Jeff – Page 2 – Jeffrey R. Saunders

Understanding the One Big Beautiful Bill (So Far)

The “One Big Beautiful Bill” was signed into effect on July 4, 2025, after months of intense negotiations in both the House and Senate. The law is 870 pages long so there’s a lot to digest but here are some key elements that are worth knowing about in the financial planning area:

On the Medicaid eligibility side there is a “community engagement” requirement. Able-bodied adults must affirm on a monthly basis that they spend no less than 80 hours per month working, participating in a work program, completing community service, participating in education programs or doing a combination of all of the above. There are exceptions for those under 19 years of age and individuals with certain identifiable hardships.
There are state requirements for quarterly reviews of records to verify deceased beneficiaries so they don’t remain on the Medicaid program after death.
There is a newly created Rural Health Transformation Program that will provide $50 billion over five years to hospitals and other providers for states that submit a rural health transformation plan establishing how such funding will improve access to care and patient outcomes in rural hospitals.
Existing tax brackets become permanent, and the standard deduction increases by $750 for single people and $1,500 for married joint filers. ($15,750 for single; $31,500 for married filing jointly)
State and local tax deductions are increased to a cap of $40,000 for married joint filers over the next five years.
There is now a deduction for tips up to $25,000 and overtime pay up to $12,500, but there is a phaseout based on income levels. This change ends after 2028.
It is now possible to deduct up to $10,000 for car loan interest associated with vehicles in which the final assembly occurred in the United States. This is also phased out based on income levels. This change ends after 2028.
Student loan repayment plans have been revamped. New borrowers going forward will choose between the following options: 1. A fixed monthly payment over 10 to 25 years based on total principal, or 2. Income-based repayment based on adjusted gross income with a minimum payment of $10 per month and payment continuing until the loan balance is zero or the borrower makes 360 qualified monthly payments, whichever is earlier. Existing borrowers will be transitioned into one of these two plans by July 2028.
On the estate tax front, the law puts a lot of confusion to rest. The federal estate gift and generation skipping tax exemption will increase to $15 million per person starting January 1, 2026, and for married couples the exemption will be $30 million. These amounts will then be subject to a cost-of-living adjustment on an annual basis. You should note that Michigan has no state inheritance tax so Michigan residents can rely exclusively on these exemptions to plan their estates.

As I slowly wade my way through summaries of the tax bill, I realize just how extensive it is, from oil and gas interests to farming to nuclear power, to immigration and defense spending, it is truly massive. Like any major tax bill overhaul it will need clarification as time goes on, but I think the important elements above can be relied on for planning purposes.

Fun fact: Every year thousands of hours of planning and expertise goes into the avoidance or minimizing of income taxes. Perhaps you’ll feel better knowing that while US income taxes aren’t low per se, our maximum tax rate of 37% is not at the top of the list. The Republic of Côte d’Ivoire (or the Ivory Coast) has a 60% max income tax followed by Finland at 56% and Japan at 55%. In fact, if you look at it in terms of tax revenue as a share of gross domestic product, Denmark has the highest taxes, while the US comes in at number 31 with total tax revenue being roughly 25% of GDP.

Understanding Real Estate Deeds

As an estate planning attorney, I spend a lot of time reviewing deeds to real estate. The laws regarding real estate ownership and transfer are archaic and lead to confusion for many property owners. Perhaps the Q & A format below will help you.

Q: What exactly is a deed?

A: A deed is a written legal document that is used to transfer interests in real estate (also called real property as opposed to personal property). If you review your deed, you will find some key information, including the following: a grantor (seller or transferor), a grantee (buyer or transferee) and a legal description of the property.

Q: Are there different types of deeds?

A: Yes. Here are the most common types of deeds you are likely to run across: Quit Claim Deed – In this deed the seller/transferor does not guarantee that they own 100% interest in the real estate, but does guarantee that they are transferring all of the interest they do own. Warranty Deed – As the name suggests, the seller/transferor uses this deed to warrant or guarantee that they own 100% unencumbered interest in the property they are transferring. This is the preferred deed for a buyer/transferee in an arm’s length transaction. The buyer will want a guarantee that they are the only owner on the purchased property. Ladybird Deed – Supposedly named after Ladybird Johnson, this deed is technically called an Enhanced Life Estate Deed. It is used in Michigan to name beneficiaries on real estate to avoid probate. When used properly, it also can provide protection in Medicaid eligibility planning.

Q: Who is in possession of the deed to my home?

A: Likely you have the deed (even if you may not know it). When you purchased your home, with or without a mortgage, the deed was supposed to be recorded and then sent directly to you shortly after the closing. Many people mistakenly think that they are not given the deed to their home until they pay off the mortgage. Not true! You are given the deed up front even with a mortgage. On the other hand, if you purchase real estate with a land contract (essentially, financing from the seller), then you will not be given the deed until the last payment is made on the land contract. The deed is typically held by a third party during the term of the land contract (“held in escrow”). Mortgages and land contracts are two different animals.

Q: What if I cannot find my deed?

A: Don’t worry, a legal copy of your deed is probably recorded with the Register of Deeds in the county you live in. In fact, almost no one will ever ask you for your original deed. Instead, future buyers and their title companies will rely on what is recorded at the Register of Deeds.

Q: How do I get a copy of my deed if I cannot find it?

A: Contact the Register of Deeds in your county and ask them for a copy of the most recent deed recorded on your address. You can also get a copy of your deed online through the county website in most cases. There will be a small fee. Do not rely on information from the assessor’s office. They have information about your property for tax purposes, but not technically for ownership.

Q: Is there anything special about a deed that shows ownership by a married couple?

A: In Michigan, yes there is. If both spouses’ names are on the deed with language that indicates that they are married, then they own it as “tenants by the entireties” which provides some lawsuit protection if only one of them is sued. Property owned as tenants by the entireties cannot be separated to pay a claim against only one of the spouses. If both spouses are sued, then the property does not have that protection.

I hope the information above clarifies some important points concerning ownership and transfer of real estate. A complete mastery of real estate law is very difficult. I owe much of my understanding of real estate law and, for that matter, my approach to breaking down complex legal issues, to my favorite law school professor, Jeffrey Lanning. Professor Lanning once called on me in his Real Property class to ask about a real estate issue in a case and said: “Mr. Saunders, what’s the answer and then tell me why you’re wrong.” He clearly wanted both explanations, and it took many weeks of that class for me to understand the brilliance of his teaching.

Fun Fact: You would know if you ever drove past Professor Jeffrey Lanning. Back in the mid-80s when I was at Wayne State University Law School, Professor Lanning had a large “artificial” pompadour hairstyle and drove around in a huge burgundy Cadillac Eldorado convertible with two bright gold ornate horns on either side of the windshield and a license plate that read “Harv ‘47”. Rest in peace and thank you, professor.

Think Twice Before Preparing Your Own Tax Return

This piece was inspired by a meeting I had with a Trustee and her husband last week. The Trustee was named to manage both of her parents’ trusts after their deaths. Her father died decades ago, and her mother died just last month. Turns out that the Trustee’s husband likes to organize finances and prepare tax returns, including for her parents and their trusts. This proved to be a disaster because he was unaware (and didn’t think to ask) about how the trusts were set up. We will figure it all out eventually, but not without extra time, money and the help of an experienced CPA. These issues could have easily been avoided.

Taxes can be simple or complicated, depending on your specific circumstances. If you are single and retired, or young and just starting out, then doing your own taxes can make sense. However, things can become complicated quickly, and that’s where a professional tax preparer can save you time, money and stress. Here are some factors to consider:

If you are involved with a “taxable entity”, then see a tax professional. Taxable entities are enterprises that usually have their own tax identification numbers. LLCs, business partnerships and irrevocable trusts are taxable entities. (Revocable Living Trusts are not taxable entities because they use your Social Security Number as their tax id and thus are invisible tax-wise).
If you receive a Schedule K-1, then see a tax professional. A Schedule K-1 is a federal tax document that is used to report income, deductions, losses and dividends from taxable entities like LLCs and certain trusts. You could get a Schedule K-1 if you benefit from someone else’s trust (i.e. you are a beneficiary) or you have your own business. Any Schedule K-1 you receive becomes a part of your personal income tax return and without properly understanding them, you can cause yourself problems. One mistake I sometimes see is the filing of a personal tax return by a beneficiary before a Schedule K-1 is received by that beneficiary. That often requires going back and amending your return, ugh!
If you or a loved one have lots of medical expenses, then see a tax professional. Not only are those costs potentially deductible, but they also can dictate how best to prioritize which assets to withdraw from. (Hint – it’s often better to withdraw from a tax deferred account like an IRA in years when you have large medical expenses for the write-off). A good tax professional will walk you through the options and can save you a lot of taxes.

Sure, tax professionals can be expensive but so can mistakes made without proper guidance. The Trustee I mentioned at the beginning of this piece is about to find that out. I don’t want that to happen to you. In general, a good tax professional is more than worth the price.

Fun Fact: My wife has quite a backyard garden that includes bird feeders and inevitably, squirrels. It’s fun to see how resourceful a squirrel can be when they like what’s in the well-protected bird feeder. Not only are they resourceful, but they are also tricky. They sometimes engage in “deceptive caching” wherein they dig a hole and vigorously cover it up again without depositing a nut. Scientists think it is to throw off potential food thieves

Understanding Risk and How to Use It to Your Advantage

The term “risk” is as important as it is hard to define. The dictionary defines it as “a situation involving exposure to danger.” Of course, the word danger itself is ambiguous. Danger could mean all sorts of things from physical to mental to financial hardship. That’s why the term “risk” is so important – it applies to all elements of your life. In its broadest sense, risk is simply the probability of a negative outcome.

Risk is essential to quality of life because it drives innovation, fosters growth and opens doors to new opportunities. Identifying risk is different from being fearful of something. If you just gauge your fear in decision making, you’ll get nowhere. But risk can help you make better decisions if you approach it objectively. When you make an important decision, including a financial decision, consider this approach to risk:

Identify all potential risks. Lawyers are trained to do this quite easily because we essentially have been trained to look for what can go wrong. You need to sit down and make a bullet list of all the things that can go wrong in your important decision.
Assess the risks. As to each risk you’ve identified, attach a likelihood (probability) of that risk occurring. In addition, determine the potential severity of its consequences.
Develop a risk management strategy. For each risk, based on its probability and severity, determine whether your course of action should be as follows: 1. Complete avoidance. 2. Mitigation. Perhaps a slight alteration in your plan can substantially mitigate the risk. 3. Transferring the risk to a third party. That’s what insurance is all about. If you buy a home on a lake to enjoy lake activities you have a risk of injury to people you invite over. Homeowners insurance transfers that risk to a third party. 4. Accepting the risk. Once you’ve identified the risk and its probability you can decide whether it’s worth simply taking on the risk to enjoy the potential benefits of your decision.
Often missed in identifying the risks of a particular endeavor is the risk of not engaging in it at all. In my financial planning business, people sometimes think that if they hold their money in cash instead of in equities they eliminate a huge risk of volatility. While that may be true over the short term, holding all or most of your savings in cash creates a huge inflation risk over the long term because inflation slowly but surely eats away at the buying power of your money. Historically, nothing fights inflation as well as owning stock in good companies.

Risk is inevitable in life. I can think of very few things that I have accomplished in my life that didn’t involve overcoming one or more risks. In fact, I abide by the adage that the biggest risk in life is not taking any risk.

I’ve tried to teach my sons that success in life is directly related to the amount of risk you’re willing to take. However, I’ve also taught them to break down the risk elements of a decision objectively as I set forth above. Hopefully, you will take the time to do the same when making an important decision in your life. Not only will it help you to identify risks, but it will give you much more confidence in your decision-making.

The First Tee Beckons

I’ve counseled thousands of clients on issues concerning estate planning and elder law. Counseling in those areas is a big part of what I do. This weekend, the tables will turn. When you read this on Friday it’s likely I will be sitting at the kitchen table in the home of my 90-year-old father in Phoenix, Arizona. Also at the table will be my father who is still fairly mentally capable, my brother who is a physician in Florida, my stepmother who while substantially younger than my father, suffers from short-term memory problems, and last but not least, my half-brother who is 25 years younger than me, is a gregarious bartender in Phoenix, and has surely had his share of personal life challenges.

This meeting was triggered by a fall my father recently had in his backyard. He could not get up and his calls for help went unanswered. Eventually, he dragged himself into the house. That event scared him a great deal, which prompted his call to me asking that I come out to discuss his final wishes, review his estate plan and go to the bank to be put on his safe-deposit box. That might sound straightforward but looks (or sounds) can be deceiving. Just like it is for my clients, there is a lifetime of events and relationships that will swirl around this weekend in Phoenix.

I think that I am very good at identifying and addressing issues that arise for families confronting end of life issues. Lord knows I’ve had plenty of practice. But there is a great saying that golfers committed to the game know: “It’s a long walk from the practice tee to the first tee.” Golf swings seem effortless when they have no personal consequences. That’s the practice tee. But once you stand on the first tee and play for something, then every swing counts and things change substantially.

Counseling clients is kind of like the practice tee for me – I stay logical and draw on my experiences and knowledge of the rules. Sitting down in a personal family meeting is like the first tee – emotions, history and family dynamics take up residence in my lawyer’s mind—and try as I might, they’re not going anywhere.

Nonetheless, I will make every effort to stay committed and offer value to enhance my father’s quality of life moving forward. Here are my “pre-meeting” goals. I share them so that you can see if they might be relevant now or in the future in your own situation.

Make sure important documents are accessible. This can get complicated when you live out of state. We will need to go through my dad’s house so I know where he keeps his important documents, and we will likely need to go to the bank so that I can get my name on his safe-deposit box. He thinks he can get my name on the box on his own, but I know that I will most likely need to sign the signature card to have access. I also need to know where his “second” and maybe “third” hiding places are. There’s never just one.
Discuss any changes that need to be made to his plan. Despite being 90, my dad is recently remarried (back to his second of three wives – ah…family dynamics). His current estate plan was created before this remarriage and I suspect and hope that he will want to change his plan to provide more for his current wife. Two big issues arise there: First, telling the family what he’d like to do is one thing but having it put into a legally valid written estate plan is quite another. We will try to find the time to go to his attorney to get that process started. Second, my dad needs to revisit his decision-makers. I doubt seriously that my father’s wife will be able to manage assets on her own after his death. We need to have a long hard discussion about the best person to take on that role. My half-brother (who happens to be her son) is the obvious choice since he lives nearby and is a 40-year-old adult. However, he has not always shown himself to be responsible during times of challenge. This topic will not be easy to resolve.
Discuss living arrangements. My father has lived a long time for many reasons, including that he finds age to be just a number. He recently bought a convertible Mustang on a whim and lives in a 3,000 plus square foot home on the outskirts of Phoenix. Several factors come into play here. First, despite appearances my father is not a wealthy individual and maintaining all of his “stuff”, even while healthy, is going to continue to be an increasing financial challenge. Secondly, at any moment his whole situation could change, and his living arrangement may be unsustainable. I have arranged for tours of two high quality multistage senior living communities. They have everything from individual apartments to full nursing care as the situation changes. While my father has told me he’s interested in seeing the places, I hear through the grapevine that he really has no interest in moving. This is yet another topic that will get interesting, I’m sure.
The unexpected. As this section suggests, I have no idea what to expect, but I’ve known my dad all my life and I have no doubt that he will raise some topic, issue, and/or concern that neither I nor anyone else in the room will have anticipated. All I can say is it will be interesting, because…it always is with my dad.

It’s easy for me to sit in my office at my desk with no emotional attachment and address all sorts of issues like the ones above with my clients. I believe that I provide clarity and objective analysis that helps my clients wade through these difficult situations. The feedback I get seems to suggest that I’m right. However, this weekend I will be far from my office desk and sport coat. The person at the table won’t view me as his attorney, but instead as his son. I will make every effort to stay neutral, compassionate and understanding. Also seated silently at the table will be memories of our family history and relationships, both the good and the bad.

I hope that my topic today lets you know you’re not alone when you deal with these unique family issues. Further, I hope that if I survive this trip (LOL) I will be a better estate planning and elder law advisor for you going forward. I’m sure I will learn a lot during this trip.

I’m about to step onto the first tee. I hope I play well.

Fun fact: Phoenix is known as the “Valley of the Sun” and is consistently one of the hottest cities in the US. The average high in the month of July is 103°. My dad would tell you that it’s a dry heat. I would tell you that my body doesn’t recognize the difference between a dry and wet heat when I open a car that’s been sitting in the sun.

Understanding Your Life Insurance Policy

People who own life insurance typically get an Annual Statement summarizing the policy and its benefits. Unfortunately, many of them don’t understand the information provided, especially if the policy is very old and their memory of the initial purchase has faded. You really should take a minute to carefully review your Annual Statement. Here’s some information that might help you to understand what it says:

First, be aware that you were given the actual life insurance policy when you purchased the insurance. The “policy” is simply a contract between you and the insurance company with terms and conditions related to your premium payment and the death benefit. It’s good to try to dig out that policy because it will tell you who you named as beneficiaries and other important details of the policy. The Annual Statement is just an updated summary based on that initial contract.
Policy owner/insured. In most cases the policy owner is also the person whose life is insured. However, that does not have to be the case, and you should carefully check to see if the insured and policy owner are the same. The policy owner is the only one with authority to change beneficiaries and cash in the policy. The policy insured is the person whose death triggers the death benefit payout.
Your policy is one of two types: term coverage or permanent insurance.
- Term coverage typically provides a guaranteed premium and death benefit for a term of years. If you have “15-year term” then you have a guaranteed death benefit at a guaranteed premium for 15 years from the date you purchased the policy. Once you hit the end of that 15-year term, the policy typically doesn’t terminate but the premium is no longer capped and most people get rid of the policy because of the substantial premium increase at that point.
- Permanent insurance has a death benefit and typically a cash value. It’s called “permanent” because it is intended to last for your lifetime. For insurance to be permanent, the amount you pay into the policy is greater than the premium requirement for the death benefit. The amount you pay over the premium requirement is kept in a separate account that gets a fixed interest rate (whole life) or is invested in the stock market (variable life). If you have a whole life policy, you will be able to see your minimum guaranteed interest rate and current interest rate. If you have a variable life policy you will be able to see your investment subaccounts (similar to mutual funds).
Death benefit (sometimes referred to as Face Value) is just as it sounds, the amount that will be paid to your beneficiaries at your death.
Beneficiaries. Many, but not all, Annual Statements will indicate who your current beneficiary is on the policy. If it’s not listed, it’s a good idea to contact the company to ask what they have on record. Insurance companies get purchased by other insurance companies and sometimes the beneficiary designations don’t completely make it to the new company. If the beneficiary designation is missing or incorrect, request a change of beneficiary form to complete and send back to the insurance company.
Riders and endorsements. This is where things get complicated. Your policy might have an assortment of “bells and whistles”. Perhaps it has a terminal illness benefit that accelerates the death benefit for your use before the end of your life. It may also offer an accelerated benefit if you are confined to a nursing home. It’s a good idea to call your agent or the insurance company if you see a rider or endorsement to review the details of the benefit and (equally important) what you’re paying for the benefit. Every added benefit on an insurance policy has a cost and it’s good to review the likelihood that you will use that benefit and compare it to the cost of the benefit. You can save some money if you decide that a rider is no longer needed.
Some policies have the premium paid from the cash value or investment value. If your policy is doing that, you need to carefully review the cash value each year to see if it is rising or dropping based on the deduction of premium and costs. If it’s going down, then you need to estimate when the cash value will be used up because at that point the insurance company will contact you about how you want to cover the premium payment which can be very large later in life. If you don’t pay it, your policy ends (“crashes”) and that can be a big surprise. You can call the insurance company and ask them for a report on how long the premiums will be covered by the policy value.

Fun fact: I don’t know how fun it really is but it’s important to know. Millions of dollars of insurance policies go unclaimed simply because the beneficiaries didn’t know they exist. The National Association of Insurance Commissioners (NAIC) has a website available for anyone who believes they might be a beneficiary for an unclaimed insurance policy. To use the website you have to have the policyholder’s legal name, Social Security number and date of birth and date of death. Here is the link: Life Insurance Policy Locator

Gifts Can Have Consequences

People make small gifts to friends for Christmas, birthdays, anniversaries, and the like without thinking twice. Bigger gifts need to be thought through more carefully. Maybe it’s to help someone finance the purchase of a home, or to buy a car. Perhaps your estate is large enough that you would prefer to pass some of it on before you die to minimize estate taxes. Regardless of the reason, many people don’t understand all the rules associated with making a relatively large gift to a friend or family member. Here are some points to remember:

According to the IRS, a gift is any transfer to an individual for less than fair market value in return. No gift occurs if I sell my car to my son for the fair market value Kelly Blue Book price. However, if I simply transfer the title to him for free, or sell the car to him for far less than the fair market value, then I have made a gift of the difference between the fair market value and what I received in return. Similarly, if I loan my son $100,000 and he signs a promissory note to pay it back and I subsequently forgive the loan, then I made a gift of the outstanding loan value.
Know that there can be a tax on making gifts. It doesn’t come up that often because there is a gift tax exemption, which for 2025 is $19,000 per person. If you are married, then one spouse can use both spouses’ exemptions for a total of $38,000 without any gift tax consequences. This is referred to as a “split gift”. Once you get over the threshold of $19,000 for an individual or $38,000 for a married couple, then the IRS imposes a “gift tax.” The exemption runs to each gift receiver so a single person can make lots of gifts to different people without any tax as long as no individual person receives more than $19,000.
You can make certain gifts over and above the annual exemption listed above without incurring a tax. Tuition or medical expenses, gifts to spouses and even gifts to political organizations do not have an annual exclusion limit. The same is true for gifts to qualifying charities. However, those gifts must be made directly to the educational institution or medical provider. You can’t give the gift to your loved one as reimbursement for what they already paid for tuition or medical expenses.
If there is any gift tax to pay, it’s not paid by the receiver of the gift (donee) but instead is paid by the giver of the gift (donor). A gift of a new car to my son (fat chance) does not trigger any income tax for him.
Gifts to friends and family are not tax deductible by the giver (donor). Gifts to charitable organizations might be tax deductible depending on the status of the organization.
How does the IRS know if you made a taxable gift over the annual exclusion? The onus is on the giver of the gift who is required to file a gift tax return Form 709. It’s been said that gifts over the annual exclusion are one of the most underreported tax transactions in the United States.
One of the most misunderstood elements of the gift tax is just exactly how it’s paid. Making a “taxable” gift does not increase your income taxes for the year of the gift. Instead, your “taxable” gift simply eats away at your lifetime estate/gift tax exemption. Currently, for a single person the exemption is almost $14 million so if you make a gift of say $29,000 in 2025, then you are $10,000 over the gift tax exclusion and the result is that your estate/gift tax exemption at the time of your death moves down from $14 million to $13,990,000 (I rounded it to make it easier to understand but you get the idea). This is not that big a deal unless the gift you give is large and your estate is also really large. The only possible way you would pay a tax in the year you made a gift is if you had already made so many gifts that you ate up your total $14 million estate tax exemption. For most people it’s a nonissue.
As I’ve indicated in prior posts, you should understand the capital gains consequences of making a gift of appreciated property. Writing a check for $10,000 as a gift to someone has no capital gains tax consequences because it’s cash. But if you give someone $10,000 worth of Apple stock that you bought years ago for $1,000, then the receiver of that Apple stock gift is treated as though they bought the Apple stock for $1,000. That’s called their basis in the stock, and if they immediately sell it for $10,000, then they have $9,000 of capital gains. However, if instead of giving the Apple stock while you are alive you create an estate plan that gives $10,000 of Apple stock to someone after your death, then the receiver of that gift at your death is treated as though they bought the Apple stock for $10,000, not $1,000. They get a step-up in basis. Death transfers wipe out capital gains while lifetime gifts do not. As a result, it’s almost always better to give cash rather than appreciated stock or real estate if you intend to make a lifetime gift.

If you intend on making a large gift you must be aware of the basic rules regarding exemptions and tax filings. You should also be aware of the capital gains tax issues as well. Hopefully the information above will give you more confidence in exploring your options for making gifts.

Fun fact: Speaking of gifts, the word “philanthropy” literally means “the love of humanity.” George Peabody is considered the father of modern philanthropy. He was born into poverty in South Danvers, Massachusetts, and rose to tremendous wealth. He subsequently gave almost all of his fortune away so as to set an example to other wealthy people in the mid-1800s. As a result, they renamed the town in which he was born to Peabody in honor of his generosity.

Getting the Most Out of Your Marginal Decade

As an estate planning attorney my focus is on something many people don’t like to talk about: Their inevitable demise. I make them talk about it and plan for it and the result is almost always a lot of relief.

Despite similar reservations, your marginal decade is also something you need to focus on to make it as pleasurable as possible. Popularized by Dr. Peter Attia, a physician who specializes in longevity, your marginal decade is the final 10 years of your life. It’s important because it is during that decade that most people are likely to experience significant declines in physical and cognitive function. But that’s not a preordained condition. You can protect your assets with a good estate plan; and you can put together a mental and physical health plan to make the most out of the last 10 years of your life. Of course, no one knows when they’ve entered their marginal decade, but it’s never too soon to plan for it. By observing ageing clients over three decades I have personally witnessed the positive impact that mental and physical health planning can have on people.

Preparing for your marginal decade is all about lifestyle choices. There are many exceptional people in their 80s, 90s and beyond. Almost all of them make conscious choices that affect their quality of life. It isn’t just genes or happenstance.

Here are some very important factors to consider:

Whether you think it’s decades away or you’ve already entered it, it’s important to plan for what you want your marginal decade to look like. Dr. Attia calls this “back casting.” Come up with what you want to do in the last decade of your life and then work backwards to make that happen. Be able to hold your grandchildren or great-grandchildren. Climb the stands at Comerica Park to catch a baseball game. Play 18 holes of golf and then go back out for 9 more (just ask my wife). Travel to a foreign land. The options are limitless.
From the physical side, you need to make sure you have an aggressive plan that includes regular exercise, good nutrition and proper sleep. Regardless of your physical limitations there is a plan out there that you can use. One of the strongest predictors of quality of life and longevity is VO2 max, which is the measure of how efficiently your body uses oxygen that it takes in. Find an aerobic activity to get your heart pumping within your limits. Walking, running and if you can do it, interval training, will increase your VO2 max.
Work on your balance to minimize your risk of a devastating fall. Start with something simple like balancing on one leg for 30 seconds or a minute. Once you’ve mastered that, go to Amazon and look for some equipment that focuses on balance. Take a look at the Wanyida ankle and foot strengthener. It’s great for balance and ankle strength.
Believe it or not, your grip strength is a very accurate measure of longevity. It is directly linked to your quality of life as you age. It reflects your overall muscle condition and is a lifesaver if you start to fall and need to catch yourself. Start simple but make sure you increase the strength of your grip. A good start is to squeeze a tennis ball.
Eat right. You know what your food weakness is. Get control over it and keep your weight down.
Socialize. It’s so important to have strong relationships as you age. It has both a physical and mental component and so make sure you find opportunities to consistently interact with others. Loneliness and isolation are now viewed as serious health risks later in life.

When I do retirement planning analyses for my clients I assume they are going to live well into their 90s. I will do my part to make sure your money lasts that long. I only ask that you do your part to make sure that your quality of life is as good as it can be in your marginal decade.

Fun fact: I’m sure you’ve heard about the world’s oldest living person, but do you know about the oldest living animal ever discovered? It is a quahog clam named Ming estimated to be 507 years old when found living on a seabed off the coast of Iceland. Researchers found the clam in 2006. It was estimated to be born in 1499 during the Chinese Ming Dynasty. Researchers counted the rings on its shell like how you count rings on a tree to determine age.

The End of an Era

Warren Buffett is passing the torch. At 94 years old and after delivering extra ordinary investment returns for 60 years, he announced last weekend that he will step down as CEO of Berkshire Hathaway and turn the reigns over to Greg Abel beginning next year. Warren Buffett has been called the epic compounding machine because each dollar he started with at the beginning of his investment career is worth about $365,000 today. $1,000 invested in his Berkshire Hathaway stock in 1964 is worth now about $13 million.

Regardless of your financial acumen and interest in business, the fact that you know who Warren Buffett is tells you all you need to know about his success. He has been to investing what Michael Jordan was to basketball, Muhammad Ali was to boxing and Marie Curie was to physics and chemistry: a once-in-a-lifetime star.

Warren Buffett’s success as an astute investor has been studied and dissected for decades; with the goal of uncovering the “secret” he must harbor away. I view him differently. I believe he was a great investor because of his timeless life philosophy. The same things that make people great at living life make them great investors, and Buffett’s advice spanned all elements of finding personal success. To prove my point, here are some of his quotes on all sorts of life challenges:

On education and self-improvement: “The best investment you can make, is an investment in yourself… The more you learn, the more you’ll earn.”
On budgeting: “Do not save what is left after spending, but spend what is left after saving.”
On emotional intelligence: “If you cannot control your emotions, you cannot control your money” (I believe you can replace “money” with “relationships”, “professional success” and any number of important goals).
On the company you keep: “Look for three things in a person. Intelligence, energy, and integrity. If they don’t have the last one, don’t even bother with the first two.”
On keeping it simple: “You don’t need to have extraordinary effort to achieve extraordinary results. You just need to do ordinary, everyday things exceptionally well.”
On procrastination: “The only question is whether you’re going to do it today or tomorrow. If you keep saying you’re going to do it tomorrow, you’ll never do it. You have to get on it today.
On how to approach any type of risk in your life: “Never test the depth of a river with both feet.”

Humble, brilliant, patient, kind. Warren Buffett has always been about the greatest of human attributes. Investment success is simply a byproduct of a proper life philosophy.

Fun Fact: Warren Buffett and his wife live in the same home in Omaha, Nebraska that he purchased in 1956 for $31,500. I suspect there have been some home improvements since that time.

A Brief Guide to Roth IRAs

Individual Retirement Accounts (IRAs) are popular and there are multiple varieties: traditional, rollover, inherited, to name a few. Today I focus on the Roth IRA, which is unique in how it grows tax-free. As we age and move into retirement, distributions that affect income taxes can be a concern. Traditional IRAs and 401ks require you to distribute a taxable amount each year in retirement, which adds directly to your income tax liability. The higher your income tax liability, the more likely that your Social Security will be taxed and your Medicare Part B premium will be increased. Unlike traditional IRAs, withdrawals from Roth IRAs are tax free and thus don’t impact Social Security or Medicare premiums.

There are whole books written on Roth IRAs and the strategies associated therewith. My goal below is to just give you some basic facts that may intrigue you to ask more questions:

Unlike traditional IRAs that are funded with pre-tax amounts, Roth IRAs are funded with after-tax amounts and thereafter allowed to grow tax-free. Pay the tax now and fund a Roth IRA vs. delay the tax until later and fund a traditional IRA.
Unlike traditional IRAs, there are no required minimum distributions from Roth IRAs for the original owner. Beneficial owners after the death of the original owner do have a 10-year time limit to fully withdraw the funds from the Roth IRA but there’s no tax associated with the withdrawal.
There are contribution limits to a Roth IRA. First, you can only contribute an amount equal to or less than your earned income for the year. For 2025 the contribution limit is $7,000 if you’re under 50 and $8,000 if you’re over 50. There’s also a phaseout on your ability to contribute that begins at $150,000 for single filers and $236,000 for married couples filing jointly. For high earners there still may be ways to get around the income limits (see paragraph 5 below).
Employer Roth IRAs through a 401(k) plan are becoming more popular. If your employer offers one, the 2025 total employee and employer contribution limit is $70,000 and the employee portion is based on age: $23,500 if under 50, $31,000 if 50 or older, and (just to make things more complicated) there is also a “super” catch up rule for those age 60 to 63 that allows for a $34,250 employee contribution. All those limits are subject to the company 401k plan rules.
Outside of a traditional Roth or a 401(k) Roth, there is also the area of Roth conversions. Basically, it’s a process in which you take money that you contributed pre-tax to a traditional IRA and “convert” it to a Roth IRA after paying taxes on the amount converted. Subsets of the Roth IRA conversion have fancy names like the “Back Door Roth Conversion” and the “Mega Back Door Roth Conversion.” The concept is similar in that you are putting money into a traditional IRA or 401(k) and then converting it to a Roth. High earners can use these “back door” approaches to get around contribution limits. There are several factors to consider in deciding if a Roth conversion is right for you. They include relative marginal income tax rates now and in the future, whether you are in your highest income earning years, and the amount you currently have in tax-deferred traditional IRAs. Since you must pay taxes on the conversion, the source of outside funds available to pay the taxes is also a factor. Note though you cannot make a Roth conversion with an IRA you inherited from someone else. It has to be your original traditional IRA.
There are limits to withdrawals from Roth IRAs and their complexity is beyond this weekly newsletter. Many people who look into Roths come across the five-year rule that says you will be penalized if you withdraw funds from the Roth IRA within five years of its creation. That rule is commonly misunderstood. The rule only applies to the growth in the Roth IRA. Your original contribution amount can be withdrawn at any time without a penalty or a tax. Note there are different rules for withdrawals from 401(k) Roths that aren’t so accommodating.

Roth IRAs have their place in an investment portfolio because of their tax-free nature and avoidance of required minimum distributions. However, there are many factors to weigh before determining if a Roth is right for you. The younger you are, the better the Roth option becomes. If you have a friend or loved one in their teens who has a basic job, a wonderful gift is to open a Roth IRA and contribute an amount that equals their wages for the year. Just think of the growth over decades tax-free.

Fun fact: I hope you’ve been following my beloved Pistons basketball team. They are in a playoff dogfight with the New York Knicks and growing into seasoned competitors. The Pistons have won 3 world championships: 1989, 1990 and 2004. They are slowly getting closer to their 4^th!