2025 has been interesting to say the least, however, through the ups and the downs our team is here and equipped to navigate whatever is thrown our way. We consider it a great honor to guide you through the turbulence, and we are grateful we get to walk alongside you.
Another edition of The Inside Scoop is here, and this one is packed full of more great content. In this quarter’s edition you will find timely pieces surrounding the market volatility, IRS updates, and trusts. We have also included some photos of recent events our team has experienced.
We hope you enjoy.
Yaz, Justin, Karley, Ashley & Whitney
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Our team exists to come alongside you in your wealth journey as we do not believe in a one sized fits all approach when it comes to your future. In order for us to serve you to the best of our ability, we ask that you keep a few things updated along the way.
Taxes
After filing, send us your tax return. Every year. It's that easy. Our team will then do a thorough analysis.
We will discuss implications and scenario-based decisions personalized to you and your family.
Tax Planning Perspective VIDEO
Estate Documents
It is imperative that you update us when there are material changes to your will, power of attorney, and other directives. No one wants to think about the worst-case scenario, however, keeping our team informed of any updates ensures a smooth transition if/when it was to happen.
Estate Planning Perspectives VIDEO
Insurance
Start the conversation and keep us updated on your current plan.
Whether it be a whole life policy review, health or property insurance referrals, we will review your current situation and connect you with the best resource to mitigate risk.
360 Wealth
Log in to the Baird Online app. At a minimum, link the basics. (mortgage, 401(k), loans and bank accounts).
Your accounts will auto-update and will feed into your financial plan for a 360 view & precise financial advice. It is important to keep us informed of any outside accounts as we periodically review your long-term goals.
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BULL & BAIRD : When Uncertainty Reigns
Spring is one of my favorite seasons of the year. Winter is ending, flowers are starting to bloom, and each day brings more and more sunshine. What’s not to love about daffodils, shedding our puffy jackets, and sunsets past 6pm?
However, Spring also brings horrendous storms. Massive bouts of rain and lightning are common as the atmosphere warms from its winter chill.
My family flew home from spring break earlier this week into the kind of storm that grounds airplanes. From Alabama to Wisconsin all you could see was red on the radar. Luckily, we landed before the worst hit.
As we were driving home the rain and wind were so bad we had to stop at a gas station to let it pass. The storm wasn’t aimed at us (even though it felt like it). Everyone in the region was being pummeled by the elements – no one was immune.
Sitting there I was reminded that there are moments in life that are completely out of my control, where all the wishing in the world won’t help end the event. When uncertainty about what might happen is so high that you have to sit back and let it unfold. Only after the event passes do you assess what to do next.
Kind of like the stock market in Spring of 2025.
For better or worse the new US administration wants to rebalance global trade via the use of tariffs. Whether it will work or not is up to history to decide, but right now it’s causing a storm in the stock market and there’s really not much anyone can do about it.
Like the wind battering my family, stock portfolios are being buffeted by surprise after surprise (which we know the stock market hates) and, unfortunately, no one has the answer to how this all ends. Its just too chaotic in the moment.
My dear friend Morgan Housel is fond of saying “good investing is about how you behave, not what you know. Investing rewards those who can sit still when everyone else panics”.
How could knowledge help you in this moment when even the stock market is struggling to understand what’s happening day to day?
What was the key to getting through massive uncertainty in the stock market during 2020? Behavior, not intelligence. What you did in March of 2020 determined all your investing success for the next 5 years.
Would it have made sense for me to take some dramatic action during the big storm this week? Should I have stepped out of my car and raged at the sky? No. Should I have pushed on and put my family in danger even though driving conditions were hazardous? Also no.
When there is red on the radar, or red on your stock screen, it’s time to think through the best decisions you can make and not let fear take over.
When uncertainty reigns, your reaction to it determines your success or failure. Hunkering down and waiting for a storm to pass is sometimes the correct course of action.
Let Wall Street sift through this paroxysm of uncertainty, stay calm, and when the winds die down a little, you and your Financial Advisor can assess where you are and what to do next.
All That Matters: Weathering a Storm VIDEO
In April’s episode, Mike and Ross tackle the challenges of a stormy market, providing an overview of how investors should view the coming months.
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We share our lives with you because you are an extension of our family. Long-term relationships which encourage open and honest communication have been the cornerstone of our team's success for many years. Thank you for allowing us to walk alongside you and your family.
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Wills vs. Trusts – What’s the Difference?
Article written by Baird Trust
At the surface, wills and trusts may seem similar – and maybe even interchangeable. If you dig deeper, though, you’ll find that the two have a few important differences that could make one a better fit for you.
Contents and Instructions
The first key difference between wills and trusts is that wills only take effect after a person’s death, whereas trusts can be implemented both during a person’s life and after their death. The contents of a trust can also protect a person during incapacity. Therefore, a trust can cover everything from instructions for distributing property (after death), to how end-of-life care should be handled, to who the designated guardians are for children or pets. Wills, on the other hand, mainly cover the manner in which assets should be distributed by an Executor.
Degree of Flexibility in Terms
By design, most wills are inflexible: While the contents of a will can be modified, the process can be strict and complicated. For trusts, the degree of flexibility depends on the type of trust – revocable trusts, for example, can be more easily modified after they are created, but irrevocable trusts can only be altered under certain conditions.
Complexity of Implementation
A major disadvantage to wills, for many people, is that they must be filed with a probate court – the court that oversees the distributi on of an individual’s assets. The probate process can be long and makes all information within the will publicly accessible. In contrast, trusts are effective immediately upon signing and funding – once a trust’s assets are transferred to a trustee, the trustee is required to manage it according to the terms. In addition, a trust keeps the information within it private from the general public.
Tax Benefits
Whenever you’re passing assets above a certain amount onto your heirs ($13.99 million for an individual in 2025), you run the risk of incurring estate tax. Unlike a will, a trust can help you mitigate these estate taxes. For example, putting assets into an irrevocable trust can remove them from your taxable estate, therefore lowering your estate tax bill.
Protection From Creditors
During the probate process, the decedent’s debts and liabilities typically must be settled first – so a judge can order that creditors be paid from the estate before any distributions are made to beneficiaries. Irrevocable trusts, on the other hand, can help protect assets from creditors.
When considering wills and trusts, remember that the two are not mutually exclusive. While wills can be effective for those with children or dependents, trusts are helpful for those who want to distribute assets while they’re still alive or keep their information private after death. An individual who fits into multiple categories might benefit from both documents.
To discuss which (or both) of these options could be the most effective for you and your family, reach out to our team.
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Below are the upcoming Wealth Strategy calls. Mark your calendar for those that pertain to you and be on the look-out for the registration email.
6/18/25 Social Security
7/16/25 Estate Planning
8/20/25 Cybersecurity/Identity Theft
9/17/25 Charitable Giving
10/15/25 Medicare
11/19/25 Year-End Planning Strategies
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The Internal Revenue Service income tax brackets, standard deduction, and retirement contribution limits for the 2025 tax year are below.
With a new administration taking over in Washington in January, along with the potential sunsetting of many aspects of the Tax Cuts & Jobs Act, there is an expectation that significant tax legislation will be introduced in 2025. While it’s possible there will be tax law changes that affect these numbers, it’s more likely that any changes will be effective in 2026. As always, Baird will continue to monitor any legislation and be ready with any updates as they happen.
Standard Deduction
The new standard deductions for 2025:
Married filing jointly: $30,000, up $800 from 2024
Single taxpayers and married individuals filing separately: $15,000, up $400
Heads of households: $22,500, up $600
Additionally, retired married couples receive an additional standard deduction of $1,600 for each spouse age 65+. Single individuals receive an additional $2,000.
Takeaway: This increase will make it more difficult to itemize your deductions in 2025, which means your tax payments, mortgage interest and charitable contributions are less likely to provide you a tax benefit. With the standard deduction potentially falling significantly in 2026, you may want to consider a “bunching” strategy, such as deferring charitable contributions from 2025 to 2026 where they may provide greater tax savings.
Retirement Savings Contributions
The 401(k) contribution limit is rising by $500, to $23,500. The overall savings limit, referred to as the 415 limit, is also increasing $1,000 to $70,000. This includes your own savings plus any matching or profit-sharing contributions from your employer. While catch-up contributions for participants aged 50 and up will remain at $7,500, the IRS is introducing a new “super catch-up” contribution limit for older employees. Beginning in 2025, individuals aged 60-63 can contribute an additional $3,750 to their employer-sponsored retirement plans, for a total catch-up amount of $11,250.
Traditional and Roth IRA contribution limits will hold at $7,000, though who can qualify for a Roth contribution will change: Married couples with income below $236,000 will be able to make a full Roth contribution next year, as will singles below $150,000. Those are up from $230,000 and $146,000, respectively, in 2024.
Takeaway: Make sure you assess your retirement contributions to ensure you’re maximizing your benefits. Keep in mind the phaseout ranges have changed; couples with income over $246,000 (and singles over $165,000) will not be eligible to contribute to a Roth IRA next year. Barring any legislative or other changes, remains an option for those over the applicable income levels.
Gift Tax
The gift tax annual exclusion is increasing from $18,000 to $19,000 for 2025 – the fourth consecutive year the gift limit has increased. Individuals can gift up to this amount to any number of individuals in 2025 without incurring gift tax or using any of the taxpayer’s lifetime exemption. Married couples can each use this exemption, allowing them to gift up to $38,000 annually to each recipient in 2025.
In addition, the lifetime exemption amount increased $380,000 per person, up to $13.99 million per individual. This increase means that a married couple can shield a total of $27.98 million from federal estate or gift tax. Those individuals who used their full exemption in recent years will now be able to make an additional tax-free gift to family members or others.
Takeaway: Note that the exemption is still set to sunset back by more than 50% at the beginning of 2026. Your Baird Financial Advisor can be a resource for tax planning strategies to effectively transfer this wealth to maximize this exemption.
Social Security
Social Security and Supplemental Security Income (SSI) benefits will increase 2.5% in 2025, an average increase of almost $48 per month. This adjustment is notably smaller when compared to the recent years’ 5-8% increases that were in response to high inflation.
Takeaway: While inflation has slowed compared to the start of 2024, prices continue to be higher than previous years and may require you to review your cash flow strategy for the year to come.
As always, retirees have many factors to consider when choosing their start date for benefits – including how your start date could impact the surviving spouse – so it’s best to weigh all your options with your Baird Financial Advisor before deciding when to begin benefits.
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