buying opportunities, and hedge funds often benefit from such conditions by accessing diverse asset classes that perform well during turbulence.
Private companies vastly outnumber public ones, with the private market valued at $11 trillion compared to the $88 trillion public market cap. This disparity highlights the growth potential in private markets.
Private equity and debt offer companies alternatives to traditional bank loans, especially as post-2008 regulations have made banks less willing to lend to large companies. Investment firms have stepped in to fill this gap.
Private debt markets are described as less risky than equities, with lenders conducting thorough analyses to ensure loan security. Returns in private debt markets can range from 12-14%, with companies using these funds for growth rather than survival.
Private investments often require a higher level of sophistication or assets due to liquidity challenges and high barriers to entry. Investors must adhere to the company's schedule for accessing funds, aligning their interests with investment managers.
Diversification in portfolio construction is crucial, as different asset classes perform variably, smoothing out overall returns and reducing volatility. Private markets often offer higher yields compared to public markets, but at the cost of liquidity.
Investors should limit illiquid assets to around 5% of their portfolio, aligning investments with their liquidity needs and life planning goals. Longer-term investments can yield better compounding returns.

No Time to Die (Rebroadcast)

Like the title of a James Bond movie, we live in a day and age where it can seem like there is no time to die. There seems to be so many obligations that need our attention. Do you care about your family? Then you don’t want to miss this week’s episode of Life Planning 101.