National Debt and High Net Worth Planning | Ep #78

Speakers: Bruce Hosler, Jason Hosler, Alex Koury, and Jon Gay

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Jon Gay (00:07):

Welcome back to Protecting and Preserving Wealth, I’m Jon Jag Gay. I’m joined by Alex Koury, Bruce Hosler and Jason Hosler of Hosler Wealth Management. Great to be with all of you today.

Bruce Hosler (00:15):

Jon, great to be with you, thank you.

Alex Koury (00:18):

Good to see you, Jon.

Jason Hosler (00:20):

Good to see you again, Jon.

Jon Gay (00:20):

Alright, so, today we’re talking about a topic that has become unavoidable for every high-net-worth family in America: the US national debt. What it means for your future taxes, your state, your legacy. We actually alluded to this in our last podcast.

We’re sitting over $38 trillion (that’s trillion with a T) of national debt today. And what matters most is not the exact number, but the mathematical reality that when you combine rising debt, aging demographics, and expanding entitlement obligations, we’re talking Medicare, Medicaid, and more, future taxation is likely to look different than today.

And again, I want to put the disclaimer out here, this conversation is not doom and gloom, it’s about being proactive, rational, and strategic while you still have control. And today, we’re going to break down what we’re seeing, what high-net-worth families are asking the team, and what steps you can take today to better protect your estate before Congress eventually adjust the rules, and well, the tax rates. So, we’ll get right into it here.

We don’t know exactly when or how tax rates are going to shift, no one does. But high-net-worth families, especially those with $5 million, $10 million, $20 million or more in net worth, they’re facing a very real risk that future taxes could be meaningfully higher than they are today.

So, the right mindset is control what you can while you still have historically low tax rates with the extension of the Tax Cuts and Jobs Act, estate structures, charitable planning, moving to tax-free with tax-efficient wealth transfer planning. These are more powerful right now before Washington has to change the math to deal with our national debt and unfunded social insurance obligations with Medicare and Social Security.

So, first question guys; what is the most common misconception you’re hearing from wealthy families when it comes to national debt and future taxation risk?

Alex Koury (02:04):

Anytime we’ve had any type of event or struggle in the markets or in the economy, we’ve had the Federal Reserve and or the government stepping in to backstop. We called it the Fed put, it happened a lot during the 2010s, 2018, 2020 even, where they’re able to keep rates really historically low, inject a lot of liquidity in the market to help keep the market from really crashing and falling.

Taxes, they think they’re going to always stay historically low. They’ve been able to do it for so many years now. We haven’t had to really face any of those real consequences just quite yet. But eventually, we believe that there is going to be a point in time where mathematically, the debt can’t continue the way it’s going, we can’t keep tax rates the way that they are, and what’s happening now is we’re thinking about IRA as deferred IRA accounts, your 401(k)s, that’s a tax deferred vehicle. That’s a taxable vehicle that the federal government can tax you on.

The same thing applies to estate plans, especially for those higher net worth families that haven’t put all those planning pieces into place about how do I protect my wealth when I transfer onto my heirs from being overly taxed.

They just don’t think about it as much. There’s kicking the can down the road, but in the last few years, especially as the “great wealth transfer” picks up in steam, more families are asking the question about: What do I need to do now at this point in my life in order to protect my family and my estate from being heavily taxed and eroded?

Jon Gay (03:32):

And that’s why this conversation matters so much, the default path is just to wait, it’s inaction. But waiting could be the most expensive decision.

Alex Koury (03:41):

Absolutely.

Jon Gay (03:42):

What planning windows are people wasting right now because they think they have more time than they actually do?

Bruce Hosler (03:47):

You know, Jon, one of the things that we’re seeing is we’re helping people as the author of Moving to Tax-Free, we’re talking to people that have these big tax-deferred accounts. They’ve had 401(k)s, they’ve had IRAs, these have grown to 1, 2, 3, 4, 5 million dollars, and they may be in their 60s or about to get to their 70s.

And the required minimum distribution date used to be 70 and a half, it got moved to 73. And then for those born in 1960 and later, it got pushed off to age 75. They haven’t done the math to see what a required minimum distribution looks like.

If someone has $3 to $5 million, all of a sudden, they could have an RMD somewhere between $300,000 to $500,000 a year that they have to pay taxes on. And because that income is so high, now the tax rate is in the 30% or higher tax rate. These people are going to get killed and they don’t realize it, and they could be converting in these other years, and it’s like delayed gratification. If I delay it, then I’ll have to pay the taxes later.

Whereas if they bit the bullet right now in their 60s and converted some of that, they may have to pay higher taxes today, but that leaves less on a RMD later on. I think that’s a timing issue that a lot of people are missing.

Jon Gay (05:14):

Yeah, for sure. And that’s the quiet risk people think policy gives them warning shots. Historically, major tax law shifts have not come with long lead time. So, what are the top planning strategies today that most high-net-worth families overlook that conveniently reduced future tax exposure?

Jason Hosler (05:30):

Well, Jon, you know this is our bread and butter. So, Roth conversions, like my dad was just talking about, is a huge one. But we also have a lot of clients who, either through owning businesses or their savings, they have big nest eggs that aren’t in retirement accounts, and they wonder how they can protect those from future higher taxes.

And we have a number of tools that we can use in that case: life insurance, retirement plans, charitable remainder trusts. There’s a number of tools that you can utilize to lower the tax impact for both the current generation and for future generations.

It’s all about the goals that a client has, what they want to accomplish, what’s most important, and then applying the best tool in that case. And depending on what a client’s situation is, we’ll talk with them and we’ll find the right tool that fits their situation to help them avoid the taxes in the future.

Bruce Hosler (06:29):

I want to put in there for those people that own real estate, the 1031 exchange is a beautiful vehicle, and we’re experts on the Delaware Statutory Trust. We can help people defer that exchange selling their real estate, but they can get income then, and they can pull the cost basis out income tax-free.

So, we have some really cool planning, but we just have to see their specific situation to apply the tools that we have to them. Perhaps it’s just a matter of keeping their income as a married couple under $600,000, so their long-term capital gains rate is only 15% and not 23% because they bumped up over the higher 20% long-term capital gains, and they subjected themselves to net investment income taxes.

So, there’s just a whole bunch that comes together, and we kind of have to look at the puzzle and then put the pieces together for them. But Jason’s absolutely right on that. Those tools, the people are not doing the planning that they should be early enough, I think.

Jon Gay (07:31):

Yeah, it’s simple moves done in calm times that can compound impact later. And as your producer, I’d be remiss if I didn’t mention, we’ve done episodes on 1031 exchanges and DSTs, Delaware Statutory Trusts. I would encourage our listeners and our viewers to go back and check those episodes out if they’re not familiar with those specific strategies.

So, let’s talk legacy. Where do we see the greatest gap between financial assets preparation versus heirs’ emotional or behavioral preparation?

Alex Koury (07:58):

Yeah, great question there, Jon. I was thinking about this the other day. We have some of our oldest clients, they’re in their mid to late ‘80s, their children are now in their early to mid-60s, and there’s ever been a conversation in the family about family finances.

So, we had to come in a couple times and we did a family meeting to sit down with children with the parents and let the parents tell their children, “Hey, this is what we’ve accumulated over our lives. It’s$ 5, $6 million of wealth.”

And the way I was viewing that conversation was really, this was the first time that these children even in their older age even were aware of what the family even had for assets. And that happens a lot. That’s an old way of thinking, obviously is “keep the money quiet.” We don’t talk about money and so forth and so on.

But there’s so many opportunities that can be created when you actually open up the conversation to your children, especially at that later age of what can we give now? What can we do for our children now while we’re still alive that we can actually give them more? How do we as advisors help those children prepare for their own retirement, understanding they have to pay for their own lives upfront?

Eventually, maybe at the end of the day, those monies may be used for their children in terms of retirement assets, but it helps start that conversation about what does the parents need to do? What can they do and what do the children need to do to be emotionally ready for that time when they get this big wealth transfer sometime 10, 15 years from now?

Jon Gay (09:28):

What you said really resonates about that old school mindset of :we don’t talk about money,” and that can really come back to bite you. It’s where values transfer is just as important as asset transfer. I love this line: “You cannot tax away wisdom.” I love that line.

Alex Koury (09:43):

That’s right. You know wealth typically doesn’t last beyond a third generation. So, especially if you really want to pass this on, not just to your children, but to your children’s children and beyond that, having a legacy plan, some people call it a “hundred-year plan” in place, will help every generation understand their responsibilities and learn how to manage money before they actually take hold of those bigger amounts.

Jon Gay (10:04):

Yeah. You worked so hard for so long, you’d hate to see it go up in smoke, so to speak. within just a generation or two.

Alex Koury (10:09):

That’s right.

Bruce Hosler (10:10):

Well, and that’s where some of our multi-generational planning, we call it the two-generation tax-free legacy plan, but we can actually leave that, some of that in a tax-free income stream. So, you’re leaving that legacy as a tax-free income stream. It lasts so much longer if it’s not being taxed, Jon.

Jon Gay (10:29):

Absolutely.

Bruce Hosler (10:29):

But that takes some planning to do that.

Jon Gay (10:31):

For sure. So, as we record this on November 13th, 2025, what has changed for you gentlemen in the last 12 months as far as questions clients are asking? What new concerns have been popping up throughout 2025?

Jason Hosler (10:43):

Well, Jon, there’s been a lot of talk and a lot of questions around artificial intelligence. People are finally realizing how big of a deal this is going to be. We expect it to be changed on par or greater with the introduction of the internet and how that changed commerce, how that changed how we interact with each other, how that changed contacting each other, communications. It’s going to be a very big thing and clients are realizing that now at this point and asking about that.

I would say the other thing is the uncertainty around the world with geopolitical risk: rising tensions, rising conflicts, country struggling with debts and regulations. So, that uncertainty coupled with the artificial intelligence has been the two biggest concerns I’ve received in the last 12 months.

Jon Gay (11:41):

It’s exactly why early planning shouldn’t be fear-based; it should be responsibility-based. And I’ll ask any of the three of you or all of you if you want to take it — if you can give one sentence of advice to high-net-worth families listening to us today, who feel overwhelmed by the national debt and that uncertainty that Jason just mentioned, what would that one sentence of advice be?

Bruce Hosler (12:00):

I would say begin planning. Begin planning with a complete foundational financial plan that tracks your net worth, helps you move to tax-free, and every year you’re moving your assets to tax-free whether it benefits you or benefits your children or your grandchildren.

This whole planning, you can avoid a lot of mistakes by looking at things. It’s like building a house without a blueprint. You can imagine that’s going to look like a haphazard old shanty, but with a plan and a blueprint, the life that you’re building is going to be so much more stable.

Jon Gay (12:37):

More of a run-on sentence or a paragraph than one sentence Bruce, but there’s some really good stuff in there, so we’ll allow it.

Bruce Hosler (12:43):

Ah, thank you.

Jon Gay (12:44):

Jason, Alex, if you could do it in like one sentence, what would your advice be?

Jason Hosler (12:50):

Jon, I would have to say that when you’re faced with uncertainty, planning for various contingencies can give you peace because if it goes one way or another, you know that you have the plan to take action.

Jon Gay (13:04):

Close enough to one sentence. Alex, let’s see how you do.

Alex Koury (13:06):

People just are afraid of going to revisit their attorneys after they’ve drawn up their trust documents after 10, 15, 20 years. They know it’s expensive, they know it’s costly, but I would say at what cost are you foregoing getting your plans updated to current times and laws and regulations that protects more of your money potentially, number one.

Number two is there’s a lot of great tools today that we have in our own practice as well, that we can help our clients with ongoing estate planning in their lives without having to go visit their estate attorney as well. Let us help you with that planning, let us help you dig deeper into your documents to see what are you missing, what do you want to have in there that may have changed over time?

There’s many reasons why you don’t just set it and forget it. Just put it in a drawer, pull it out, dust it off. Bring it in. We’ll look at it with you and for you and see where we can help you add some value and help you protect your estate for yourself and for your future heirs.

Jon Gay (14:02):

Alex, you did hear me say one sentence, right?

Alex Koury (14:05):

I did, yeah (laughs). Well, I went a little bit longer than that, but hey, we’re still at 15 minutes, so we’re good.

Bruce Hosler (14:11):

I just don’t think we’re very good at being short-winded there, Jon, I’m sorry about that.

Jon Gay (14:15):

There’s a famous Mark Twain line where he says, “I wrote you a long letter because I didn’t have time to write you a short one.”

Jason Hosler (14:22):

Yep, that’s right.

Bruce Hosler (14:23):

And being succinct is difficult.

Jon Gay (14:24):

We’ll work on that for our next episode. In the meantime, if our folks listening or watching want to reach you and the team at Hosler Wealth Management, how do they best find you?

Bruce Hosler (14:33):

Well, they can catch us on the website at hoslerwm.com. In Prescott, Jason?

Jason Hosler (14:39):

(928)-778-7666.

Bruce Hosler (14:43):

Scottsdale, Alex?

Alex Koury (14:44):

(480)-994-7342.

Jon Gay (14:48):

Alright. The disclaimer’s going to be more than a sentence, that’s coming up next. Thank you all, gentlemen, we’ll talk again soon.

Bruce Hosler (14:54):

Thank you, Jon.

Alex Koury (14:54):

Thanks.

Jason Hosler (14:54):

Thanks, Jon.

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Disclosure: (23:50):

Investment advisory services are offered through Mutual Advisors LLC, DBA Hosler Wealth Management, a SEC registered investment advisor. Securities are offered through Mutual Securities, Inc., a member FINRA/SIPC. Mutual Advisors, LLC and Mutual Securities, Inc. (collectively Mutual Group) are affiliated companies.

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