“Hey Dad, Are We There Yet?”

Covid booster shots, help wanted signs, price increases, supply chain disruptions; nothing seems to be going right these days. The experts keep claiming that the end of the pandemic is just around the corner. We are almost there. They may be right, and we may be crazy, but it just may be a while before everything “gets back to normal”. Our biggest concern is the 5.3% inflation that we have experienced over the past twelve months. The increased material costs to businesses due to supply chain disruptions as well as higher wages mean that inflation will continue to be elevated. The Federal Reserve has been claiming that this bout of high inflation is temporary, but lately, they have been changing their tune. Something to keep in mind is that if inflation does go back to 2%, that doesn’t mean that prices go back to where they were. Instead, it means that while prices won’t rise as quickly, the higher prices are here to stay.

Congress is in the headlines again. They are working on two large spending bills that could have a major impact on tax policy. Reading our social media feed, the myriad ways that Congress is going to tax our hard earned money is dizzying. As of this writing, Congress is still wrangling with the size, scope and reach of both the infrastructure and human infrastructure bills. The size of these bills (unfortunately) means that no one knows what surprises await us if either pass and get signed into law. If Congress does pass one (or both) of the spending bills, we will do our best to mitigate your exposure to future taxes to the best of our ability. For now, we will need to wait.

We recently had an older client call asking to add one of their children onto their brokerage account so that the child could help manage their finances (pay bills, etc). This sounds like a great idea. It is easy to do and keeps things simple…as long as you do it correctly. If you explicitly add them to your account, your child could end up with custody of the account which could cause a lot of tax/inheritance issues. Fidelity gives us the ability to add a Third-Party to an account with check writing privileges. This allows someone to write checks while not being an owner of the account. Another idea is to get a Durable Financial Power of Attorney. This document allows your child (or anyone you appoint) to use your assets to pay for your day-to-day expenses and manage your income. With the Durable Financial Power of Attorney, you can determine what they can and can’t do, so it gives you the control that you are looking for while also giving you the peace of mind that they can take care of your affairs. We bring up this topic so that you can start the conversation and understand that there are pitfalls. Each person’s situation is unique, so work with someone you trust to find the right solution for you.

Very truly yours,

Michael Cantlon
Thomas Guyett
Robert Gephart