For more information and show notes visit: https://www.bwmplanning.com/post/87

In this episode of Financial Planning for Oil & Gas Professionals, hosts Justin Brownlee and Jared Machen dive into the recent updates to the SECURE Act, focusing on changes affecting non-spouse beneficiaries and the implications for Required Minimum Distributions (RMDs) under the 10-year rule.

The SECURE Act, passed in 2019, introduced significant changes to how non-spouse beneficiaries manage inherited IRAs. One of the most notable changes is the requirement for most non-spouse beneficiaries to deplete inherited accounts within a 10-year period. This shift has significant implications for tax planning & financial management, particularly for those inheriting large pre-tax retirement accounts.

1) 10-Year Rule for Non-Spouse Beneficiaries: Previously, non-spouse beneficiaries could stretch distributions from an inherited IRA over their lifetime, allowing them to take smaller required minimum distributions (RMDs) annually. This approach enabled beneficiaries to manage their tax burden effectively, even when inheriting substantial IRAs. Under the SECURE Act, however, most non-spouse beneficiaries must now withdraw the entire balance of the inherited IRA within 10 years. This change compresses the distribution timeline, potentially leading to significantly higher taxable income in the years when distributions are taken.

2) Tax Implications: The requirement to withdraw funds within a decade can create a substantial tax burden, especially for beneficiaries already in a high-income bracket. For instance, if a beneficiary inherits a $4 million IRA while earning a significant income, the additional distributions could push them into an even higher tax bracket, resulting in a larger percentage of their inheritance being lost to taxes. This scenario is particularly concerning for those who may not have anticipated such a sudden increase in taxable income.

3) Clarifications on RMDs: The SECURE Act also introduced nuances regarding RMDs for non-spouse beneficiaries. If the original account owner had begun taking RMDs before their death, the beneficiary must adhere to both the 10-year depletion rule and the annual RMD requirements. This dual obligation complicates tax planning, as beneficiaries must ensure they meet both requirements to avoid hefty penalties. The penalties for failing to take the required distributions can be severe, adding another layer of complexity to the management of inherited IRAs.

4) Exceptions to the Rule: While the 10-year rule applies to most non-spouse beneficiaries, there are exceptions for certain eligible designated beneficiaries, such as surviving spouses, disabled individuals, and minor children. These exceptions allow for more favorable distribution options, but they are limited to specific circumstances.

Given these changes, it is crucial for beneficiaries to engage in proactive tax planning. Here are some strategies to consider:

• Timing of Distributions: Beneficiaries should evaluate their current and expected future income levels to determine the optimal timing for taking distributions. For example, if a beneficiary anticipates a lower income in the future, it may be beneficial to delay distributions until that time to minimize tax impact.
• Tax Diversification: Beneficiaries should consider their overall tax situation, including other sources of income and tax-advantaged accounts. This holistic view can help in making informed decisions about how much to withdraw each year.

The SECURE Act has fundamentally changed the landscape for non-spouse beneficiaries of IRAs, requiring careful planning to avoid unintended tax consequences. By...

For more information and show notes visit: https://www.bwmplanning.com/post/86

In this episode of Financial Planning for Oil and Gas Professionals, we dive into the complex considerations involved in purchasing a second home. We explore the decision from both an investment and lifestyle perspective, providing insights to help you determine if a second home makes sense for you.

The Investment vs. Lifestyle Decision:

We break down the decision to buy a second home into two primary motivations: investment and lifestyle. It's important to consider the potential for appreciation, rental income, and the overall impact on your balance sheet. We emphasize the need for a second home to be a small fraction of your net worth if viewed purely as an investment and highlight the importance of loving the location and considering the true cost of ownership, including property taxes, insurance, and maintenance. We also stress the need to evaluate how much time you will realistically spend at the second home and the impact on your travel plans.

Accessibility and Utilization:

We discuss the importance of accessibility, especially for working professionals with limited time. The ease of travel to the second home can significantly impact its utilization and overall value. Included in the episode are personal anecdotes to illustrate how accessibility can affect the decision-making process.

Mindshare and Management:

We talk about the mental and time investment required to manage a second home. Whether you plan to handle maintenance yourself or hire a management company, it's crucial to consider the mindshare ratio and the potential headaches involved.

Market Timing and Real Estate Trends:

We caution listeners about the current real estate market, noting that home prices are at an all-time high and the easy money has already been made, and discuss the headwinds facing new buyers and the importance of being realistic about potential returns.

Personal Balance Sheet Considerations:

We emphasize the need to understand your personal balance sheet and liquidity when considering a second home. The structure of your assets, whether liquid or tied up in a privately held business, can significantly impact your ability to manage a second home.

We wrap up the episode by reiterating the importance of approaching the decision to buy a second home with humility and a clear understanding of your motivations. Whether for investment or lifestyle, it's crucial to be realistic about the costs, benefits, and potential headaches involved.

As always, we encourage our listeners to reach out with any questions or ideas for future episodes at podcast@brownleewealthmanagement.com.

Thank you for tuning in, and we look forward to bringing you more insightful episodes in the future.

Facebook - https://www.facebook.com/BrownleeWealthManagement/?ref=py_c

Linkedin - https://www.linkedin.com/company/brownlee-wealth-management/

Disclosure: This information is for informational purposes only. Nothing discussed during this video should be interpreted as tax, legal, or investment advice. If you have questions pertaining to your specific situation, please consult the appropriate qualified professional.

For more information and show notes visit: https://bwmplanning.com/post/85

In this episode of Financial Planning for Oil and Gas Professionals, hosts Justin Brownlee and Jared Machen discuss their theory on resort town hyperinflation, do a residential real estate heat check, and delve into back-to-school financial topics.

Challenges Faced by Resort Towns and Luxury Vacation Inflation

Resort towns and luxury vacation destinations are grappling with a unique challenge that could result in inflation surpassing that of other sectors of the economy. We dive into how these areas have witnessed a significant surge in prices over recent years, rendering them unaffordable for many. The primary issue highlighted is the struggle to establish the necessary infrastructure to sustain the workforce essential for maintaining these locations.

1. Workforce Shortage: Resort towns often encounter difficulties in attracting and retaining an adequate workforce to support their daily operations. From stocking grocery shelves to providing services at upscale hotels, these towns rely on a large number of employees. However, with housing costs soaring, it becomes increasingly tough to entice individuals to work in these areas.
2. Geographical Challenges: Many resort towns are situated in remote areas, far from major cities and transportation hubs. This geographical isolation further complicates the workforce availability issue. Without a steady influx of workers, these towns find it challenging to uphold the necessary services and amenities for residents and visitors.
3. High Infrastructure Costs: The cost of living in resort towns is often exorbitant, with even basic housing options reaching millions of dollars. This high cost of living extends to businesses operating in these areas, making it financially burdensome to provide affordable housing for employees.
4. Reliance on Wealthy Patrons: The episode mentions instances where ultra-wealthy individuals have subsidized housing for full-time workers in resort towns. This dependence on affluent benefactors to support the workforce underscores the unsustainable nature of the current economic model in these areas.
5. Demographic Shifts: The episode also touches on the demographic trends influencing the demand for resort town properties. With an increasing number of high-net-worth individuals and decamillionaires, the demand for luxury vacation homes is on the rise, further propelling prices in these areas.

The challenges faced by resort towns in providing infrastructure for their workforce are contributing to a scenario where luxury vacation inflation may outpace inflation in other economic segments.

Residential Real Estate

We discuss the current state of the residential real estate market, highlighting its normalization. This normalization is characterized by increased inventory and longer listing times, indicating a shift from the rapid market pace seen in previous years. In areas like Northwest Arkansas and DFW, more homes are being listed for sale, and these homes are staying on the market for longer periods compared to the previous boom.

Public vs Private Schools

The decision between public and private schools for children is a complex and highly personal one, as discussed in the podcast episode. There are various considerations that parents need to take into account when making this decision. One key factor mentioned was the desired end product for the child. Parents often consider what type of education and environment will best prepare their child for the future. This could include factors such as academic rigor, extracurricular opportunities, and overall school culture.

As always, we encourage our listeners to reach out with any questions or...

For more information and show notes visit: https://www.bwmplanning.com/post/84

In this episode, we discuss some thought-provoking ideas and share our insights on optimizing investments, lowering future taxes, and growing wealth. Here are three key takeaways from this enlightening discussion:

One of the main points we explored in the episode is the concept of intentional spending and the idea of "memory dividends." We discussed how being intentional with how you spend your time and money can lead to meaningful experiences that pay off in the form of cherished memories. By investing in worthwhile experiences, you are essentially creating lasting memories that enrich your life.

We delved into the notion that net worth should peak around age 50, as suggested in the book. While this idea may seem appealing, we highlighted the potential risks and challenges associated with this approach, especially in the context of sequence of returns risk and changing financial landscapes. It's essential to consider the practical implications and long-term sustainability of such a strategy.

Another key takeaway from the episode was the importance of finding a balance between saving for the future and enjoying life experiences in the present. We discussed the value of making meaningful investments in experiences that create lasting memories, even if they may not align with traditional financial optimization strategies. It's about finding the right balance between saving for the future and living in the moment.

If you're interested in optimizing your investments, lowering future taxes, and growing your wealth, this episode is a must-listen!

As always, we encourage our listeners to reach out with any questions or ideas for future episodes at podcast@brownleewealthmanagement.com.

Thank you for tuning in, and we look forward to bringing you more insightful episodes in the future.

Facebook - https://www.facebook.com/BrownleeWealthManagement/?ref=py_c

Linkedin - https://www.linkedin.com/company/brownlee-wealth-management/

Disclosure: This information is for informational purposes only. Nothing discussed during this video should be interpreted as tax, legal, or investment advice. If you have questions pertaining to your specific situation, please consult the appropriate qualified professional.

For more information and show notes visit: https://www.bwmplanning.com/post/83

In this episode of Financial Planning for Oil & Gas Professionals, we had the pleasure of speaking with Bob Phillips, a seasoned veteran with a 47-year career in the oil and gas industry. Bob shared his incredible journey, from his early days in Tyler, Texas, to his recent sale of Crestwood Equity Partners to Energy Transfer for $7.1 billion.

Key Highlights:

Early Career and Background:

Bob grew up in Tyler, Texas, and attended the University of Texas, where he got into the oil and gas program. His first job in the industry was as a rig hand making $2.15 an hour, which sparked his passion for oil and gas.

Career Milestones:

Bob's career began with Gulf Oil Company and included significant roles at Anadarko and Tenneco. He witnessed the deregulation of the natural gas industry and the technological advancements that transformed oil and gas production.

Entrepreneurial Ventures:

Bob founded his first company, EastEx Energy, in 1981 and took it public in 1987. He shared the challenges of competing with larger companies and the lessons learned from those experiences.

Mentorship and Influence:

Bob was mentored by Boone Pickens, who taught him the importance of using capital to build a company. This mentorship played a crucial role in Bob's decision to IPO EastEx Energy.

Crestwood Equity Partners:

Bob founded Crestwood in 2008 with private equity backing. He discussed the importance of aligning with the right equity partners and the commercial challenges faced during the early years. Crestwood's success was attributed to strategic acquisitions and a strong focus on ESG (Environmental, Social, and Governance) principles.

Industry Challenges and Successes:

Bob highlighted the impact of commodity price fluctuations and the emergence of ESG as significant challenges. Despite these challenges, Crestwood thrived, culminating in its sale to Energy Transfer.

Personal Insights:

Bob shared his first memory of money and the importance of saving and investing wisely. He also discussed how his faith and Methodist upbringing influenced his leadership style and commitment to community and employee well-being.

The Energy Transfer Deal:

Bob detailed the process leading up to the sale of Crestwood to Energy Transfer. He expressed pride in the transaction, noting the positive reception from shareholders and the market.

This episode offers a deep dive into the career of a remarkable industry leader and provides valuable insights for professionals in the oil and gas sector. Bob's story is a testament to the importance of perseverance, strategic thinking, and ethical leadership in achieving long-term success.

As always, we encourage our listeners to reach out with any questions or ideas for future episodes at podcast@brownleewealthmanagement.com.

Thank you for tuning in, and we look forward to bringing you more insightful episodes in the future.

Facebook - https://www.facebook.com/BrownleeWealthManagement/?ref=py_c

Linkedin - https://www.linkedin.com/company/brownlee-wealth-management/

Disclosure: This information is for informational purposes only. Nothing discussed during this video should be interpreted as tax, legal, or investment advice. If you have questions pertaining to your specific situation, please consult the appropriate qualified professional.

For more information and show notes visit: https://www.bwmplanning.com/post/82

In this episode of Financial Planning for Oil & Gas Professionals, we had the pleasure of hosting Terry Nixon, a seasoned veteran in the oil and gas industry with a career spanning over four decades. Terry, who is also my neighbor in Fort Worth, shared his incredible journey and the pivotal moments that shaped the modern-day Texas oil and gas landscape.

Key Highlights

✅ Early Career: Terry started his career at Northern Natural Gas in Tulsa, working in the gas purchase department. He later moved to Houston to work for Lone Star Gas and then Tennessee Gas Pipeline.

✅ Entrepreneurial Leap: In 1979, Terry and his colleague Chester Clute decided to form their own consulting company, Tulsan Energy, which later evolved into Transstate Gas Service Company. They capitalized on regulatory changes and market opportunities to build a successful business.

✅ Major Deals and Partnerships: Terry recounted his experiences working with industry giants like Kelsey Warren, Ray Davis, and Bob Phillips. He shared fascinating stories about the formation and growth of companies like Energy Transfer and Cornerstone.

Notable Investments and Successes:

✅ Energy Transfer: Terry discussed his early investment in Energy Transfer, which turned out to be a monumental success, yielding over 100x returns. He highlighted the importance of relationships and trust in making investment decisions.

✅ Strategic Decisions: Terry reflected on some of the pivotal decisions he made, including turning down an early offer from Kelsey Warren to join Energy Transfer's marketing team, a decision he later had mixed feelings about.

Industry Insights and Future Outlook:

✅ Energy Transition: Terry emphasized the ongoing transition in the energy sector, noting that while natural gas will remain crucial, there will be a significant shift towards renewable energy and cleaner technologies.

✅ Advice for Young Professionals: Terry advises to take calculated risks and consider entrepreneurial ventures, as the skills and experiences gained can be invaluable. Terry's story is a testament to the power of perseverance, strategic thinking, and the importance of building strong professional relationships. His journey from a gas buyer to a successful entrepreneur and investor offers valuable lessons for anyone in the oil and gas industry.

We're grateful to Terry Nixon for sharing his remarkable journey and insights with us. His experiences provide a unique perspective on the evolution of the oil and gas industry and the opportunities that lie ahead.

As always, we encourage our listeners to reach out with any questions or ideas for future episodes at podcast@brownleewealthmanagement.com.

Thank you for tuning in, and we look forward to bringing you more insightful episodes in the future.

Facebook - https://www.facebook.com/BrownleeWealthManagement/?ref=py_c

Linkedin - https://www.linkedin.com/company/brownlee-wealth-management/

Disclosure: This information is for informational purposes only. Nothing discussed during this video should be interpreted as tax, legal, or investment advice. If you have questions pertaining to your specific situation, please consult the appropriate qualified professional.

For more information and show notes visit: https://bwmplanning.com/post/81

In this episode, we discuss an interesting situation forming in the financial advisor industry: while client retention rates are high, trust and satisfaction levels are not as impressive. This discrepancy suggests that many clients stay with their advisors despite feeling underserved 📝

We explore several reasons why clients might hesitate to switch advisors, including relational ties, pride, and the pure inconvenience of finding a new advisor. We also share personal anecdotes from our experiences, illustrating how some clients remain in subpar relationships due to these factors.

To help our listeners navigate this challenging process, we offer practical advice on how to break up with an advisor. Key points include:

✅ Adopt the Right Mindset: Remember, it's your money, not your advisor's. You have every right to seek the best possible service for your financial needs.

✅ Let the Transfer of Assets (TOAs) Do the Talking: You don't need to inform your advisor before initiating the transfer. This can help avoid uncomfortable conversations and potential guilt-tripping.

✅ Communicate Clearly: If you choose to inform your advisor, do so after the transfer has been initiated. Clearly articulate your reasons for the change, whether it's seeking a fiduciary, reducing fees, or finding an advisor with specific expertise.

We also dispel the myth that switching advisors will necessarily result in significant tax impacts. Transfers are typically done in-kind, meaning your securities move to the new custodian without immediate tax consequences.

Finally, we emphasize the importance of regularly evaluating your advisory relationship to ensure you're receiving the best possible service for the fees you're paying. The stakes are too high to remain in a subpar situation.

✅ We hope this episode empowers those of you who feel underserved by your current advisor to take action.

As always, we welcome your feedback and ideas for future episodes.

Thank you for tuning in, and we'll see you next time!

Connect With Us:

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Linkedin - https://www.linkedin.com/company/brownlee-wealth-management/

Disclosure: This information is for informational purposes only. Nothing discussed during this video should be interpreted as tax, legal, or investment advice. If you have questions pertaining to your specific situation, please consult the appropriate qualified professional.

In this episode of FPO&G, Justin and Jared dissect how retirement planning is impacted by executive compensation.

Should my investment allocation be changed due to the nonqualified stock options, deferred comp, and restricted stock that vest after retirement?

Do Roth conversions still make sense as a retiree in light of my post retirement income?

How do I balance optimizing for taxes while managing the concentrated stock risk of this equity compensation on my balance sheet?

For more information and show notes visit: https://www.bwmplanning.com/post/80