Wealth planning for the year ahead

Wealth planning for the year ahead

Hosted by:

·         Katie Carlson, Managing Director, Head of Wealth Strategy, Bank of America Private Bank

Panelists:

·         Mitch Drossman, head of National Wealth Strategies from the Chief Investment Office

·         Anthony Fittizzi, Market Trust Executive for Bank of America Private Bank

·         Wendy Gatlin, Wealth Strategies Advisor for Bank of America Private Bank

·         Joe Quinlan, head of Chief Investment Office Market Strategy for Merrill and Bank of America Private Bank

KATIE CARLSON: Thank you for joining us today. I am Katie Carlson, Head of Wealth Strategy for Bank of America Private Bank. And I am very much looking forward to our discussion today, Wealth Planning for the Year Ahead. Today's conversation is going to feature some of our foremost thought leaders in the areas of Markets, Public Policy and Wealth Planning. We're going to spend time discussing this ever-changing landscape, and the ways that you can plan for it. Wealth planning is at the core of everything we do. And it is an essential part of our relationship with you and with your family. The more that we understand you, your goals, your needs and your values, the better equipped we are to help you make a lasting impact with your wealth. External factors certainly increase the demand for these type of conversations. And there's no shortage of those factors right now. From the potential tax-law changes coming out of Washington, to a global pandemic that has continued to drive a focus around families, quite frankly, our own mortality and are we financially prepared. To an under-prepared aging baby-boomer population, we're on the precipice of 68 trillion dollars of wealth transfer taking place over the next 20 years. Yet, under 20% of the population has really put the necessary planning in place, to direct their wealth as they've intended to. The time for these conversations is now. To discuss some of these topics and strategies, and to help you prepare for them, I am thrilled to be joined by my colleagues. An esteemed panel of experts. Mitch Drossman, Head of National Wealth Strategies from the Chief Investment Office. Anthony Fittizzi, Market Trust Executive for Bank of America Private Bank. Wendy Gatlin, Wealth Strategies Advisor for Bank of America Private Bank. And Joe Quinlan, Head of Chief Investment Office Market Strategy for Merrill and Bank of America Private Bank. So let's jump right in. Joe, I'd love to start with you. I think you would be really helpful to set the stage with a look at our current market outlook.

JOE QUINLAN: Well, Katie, there's a lot to discuss, and I'll try to boil it down. But here we are in '22. We start the year with the economy in pretty good shape, relatively speaking, but let's go back two years ago. We're right on the abyss. The pandemic had just struck. It became a pandemic officially in March of 2020. We saw deep dive in growth in over 2020. But we saw a V-shape recovery last year. And we still think we've got a good head of steam heading into '22. The key difference this year? Consumers and corporations will help drive growth. Consumers are feeling better about the employment picture, the increase in home prices, the stock market. But jobs, in particular had been very robust. Asset wages. Well, I'll talk about wages in a moment when it comes to inflation. So the consumer's in great shape. Remember, they're around 70% of GDP. So when the consumer spends, our economy moves ahead. So the consumers are also getting some help from the corporations. Corporations are flush. They have something like seven trillion. That's a "T" trillion, in excess cash. And you're going to see that put to work this year. Vis-a-vis hiring, more capital expenditures, share buybacks, dividends. So it's a pretty good backdrop when you look at the two main drivers, consumers and consumption. But there's a big elephant in the room, Katie, for sure. It's called inflation. And many folks, investors, they don't know what inflation is. They've never really invested through it. But if you look at the supply chain. Bottlenecks. You look at high energy prices, and now, rising wages. That is a trifecta for rising prices. And you've seen it already. January, consumer prices were up 7.5%. Core PCE was around up 6%. So we haven't seen these types of inflation levels in decades. And we've got to work through that. And that creates that volatility. Puts a lot of pressure on margins for corporations. And it does eat into the real incomes of households. Inflation, takes away, subtracts from consumption. So that means the Fed is in play. And Katie, this is very important for investors. We're in a regime change when it comes to the cost of capital. We think the Fed can raise rates up to seven times this year. So it's a lot of guessing game going on. How quickly will the Fed move. How quickly will they taper, raise rates, quantitative tightening. It's all on the table. So when the cost of capital goes up, you want to look very, very carefully at your portfolio, your tax strategies. Because as I've said earlier, it's a regime change when it comes to cost to capital. Doesn't have to end badly. For sure, we're not forecasting any type of recession. But a year from now, as we do have tighter monetary policies in place, less fiscal spending. You're going to see an economy that's going to grow by say, three and a half percent. This year it'll slow down to around 2%. More normalization heading into '23. But it's a challenging environment for investors when the Fed is raising rates, when you have the volatility. When you have a fully employed labor market, corporations are finding it hard to workers. And then prices continue to rise as well. And we think they're stickier than the Fed initially thought. In particular, higher energy prices. They look like they're here to stay for a while. Maybe they'll roll over later on. More supply comes on. The global supply chain bottlenecks. A lot of folks, typically in the automobile industry, need semiconductors. They're not look for any relief until the second half of this year. And then wages. They're stickier. Once they go up, they're hard to bring down. Which means corporations would have to increase their productivity. And they will. We think, many across this sectors. They will. So in general, it's a good backdrop, but it's challenging, it's a regime change. You've got to be nimble, you've got to think quality, the dividend payers, cyclicals. We like energy, financials, commodities. And that's kind of, what we're tacking to when it comes to portfolio construction this year, Katie.

KATIE CARLSON: Thanks, Joe. I appreciate that. Mitch, why don't we turn it over to you and spend a few minutes just talking about the President’s agenda. Specifically, Build Back Better, which I know we've been talking about a lot over the last several months. But I do think it'll be helpful for you to recap how we got to where we are today.

MITCH DROSSMAN: Sure. When I think of the President's agenda, I really think of two pillars. We have a hard infrastructure bill. Think of roads, bridges, tunnel, the electrical grid. And we also have a soft, or human infrastructure bill. That's what we call the Build Back Better bill. That is an incredibly wide-ranging spending bill. A spending bill with tax provisions. And when you have a bill that basically covers from soup to nuts, it's not that easy to pass. It's more like, kind of, a marathon, rather than a sprint. And as marathons go, sometimes you just don't make it over the finish line. And that is what happened in December of last year. Now, let's be clear, it is the spending provisions that tanked that bill, the Build Back Better bill, not the tax provisions. Essentially, what Congress was trying to do when you factored in all of the provisions if they were extended through the budget window. They were trying to fit four trillion dollars of spending, into a two trillion dollar shopping bag. And when something like that happens, something's got to give. And the bag broke. And all of these spending provisions are now scattered among, kind of, the floors of Congress. And they now have to figure out some way to get this back. To right-size this. Let me touch on the tax provisions also for a moment, because this is vitally important. It wasn't the tax provisions that caused damage or tax these bills. So what Congress is essentially sitting on is a menu of tax-raising provisions that range somewhere in 1.8 trillion dollars, that they can use. Whether it for another version of Build Back Better, or Build Back Smaller, as I like to call it. Or for other kind of future uses. And they range from corporate provisions, raising over 800 billion dollars. Individual provisions, raising over 600 billion. Including enforcement or compliance provisions. That would raise another 200 billion dollars. Katie.

KATIE CARLSON: So with that as the backdrop. I mean, really, Mitch, what's the likelihood that the President can even revive Build Back Better. And maybe more importantly, get it enacted?

MITCH DROSSMAN: Well, you know, this is a real uphill battle. And when I think of that, I think of, kind of, Greek mythology. And I think of, you know, somebody in Greek mythology who was, I think, sentenced to eventually, kind of, roll a boulder up the hill. Only to have that boulder, kind of, just keep coming back down. And that's what's happening here. This is a very, very heavy lift. And it all really is going to depend on Joe Manchin. Joe Manchin, back in December said, "Build Back Better is dead". Now that's a pretty black and white term. But there's actually more nuance behind it. And there were actually conditions. And Joe Manchin's conditions are three-fold. First, COVID needs to recede. Second, the fiscal situation needs to improve. And third, inflation. So let me just comment real quickly on each of those. So, COVID improving. I think that we're seeing that now. Blue states are getting rid of their mask mandates, COVID positivity rates are decreasing, hospitalizations are decreasing. On the fiscal front, we've actually also seen some very good news. Revenues are up, and in fact, they're way up. And we are on pace for the largest deficit reduction, as a percentage of GDP since World War II. So lots of revenue is coming in. Part of that is because of the stock market last year. Part of that is because many taxpayers pulled forward income into last year when they were concerned about pending tax increases. So I expect to see, not only high income, but I think this April and this May, we are going to see incredibly high revenues from income tax receipts. It's the last piece that is probably the most, or is certainly the most problematic, and that is getting inflation under control. Joe just talked about this. We have seven and a half percent increase inflation. That's the highest rate in forty years. Inflation doesn't turn on a dime. This is going to take time. We may not see the results, or we may not see inflation come down. It may not be April, it may not be May, it may not be June. And that's the problem. The closer you go out, further this year, the closer you get to mid-term elections, and there's the rub. That may not make it across the finish line because of the political realities.

KATIE CARLSON: So to that point, and think about inflation as the backdrop, mid-term election's potentially getting in the way of this. How does the bill have to look different?

MITCH DROSSMAN:  It won't be Build Back Better. It won't even be a shadow of itself. It'll be Build Back Smaller, or Build Back Tiny. Well, I guess you could say, you know, close to a trillion dollars is not necessarily tiny. But in light of what number of bills that have passed recently, that, you know, is a rather skinny bill. Again, I say, they're kind of soup to nuts to what the original Build Back Better was. There was Medicare expansion, Medicare, ACA tax credits, Pre-K, childcare, immigration, paid family leave. I mean, you name it. That's all going to be shed. And probably will have Affordable Care Act credits. We will have environmental and climate provisions. And then perhaps Pre-K. And those three together come close to a trillion dollars. As I've mentioned earlier, we have a menu of tax increases that Congress can draw upon, that raise approximately up to about 1.8 trillion dollars. It is that. They're going to look to that menu, to pay for those expenses. So what is also important to know is what is out. Free college, the expansion of the child tax credit. That may be paired back, but it's not going to be expanded and extended in the manner that was in the original Build Back Better bill. So it's going to be right-sized. And there's not going to be gimmicks, there's not going to be provisions that expire. And then you're going to need to extend them. I think we're going to see fully paid for bill that is much narrower and skinnier. And that, perhaps can make it across the finish line. But there's a lot of political realities that could get in the way.

KATIE CARLSON: So, perfect question. I mean, Joe, from your perspective, what gets in the way?

JOE QUINLAN: Well, everything that Mitch just talked about. But Katie, you know, just the polarization of the parties. And you know, within the Democratic Party there's visions, in terms of what gets done. Whether it's immigration, whether it's dealing with China trade. You know, inflation is a problem. So there's a lot of pressure now on the President to reduce the tariffs. Even on China. So, there's a lot out there that we need to kind of work through and sit through in the next couple of months. But it's going to be challenging. I think Mitch hit the nail on the head. Inflation takes a while to bring back down. That's why you never want to let that genie out of the bottle, because once it's out, it's hard to put back in. So this isn't going to be months, it can be quarters, if not a year.

MITCH DROSSMAN: If I could add something to that in terms of what's getting in the way, I just want to comment on three things. It is votes, principles and timing. So in terms of voting is, unfortunately, one of the Democratic senators Ben Ray Luján suffered a stroke recently. He is expected to fully recover. But if you think about the division of Congress where any one Democrat has veto power over the spending bill, is now you're in a situation where Democrats do not even have a majority. It's 50 to 49. So some of these voting and these bills are going to have to wait for him to return if the Democrats can't convince a republican to come over to their side. And that's not going to happen. Second is, principles. So I think the progressive party needs to focus on, not what they want to get done, but what can get done. And then finally is the timing, as I said. It is, the longer this takes, the closer we get to mid-term elections. And that's like flying to close to the sun. You just can't get there. There's a lot that happens, as we get to the summer. A lot of the Senators and Republicans return to their districts to campaign. But also, not a lot of people like taking difficult votes, especially when you get close to mid-term elections.

KATIE CARLSON: So I've heard both of you mention mid-term elections already, in a few different capacities. Joe, let's really shift the conversation there for a minute. I'd love to know, first, you know, what are your thoughts about a potential change in the balance of power in Washington?

JOE QUINLAN: Well, Katie, I think the markets would take it in stride. And I think, in fact, already discounting the fact that there could be a red wave, come November. President Biden, given where inflation is, you know, his popularity is plumbing new lows as we speak. That's not unsurprising. Incumbent, Presidents always have a challenging mid-term election. So we could easily see Republicans take the house. They only need to flip five seats to control the Senate. So what does that mean? It means gridlock. And we've had gridlock before. And quite frankly, I don't think the markets would mind that because in the last two years since the pandemic started, we've seen unprecedented monetary fiscal policies, the expansion, war-like, right? We haven't seen that in decades. So if Washington takes a breather, vis-a-vis gridlock, post-November, I think that's okay. The markets are discounting. They'll be focused on the Fed. How quickly they're moving where it's inflation. And one important point, Katie, to notice. Yes, fiscal and monetary policy, they were the catalyst that helped drive growth in the second half of '20 and '21. And a lot of people are worried that without this stimulus from the monetary and fiscal side of the equation, the economy will slow down too fast, too quickly. We don't buy that. Because as I've said earlier at the outset of my comments, the consumer and corporations are going to pick up the baton of growth and drive the economy ahead in the next 18, 24 months. Washington can take a break. It'll probably be welcomed. So, we're looking for a shift, so to speak, in the composition of Congress. And as we lead into '24. But to me, it still makes for a pretty good constructive backdrop, overall for growth.

KATIE CARLSON: So, with the constructive backdrop for growth, you talked a little bit about the economy and that corporations were going to be a big part of that, versus Washington. How should we think about the markets, more specifically, leading up to, and maybe even more importantly, coming out of these elections?

JOE QUINLAN: Well, you know, Mitch touched on a couple of these key issues. Immigration. I mean, we're very short of labor here, skilled and unskilled. Yet it's very hard to find that seasonal work that we typically get overseas. Trade is a huge issue. If you want to alleviate pressures when it comes to inflation, bring more product in. So whether it's, you know, talking to China, rolling back some of these other tariffs with Japan and Europe. That's all on the table right now. So I do think in specifics. And then there's a big bill, and Mitch can talk about this. About the semiconductor, you know, the innovation competitive bill that's working its way through Congress. That's hugely important, because we do need the infrastructure spending in and around semiconductors. We need to encourage companies to increase their capacity here in the United States. That should be all on the table. And in many cases that has by partisan support. So, you know, Washington, hopefully can put some packages together incrementally, over the next couple of years, that could really help boost the foundation of US competitiveness.

KATIE CARLSON: So, I'd like to shift gears a second, and bring Anthony and Wendy into the conversation. We know that last year was just incredibly active from an estate planning perspective. Just given everything that Joe and Mitch have shared, Wendy what do you see relative to planning for the year ahead?

WENDY GATLIN: Katie, I really see continued activity. Last year was a normally busy year, as you mentioned. I don't maybe see it at the same fanatic pace of last year. But I do think clients are still concerned about their estate plans. The pandemic allowed them to really think about their own mortality, concerns over their family, and really want to reassess their goals. And wealth strategy plans. And the overarching thought process last year was that there was going to be some imminent change and estate tax laws. And so that drove clients to really have a sense of urgency around their state plans. So as we sit here, you know, going into the rest of the year, and sitting here at the beginning of 2022, those same concerns are still there for our clients. They're still concerned about their families and still reassessing their goals, and still thinking about their own mortality. And they're still thinking about what the Biden administration might do as it relates to estate taxes. And we're positioning our clients the same way we did last year when we spoke with clients. We told them we don't have a crystal ball. And we can't predict what Washington or what Congress is going to do. However, if they do nothing, we already know that there are estate tax planning on the way. Changes in the state tax laws on the way. If they do nothing, we have estate tax laws that are currently going to sunset at the end of 2025. And in 2026, we’ll be able to pass far less assets down to the next generation, than we can currently do in 2022. So our clients are aware of this. And so, many of them are interested in strategies that can allow them to take advantage of some of these wealth planning strategies and techniques. And so, for clients today in 2022, you can transfer a estate tax free, a little over 12 million dollars. And if you're a couple, it's a little over 24 million dollars. That's a lot of wealth that you can pass down. And so clients are really taking the time to assess their goals. And really some strategies around what they need to be doing to take advantage of it, before any changes in the estate tax laws in 2026. And so, for many of our clients, while there was a lot of activity and it was busy. Even though some of the state tax provisions didn't make it into the spending bill that Mitch just talked about. That's still a concern for a lot of our clients, and the pandemic is still pressing on. And so the concern and care for their family has not changed. And so, I think the activity will continue on through 2022. And it's time for clients to just reassess and continue to make some changes, and benefit from some of the estate tax laws.

KATIE CARLSON: Just a tremendous opportunity to really make an impact. To think about their wealth and their families and make that impact today. Anthony, Joe mentioned, and Mitch mentioned, you know, we've talked about inflation. And also, interest rates are on the rise. I think, Joe, you said, seven potential hikes this year. We know that interest rates play an important role in estate planning. And so, Anthony, what should we be thinking about, just given both the expected imminent increases and a continued increased rate environment?

ANTHONY FITTIZZI: Yeah, thanks Katie. You know, Wendy did a great job of setting the stage for us here, with regard to the opportunity to do wealth transfer and take advantage of exemptions. But there are other strategies that we commonly see come into play, where low-interest rates really benefit the transfer of wealth and the transition of wealth. And you know, as you've said, and Joe and Mitch had mentioned earlier. Rates are rising, but there's still today at historically low rates. So taking advantage of those strategies now really makes a lot of sense. And you know, there are a number of strategies out there, grantor retained annuity trust, intra-family loans, sales to grantor trusts. Those are all different strategies where you have the opportunity as someone who wants to transition wealth and assets to the next generation. To be able to do that in a way that's tax-efficient, because of the interest rate environment. I'll just give you a quick example. I mentioned the grantor retained annuity trust which we affectionately call by the acronym a GRAT. You know, that structure, someone who wants to gift or transfer wealth can move assets, and let's just for a round number say a million dollars into a trust. And that trust, you know, and it's right in the name of the strategy of the grantor retained annuity trust. We'll pay back to that gift or that grantor on annuity. So they will effectively put a million dollars into the trust. And over a period of years, that's set at the time the trust is established, they will receive back an annuity, a payment of the principle they put in. So you put in a million dollars. And let's say, you set one of these trusts up for two years, just for a simple example. And on the first anniversary of the trust, you're going to get an annuity payment of five hundred thousand dollars back. On the second year you're going to get another five hundred thousand dollars back. So you put in a million dollars of assets, you get back a million dollars of assets. Which means you haven't really effectively made a gift. What you put in came back. And what the tax code allows us to do is to transfer any of the appreciation and growth in that trust, to the next generation, outside of the gift and estate tax, being hit by estate gift taxes. Now there's a caveat around that, and that's how this ties into the interest rate environment. The IRS doesn't let you give a free gift of all of the appreciation. The tax law doesn't allow you to gift all of the growth and income of the assets in the trust, free of tax. They require you to take back as part of that annuity, in addition to the annuity or the principle that you receive back, on assumed rate of return, which is based on the interest rate, at the time that you established the trust. And those rates right now, again, are just historically low. For a trust established in February, 2022, the hurdle rate that you have to meet, the rate of assumed investment return that, that trust has to make is 1.6%. So if you put a million dollars of assets in, in February of 2022, you're going to be required to take that million dollars of assets back, plus 1.6%. If the underlying assets of that trust grow by more than 1.6%. They can be any type of assets. They can be stocks, they can obviously be fixed income, they can be private business. There's a whole bunch of different assets you can put in there. But if they grow beyond that hurdle rate that the IRS has set, all that interest passes to your children, potentially. Estate and gift tax-free. And in a similar vein, you know, I mentioned briefly, Intra-family loans, and sales to grantor trust. Same concept. Move assets into a trust - Or in a case of an Intra-family loan, you lend assets to your children. They're required to pay you back an interest rate, based on the interest rates of today. But if the assets they're holding grow more than that, they get to keep all that appreciation. And that's really where there can be some value. So right now, again it makes sense to talk to your advisors and understand what are the opportunities for transferring wealth in a tax-efficient way, given, you know, the exemptions that Wendy mentioned, and these different types of strategies that are out there.

KATIE CARLSON: I mean that's perfect. And then just maybe to kind of summarize two points there. The exemption amounts are still, you know, as large as they've been. And interest rates, although rising, are still low. Those two concepts together, it's the perfect time to consider thinking about planning. Wendy, we know our clients our extraordinarily charitable. And so, you know, I have to imagine, even thinking about interest rates right now, there's a real opportunity around planning for those that are philanthropically minded.

WENDY GATLIN: Absolutely. So very much so, which Anthony did a great job explaining the grantor retained annuity trust. A charitable lead trust is a great way for our clients who want to benefit charity, but also want assets to go to their heirs. And so, similar to the GRAT, a charitable lead trust, a grantor would fund a trust based on the interest rates, prevailing interest rates at the time the trust is funded. And just like the annuity payments are paid to the grantor in a grantor retained annuity trust. The annuity payments will go to a charity of their choosing. And over that time period or term of the trust, on an annual basis, the trust will receive an annuity payment. Whatever is left in that trust, above that interest rate hurdle rate, will accrue and go to the beneficiaries, and pass gift tax-free. And so that's a way for our clients to benefit charity, and also be able to leave assets for their beneficiaries. So for their heirs, children and grandchildren. Another benefit is, depending on how the trust is structured and you may be able to structure the trust, and you can structure the trust, such that you can get a charitable deduction for the contribution of the assets on the front end of the trust. So just a great way to leverage you philanthropic intentions and also your desire to benefit your children. And as Anthony mentioned earlier, just like the GRAT, charitable lead trusts are really good planning options when interest rates are low. And even when interest rates are expected to tick up, there's a still a good opportunity and a good way and strategy to pass wealth to both, the charity and to your family members.

KATIE CARLSON: So, really tremendous opportunity out on all fronts. We talked about how right now, in this environment clients are very concerned about the impact they'll make. And tremendous opportunity planning for your family and the impact there. And planning for the communities and the causes that you care about. We know, Joe said, the overall outlook for the markets are optimistic, but we do realize that there's interest rate movements. There's a geopolitical events, and a lot of them that could impact the markets, as well as the mid-term elections that we spent a lot of time just taking about. All of that leads to market volatility. Mitch, given that backdrop and knowing that there will be volatility, what should our clients be thinking about as we think about potential market dips over the coming year?

MITCH DROSSMAN: Yeah. Well, let me just take it from an investment perspective. For a client that's a long-term investor, a market decline can be a great entry point into the market. Well, we can say the same thing for a wealthy taxpayer who is looking at making a gift, or whether it's their children or grandchildren, a market decline could be an interesting opportunity and actually present additional opportunities to get, let's say, a greater amount. For instance, if a parent wants to give a grandchild a hundred thousand dollars, and if they were giving them a fictitious stock of let's say, that was trading at a hundred dollars a share. Well, then they would give a thousand shares of that stock. If that stock declined to 80 dollars, they'd be able to give 12 hundred shares. So you could see that essentially you're stuffing more shares into that gift-giving basket. Hopefully the stock will increase in value over time. And a greater amount of wealth can be transferred out to the children or grandchildren. Now that doesn't work like that in almost all cases. Let's say the parents were looking at making a charitable gift. In that case, you'd rather not give the stock that has declined in value. And the good news here is that when you make a charitable gift, is any gift may during this year would be capable of claiming a charitable deduction for that gift. So in that instance our clients could exercise patience. And wait between now and all the way up to December 31st to make these gifts and to see what happens with that particular stock and if it recovers. So I'd say there's opportunity, but opportunity with patience, depending on what you're looking to do in terms of gift-giving.

ANTHONY FITTIZZI: Yeah, thank you Mitch. And I'll just jump in here and say, you know, you've laid out, really well, the opportunity to make gifts. And one of the things, you know, we look at here, obviously at Bank of America is, you know, how to make the gift. So, the opportunity to make the gift, and does it fit your personal situation is part one, and the part two is, how do you actually effectuate and make that gift. And you know, you can give that gift out right. And that certainly will take advantage of the exemption and all of the reasons Mitch said, they can have all the benefits of all that and making that transfer to the next gen. But by using a trust structure you can afford yourself some benefits. And you know, I sometimes summarize as there's four main benefits to gifting through a trust. One is some trusts, like the grantor retained annuity trust we mentioned earlier, can mitigate less in taxes. Some trusts will allow you to control assets, even from the grave, in terms of access by beneficiaries. Trusts often allow for administrative ease, for successors. So after you're gone, somebody takes over the plan, and is trying to implement it. Has that path and that way to really make sure that, you know, your wishes are being carried out appropriately and easily. And then protecting assets, you know, from creditors. So, you know, when you talk about the gifting, if you have the wherewithal, and you have the financial means to gift away the 24 million dollars for a married couple, 12 million dollars for an individual, related to the exemption that, you know, Wendy and Mitch mentioned earlier. Then a dynasty trust in an appropriate jurisdiction like the state of Delaware, or one of the states that allow for these perpetual trusts to exist, becomes a great vehicle for, you know, transferring those funds, those assets, that wealth that you want to get out of your name and into the hands of your children or great-grandchildren, in a way that will pass, you know, potentially free of taxes, estates and gift taxes for future generations. So that dynasty trust structure can become really valuable. And then a second strategy for - You know, maybe folks don't have 12 or 24 million dollars to give away, is the use of what we sometimes call a spousal lifetime access trust, or SLAT. That type of trust is like a dynasty trust, and that you're transferring assets for the benefit of, you know, your next generation. But with certain provisions you can retain access by your spouse. So, you know, for a husband or wife who don't have 24 million to give away, but want to do some type of gifting, they can give away a meaningful amount to their kids, while still allowing their spouse to access those funds for certain reasons. Not, you know, free access to all, but to be able to get in there if, you know, let's say your own personal assets depleted to the point where you needed access for, you know, maintenance and support. So, you know, different structures out there, and you know, different benefits to use in your trust structure, as opposed to just doing an outright gift. So, something I just want to throw out to think about.

KATIE CARLSON: Thank you, Anthony, and thank you, Mitch. Again, clearly, no shortage of things for our clients to consider. And I know we could spend all day talking about, you know, the strategies we've just mentioned, as well as the many that we didn't have time to. But we're nearing, really the end of this discussion, and so I'd like to give each of you the opportunity to have a last word. What's that one last thing you'd like clients to take away today? Joe, maybe we'll start with you.

JOE QUINLAN: Okay, thanks, Katie. And thanks for having me. I would say to the clients, you know, don't be paralyzed by all the negativity. It's 24/7. It's on our Tweets, our phones, the TV. Don't be paralyzed, and kind of step back, and realize where we were two years ago. It was the abyss, but look how much science has done, technology, our own journey in the last two years, just speaks to the resiliency of households, corporations, our great country. So, you know, don't buy the negativity, be active, be nimble in the portfolios, and go after it. Be proactive. Don't be paralyzed by negativity. Use that as a catalyst for change, to your change, to your benefit.

WENDY GATLIN: Planning, planning, planning. With estate tax exemption levels at the highest they've ever been, interest rates on the rise and 2025 fast approaching. I urge you to work with your Bank of America team, and engage your wealth strategist to review your goals and objectives, and determine if one of the strategies we've discussed today are right for you and your family. Don't wait, plan now.

ANTHONY FITTIZZI: In case it wasn't clear from Wendy, you know, planning is important right now. So hammering that home, making sure that you, you know, speak with your advisors. You know, that's obviously your wealth advisors here at Bank of America but also your attorneys and accountants, to make sure that you're taking advantage of the right planning strategies and implementing in the right way. So, you know, considering, you know, the right jurisdiction. I mentioned Delaware earlier for certain strategies. Ensure that you're putting the trust in the right place. And then also think about who is going to actually administer your plan, going forward. And that's where we talk about executors and trustees under estates. Make sure you find the right trustee. You know and sometimes a corporate trustee is the right person, because they offer expertise. Years of purely doing estate and trust administration. Those types of companies like the bank are going to have continuity and longevity. They're going to be around for a long time. Whereas if you appoint a family member or trusted friend, at some point they're going to pass as well. And then impartiality and neutrality. You know, taking some of the family dynamics out of the decision-making. You put in place your plan. It's set for your children, your grandchildren. You know, to have somebody who's going to administer by the letter of the documents you put in place is really important. So planning, planning, planning, to echo Wendy's comments. And planning and doing it the right way. Making sure you have it administered and executed, would really be my message.

MITCH DROSSMAN: Don't ignore all the good news coming out of the states. The states are flushed with cash. Whether it's from the pandemic aid received from the Federal government. Whether it's from tax receipts. And something is happening with all that cash. Either the states are investing in their infrastructure, or lots of governors are proposing, whether its income tax cuts, gas tax holidays or even rebates. And if you don't live in one of those states, those are likely going to be one of the states that is going to see and increased migration to the states that are giving back to their residents. So lots of good news on the states side.

KATIE CARLSON: That's tremendous. So just in summary. Joe, don't be negative. Wendy and Anthony, plan now. Lots of reason for planning. And Mitch I love always ending on a high note with lots of good stuff to think about from a state perspective. Really a huge thank you to all of you. You know, I've said it a few times, there's no shortage of important topics for us to discuss. And there's just not enough time. Today we've really only hit the tip of the iceberg. Everything that we're discussing today is not only important, but it's complex. So are the decisions that you need to make. They are important and complex. So I want you all to know that we are here to advise you every step of the way. I view our job as three-fold. Our job is to educate you around all of the planning vehicles and solutions that are available to you. To understand you and know your goals and objectives. To provide you with very specific advice around which of these planning techniques will help you make the impact, and leave the legacy that you are looking to. Thirdly, or lastly, our job really isn't done until we have helped you to implement that advice. We've said it more times than I can count today, but it's worth repeating. Having an estate plan or a wealth plan is not a one and done exercise. There is always a reason to discuss and review the current planning you have in place. Regardless of your age, your income or your net worth, there are important decisions that you need to make now. And I really encourage you to reach out to your team and have those conversations. We certainly can't predict the future, but we can absolutely help you plan for it. And I assure you that the tax legislative and planning environment are going to continue to evolve. As will you and your goals and your values. We want to be here every step of the way to help you through that process. Thank you again for spending time with us today. Have a great day.

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