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>> Josephine Dries: Today we're here with Leon LaBrecque, Managing
Partner of LJPR, LLC., a wealth management firm in Troy,
Michigan, who had recently wrote a white paper on the tax storm.
Why is that important and what should we be paying attention to
with regard to the impending tax storm?
>> Leon LaBrecque: The tax storm basically refers to what's going to
happen at the end of 2012, and that's the expiration of the Bush
tax cuts. In 2010, Congress and the Senate and the President
kicked the can down the road to this year, and they let the tax
cuts that were scheduled to expire in 2010, expire this year.
The political situation in the United States to say the least is
a little bit tenuous, and I'm not necessarily sure they're all
going to get around and do things, so here's kind of my
prognosis. It's unlikely, in my opinion, that the Senate and the
President will get together and extend the Bush tax cuts before
the election. Come the election, we now either have a new
President or we have the same President. We either have a new
Senate or have pretty much the same Senate. If we have - so
there are four scenarios. They could get together and kick the
can down the road another two years and say, okay, let's just
stall our decision for another two years. Unlikely. The
current President, if he's reelected, would probably let the Bush
tax cuts expire, forcing the Republicans to come back to him with
a bill that he will sign, which is, he wants the upper two
brackets raised. If the current President is unelected, he's
likely to let the Bush tax cuts expire, because he wants the
Republicans to have to go fix the tax laws to have it the way
they want it. So, I'm looking at, and I can't see how this
scenario really comes itself out to play, or they could all sit
around saying Cumbaya and change the tax law, but I don't see
them all doing that either. It just seems like they haven't sang
anything together since the last time they did this, and they
waited until December 23rd of the tenth year of a ten-year window
to do anything. So, if the Bush tax cuts expire, all of us are
faced with gigantic changes in our estate tax, gigantic changes
in our income tax, and it's a lot of unknowns. So, we have to
get ready for that. I'm not saying we have to do everything
right now, but we have to be ready. We might be positioning our
assets into municipal bonds. We might be positioning things into
Roth IRAs. We might be looking at what to do with our estate
plan. We might be making lifetime gifts to kids. We might be
thinking about charity. For example, right now interest rates
are exceedingly low. I can make a charitable gift to a charity
in what's called a charitable lead trust, and that charitable
lead trust allows me to get an income tax deduction, but still
get the money to my kids and get it out of my estate. So, we're
in an exceedingly complex situation. In fact, the white paper I
worked on is 11 pages long and I suggest if people want to see
more on that they should go on the web site and grab the white
paper. Grab the white paper. Sit down with your estate-planning
attorney. Sit down with your financial advisor, your wealth
manager, and go over how this might integrate to you. By the
way, I see some people just saying, "Oh, I don't think it's gonna
happen," and I, that's not my style. That's not how I ride. I'm
not going to sit there and say, "Well, I don't think it might
happen." I'm going to say, you know what, I'll, I'll hope for
the best, but I'll plan for the worst," and in this case, I see a
tax storm coming. Worst case scenario, I'll go buy a rain coat,
I put some battens on the hatches and it doesn't come. I go, Well, cool. Didn't get hit. So,
tax storm. Be careful.