Repealing the Estate Tax Could Be Worse for Most People

Repealing the Estate Tax Could Be Worse for Most People

Bloomberg came out this morning with an article highlighting a Republican Congressional effort to draft a Contract with America Part 2. In this platform they plan to add Repealing the Estate Tax.

How could repealing the estate tax be bad for you? How could cutting any tax be worse for you?

Repealing the Estate Tax Repeals the Stepped Up Basis

In 2010, that one brief year without estate tax, average people learned how costly this could be. It was because of elimination of the stepped up basis on capital assets.

What does that mean?

Lets break it down. A capital asset is something you own. It doesn’t have to be something that goes up in value (businesses own many capital assets that depreciate). But for average people it usually means something that goes up in value.

Examples: your house; stocks; vacation home; collectible car.

Stepped Up Basis means that if your grandfather bought a house in 1960 for $25,000, and died in 2015. And left it to you in his will. And when he died the house was worth $750,000, you could sell that house the next day for $750,000 and pay NO TAX (in most circumstances).

The Reason? The “cost basis” steps up at death. So when you inherited it, the law treats it as if you just “bought” it for $750,000 and therefore have no taxable gain.

That’s pretty good isn’t it?

It sure is but this benefit mostly went away the last time they repealed the estate tax.

So what happened?

In 2010, those with very large estates paid no estate tax that year. Granted the estate tax rate is rather nasty. And some states like mine (Massachusetts), add a nasty state tax to the bill too (11% for estates

Repealing the Estate Tax Could Be Worse for Most People

No estate tax will help some people!

over $1 million – note the level is different than the federal level).

Those with smaller estates, who would never have paid an estate tax, suddenly were potentially exposed to capital gains taxes on capital assets. In the example above, if there were no stepped up basis rule, that $725,000 gain on the house might be taxable if the house were sold. At 15-20% capital gain tax, that’s a big consequence of repealing the estate tax!

Here’s how broke it down at the time:

In 2010 there would be a 1.3M exemption in stepped up basis. Plus 3M for spouses. So if a child inherited 2M of property, $700,000 would be over the exemption and taxable. In 2015 the rate hypothetically on the sale of a $2M inherited property would be 15-20%! As opposed to ZERO. 


And now the middle class gets hit hard. In many cases in my work, the largest estate asset is the house. A middle class person passes away, and leaves their home to the kids to split. In many cases there is no tax.

But if the estate tax is repealed in the way it was before in 2010, there might be a tax. And that tax will hit many average families. the likely scenario would be a home or small business inheritance.

Repealing the Estate Tax – Just What the Government Wants

And to add insult to injury, perhaps government figures know this because reports show that repealing the estate tax will INCREASE government tax revenue.

And with recent decisions on Medicare and Social Security, the government is not opposed to dinging middle and upper middle income people.

For further reading:

Obama would love to increase taxes on the Middle Class by eliminating the step up basis: Wall Street Journal

Changes in Medicare costs:  Medicare Hold Harmless – Chris Grande interviews Medicare expert Lindsay Quillen LCSW (Video). 

Bipartisan Budget Bill Kills Popular Social Security Maximizing Strategy: Wall Street Journal 

Want to make smarter choices with your money? Consider Working with Chris

Medicare Hold Harmless: Your Questions Answered (Video)

Medicare Hold Harmless: Your Questions Answered (Video)

Medicare’s Hold Harmless provision is lashing out in 2016. Certain people, particularly those not using Medicare part B yet and those earning over $85,000/year single (170k married) will likely see an increase in their Medicare Part B premiums when they do sign up.

Medicare Hold Harmless and the 25% Rule

The Medicare hold harmless provision builds in protections for low to middle income earners against strong increases in part B premiums. It accomplishes this in a simple way. By charging new signups more and higher income people more.

That’s the way to get re-elected. Don’t raise anyone’s existing bill too much. Hit the new people! Basically, the 25% rule is that premiums collected should cover 25% of the costs. However with perennially rising costs, and no cost of living increase this year on social security, current premiums won’t cover 2%.

Therefore, premiums must go up. But protections prevent increases for most people. Therefore, shortfalls must come from elsewhere.

Medicare hold Harmless – So Exactly How Will This Play Out?

This is where my latest video comes in. I interview Medicare expert Lindsay Quillen LCSW and ask her the top questions people are asking about Medicare Hold Harmless. If you or someone you know maybe affected, watch this video.

It’s free education – which is what my site is all about (and always has been about). If I can help more in any way, contact me personally! Without further delay, here’s the video:

About Our Featured Guest

Lindsay Quillen LCSW is a former social worker with a specialized knowledge of Medicare and services

Medicare expert Lindsay Quillen LCSW discusses hold harmless

Lindsay Quillen LCSW discusses Medicare Hold Harmless

to seniors. Lindsay has counseled thousands of individuals and professionals.

Lindsay has had the distinguished honor of presenting at several national and regional conferences. In 2011 she founded Medicare Mentors to “empower individuals to be informed consumers of their retirement healthcare options through education and guidance.”

For more information on Lindsay Quillen, LCSW and how to reach her, visit her site at To learn more about Medicare hold harmless changes, go to Lindsay’s “Happenings” page HERE.

To learn more about working with Chris, go to the Work with Chris page.

To learn more about Medicare and changes at Medicare, go to


This video is meant to be helpful and educational. But not advice just for you. We don’t know you. if you’d like personalized Medicare (and other) advice, contact a professional. One who can do a thorough needs analysis.  And advise you on the best way to go for your situation.



Ideal Client Profile – The Key to Business Happiness

Ideal Client Profile – The Key to Business Happiness

Seth Godin shares why you want to determine and serve only your ideal clients and customers:

Sometimes, it’s essential that you be completely understood. That every passenger knows where the emergency exit is, or that every employee knows how it is we do things around here.

But most of the time, if 2% of your audience doesn’t get the joke, doesn’t learn what you seek to teach them, doesn’t understand the essence of your argument, it’s not the problem you think it is.

Sure, the 2% who are underinformed can write reviews, tweet indignantly and speak up. You know what? It doesn’t matter that much.

If you insist on telling everyone on the airplane precisely how to buckle their seatbelt (!), then yes, of course you’re going to not only waste the time of virtually everyone, but you’re going to train them not to listen to the rest of what you have to say.

If you insist on getting every single person in the room to understand every nuance of your presentation, you’ve just signed up to bore and alienate the very people you needed most.

When you find yourself overwriting, embracing redundancy and overwhelming people with fine print, you’re probably protecting yourself against the 2%, at the expense of everyone else. (And yes, it might be 10% or even 90%…. that’s okay). 

When we hold back and dumb down, we are hurting the people who need to hear from us, often in a vain attempt to satisfy a few people who might never choose to actually listen.

It’s quite okay to say, “it’s not for you.”

How to Determine Your Ideal Clients

When you work with people in your business, whom do you enjoy serving? What type of people? What part of what you do provides the most fulfillment? Answer these questions. And you’re on your way to developing your ideal client profile.

Can you do this fulfilling work, with the type of people you like and command a solid fee? In other words, can you be paid to serve your ideal clients? Or will it be charity work? If you can serve people you like and do something you like, and earn a living, you’re on to something.

Design Your Life When You Have an Ideal Client Profile

Achieve Balance by Having an Ideal Client Profile

Achieve Balance by Having an Ideal Client Profile (photo credit: Sharon Mollerus)

Take the ideas above, and plan your work around your life. By working with people who fit your ideal client profile, who like and appreciate you, you can achieve balance. If your work is helping them be more balanced, they will appreciate your attempts to be more balanced.

Be an example. Develop your ideal client profile. Serve ideal clients. Help them achieve their goals.

I have an ideal client profile. Want to see what a good fit to work with me is? Click HERE to find out.

About Chris

Cover photo via

Real Estate Price Cuts Follow the Slowdown in Stocks

Real Estate Price Cuts Follow the Slowdown in Stocks

What’s different about this image? (hint: I put yellow arrows to help you)

Real Estate Price Cuts

Real Estate Price Cuts Piling Up (Zillow)

I haven’t seen this many price reductions on one real estate search screen in a long time! My personal belief is that we are way overdue for a slowdown. As any of you who have been reading my newsletter know. You know that I personally believe that central bank stimulus can not have a lasting impact.

Time for the Hangover

Typically I am harping on the magical performance of the stock market. 2014 and 2015 have been just reflexive buying in my opinion. As the Fed has taught people to just keep buying. And companies have used low interest rates to borrow money and buy back stock. Instead of investing in their businesses.

We haven’t had much real growth. It’s been mostly financial engineering.

And we are finally seeing that not work anymore.

Real Estate Price Cuts Overdue

Real Estate Price Cuts / Reduction

Real Estate Price Cuts / Reduction (via futureatlas)

Stocks have been overpriced but I haven’t mentioned real estate too much. With rich Chinese people desperately trying to hide money from the grasp of their government. And low interest rates. And large US investors turning homes into an asset class just like large cap and small cap stocks, I wasn’t sure when real estate would slow down.

Now it appears to be decelerating a bit. Small price cuts on occasionally outrageous asking prices isn’t a huge deal. But any real estate price cuts, especially in the Boston area, are news.

Real Estate Price Cuts are Good for the Economy

They’re not good for retirees trying to use the housing ATM or to downsize. Though the targeted downsize home would theoretically change prices in step with the home being sold.

But they are good for young people trying to start a darned life. Something the Federal Reserve has no interest in. We seem to cheer nationwide as house prices increase. but this only helps the large investors and existing owners. Millennials trapped in a permanent rent cycle or in moms basement see no benefit. Unless they’re getting a piece of mom’s sale price.

What’s the Plan

if you’re a young buyer, keep hope alive. Maybe we get a price implosion. I have a theory that a large chunk of boomers will downsize at the same time. Downsizing has been accelerating. Boomers are herd animals. As soon as they think they won’t get “full value” on the sale of their home, they will try to sell. or when they see many of their friends selling, they’ll copy them. And when they all compete, we’ll see price cuts.

Maybe those price cuts will be big enough to make it affordable for you. Don’t rush into real estate right now. Become a sniper. Wait for a good opportunity. Let this market get messy. Then consider striking when you find the place you like at a price that works.

Do you want to think intelligently about your next major money move? Tell me more.

Gold Shortage Coming to America (and Europe)

Gold Shortage Coming to America (and Europe)

It’s been a while since I discussed gold in any detail on my blog. And even though I still hold the belief that nothing has been “fixed” in the global economy (just can kicking), it made no sense to keep discussing gold. With gold being in a 3 year bear market and all.

A Gold Shortage?

However a different angle on the gold market has arisen. The idea that there isn’t enough of it. Kathy Derbes, who deals in gold, wrote a recent piece on the potential shortage of gold if holders of gold futures contracts tried to claim physical delivery of their contracts.

As a side note: What’s most interesting is that this is yet another topic that “alarmist” libertarian blog Zero Hedge has brought up repeatedly for some time (recently HERE and HERE). They keep reporting interesting angles that sound alarmist to me (and I have libertarian leanings) but end up often being found true. 

Many discussions on gold will often admit that there is “plenty” of the shiny yellow metal. The usual metaphor is the one that says that all the gold in the world would fill an olympic sized swimming pool. Warren Buffett has offered the same joking reference to gold when he talks about some people digging it out of the ground, only to bury it again (in a vault).

If there is a gold shortage, get it while you can...

Gold shortage – Got gold? Courtesy of Philip Taylor PT via Flickr

A Gold Shortage Explained: Major Commodity Dealers Overpromise

So if there is plenty, what is Kathy talking about? What would cause a gold shortage? It’s the idea that a small amount of gold in the vaults of commodities dealers (like JP Morgan) is being used to back multiple contracts.

Metaphorically speaking, it’s as if 10 people own contracts that represent 10 oz of gold but only one real ounce backs those 10 different contracts.

All you’d need is two people deciding at the same time to claim the physical gold delivery for there to be a problem.

The problem could cause chaos in the gold market. Where did all of the physical gold go? Of course to the people who have historically mistrusted paper “money” and prefer something real – Asians (read Chinese and Indians).

Westerners are being increasingly left to pass around paper gold because the real stuff is mostly gone overseas. Never to return.

Read Kathy’s article for a full explanation.

Gold Shortage Action Item Ideas

A gold shortage problem, and the chaotic scramble for supply  that would result from this being true, would make cheap gold discovery mining stocks very valuable.

One potentially helpful resource for putting together a portfolio of emerging discovery gold stocks is Brent Cook. He is a geologist who writes a newsletter on gold stocks. He tells people what he is personally investing in.

I have already begun adding gold exposure back to my client portfolios. Want to learn more? Click HERE

featured image via Anthony Joh on Flickr.

Gold shortage solutions image via digitalmoneyworld on Flickr