The Estate Tax Laws that could cost you thousands

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So many people obsess over estate tax laws and the $15 million federal estate tax exemption, and quietly walk right into a state estate tax problem they never saw coming. In this episode, Dave and Heather dig into the tax that's already hitting their clients: the 12 states that tax estates at limits far below federal, where a single dollar over the line can make your ENTIRE estate taxable.▶ Listen on Apple, Spotify, or visit https://playbookotw.com★ WHAT YOU'LL LEARN ★▸ Why the federal exemption is a red herring — only 12 states levy an estate tax, but their limits run from $1M (Oregon) to ~$13M (Connecticut), and that's the gap that gets you▸ The "cliff" that should terrify you: cross Illinois' $4M limit by a single dollar and the entire estate becomes taxable — plus a graduated tax and a mountain of compliance▸ Why seven-figure earners in their 40s already have an estate problem — and why their documents have to be designed as if they could die tomorrow▸ The portability trap: some states (like Washington) won't let a surviving spouse inherit the deceased's exemption — so it simply vanishes▸ Why illiquid assets are the real danger — you can't "sell a bedroom" or chop off part of a business to cover the tax bill the state wants up front▸ How to spot a good estate attorney from a bad one — the ones who design pretty documents without thinking through taxes, liquidity, and how it all actually gets carried out▸ The vacation-home tax bomb: own a second home in a taxing state and it becomes partially taxable there, even if you never lived there▸ Annual gifting in plain English — $19,000 per person in 2026 ($38k per recipient for married couples) and how "warm hands vs. cold hands" reframes giving▸ AB trusts vs. disclaimer trusts — why a strategy that nearly died at the federal level is roaring back as a STATE planning tool, and why optionality matters▸ How business owners use an ILIT so heirs can pay the estate tax with insurance proceeds instead of being forced to sell the business★ CHAPTERS ★00:00 Cold open: illiquid assets, family fights, and "warm hands vs. cold hands"01:18 Welcome — today we're talking state estate tax law (yes, it's nerdy)01:40 What the federal estate tax exemption actually means02:10 The part everyone forgets: your state may want its own cut03:20 Problem 1: Does your state's limit differ from federal? (only 12 states tax)04:40 Problem 2: The "cliff" — go $1 over and your whole estate is taxable05:43 Why high earners in their 40s have to plan now06:21 Problem 3: Lack of portability between spouses09:42 Problem 4: The liquidity trap of real estate and businesses10:05 How to tell a good estate attorney from a bad one11:02 Problem 5: Real estate in multiple states (the vacation-home bomb)12:13 Solutions begin: annual gifting and gift splitting13:59 "Warm hands vs. cold hands" — the case for giving while you're alive14:42 AB trusts and disclaimer trusts explained19:31 ILITs: irrevocable life insurance trusts for business owners20:38 Tying a bow: start with your end goal, and don't make anything permanent22:37 What Would You Do?22:42 Scenario 1: 45, single, $3.5M estate in a $4M-limit state23:55 Scenario 2: 85 couple, real estate in three states, $6M total26:15 Scenario 3: 70-year-old leaving a $12M business to three sons29:46 Highlights: Heather's fitness reboot and the seven-miles-a-day plan31:31 Highlights: the accidental backyard pumpkin patch34:02 Wrap up

LLC or S-Corp? - How to choose your business structure | EP077

Your buddy at the gym swears an S Corp will save you a fortune. Your accountant says don't bother. Who's right? Both — and it comes down to one number most people get wrong: profit, not revenue. In this Playbook of the Wealthy episode, financial advisors Dave Grant of Retirement Matters and Heather Townsend of Townsend Financial untangle the LLC-vs-S-Corp confusion clogging your social feed. Heather (a self-described "humongous nerd") goes deep on the real math — the self-employment tax savings everyone brags about, the costs that quietly erode them, the QBI deduction, the PTET state-tax workaround, putting kids on payroll, and the reasonable-salary trap that gets S Corps audited — while Dave keeps her out of the weeds. ▶ Listen on Apple, Spotify, or visit https://playbookotw.com ★ WHAT YOU'LL LEARN ★ ▸ Why "I'm an LLC" is the wrong answer to "how are you taxed?" — an LLC is liability protection, not a tax status, and you tell the IRS how it's taxed ▸ The S Corp tax savings explained simply: pay yourself a W-2 wage, take the rest as distributions, and skip the 15.3% self-employment tax on that portion ▸ The costs that eat the savings — a separate 1120-S return, payroll software, unemployment and franchise taxes ▸ How the 20% QBI deduction shrinks once you're an S Corp, and why high earners in "specified service" businesses can lose it entirely ▸ PTET: the state-tax workaround that gets you a federal deduction past the SALT cap — but usually only if you're an S Corp or partnership ▸ The profit thresholds that actually matter: under $80K probably no, $80-150K run the numbers, $150-400K usually yes, $400K+ almost always ▸ Why a too-low salary is one of the biggest S Corp audit risks — pay yourself what it would cost to replace you ★ CHAPTERS ★ 00:00 Cold open: who's right about the S Corp? 01:11 Welcome — LLC, S Corp, or none of the above? 03:11 Why "I'm an LLC" doesn't tell anyone how you're taxed 05:09 The trap: jumping to an S Corp too soon (profit, not revenue) 06:35 Benefit: the self-employment tax savings everyone talks about 08:53 Cost: S Corps are pricier and more complex 11:13 QBI: how the 20% deduction shifts under an S Corp 14:00 PTET: the state-tax workaround you need an S Corp for 17:42 Kids on payroll & retirement contribution math 19:56 The accountable plan and the Augusta rule 20:42 Who should actually elect: the profit thresholds 23:14 Heather's bow: the higher the profit, the more it makes sense 23:56 What Would You Do? — listener scenarios 28:15 Highlights: Heather's "woo woo" signs & Dave's gaming 34:00 Wrap up ★ LISTEN ON ANY PLATFORM ★ Apple Podcasts: https://podcasts.apple.com/us/podcast/playbook-of-the-wealthy/id1787630097 Spotify: https://open.spotify.com/show/21LrI3IB2wMsOOJLiGsRJK Website: https://playbookotw.com ★ WATCH NEXT ★ 9 financial charts explaining the world today | EP075: https://www.youtube.com/watch?v=sNOgDL6x5cA What are Buffered ETFs and should you have them in your portfolio? | EP074: https://www.youtube.com/watch?v=ZzKEyyJePx8 ★ CONNECT ★ Submit a question: https://playbookotw.com Email: hello@playbookotw.com Dave Grant: https://www.instagram.com/davegrant82 Heather Townsend: https://www.instagram.com/heather.townsend.financial ★ ABOUT THE SHOW ★ Playbook of the Wealthy makes wealth planning and retirement simple, clear, and approachable. Hosted by financial advisors Dave Grant of Retirement Matters and Heather Townsend of Townsend Financial. ★ DISCLAIMER ★ All opinions expressed by Dave Grant and Heather Townsend are solely their own and do not reflect the views of their respective wealth management firms. This podcast is for informational purposes only and should not be relied upon for investment decisions. Nothing in this material constitutes a solicitation for the sale or purchase of any securities. Clients of Retirement Matters and Townsend Financial may maintain positions of the securities discussed. #SCorp #SmallBusinessTaxes #PlaybookOfTheWealthy

3. juli 202635 min

The Estate Tax Laws that could cost you thousands | EP076

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