Published: March 24, 2017

If you live in the Philadelphia area, you know DiBruno Brothers, "the House of Cheese", where you can buy not only great cheese but everything else you can imagine in an Italian grocery and delicatessen. St.

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Published: March 6, 2017

No; of course not. Some people choose to continue to work full-time after reaching what many would consider retirement age, such as 65. And more than a few people have to work. But others look forward to the absence of daily work. One of my co-workers told me she would be happy to sit on her front porch with a cup of coffee once she was able to retire. But others like at least some aspects of their working life, and want to continue it. An article in the New York Times of Sunday, March 5, 2017 offers examples of people who view continued work as a healthy and enjoyable thing.

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Published: March 4, 2017

There is so much being written about retirement these days, in large part because of the bulge of baby boomers now reaching and past retirement. My experience has been that many people fear retirement, because they think it's the end of their useful life and just a stage of waiting for inevitable decline. But the reaction of many, maybe most, people who have retired is very different: they experience retirement as full of new opportunities and a stage in life that rewards careful planning. Careful planning is arriving on a daily basis through books, articles and other media.

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Published: March 2, 2017

I've written before about the Haub School of Business at St. Joseph's University and its Initiative for Family Business and Entrepreneurship. Another program was presented on February 23 on the St. Joe's campus, titled Building Shared Mission, Vision & Values. The program began with a discussion of shared family values by IFBE's Director, Mary Nicoletti. This was followed by a panel discussion featuring two family business members of IFBE's Advisory Board, Taylor Fernley and Reshma Moorthy, together with Marc Kramer, the Family Business Executive in Residence.

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Published: January 29, 2017

As we enter the beginning of a new administration in Washington, many provisons of federal law are being considered for possible changes. At this point (January 28, 2017) it's not possible to say what will be changed and when, but it is important to be ready for change and to take advantage of opportunities it presents and avoid problems it creates. We will try to anticipate these changes as soon as we know enough to be helpful, but meanwhile consider these areas of possible change:

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Published: January 1, 2017

In the classic Hollywood movie All About Eve, Bette Davis offered that advice to party-goers, and they were well-advised to heed it. The same advice applies as we begin a new year and the start of a Congressional session that is very likely to bring dramatic changes to our tax system. Those who say they know what will happen in the next six months have either perfected time travel or are not paying attention. Presidents generally begin their term of office planning to change everything, and if they are lucky they can bring about some incremental changes.

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Published: October 31, 2016

The Initiative for Family Business and Entrepreneurship at St. Joseph University's Haub School of Business presented another interesting program for family businesses on October 27, 2016. The program, which was part of a series sponsored by Wells Fargo and Abbot Downing, was titled "The ABCs of Educating and Engaging the Next Generation." The principal presenter was Meghan Juday, who is a consultant to the Initiative and Chair of the Family Council at Ideal Industries.

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Published: October 18, 2016

The Social Security Administration has announced changes for 2017. Social Security benefit payments will increase by .3% (3/10s of 1%) next year. The Social Security Wage Base, the amount of income subject to Social Security taxes, will increase from $118,500 to $127,200, which is the largest increase ever in the wage base. (Medicare taxes are imposed on all compensation income.) In addition, based on a "deal" enacted in 1983, the age for full retirement, which has been 66 for the past 12 years, will start to increase next year.

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Published: September 28, 2016

St. Joseph's University's Haub School of Business sponsors the Initiative for Family Business and Entrepreneurship, and I am honored to be a member of its Advisory Board. Yesterday, September 27, 2016, the Initiative presented an entertaining and informative program featuring two generations of the Yuengling brewing family, owners of America's oldest brewery.

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Published: September 14, 2016

I've written before about the new proposed Treasury Regulations under Section 2704 of the Internal Revenue Code. The new regulations would limit the ability of owners of family businesses and other closely held business interests to transfer a portion of their ownership at a discount. These regulations would change asset transfer techniques that have been used for many years, and that have saved taxpayers many millions of dollars in federal estate taxes and state inheritance taxes.

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Published: August 4, 2016

Many books and articles talk about the ongoing transfer of business interests from one generation to the next within families. One of the most valuable techniques in that process is the ability to transfer business interests at discounted values, and by doing so to transfer more value within the existing gift and estate tax exemptions. Discounts of substantial amount have been based on the lack of marketability of closely held business interests and the fact that they generally represent only a minority interest in the business, and therefore do not permit control of the business.

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Published: June 6, 2016

Will Americans choose to work longer than originally planned, to make up for investment losses and the failure to save enough for retirement? A survey sponsored by Willis Towers Watson suggests that at least some will. The article describing the survey mentions two octogenarians still working, Messrs. Buffett and Bogle, but they can hardly be considered representative of workers in general. Well, the survey indicates that a higher percentage plan to work past 70 than was the case just a few years ago. It's clear that there is uncertainty about making retirement successful.

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Published: May 21, 2016

The Institute for Family Business and Entrepreneurship at St. Joseph's University presented an interesting program on May 19, 2016 on the importance of family meetings, and families working toward an understanding of their shared values, mission and goals. In two separate talks, Meghan Juday and Darcy and Hans Latta discussed why it's important that families understand the values implicit in the operation of their businesses and how they can work together to accomplish the goals of both the families and their businesses.

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Published: April 19, 2016

The Department of Labor has included on its website (www.dol.gov/ebsa/) a fact sheet that describes its reasons for issuing a final rule on fiduciary status. As described previously, this is a major change in the rules governing retirement asset investors, and it is sure to generate controversy and litigation. In less than two weeks since the new rule was published, there have already been many articles published, and we can expect many more articles and seminars in the next few months to explain the rules in more detail.

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Published: April 12, 2016

After years of preparation and fierce lobbying from all sides, the US Department of Labor has issued new rules on fiduciary standards for retirement plans and IRAs. Proponents of the new rules point to statistics that show that persons saving for retirement are paying more in fees than they should, and are often being placed in investments that are not appropriate. Opponents say the new rules will result in cutting off services to those with smaller retirement accounts. Debate will continue, but it's important to understand what's changing, and when the changes will take effect.

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Published: April 9, 2016

An article on the Financial Advisor website by Dan Moisand offers another take on the question of how much can be spent during the retirement years without risking insolvency. The author finds the basic "4%" rule not helpful. It's not the case, in his experience [or mine] that clients spend a fixed percentage each year. While people on a fixed income, such as from Social Security and pensions, might spend at a uniform rate because they need to, more affluent retirees have options to vary their spending, and they often do.

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Published: March 28, 2016

An article in Private Wealth magazine discusses the process of determining a sustainable withdrawal rate from retirement savings. Many commentators use 4% as a number, but that can't be right for everyone. The article makes the important point that much depends on how clients view spending: do they plan to spend just what is necessary and then see how much more they can reasonably spend, or do they spend up to their incomes, whatever they are? This will be an important component of determining the correct withdrawal rate.

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Published: March 11, 2016

Many people who have been successful in their life endeavors turn their attention to the well-being of the next generation or two in their families. They have sufficient wealth for their own needs, but would like to do what they can to make life better for children and grandchildren. It is important to think of estate planning as a multi-generational project. This means more than wills for the parents. It's a process that includes how retirement plan and IRA assets and other employment-related benefits will pass among members of the succeeding generations.

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Published: January 23, 2016

More people are asking why people retire and how they enjoy it. One article reports that people in their 80’s who were surveyed said: when you retire is determined by how much you’ve saved. The same survey says that retirees found the first few years of retirement the happiest of their lives. But another survey says people pick a date when they want to retire, and do so regardless of how much money they have saved. The more likely view, in general, is that people decide when they want to retire and mold their retirement lifestyle to what they can do with what they have accumulated.

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Published: December 24, 2015

For some people, it’s abundantly clear that setting up a Roth IRA, where you get no tax deduction for the contribution but have no taxable income when amounts are distributed, makes perfect sense. People just starting out on their working careers, who might be in a very low tax bracket, are probably better off using the Roth IRA because the tax savings from a traditional IRA deduction don’t help very much.

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Published: December 21, 2015

President Obama has signed the Protecting Americans from Tax Hikes (PATH) Act, which makes permanent several provisions that were previously enacted year to year; which made any kind of careful tax planning very difficult. One provision that was revived and made permanent is the IRA charitable rollover provision. This provision permits individuals who have reached age 70 1/2 to make a direct transfer from their IRAs to certain kinds of charities (excluding donor advised funds, supporting organizations and private foundations). There is a $100,000 annual limit on such transfers.

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Published: October 29, 2015

The House of Representatives just passed a two year budget deal to avoid a default by the Treasury. Next stop will be the Senate. One provision of this deal is a change in Social Security rules. Specifically, the ability to use the file and suspend method to get extra benefits will be curtailed. This is a valuable benefit, and it will still be available to people of a certain age.

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Published: October 29, 2015

A recent article reminds us of a scam that is still being tried: telephone callers saying they are from the IRS and demanding immediate payment to avoid arrest and imprisonment. If you won’t pay on the spot, your Social Security number is demanded. But, as the IRS frequently tells us, they don’t call people on the telephone demanding payment. So it’s a scam and you should hang up. Similar ploys involve school loan payments, and nearly all of them want your identifying numbers so they can be stolen. Never give out Social Security or bank account numbers to people who call you.

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Published: October 21, 2015

Some other publication has just come out with its list of the top 10 places in the country for retirement, based on criteria such as availability of health care, activities for seniors, climate, etc. I believe all 10 were fairly small towns in less populated areas. There are magazines as well that focus solely on where retirees should go. OK, it’s an idea, but it’s not ideal for everyone. One of my colleagues just mentioned a reason to stay where you are: having children nearby. These decisions should be based on the individual’s own interests.

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Published: October 21, 2015

I saw a discussion online today about trying to measure retirement income readiness. There was discussion of Black Rock’s CORI retirement index, which tells you how many dollars you need to save to produce a dollar of income at retirement. It’s a helpful number to know, even if it’s possibly a depressing one. Of course, knowing whether you have saved enough for retirement starts with knowing how much income you need in retirement, which is a process in itself: how much income for a basic retirement or a more “robust” one.

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Published: October 21, 2015

An online report about retirement issues included the statement from one participant that 401(k) plans and IRAs were the worst ideas ever. Why? Because they are voluntary and it’s easy to put off contributing to them. The result, obviously, is too little saved for retirement. In an earlier era, which featured more defined benefit pension plans, employees were often, in effect, forced to save for retirement, which was in the form of a monthly check at retirement.

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Published: September 26, 2015

For many people who reach the customary retirement age of 65, it’s not time to sit on the porch in a rocking chair. Because of advances in health care and greater attention to developing good habits, people at 65 are physically and mentally able to do more. Call it the second season or whatever, there is a desire to remain active. It could be a second career or something related to the prior career. Or it could be charitable work or greater attention to a hobby. Studies, as well as common sense, prove that staying active is a key to a longer and more satisfying retirement.

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Published: September 26, 2015

Numerous articles discuss the ongoing march of baby boomers to retirement, and part of that process involves succession planning for businesses. There are several steps to the planning process, and the process itself should begin at least 3-5 years before the planned sale and its aftermath. No business should be sold or transferred to family members until there has been detailed estate and tax planning, and some of that should take place years before the event.

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Published: July 27, 2015

Recently, the British government decided to allow people over 55 to cash in their pensions, and the result, according to the Financial Times, has been a dramatic upswing in fraudulent schemes. People have been offered pension reviews and investments with remarkably high rates of return as a way of gaining access to their pension funds, which are then stolen or lost. Although it’s an example from another country, this news makes several important points. First, if people contact you with “freebies” or incredible investment opportunities, look at them very carefully.

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Published: July 5, 2015

Among the many articles about retirement planning, a couple stand out as offering interesting “takes” on the process:
1. One study reports that retirees in better health are more likely to feel financially secure, enjoy retirement and feel fulfilled. No surprise, but worth remembering.
2. Among workers with at least $1,000,000 in investable assets, the average planned age for retirement, according to another study. But 53% will continue to work in retirement, suggesting that retirement might mean “retooling”.

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Published: July 1, 2015

A recent article on the website Employee Benefits News offers these five trends in planning for retirement:
1. better and more data available to measure success in reaching retirement goals.
2. automatic features in promoting more saving for retirement.
3. the increased use of target date funds.
4. the coming availability of automatic IRA saving.
5. greater 401(k) disclosure.

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Published: June 10, 2015

A recent survey conducted by US Trust on the subjects of wealth and worth reported the views of high net worth investors. Interesting and revealing. The most important component of wealth? No surprise, it’s health. If you can maintain your health in your retirement years, they will be richer and more fulfilling. Plus being healthy means spending less on medical care, which makes retirement less expensive. The takeaway: money and effort devoted to maintaining and improving your health is well worthwhile.

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Published: May 25, 2015

In his recent book At Last, the English writer Edward St. Aubyn describes the choices that members of a wealthy family make to distribute their wealth, and how those choices affect the family in ways not expected. In a way, the book illustrates the discussion we often have with wealthy families: wealth is better than the opposite, but it’s very important to plan how that wealth passes to succeeding generations, so that it doesn’t end up destroying initiative and achievement. Perhaps there’s a need for both philanthropy and maximizing the opportunities for the family.

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Published: May 19, 2015

It seems that these days, every other person is a coach: life coach, executive coach, retirement coach, stage coach. But calling yourself a coach or any other kind of expert doesn’t make your advice worth listening to. Some people in the St. Louis area recently found this out “the hard way”. According to Financial Advisor online news, a local investment advisor and radio show host who called himself a financial coach persuaded people to give him more than $3,000,000 to invest.

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Published: May 6, 2015

And that is, not involving your spouse in the planning and decision-making process. Even in these modern times, it’s often the case that the husband makes and carries out financial decisions. The wife knows little about why decisions were made. Then, if the wife is the surviving spouse, she is lost in trying to decide on financial matters, and can be prey to people who want to help themselves to her assets. It’s far better to explain every step with your spouse, if you have one, and to be sure that both of you understand what’s being done and why.

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Published: May 6, 2015

And that is, not involving your spouse in the planning and decision-making process. Even in these modern times, it’s often the case that the husband makes and carries out financial decisions. The wife knows little about why decisions were made. Then, if the wife is the surviving spouse, she is lost in trying to decide on financial matters, and can be prey to people who want to help themselves to her assets. It’s far better to explain every step with your spouse, if you have one, and to be sure that both of you understand what’s being done and why.

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Published: May 1, 2015

An interesting report from Bernstein Investments discusses choices you can make that will enhance the chances that you will have a successful retirement. Here are their categories:

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Published: April 21, 2015

The US Department of Justice has established the Elder Justice website, at www.justice.gov/elderjustice/. The introduction of this website is further proof of the serious issues, financial and otherwise, that are facing the growing number of senior citizens. The site contains information to assist victims and family members, prosecutors, researchers and practitioners in combating elder abuse and financial exploitation.

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Published: April 8, 2015

A recent study (there must be whole industries of people who prepare recent studies) from Northwestern Mutual reports that Millennials, also referred to as Generation Y, plan to work beyond age 65 in much larger numbers than their elders. Given that this cohort is people now ages 18-34, I would take with a large grain of salt what they say are their plans 30-45 years in the future. One of their reason for planning to work longer is that they have little confidence in the future of Social Security.

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Published: March 27, 2015

More thought is being given to the idea of where to live in retirement. Although many still depart for the warmth of southern climes, others feel they want to stay where they have been. Is this a good idea? It often is, but, according to an article in Wealth Management, there are some questions to ask:

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Published: March 27, 2015

A recent article in US News offers four simple rules for maximizing retirement plan investments:

  1. contribute enough of your own income to max out the employer match, if there is one.
  2. research investment options, such as low cost, diversified funds.
  3. don’t take early distributions.
  4. start saving for retirement as soon as possible.

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Published: February 25, 2015

It’s a measure of readiness for retirement, but, unlike other measures of readiness, it’s not just based on financial status. A report from the Goldenson Center at the University of Connecticut lists four non-economic factors entering into a determination of retirement readiness: your level of job satisfaction; your health status at retirement; the level of financial planning you have done; and your level of adaptability.

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Published: February 11, 2015

An organization called the MIT AgeLab has produced some very interesting research on the challenges and benefits of the retirement process, and I think you would find a visit to their website useful. Google MIT AgeLab. An article that appeared in a local publication recently, written by a representative of the Hartford Funds and using research from the MIT AgeLab, asks three simple questions that will help to define the success of your retirement, or the lack thereof:

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Published: January 31, 2015

A survey taken by the Insured Retirement Institute asked if participants would like their benefit statements to contain an estimate of the income their account balances would produce at retirement. The answer, of course, was yes. The US Department of Labor is planning to propose a rule that would require that defined contribution plans (those in which you have an account balance rather than a promised benefit) contain such estimates, and this survey apparently shows support for the idea.

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Published: January 18, 2015

Another difference between the more traditional defined benefit plans and today’s more prevalent defined contribution plans, including 401(k) plans, is that with the latter you approach retirement with a lump sum of money, and you have to determine how you will withdraw it. In effect, you need to make some kind of a guess as to how you will make the lump sum last throughout your retirement years. By contrast, with a defined benefit pension plan, you receive a monthly benefit, which you know you will receive for the rest of your life. That kind of benefit makes planning easier.

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Published: December 28, 2014

An article on the website fredreish.com describes a problem facing baby boomers who are about to retire. Many of them have participated in employer-sponsored retirement plans, and in those plans they have chosen their investments from a menu of funds selected by the plan’s administrator. But if they retire and roll over their retirement account balances to an IRA, they’re on their own. They must choose from the vast universe of investment opportunities. They might get advice, but they will generally pay for it, and often at a higher cost than was charged in the retirement plan.

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Published: December 28, 2014

Not exactly, but a recent article in an insurance industry publication, The National Underwriter, tells the results of a survey taken among older individuals in end-of-life care. They were asked what they regretted. Here are the top five answers:

5. I wish I had let myself be happier.
4. I wish I had stayed in touch with my friends.
3. I wish I’d had the courage to express my feelings.
2. I wish I hadn’t worked so hard.
1. I wish I’d had the courage to live a life true to myself, not the life others expected of me.

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Published: December 18, 2014

Congress has finally passed a bill, introduced in 2013, to extend certain credits and other tax provisions. Among the provisions it extends is the ability to make transfers of IRA funds to certain (mostly public) charities, up to $100,000, provided the IRA owner has reached age 70 1/2.

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Published: November 30, 2014

An article from the Callan Investments Institute argues in favor of defined benefit pension plans, which are surely out of favor these days. Those points are worth considering:

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Published: November 23, 2014

Perhaps there is, but it takes some planning to achieve and enjoy it. I’m not an expert on this topic, although there appear to be many people who claim to be such. Second act activities can be rewarding, but you need to be careful to avoid just becoming the way someone else makes money from your labor.

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Published: November 23, 2014

So many people have IRAs, whether because they have set them up for annual contributions or used them for rollovers from employer retirement plans; and so many banks and mutual fund companies attempt to administer them; that it is no surprise that errors occur:

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Published: November 14, 2014

Apart from marrying a very wealthy person, or correctly guessing the winning lottery numbers, there are some helpful ways to ensure that you will be likely to have enough to live on in your retirement years:

Get a realistic estimate of how long you’re going to live. Try www.livingto100.com for example. This will give you an idea of how long your money must last.

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Published: October 31, 2014

Much has been written about the process of transitioning from the daily working world to the world of retirement. Of course, these two worlds can overlap, as many people continue to work after they have begun the retirement process. But there are some dividing lines, and things to do as you cross those lines:

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Published: October 7, 2014

Several sessions of the US Congress have eventually passed provisions permitting contribution of IRA amounts to charities. It’s always been a limited right, applicable only to those who have reached age 70 1/2, limited in amount to $100,000, and somewhat limited as to what charities could receive it. It’s really more symbolic than anything else, because anyone can withdraw from an IRA, distribute the funds to a charity and get an income tax deduction. The benefit of a charitable IRA rollover was that the amount withdrawn was not included in income.

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Published: September 19, 2014

As members of the large baby boom generation get older, worries about the adequacy of retirement income tend to grow. Too often, that leads to attempts to boost that income with more aggressive planning. That makes older people more likely to fall prey to unethical salespeople, whose aim is to sell whatever makes the most income for them, regardless of the needs or investment profile of the buyer.

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Published: September 1, 2014

Two recent books discuss these questions. Apparently, the key to a successful retirement is to write a book about it. In a book called Unretirement, author Chris Farrell explains that it means you retire a little later. If you retire from the work you’re doing now, find something else you can do that you will enjoy. Easy to say, I suppose. If you find that kind of work, delay using your retirement savings and delay starting Social Security benefits.

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Published: August 29, 2014

A Pennsylvania lawyer was disbarred recently after a hearing that revealed a years-long practice of high pressure selling of estate planning or probate avoidance kits. For a substantial fee, individuals signed up to have living trusts prepared. Nearly all of them never saw or spoke with the lawyer who was preparing the trust, which he did based on forms provided to him by national sellers of these products. All contact seems to have occurred through non-lawyer salespeople.

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Published: August 13, 2014

An article in a publication called National Underwriter Life and Health makes a very good point about the many advertisements we see picturing retirement. Whether it’s on TV or in a magazine or brochure, retirement is always pictured as “fishing, gorgeous sunsets…” as the author, Maria Ferrante-Schepis writes, to which I would add the inevitable sailboat, the dock on the lake, the shining grandchildren. As she points out, retirement means a lot more than that to most people. For many people, retirement is about figuring out if you have enough money.

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Published: July 28, 2014

And it’s not what record was No. 17 on the Top 40 Countdown on June 11, 1976. Casey Kasem had a long and, I’m guessing, prosperous career. But terrible things happened to him just before and after his death, in the form of a family dispute between his children and his second wife. I have no idea who was right or wrong, and it’s probably not relevant anyway. What should have happened in this family, as it should in many other families, is an understanding of what the “deal” was.

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Published: July 25, 2014

will probably be healthcare expenses. The Medicare program will help to defray them, but it won’t cover everything. Supplemental insurance is essential, and you need to decide on what type of policy to buy, but not without professional assistance. Some people can rely on help from people who sell such policies, while others will prefer advice from someone who doesn’t receive a commission from the sale. A recent article from US News add a couple of important yet basic considerations:

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Published: June 30, 2014

I’m not sure what is the point of continually asking people what they think of retirement, either for those who are retired or those who are close to it. But another insurance company has done so. Here are the startling conclusions: people who are retired generally like being retired. Anecdotally, I have yet to speak with a retired person who wished he or she were back in the workforce. Also, the survey found that those who have not yet retired plan to work longer than those who have already retired.

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Published: June 30, 2014

An inherited individual retirement account (IRA) is one set up and funded by the owner, who has died and named someone as the beneficiary of the IRA. As the owner of an inherited IRA, the beneficiary may withdraw the IRA funds at will, and must start withdrawing the funds at some point, depending on who the beneficiary is and whether the owner died before or after age 70 1/2.

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Published: June 26, 2014

A recent survey by MetLife highlights a trend in retirement planning by employers. Those employers who sponsor defined contribution plans (you and we put money in, it’s invested, and you get whatever is there at retirement), which is now most employers, are starting to think more about what retirement income a given level of savings will produce. In an earlier era, when most employers sponsored defined benefit plans (we promise a specific benefit or benefit formula, and it’s up to us to fund it), the amount of retirement income was explicitly stated or easy to calculate.

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Published: May 30, 2014

I was reading a magazine article about a well-known (to others) author, whose books are semi-autobiographical. In the course of reviewing his life, the article noted that he had inherited a substantial sum of money through his grandmother when he was 18. According to the article, he apparently used much of it to buy drugs. The article mentioned his grandmother and other members of his family, and I realized that the trust through which he received the money was set up by lawyers in this law firm and its predecessor, more than 100 years ago.

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Published: May 20, 2014

A federal judge has issued a lengthy opinion striking down Pennsylvania’s ban on same sex marriage. Such a ruling may be appealed, so we don’t know the final result yet. But there is a significant tax consequence to the downfall of this ban, and it relates to Pennsylvania Inheritance Tax. The Inheritance Tax is based on who receives the assets, not who leaves them. This means that the tax rate differs depending on who inherits. Assets that pass between spouses are free of tax, assets passing to children are taxed at 4 1/2%, and assets passing to unrelated persons are taxed at 15%.

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Published: May 1, 2014

An article in the ABA Journal uses this title to describe an important issue for those nearing and in retirement. The sub-heading is “retirement planning includes caring for yourself”. The points made include:

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Published: May 1, 2014

The Philadelphia Inquirer for Sunday, May 11, contained a section dealing with retirement issues. Among numerous articles, these pieces of advice stand out for me:

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Published: April 23, 2014

We’ve discussed pet trusts before, but here is a tale guaranteed to make your fur stand on end, if you’re a cat. An older woman in a nursing home wanted to ensure that her cat was well taken care of after she was gone, so she planned to set up a $450,000 trust fund for its benefit. Not Leona Helmsley money, but probably sufficient. Some “friends” offered to care for the cat, and are now accused of having used that relationship to loot the funds that were to be used for Purdy Cat, as it was called. The lesson here is to be careful to whom you entrust funds to care for your animals.

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Published: April 22, 2014

A widely observed theme when talking about retirement is the disappearance of assured sources of income, in the form of defined benefit pension plans.  Many corporations have terminated their pension plans, which remain the norm only in government service and unionized industries. Whether or not that was a good idea, the financial aspects of retirement have changed irrevocably. Most people who participate in retirement plans now do so through 401(k) plans, which offer no assurance of a level of income in retirement.

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Published: April 17, 2014

One of my partners discussed this technique with me and others, went ahead with it, and it works!  This is what he did: he and his wife have both reached age 66.  He’s going to continue to work and will likely delay receipt of his Social Security benefits until age 70.  He filed for Social Security benefits and then asked that his benefits be suspended; that is, not paid to him now.  Then, his wife filed to receive spousal benefits, about one half of the benefit he would have received if he had not suspended his benefits.  Now, his wife will receive that benefit and can also wait until a la

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Published: April 7, 2014

In Announcement 2014-15, the Internal Revenue Service restated its position on the number of IRA rollovers permitted in a single year. The U.S. Tax Court, in Bobrow v. Comissioner, T.C. Memo 2014-21, reviewed the statutory rule that only one IRA rollover is permitted in a single twelve month period, deciding that all IRAs of an individual are aggregated in determining if that rule has been broken. This was a surprise to many, because the IRS publication on IRAs, Publication 590, states that the rule is applied on an IRA by IRA basis.

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Published: April 3, 2014

This is the title of an article on the website Pensionriskmatters, emphasizing the need to start saving for retirement early in your career. It’s hyperbole, but the article cites several websites worth a visit: The International Foundation for Employee Benefit Plans includes educational materials on its website, one titled “Your Retirement Picture”. You can get a link to a Smart Money Retirement Calculator, although, as I’ve said before, these are general tools and not a substitute for individual planning.

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Published: March 28, 2014

A couple of interesting discussions in recent retirement planning literature:

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Published: March 26, 2014

I watched and heard a webinar presented by several groups within the American Bar Association today, dealing with the topics of estate planning, financial planning, after-retirement careers and selling a practice. The webinar was free and if you’re an ABA member, you should be able to access the replay of the webinar. Here’s an interesting calculation that was quoted during the webinar, from a financial writer. It concerns how you can determine if you have enough assets or are saving enough for a comfortable retirement. Multiply your age by your annual income and divide by ten.

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Published: March 22, 2014

An article on the website The Motley Fool offers three reasons to use or convert to a Roth IRA.

The first is the ability to get the money whenever you want, without taxes or penalties. But that’s a terrible reason: to be able to spend your retirement money whenever you want. Maybe it shouldn’t be sow easy to raid the cookie jar.

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Published: March 2, 2014

A recent article in Market Watch lists seven things to do if you want to retire early:

  1.  assess your current financial situation
  2.  keep track of your spending.
  3. save more
  4. invest wisely
  5. resist the pressure to plan big ticket spending
  6. live simply
  7. don’t get sidetracked by pressure to keep up with others or losing sight of your retirement goals

Actually, there are just two things to do to retire early, or to retire comfortably, even if it’s beyond early:

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Published: March 2, 2014

A recent article in U.S. News lists six documents everyone should have:

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Published: March 2, 2014

There do seem to be an abundance of articles on retirement issues these days. As usual, credit the needs and demands of the early baby boomers.

An article in the ABA Journal offers advice from the Chair of the National Association of Personal Financial Advisors: set goals for your financial independence; pay off debt; achieve a good credit rating; live within your means; resist the temptation to splurge; save more; floss daily. (I added the last one.)

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Published: February 18, 2014

Many financial institutions sponsor retirement income calculators, as a way of telling us whether we will spend our retirement on that sailboat or cruise ship always pictured, or will be just getting by on mac and cheese. (Personally, I’d like to have the mac and cheese on a cruise ship.) The Department of Labor has now added one: www.dol.gov/ebsa/regs/lifetimeincomecalculator.html.

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Published: February 16, 2014

A recent article in Plan Sponsor magazine offers these suggestions:

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Published: February 16, 2014

An article from Forbes online says there are four tasks to complete before death:

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Published: January 20, 2014

A recent article in the Boston Globe by columnist Hiawatha Bray discusses the life that continues online after we are gone. Information that we have posted online is not automatically deleted at our deaths, and online services might be unwilling to take instructions from next of kin. What to do? The author suggests an inventory of usernames and passwords, which can be given to a family member or friend, with written permission to close accounts. That might not solve the problem completely, but it’s a start.

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Published: January 4, 2014

We shouldn’t overlook some basic tax and estate planning ideas, even if they don’t produce blockbuster results. IRAs are a good retirement and tax planning vehicle. Here are some reasons why. If you are participating in a qualified retirement plan (or your spouse with whom you file a joint return is), your ability to take an income tax deduction for contributions to an IRA might phase out. But you can still contribute to an IRA, even if you don’t get an income tax deduction (we’re talking about traditional IRAs, not Roth IRAs).

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Published: December 10, 2013

The United States Supreme Court will hear an appeal on a case involving the protection from bankruptcy for inherited IRAs. Inherited IRAs are those you receive as a beneficiary of the person who set up the IRA and who then died before it was all paid out. The question before the Court of Appeals for the 7th Circuit was whether an individual who inherited an IRA can protect it from creditors if the beneficiary files for bankruptcy. That court said there was no protection, because once the beneficiary inherited them, they were no longer retirement funds.

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Published: December 8, 2013

A recent study by Bernstein Investments makes some good points about financial planning for retirement. Some of these statements seem obvious once we’ve heard them, but we don’t always act on them without being reminded. Think about these concepts:

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Published: November 24, 2013

I recently attended my homecoming at the University of Pennsylvania, and as part of the day’s events there was a program on estate planning for pets. Many people are concerned about what happens to their pets after they are gone, some more concerned than they are about their children. An interesting idea that came out of the seminar was having a card to carry around, giving information about pets and who should be contacted about their care.

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Published: November 1, 2013

When 2012 passed into 2013, many federal tax laws simply disappeared, and tax laws in effect from 13 years earlier were to be resurrected.  But in the early days of 2013, with the wind shear from the drop off the fiscal cliff picking up force, Congress and the President undid their version of Back to the Tax Future by enacting a “permanent” change to the tax laws.

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Published: October 15, 2013

Despite efforts by the Social Security Administration to make the system user-friendly, it remains a complicated system. Here are two planning techniques, one of which I’ve used myself. To be sure I’ve explained them correctly, I’m going to paraphrase a recent article on the subject by Jane Bryant Quinn, a well-known writer on financial topics.

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Published: September 18, 2013

A couple of recent articles from online sources highlight dramatic changes in the prospects for the retirement years, changes which occurred over time but have now come directly to the attention of the many baby boomers approaching retirement. One article asked people throughout the world if they thought they would outlive their retirement savings, a question I don’t recall having been asked ten or fifteen years ago. This is just people’s opinions, not a measure of what they have and need. The article revealed that one third of those in the U.S.

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Published: September 2, 2013

The U.S. Treasury Department and the Internal Revenue Service announced, on August 29, 2013, that same sex couples who are legally married in jurisdictions that recognize their marriages will be treated as married for federal tax purposes. Note that this announcement does not apply to civil unions that are permitted in some states, and note as well that it applies to couples legally married who now reside in a jurisdiction that does not permit same sex marriage.

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Published: July 25, 2013

Important decisions in planning retirement income and expenses can be made at seven ages, and the decisions made at those ages can have a substantial effect on the quality of retirement.

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Published: July 25, 2013

Advice on retirement planning is being offered by many entities and forms of media these days. Those of us in the early baby boom generation are bombarded by offers to have dinner and listen to lectures as to how to invest retirement accounts. Financial institutions offer brochures and television advertisements on the subject, most of which seem to involve sailboats and wooden docks with smiling grandchildren. What’s going on here?

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Published: July 25, 2013

Over the past 30 years, a dramatic change has taken place in the use of retirement plans to help people save for their later years. In an earlier era, many people were covered by defined benefit pension plans, which promise a fixed benefit at retirement, often based on years of service and compensation levels. In recent years, 401(k) plans have become the dominant form of plan for accumulating retirement funds. This article looks at the plusses and minuses of each.

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Published: July 25, 2013

Despite the extensive information available from many sources about retirement planning, many people remain puzzled and disconnected from that type of planning. As mentioned in a previous article, there is an abundance of advice being offered by investment professionals, but not as much assistance on getting into and through the process of planning for retirement. And, not surprisingly, the advice being sought is by older people, often within a few years of retirement, when there are fewer planning options.

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Published: July 5, 2013

The U.S. Supreme Court’s ruling in United States v. Windsor will forever change many facets of the lives of same-sex couples. One of the most important changes is how same-sex couples will now be able to engage in estate planning – an area of the law in which married couples receive numerous advantages over unmarried individuals and in which same-sex spouses were previously only granted limited access.

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Published: July 2, 2013

A government publication called the Consumer Action Handbook refers to the preparation of a social media will. Many people have online accounts of various types. What happens to them when you die? The owners of the online services may deny family members access to these accounts. What right do family members have to take over or dismantle online accounts of decedents?

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Published: June 25, 2013

A recent survey reveals some discouraging trends on the financial front.  As reported by Financial Advisor, a survey by MFS Investment Management shows that more than 2 out of 3 financial advisors say their baby boomer clients do not include their adult children in family finance discussions.  The survey also reports that 60% of investors say their financial advisor has never discussed family wealth management with them.  A summary of the survey can be found here:

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Published: June 16, 2013

Recent articles in the New York Times have added to he discussion of what amount is needed to retire. Focusing on $1,000,000, which is less than the cost of an average apartment in Manhattan, the first article suggests that this sum, which still sounds like a lot of money to the rest of the country, might not be enough to fund a comfortable retirement.

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Published: June 14, 2013

At first, the digital age crept upon us slowly.  Businesses looked at the internet skeptically, not sure how to use it.  Consumers waded in bit by bit, at first dipping the proverbial toe in the water and then taking it step by step.  Most of us were initially hesitant to do our banking online or keep our financial records in purely digital format or otherwise rely on the internet for managing our lives.  As a result, clients rarely had need to make sure their passwords and online account information were accessible in the event of death or disability.  The process to collect financial and

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Published: June 2, 2013

Warren Buffett seems to be responding to that question regarding giving to his kids consistently. He says he wants them to have enough so they have to do something but not so much that they can do nothing, or words to that effect. He recommends reviewing the estate  plan every 5 years to make sure you’re on track. He also says that you should discuss your plan with the children when they’re old enough. Of course, each of us has to answer for ourselves how much is enough and when are my kids old enough.

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Published: May 30, 2013

The website publications.USA.gov has many helpful publications, including some that offer practical advice about retirement. That website is now offering a series of pamphlets called Trustworthy Retirement Resources for Seniors. If you go to that website, www.publications.usa.gov,  and navigate to that title, you can have the pamphlets sent to you, or view them on-line.

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Published: May 29, 2013

In addition to the many companies, organizations and governmental units that are attempting to help people who are planning or are into their retirement, we should not be surprised to learn that there are many scams being tried. Here’s an example of one that was tried on one of our clients recently. The client received a letter from an organization in Palm Desert, California, basically a form letter with some names and numbers filled in: you took out a subscription to some magazine, like Llama Owners Monthly, and you didn’t pay for it.

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Published: May 27, 2013

Another feature of the Baby Boom Generation moving into retirement is the plethora of books written on the subject. Retirement for Dummies is part of the Dummies series of books on how to do everything. Of course, it’s very general, but it raises some issues to consider and has some helpful advice. A recent book by author Stan Hinden has the catchy title “How to Retire Happy: The 12 Most Important Decisions You Must Make Before You Retire”. I can’t summarize the book in a blog, but you’ll get an idea from the chapter titles:
Am I Ready To Retire?
Can I Afford To Retire?

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Published: May 24, 2013

A recent article in the New York Times reports on a development in the ongoing saga of how people will meet their expenses in retirement. A borrowing technique has been heavily marketed, called pension advances, which are high interest loans that require borrowers to sign over part or all of their monthly pension checks. Interest rates on these loans are typically very high, ranging, according to one survey, from 27% to 106%. Concerns have been expressed that retirees are mortgaging their futures, at a high cost, in an area where there is little or no state or federal regulation.

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Published: May 10, 2013

Shocked? A recent series of articles in Forbes talks about the blessings and curses of family wealth. Well, the curse, I suppose, is that family members become unmotivated and give up trying to achieve something in life. One of the blessings is that it provides a cushion if someone tries but doesn’t succeed right away. Another blessing of wealth is the choices it offers. Of course, one still has to make a choice and we hope it will be a sensible choice.

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Published: May 9, 2013

For many years, federal tax policy has been designed to encourage retirement saving. The creation of individual retirement accounts in 1974 was only a first step in this process, and subsequent tax legislation has resulted in greatly expanded limits on the amount that may be contributed, on a tax-deferred basis, to retirement plans of all types. It’s disheartening to see that this ability to save in a tax-efficient way has not solved the problem of assuring a comfortable, or at least an adequate, retirement.

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Published: March 14, 2013

Taxpayers are gearing up to pay the new 3.8% tax on net investment income that is to offset part of the cost of the new healthcare law, the Affordable Care Act. The new tax does not apply to retirement plan distributions, but such distributions could increase the tax payable. Here’s how.

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Published: February 11, 2013

A short article in the New York Times of February 9, 2013 discusses the five stages of retirement planning angst, as a takeoff on the five stages of grief. When told how much you need to save for retirement, at first you deny that so much is needed. Then, you are angry. Then, you start bargaining with yourself: maybe I can get along by saving less. Then, you’re depressed: how could this be happening to me? Finally, you accept what you must do. The author of the article concludes that you should do your best to save as much as you can for retirement, and then accept it.

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Published: January 31, 2013

The problem with many 401(k) plans is that it’s too easy to withdraw money. Money can be withdrawn in three ways- hardship withdrawals, loans that are not repaid and cashouts when participants change jobs and are entitled to a distribution. There are many reasons for the growth in “leakage” from 401(k) accounts, but the two most obvious are economic need and because the money is too easily available. When most people received a defined benefit pension at retirement, this was much less of a problem, but those plans are fading away at a rapid pace.

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Published: December 25, 2012

A woman in Caserta, Italy has left her estate valued at two million euros to her dog, Kikko, despite having two-legged relatives in the form of children and grandchildren. Under Italian law, a bequest to a domestic animal is not valid, so her executor is to administer the funds for Kikko’s benefit. It’s not clear where the estate goes after Kikko’s death, but he would be well advised to look both ways before crossing the street.

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Published: December 2, 2012

The National Retirement Risk Index is compiled by the Center for Retirement Research at Boston College. Using a variety of measures and complex methodology, the Index measures, essentially, how well-prepared people are for retirement. A recent report, from October 2012, concludes that today’s working households will be retiring in much different environment from that their parents faced. As people live longer, they need more retirement income.

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Published: November 18, 2012

A recent study shows the effect of several years of economic unrest on the spending habits of baby boomers (born 1946-1964). They are spending more money on education. Of the one trillion dollars of student loan debt, one third is held by people over the age of 40. Not surprisingly, baby boomers are spending more on medical care. They are also supporting children, and many of them continue to have large amounts of mortgage debt. Retirement savings rates are nowhere near the 10% recommended as a share of income that should be dedicated to such saving.

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Published: November 18, 2012

It isn’t just a matter of which states have the warmest weather or the most sunshine or golf courses. It’s importantly a matter of the availability of good medical care and proximity to cultural centers. As well, it’s a question of tax policies. Some states have no state income tax, but a number of them rank lower in quality of life issues. Other states have no sales tax, but that’s probably less important for senior citizens, who are less likely to be making major purchases.

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Published: November 2, 2012

A recent survey, and there are lots of them, adds more concern that people are not saving enough for retirement. A consulting group called LIMRA reports that of middle income people (incomes from $40,000-100,000), 22% are saving nothing for retirement; 19% are saving something but less than 3%; 24% at least 3% but less than 5%; 20% 5% up to less than 10%; and 15% are saving 10% or more. All seem to agree that they need to save more.

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Published: September 26, 2012

An editorial in the New York Times of September 16, 2012 makes some good points about retirement in America, People weren’t saving enough for retirement even before the recent recession, and that only got worse when unemployment and foreclosures increased in recent years. The replacement of pension plans with 401(k) plans has resulted in far less being put away for retirement. The average retirement account for people ages 55 to 64 was just $54,000 in 2010, and households with workers that age had total retirement accounts of just $110,000.

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Published: September 3, 2012

A recent article on the Fox Business website asks whether older Americans are “winging” their retirement plans. Based on a survey from the Transamerica Center for Retirement Studies, these problems are identified:

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Published: September 3, 2012

A recent report from the BMO (Bank of Montreal) Retirement Institute highlights three kinds of  issues that planners are now considering. First is the topic of digital assets, things that exist on-line and that might or might not pass to the next generation. How valuable are these assets and are they really assets at all? There is a need for more thinking about the on-line legacy that people accumulate.

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Published: September 3, 2012

A scholarly organization, the Center for Retirement Research at Boston College, computes the National Retirement Risk Index. Using complex formulae to measure the state of readiness for various ages and income levels, they conclude that many people are not ready for retirement. After further analysis, they conclude further that vast majority of people, in excess of 80%, will be ready for retirement if they work and wait until age 70.

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Published: July 15, 2012

It appears that Social Security has become something of a political football, used by both parties to achieve certain goals. But as more Baby Boomers become eligible for Social Security and Medicare benefits, there are some facts that need to be restated.

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Published: May 25, 2012

There seems to be no shortage of reports on what people nearing or at retirement age are doing. More people over 65 are continuing to work than ever before, although this could be because there are so many people reaching that age at the present time. Among younger people, a much higher percentage say they plan to work past 65. Why the discrepancy? First, many people who might want to work won’t be able to, either because of health reasons or because there aren’t jobs.

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Published: May 19, 2012

Met Life has issued a report on the state of retirement by Baby Boomers, the first of whom reached age 65 in 2011. Here are some of their findings:

About 45% of Boomers are now retired, and another 14% are retired but working occasionally.

Of those not retired, 61% plan to retire at the same time they planned to do a year ago. Those not yet retired plan to retire on average at 68 1/2.

37% retired earlier than planned for health reasons and another 16% mentioned loss of a job or job opportunities.

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Published: April 29, 2012

There is more being written these days about protecting and passing on digital assets, including passwords an online information. As more companies get involved in the business of managing online information, it becomes more important to understand who controls and can have access to digital information. A recent article in Probate & Property gives a classic example. The composer Leonard Bernstein prepared a draft of his memoir Blue Ink and left it online ptotected by a password.

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Published: March 4, 2012

I watched an interesting webinar recently, presented by the Pension Research Council at the Wharton School. The speaker was Dr. Olivia Mitchell, director of the Council. She discussed in detail the reasons for problems in the private and public pension systems. For individuals, there are three problems: they save too little, they don’t diversify their investments, and they live too long. I’m not sure the third is actually a problem; it’s more of a circumstance, the result of improvements in health and health care.

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Published: February 18, 2012

A recent article from Reuters reminds us again of the several reasons why this is the ideal time to think of transferring wealth:

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Published: February 18, 2012

There has been much in thne news about the top 1% of income earners in the country, emphasizing their fortunate status. But a recent article in the Wall Street Journal indicates that things aren’t so rosy for this group. From 2007 to 2009, the income of the top 1% fell by about 30%. By contrast, the income of the bottom 90% fell by only 3%.

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Published: February 18, 2012

A recent article in Smart Money reminds us of ways in which the $250,000 limit on FDIC insurance coverage can be expanded. Take as an example a husband and wife. Each can have an account with $250,000 protection. A joint account gives tham another $250,000. If each of them sets up a revocable trust for the other, that’s an additional $500,000. Suppose they jointly set up a trust to benefit their three children. That’s six more exemptions, an additional $1,500,000 in FDIC coverage. Beyond that, they can open similar accounts at other banks to add more coverage.  

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Published: February 18, 2012

Much was written about the shabby treatment given to philanthropist Brooke Astor just before her death, and her son is now appealing his conviction for mishandling her assets. The IRS is apparently not satisfied with the tax returns filed by the Estate. The taxing authorities are claiming that the Estate owes far more in federal estate tax than was reported. Apparently, there are issues about gifts made to charities at Mrs. Astor’s death and in previous years. Gift tax returns were not filed despite very substantial transfers over the years to family members, including her son.

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Published: February 14, 2012

The proposals recently issued by the Obama Administration include substantial changes in income, estate and gift tax law. They would, if enacted, make transfers of wealth more difficult and costly. Since this is an election year, there is much uncertainty about their future, but it’s important to know what they are, just in case. We will shortly issue an Alert on this subject, which will be posted on this site.

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Published: January 22, 2012

An article in the New York Times of January 22,2012 offers some ideas on how to make the tax system simpler and maybe fairer:

 1. Broaden the base and lower rates. What this means is eliminating some deductions, like mortgage interest, and reducing tax rates on the larger base. No one in Congress has seriously tried to eliminate that particular deduction, nor most others.

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Published: January 2, 2012

There isn’t any. Although spouses have protection when assets are held in qualified retirement plans, so that the plan participant can’t name a beneficiary other than the spouse to receive death benefits without the spouse’s approval, no such protection applies to assets held in individual retirement accounts. So a participant in a qualified retirement plan can retire, roll over his or her benefit balance to an IRA, and then name anyone he or she wishes as the beneficiary of death benefits. This loophole in the law has been known for many years, but no steps have been taken to correct it.

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Published: January 2, 2012

In the now-booming industry of determining what people think about retirement, another study reaches some conclusions that suggest a general attention to current financial issues and less confidence in the ability to achieve retirement goals:

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Published: December 31, 2011

An article in the on-line Wealth Counsel Quarterly asks why families fight over inheritances and offers several reasons:

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Published: December 31, 2011

A recent Forbes article describes some unusual final planning by the rich and occasionally famous. Magician Harry Houdini stated in his will that he wanted a seance held on each anniversary of his death. Apparently he never made contact though. Gene Roddenberry, creator of Star Trek, asked that his ashes be sent into space, and this occurred in 1997.

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Published: December 31, 2011

We hear and read frequently about baby boomers and the retirement years they are now entering. A recent article in the Wall Street Journal discusses a downside to that impending or occurring retirement. In an effort to make up losses from stock market uncertainties and the drop in home values, many baby boomers have been tempted to try less traditional investments, and this has led to an increase in investment fraud. The SEC is planning to issue some guidance about investment scams that older Americans should avoid.

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Published: December 14, 2011

Retirement seems to be the word of the decade, now that baby boomers are beginning to experience the latest in their life adventures. Unfortunately, this event coincides with a high level of uncertainty in financial markets and in other aspects of the wealth equation. Here’s some further evidence: in a recent survey (and recent surveys, as we know, are a major industry), 47% of baby boomers (born between 1946 and 1964) say that they are confident of having a comfortable retirement, down from 55% in March of 2011. About a quarter of baby boomers say they never intend to retire.

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Published: November 27, 2011

A number of articles appearing on the Internet concern the question of how much discussion there should be with a spouse and children about money. One article concludes that relationships are improved when a couple’s financial life is stable and both of them know what’s going on. Still, many spouses know little about family finances, which can be a problem when the less-informed spouse is the survivor. On many occasions, I have asked surviving spouses if they know how much money they need to live on, and the answer is usually no.

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Published: November 21, 2011

Many people postpone planning their estates, not wishing to confront issues of mortality; or, it may be that they believe the subject so complex that no amount of effort will yield any useful results. They may shrug their shoulders and say “I’ll let my kids worry about it”, not realizing the significant burden they are imposing on the next generation and the likelihood that far greater tax liabilities will be incurred by doing nothing.Estate planning should not be considered a process impossible to understand and not worth the time spent. Much can be achieved with a few hours of work.

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Published: November 20, 2011

A poll taken by a group called LifeGoesStrong.com indicates that only 47% of baby boomers (born between 1946 and 1964) feel confident they will be able to afford a comfortable retirement. As recently as March, the percentage was 55. Because of this, many more plan to continue working after age 65, with a significant percentage saying they never plan to retire. An article in the New York Times of November 20, 2011 makes a similar point, placing a large part of the blame for this change on the financial shocks that began in 2000 and continue to the present.

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Published: November 13, 2011

Several Internet articles, including the Wills, Trusts & Estates Prof Blog, have described a new development in tombstones: adding barcodes, such as you now see in billboards and other advertisements, that will connect to a website tribute page. You might have seen an example of this in a recent Doonesbury cartoon. The only problem with this technique is that barcodes will surely be obsolete in a few years, joining eight track tapes, VCR tapes and CDs, so it will be necessary to update tombstones for the new technology, whatever it will be.

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Published: November 13, 2011

Departing from the more customary sendoffs, some people have opted for unusual final instructions:

 1. Gene Roddenbery, the creator of Star Trek, had his remains launched into space. Actually, about five years later, they returned to Earth.

2. Frank Sinatra was buried with a bottle of whiskey, a lighter and ten dimes.

3. A former resident of Beverly Hills asked to be buried in a lacy nightgown sitting in the front seat of her Ferrari.

4. Elizabeth Taylor, always fashionably late, asked that her funeral service begin 15 minutes after its scheduled time.

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Published: November 13, 2011

A recent article in the Wall Street Journal suggests some issues that need to be considered by surviving spouses:

1. First, there are problems relating to IRAs rollovers, inheritances and distributions. The wrong choices can result either in IRS penalties or financial hardships. My experience has been that IRA providers do not offer the expertise needed to make the correct choices for the surviving spouse.

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Published: November 13, 2011

The question that often stumps people doing estate planning is who to choose as guardian of minor children if both parents die. Recent Internet articles highlight four myths about making such choices:

 1. There is a perfect match somewhere. There probably isn’t. Better to look for a couple of important characteristics and not worry about finding someone who will be exactly like the parents.

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Published: October 2, 2011

An interesting article in Private Wealth magazine- “Why Wealth Disappears”- examines the seemingly iron law that wealth created in the first generation disappears in the third one. The author uses several well-known families where this took place, which always makes for a fascinating story. What causes this to happen? Of course, the first generation has to work hard and for long years to create the wealth, and for that reason has a better appreciation of what it took to achieve that level of success.

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Published: June 5, 2011

I interviewed a retired partner in my firm for a program on retirement planning for lawyers, and I asked him what surprised him about retirement. He said that it was the amount of time he spent on the phone with health insurers. Although he didn’t have serious health problems, just the day to day claims for routine matters required extensive knowledge of policy provisions and how to navigate the system.

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Published: May 9, 2011

As previously reported, Leona Helmsley’s efforts to leave her dog $12,000,000 were rejected by a local court. The dog, reportedly with an unpleasant temperament, was forced to survive on a much smaller sum. The balance of the bequest was to be distributed by the trustees as they saw fit. As it happened, only $100,000 was given by them to dog-related charities. The ASPCA and other charities sought to intervene, to have the trustees give more to satisfy Mrs.

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Published: April 17, 2011

An article in the New York Times of April 17, 2011 notes that the three largest tax breaks are: the employer-provided health insurance exclusion ($264 billion of lost revenue last year), the home mortgage interest deduction and the 401(k) contribution exclusion ($52.2 billion). Lower tax rates on capital gains ($36.3 billion), lower rates on dividends ($31.1 billion) and the IRA exclusion ($12.6 billion) are also significant. Although the first two have long been viewed as untouchable, the sheer cost of them might tempt both parties to consider cutting them back, at least.

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Published: April 10, 2011

News media seem to spend a lot of time on retirement and estate planning topics these days.  Here are a few examples:

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Published: March 28, 2011

An article in Estate Planning for Texas Professionals, by Gerry W. Beyer and Kerri M. Griffin, raises some interesting issues about planning for digital assets, a topic that probably hasn’t yet occurred to many estate planners. In our increasingly digital and online world, it might be time to think about this new class of assets.

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Published: February 28, 2011

A recent article in the Wall Street Journal highlights the importance of the revised estate and gift tax law for owners of family businesses. The article appeared in the February 19, 2011 edition, and focuses on the enhanced lifetime gift tax exemption, which has risen to $5,000,000, at least for this year and next. Another important topic of the article is the issue of how business owners will fund their retirement. It might not be enough to live off what they have accumulated, and the article suggests ramping up retirement plans, perhaps establishing salary continuation plans.

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Published: February 15, 2011

The arrival of pitchers and catchers for spring training signals the beginning of what we hope and expect will be an exciting year for the Phillies. We’re tempted to look around the league to see how other teams are doing. How about those Mets? Word has reached us of a troubling development out of New York, a suit against the team owners by the trustee seeking to recover improper payments made by one Bernard Madoff.

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Published: January 26, 2011

My client Jim struggled for years over the decision when to give up his ownership of and active involvement in the family business.  He had transferred some of the company stock to the one son who had opted to work in the business, but he held on to most of his stock and continued to work every day, even into his 70s, by which time his son seemed able to run the business.  After much discussion, it became clear that Jim’s issue was maintaining a regular income after he gave up his ownership of and salary from the company.  Jim worked out an arrangement with his son and the company to pay hi

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Published: January 24, 2011

The passage of last year’s Tax Relief Act (it has a longer name that no one can remember and no helpful acronym) included changes in the law that have made transfers of business interests more tax efficient. The lifetime gift tax exemption has been increased from $1,000,000 to $5,000,000, and the estate tax exemption and the exemption from generation-skipping tax have both also advanced to $5,000,000. This makes lifetime gifts of large amounts feasible.

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Published: December 30, 2010

A provision of the Tax Relief Act of 2010 (which has a longer name but, alas, no acronym) extends through the end of 2011 the ability to make a direct trustee to trustee transfer from an IRA to a qualified charity without tax consequences (that is, no recognition of income and no tax deduction). The donor must be at least age 70 1/2 and the limit on the amount that may be transferred is $100,000 per year. The transfer must be from a traditional or Roth IRA; it can’t be from a SEP-IRA or a SIMPLE plan.

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Published: December 27, 2010

People were either amused or outraged when Leona Helmsley left a trust for her pet dog (“Trouble”) in the amount of $12,000,000. A judge later reduced the trust amount to $2,000,000, which is apparently enough for very good care for the remainder of the dog’s life. But this rather extreme case doesn’t detract from the need that many people feel for a means of caring for their pets after they are gone. There are numerous web sites and blogs dealing with this topic. Arrangements for pets depend on how much certainty the owner wants or needs.

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Published: December 23, 2010

A very entertaining article by Nora Ephron in The New Yorker of October 11, 2010, picks up a theme that we sometimes see in families: if I could just inherit a lot of money from someone, I wouldn’t have to work. Happily for the rest of us, Ms. Ephron’s expected inheritance, while nice, was insufficient for her to give up her productive career as an author and screenwriter. But the idea that one need only wait for an inheritance, and doing nothing else in life, is an unfortunate theme that, in some cases, saps the interest of younger generations in achieving something on their own.

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Published: December 3, 2010

Here is an interesting discussion of the effects of the recession on people’s retirement plans: http://crr.bc.edu/images/stories/Executive_Summaries/wp_2010-22.pdf

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Published: November 30, 2010

Apparently, Ms. Tudor had written a will leaving her copyrights and other assets to her children and a grandchild, but a subsequent will eliminated the bequest to one son, except for an antique highboy. That son may have been estranged from his mother, but he felt that his brother had exerted undue influence over their mother, causing her to change her will. The dispute ended up in court, unfortunately, but just before trial the matter was settled, to the at least expressed satisfaction of all parties.

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Published: November 30, 2010

As the Baby Boom generation heads into retirement years, there is increased interest in the adequacy of retirement income- not just initially but in later years of retirement as well.  It’s important when thinking about retirement to factor in expenses that might rise in later years, particularly health expenses. In addition, the effects of inflation must be considered.  Here is a brief discussion of a recent study on the subject:

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Published: November 20, 2010

Many books, stories and plays deal with wills and estates. A good example is in a short book written by John Mortimer, who was an English barrister, author and playwright.

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Published: October 21, 2010

The Employee Benefits Security Administration has proposed a definition of the term “fiduciary” under the Employee Retirement Income Security Act of 1974 (ERISA), the purpose of which is to expand the protections available to retirement plan participants, to protect them in particular from conflicts of interest and self-dealing by advisors. The new rules can be accessed here: http://www.ofr.gov/OFRUpload/OFRData/2010-26236_PI.pdf.

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Published: October 18, 2010

The Social Security Administration has announced that benefit payments will not increase in 2011. There has not been enough inflation to justify such an increase. The Social Security Wage Base will also not increase, remaining at $106,800 (this is the amount subject to OASDI taxes).

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Published: October 3, 2010

Actually, I was riding on a train to the airport a few weeks ago, when I overheard a not-very-quiet conversation between two people sitting on opposite sides of the train. The gist of the conversation was that one of the riders was getting involved in a new business. Having done “cash for homes” and a few other things, he was now going into IRA investment opportunities- how people with large IRA balances could make investments out of the general run of stocks, bonds and mutual funds, such as business ownership, real estate investments and the like. Why is this happening?

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Published: September 20, 2010

This fact pattern , which I wrote for a seminar, sets forth the many challenges and opportunities presented by family businesses:

The History of a Family Business 

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Published: September 15, 2010

OPPORTUNITIES FOR ESTATE PLANNING IN 2010

2010 is a strange and wonderful year in estate planning

• There is no federal estate tax (so far) for people who die this year;

• The federal gift tax rate is 35 percent this year; and

• The interest rates used by the IRS for valuing gift type transactions are at historic lows.

These three anomalies produce opportunities worth the attention of people who can afford to make transfers to children and grandchildren (and others). Here are some of them:

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Published: August 22, 2010

The IRS has announced the interest rates applicable to various planning techniques, and they have fallen again, this time to 2.4% for transactions in September. We wrote last month that the falling IRS rates made GRATs and intra-family loans more attractive, and the same is true of charitable lead annuity trusts (CLATs). The further lowering of rates means that these types of planning can be even more effective. And while it’s disheartening to see stock market values continue to fall, those lower values also make gift planning more effective.

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Published: August 8, 2010

Part of planning for retirement is deciding how much to save, as well as what to spend those savings on and when. An article from the 8/8/10 New York Times descibes some experiences and learning on what makes people happiest. It appears that Americans are saving more and spending less, which is making them happier, and that when they spend, the greatest satisfaction comes from experiences rather than things.

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Published: August 8, 2010

Social Security has been described as the most successful Federal program ever established. For some reason, perhaps related to politics, there have been claims in recent years that it was unsustainable and had to be drastically overhauled or scrapped. But several studies and reports in just the past few weeks have shown that this is not the case. An article in Bloomberg Businessweek includes this statement: “fact is, there is no Social Security crisis. The system isn’t broke.

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Published: August 1, 2010

A business school professor told the son of a client: “there’s nothing like working in a family business.” That’s true in several ways. Working in a family business can give someone a clear, eventual path to ownership and allow him or her to learn about all aspects of the business by moving from job to job within the business. But there are also pitfalls to consider: is there really a path, or will the family member not be taken seriously, by the family members and the non-family employees?

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Published: July 28, 2010

A study by the Employee Benefit Research Institute concludes that many people will be at risk of running out of funds sufficient to pay living costs at some point after retirement. Not surprisingly, the results differ based upon the level of pre-retirement income. For people in the highest quartile of pre-retirement income, 5% are at risk of running out of funds within 10 years of retirement, and 13% within 20 years. But at the lowest income quartile, 41% could run out of funds within 10 years and 57% within 20 years.

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Published: July 20, 2010

The IRS has just announced that the applicable federal rate under Code Section 7520 will fall to 2.6% in August, down from 2.8% in July and 3.2% in June. These very low rates make certain planning and wealth transmission techniques far more effective. For example, the use of grantor retained annuity trusts (GRATs) is far more effective when interest rates are lower. This means that larger amounts can be transferred to succeeding generations= more efficient estate planning.

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Published: July 20, 2010

The Florida Supreme Court has just issued an opinion denying asset protection for single member LLCs. We’ll write more about this later, but it points up the importance of thinking about protecting the wealth you have accumulated.

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Published: June 29, 2010

At the beginning of this year (2010), there was discussion in the press and in legal publications about the ability to convert IRAs and qualified plan accounts to Roth IRAs. This conversion involved paying taxes now and then being free of them thereafter, plus avoiding the necessity of minimum distributions during life. In effect, for those people who really didn’t need the amount being converted, conversion was a very effective multi-generational planning technique. To the extent you believe income tax rates will be higher in the future (a good bet), conversion makes sense.

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Published: June 25, 2010

Is it possible that Congress will do nothing for the rest of the year to restore the federal estate tax? Given the other items on its agenda, and the fact that this is an election year, it’s very possible. But then what? At the end of the year, the so-called Bush tax cuts expire. That means that the estate tax will return, at its earlier rates and exemption level: a maximum graduated rate up to 55% and an exemption of only $1,000,000 (as compared to the $3,500,000 that was in effect in 2009).

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Published: June 18, 2010

The IRS has announced the rates of interest used in valuing gifts and other transfers for the month of July, and they have fallen again. This means that transfers to the next generation can be made at a lower cost in gift tax exemption. But here’s something else affected by these lower rates: intra-family loans. An individual can lend money to a child or grandchild, for example, for a period up to just under three years, and charge interest at the rate of .61%. That means that a loan at that rate will not be considered a gift. How does this work?

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Published: June 18, 2010

A bill has passed the U.S. House making changes in grantor retained annuity trusts (GRATs). The bill would require that GRATs have a term of at least ten years, and would eliminate the zeroed out GRAT. These changes would make GRAT planning a little less advantageous, although transfers of wealth involving GRATs remain an excellent method of minimizing taxes. They are particularly helpful in transferring closely held business interests. With the right kind of assets, GRATs are a valuable planning technique. The change in the law hasn’t been acted upon yet by the U. S.

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Published: April 15, 2010

Some fun, eh, Grampa? Grampa?…

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Published: April 15, 2010

It’s family businesses. Actually, it’s a worldwide phenomenon.

Throughout the world, family ownership is the predominant form of business operation. This is true in India, Australia, Germany and, of course, in the U.S. The Philadelphia area, including New Jersey, Delaware and southeastern Pennsylvania, has many thousands of family-owned businesses. They are the primary engine of business and employment growth in this region.

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Published: April 15, 2010

Congress has fallen below even the lowest expectations of tax practitioners.  It’s like a (bad) dream come true.

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Published: April 15, 2010

Perhaps the only surprise is that someone thought they had common sense.

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Published: April 15, 2010

Very recent discussions in Washington have resulted in a proposal that resolves the estate tax issue and avoids litigation on constitutionality.

Congress is expected to reenact the estate tax at some point, although the exact date is unclear.  Some commentators have suggested that no action may be taken in all of 2010, which would result, under the law enacted in 2001, in a return to a graduated tax system with rates up to 55% and a $1,000,000 exemption.

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Published: April 15, 2010

OK, that’s not part of the President’s tax proposals, at least not yet.

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Published: April 15, 2010

At mid-February, 2010, we still have no indication of the future of estate tax legislation. There was a suggestion that it might be included in the jobs bill that could be considered by Congress soon. All that we know is that every prediction, guess and inside tip from every commentator and tax lawyer has so far proved wrong.

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Published: April 15, 2010

I read an obituary for Jody McCrea, son of famed movie star Joel McCrea. How quickly they forget.

As everyone knows, Joel McCrea was a well-known movie star of long ago. His son, Jody, who died recently, had roles in beach movies of the 1960s that starred Philadelphia native Frankie Avalon and Annette Funicello. In later years, he became a cattle rancher in New Mexico. I hope he had a satisfying life and did what he wanted after retiring from the silver screen. There’s a lesson here for those who help successful families plan their futures.

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Published: April 15, 2010

A recent news report indicates that an effort will be made to sell or recapitalize the restaurant chain Hooters, as a result of a family dispute over the will of the majority owner of the business.  (I’ve never visited one of these restaurants, but I see that their ads feature a picture of an owl, so I assume they have a library-like atmosphere.)  The report illustrates several issues in the operation of family businesses, and how a failure to plan and to consider the effect of trusts and estates law on such businesses can lead to an unfortunate result.

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Published: April 15, 2010

And his initials are RR. No, it wasn’t Roy Rogers.

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Published: April 15, 2010

That’s financial abstinence, of course.  The other kind, the Mrs. wouldn’t appreciate.

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Published: April 15, 2010

Was a classic TV show in which people did humiliating things for money. Sound familiar?

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Published: April 15, 2010

Not the high class kind, with a mask and a gun, but the financial type.

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Published: December 1, 2009

The Democrats are divided into their usual factions, and the Republicans aren’t sure whom they represent.

It’s possible that the House will vote an extension of the current estate tax rates shortly, but as usual, no one is sure until it actually happens.  The Democratic leadership, and the President, would like to extend the current $3,500,000 (per person) exemption and the flat 455 rate indefinitely.  Some Democrats want to reduce the exemption, while others want to increase it to $5,000,000; and others want to do that and index it for inflation (in case we ever have any).

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Published: November 18, 2009

The combination of continued low interest rates, a struggling economy and uncertainty about taxes makes planning important right now.

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Published: April 7, 2009

The world of estates litigation is certainly not boring. Sometimes it’s even about the money.

There are psychologists who provide a valuable service in trying to help families work through issues relating to inheritances. These kinds of issues often bring to the fore other issues that have been simmering for a while: why was one child chosen to be in the family business and another not; why one child got other advantages over a period of a lifetime; did one child plot to get on the good side of a parent to do better in the will?

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Published: April 7, 2009

It isn’t Bernie Madoff or the legion of individual advisors who have adopted his business techniques. It isn’t even the US Congress.

It’s health care. It’s the cost of health care, plus the complexity of dealing with our health care/health insurance system, plus time we will spend dealing with these problems.

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Published: April 7, 2009

This might be a good time to emphasize that it’s a trust fund.

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Published: February 22, 2009

The alternative minimum tax, which grew from an effort to provide some level of taxation on those who used various tax-avoidance techniques into a monster that threatens to swallow the entire federal income tax system, is the subject of tax relief in the recently-signed stimulus legislation. The exemption from AMT is scheduled to fall each year and engulf many millions of taxpayers, unless a “patch” is applied. The patch temporarily increases the exemption, and is reenacted every year. In the stimulus legislation, the patch was increased to the following levels:

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Published: February 9, 2009

Here is a guest article on valuation from Chuck Bertsch, a well-known valuation expert who has helped many of our clients:

RE: VALUATIONS IN HARD TIMES

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Published: February 9, 2009

The U.S. Senate has just passed a cloture motion, which means that the stimulus bill will continue to advance to likely Senate passage, followed by negotiations with the House and an eventual compromise bill. The new legislation will contain a number of tax-cutting provisions. As soon as we know what the final provisions will be, another article will be posted on this website to explain the changes.

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Published: January 27, 2009

The bad news of our economic downturn has created good news in estate planning. Clients often ask us for help in transferring wealth to children and grandchildren, as a way of minimizing future tax liabilities. There are many ways of doing this, but they all have limits on the value of what can be transferred free of tax. Our current economic problems will come to an end and, as difficult as it may be to believe, we’ll be back in the plus column very soon. But, meanwhile, now is a great time to transfer assets, when values are temporarily reduced.

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Published: January 18, 2009

In the midst of disturbing news about the economy, there are opportunities now available that make succession planning for businesses work well. There are two reasons: lower values for businesses and historically low IRS interest rates used in planning for wealth transfers.

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Published: January 12, 2009

Unless you’re Charles Dickens, or one of the people involved in recently revealed alleged embezzlements that seem incredible.

My investment adviser suggested, or perhaps prayed, that the revelation of spectacular wrongdoing was a sign that we are coming to the bottom of the investment cycle. It’s not unlike the comment by someone, I think Warren Buffett, that when the tide goes out, you see who’s swimming naked. As always, there’s a lesson here, and it applies to everyone who has responsibility, however slight, for the care and management of money and other assets.

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Published: January 12, 2009

Which is far better than lemonade. Here are some things that are likely to happen soon.

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Published: January 12, 2009

Sometimes it seems that our federal tax policy is written by the Marx Brothers. Here’s a curious example.

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Published: January 12, 2009

We are a few days away from the beginning of an era of change. There are some things to do right now.

In 2009, some changes in our federal tax system are very likely to occur, and some are already in effect.

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Published: January 4, 2009

Tax legislation that was passed unanimously by both houses of Congress and quickly signed by the President offer some helpful ideas for retirement and estate planning.

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Published: December 12, 2008

Until very recently, few people gave much thought to the insurance of bank deposits provided by the Federal Deposit Insurance Corporation. And, it’s likely that few of us will ever have to be involved with recovering deposits from failed banks. Still… it’s a good idea to know some of the basics of FDIC coverage.

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Published: October 12, 2008

Many people are now thinking that they will have to postpone their retirement, based on the dramatic downturn in the stock market in recent weeks. It has been a shock, although there are already signs that savvy (and brave) investors are about to start buying at bargain prices. But one effect of the uncertainty, coming on top of the long term decline in real estate prices, is that people have to think more carefully about their current spending. That’s why I think this (I hope) brief downturn can provide a useful lesson. The lesson is, how much or how little we need to live on currently.

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Published: October 11, 2008

It’s certainly a task to find anything positive in the startling drop in stock market levels. As of this writing, it’s unclear whether the drop has ended. Past history suggests that it will end, and possibly soon, and that the recovery could be swift. So, is there anything positive about the recent events? Perhaps this: with values depressed, maybe far more than they should be, this is a good time to make gifts to family members.

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Published: October 3, 2008

On October 3, 2008, the House of Representatives passed the so-called “bailout bill”, designed to avoid a further deepening of the economic crisis, and President Bush has already signed the bill. To make the proposals more acceptable to some members of Congress, some provisions were added that affect the tax liability of individuals. Here is a brief summary of a few of those changes.

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Published: September 29, 2008

Schadenfreude is the German word for taking pleasure in someone else’s misfortune. Like when someone speeds by you on I-95 and a few miles later, you see him pulled over by a state trooper. Schadenfreude. I have read numerous articles in the past week detailing the losses of leaders of large bank and investment firms. The New York Times of September 22 had a chart showing before and after stock ownership values for the heads of several of large institutions in the news.

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Published: September 23, 2008

In an effort to understand how the current financial crisis is being addressed, we plan to post on this blog information about what is being done; not speculation or suggestion, but announcements of what steps are being taken. Here is the Treasury Department announcement on actions to stabilize money market funds:

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Published: September 21, 2008

Not the one in Galveston; I’m not sure what lesson that teaches other than the need to live somewhere else. I’m referring to the one on Wall Street, which, it’s fair to say, hasn’t ended yet. In many similar situations, employees of the distressed or bankrupt companies had much of their wealth in stock of their employer, either owned outright or through retirement accounts.

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Published: September 17, 2008

The turmoil in the financial markets is certain to result in the loss of many thousands of jobs. The people who hold those jobs undoubtedly enjoy a variety of employee benefits, and some or maybe most of those benefits will be lost along with the jobs. Whatever happens, it’s important to remember that there is substantial regulation of benefits by the Employee Retirement Income Security Act of 1974, known as ERISA, as well as by numerous provisions of the Internal Revenue Code.

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Published: July 24, 2008

This was the only quote I could think of to introduce a discussion of planning with Roth IRA and retirement plan benefits. In response to this statement, Groucho Marx said: “Is Roth here too? Tell Roth to wax the Dean for a while.”

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Published: July 8, 2008

This was the title of a series of lectures to help spouses, mostly wives, understand financial matters. It addressed a very real problem that families face when the “financial spouse” passes on.

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Published: June 30, 2008

Dagwood Bumstead, featured in the long-running comic strip Blondie, has worked for more than 70 years for J. C. Dithers, the model for many a law firm senior partner. But that was not the way he started out comic strip life. His saga tells an interesting story about family business succession.

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Published: June 17, 2008

The San Diego Union-Tribune has been reporting for some time on the ongoing woes plaguing that city’s retirement system. A story reported on June 14, 2008 indicates that the city had hired a large law firm to look into the problems and to represent it in an investigation by the Securities and Exchange Commission. But, as it turned out, that created a conflict of interest- how could the law firm investigate the problem and at the same time defend the city in the SEC matter? Apparently, it could not, and the city sued the law firm for a very large sum of money.

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Published: June 16, 2008

Part of planning for the future is deciding where to spend the golden years, as marketing types like to call them. For those people who have an option where to live in retirement, there are the usual suspects: Florida, Arizona, North Carolina and there is the state that is one of the most popular among retirees, Pennsylvania.

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Published: June 15, 2008

A new book by Alice H. Munnell and Steven Sass, titled “Working Longer: The Solution to the Retirement Income Challenge”, published by the Brookings Institution Press, makes some important points about planning for retirement. Americans, they say, need to work longer because of a contracting retirement income system, the longer lifespans now enjoyed by many of us, and the rising cost of healthcare.

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Published: June 12, 2008

Section 409A of the Internal Revenue Code was enacted in reaction to concerns about the taxation of deferred compensation, especially some of the abuses uncovered in the failure in recent years of several large corporations, including Enron. The law was enacted in 2004, but several extensions were granted of the time to amend plans and arrangements to comply with the new law. Those extensions will come to an end on December 31, 2008.

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Published: June 9, 2008

Actually, the Warren Zevon song refers to “Lawyers, Guns and Money,” but the Internal Revenue Code can also be a dangerous weapon. Now that the campaign for president has reached the general election stage, it’s time to realize that whoever wins the election; there are massive changes in our federal tax system looming ahead. These changes will affect us and our clients in various ways. In some cases, there will be little that can be done but to accept the changes; in other situations, there may be planning that can be used to reach a better result.

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Published: June 2, 2008

I know it was discussed extensively over the past few years, but is it no longer front-page news because the problem has been fixed? Apparently not. It’s more likely that the nation is suffering from attention deficit disorder and can only think about high gas prices right now.

But this problem isn’t going away, nor is the Medicare problem on the verge of resolution. Both of these programs face long-term funding challenges and waiting another few years to think about them again isn’t going to make their solution any easier.

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Published: May 27, 2008

This is what a father wrote in a will that was brought to me. It illustrates another fundamental point about estate and retirement planning.

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Published: May 21, 2008

I adapted this motto from that of Faber College (”Knowledge Is Good”), to illustrate a point about trust and estate planning. Lawyers are specially trained in the law and in legal writing for an important reason, which is so they can write documents that make sense and accomplish what they are supposed to do. But we do that so often that we sometimes forget that others aren’t trained in that way. In the trusts and estates world, we see many people trying to write documents without the necessary training.

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Published: May 13, 2008

Or does it seem that just about everyone in America is planning to retire in the next few years? If you watch television or read magazines of almost any kind, you will see constant stories about impending retirement: Are people ready for retirement; What can they do now to get ready; etc.

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Published: May 5, 2008

“And she cruised through the hamburger stand, now.” The philosophers Brian Wilson and Mike Love remind us of the perils of giving children too much too soon, in “Fun, Fun, Fun (’Til Her Daddy Takes the T-Bird Away).”

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Published: May 4, 2008

A new book by Roger Lowenstein, a well-regarded author on financial topics, raises some issues about a problem that is becoming more obvious as baby boomers near retirement- the question of whether they have saved enough. His book, While America Aged: How Pension Debts Ruined General Motors, Stopped the NYC Subways, Bankrupted San Diego, and Loom as the Next Financial Crisis, discusses the way in which pension issues have affected the institutions named.

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Published: May 1, 2008

Federal estate and gift taxes cover a wide range of assets that a person might own, and this includes works of art. Art can come in many forms, including paintings, photographs and sculpture, among others. Art can be difficult to value, because it’s not traded on an exchange. Its value is really a question of opinion. It won’t be surprising to learn that those who file estate tax returns for decedents who owned art tend to put a low value on those artworks passing to family members. The IRS, of course, likes higher values.

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Published: April 28, 2008

This title will be familiar to readers of the adventures of Sherlock Holmes. It’s a story mentioned in one of the Holmes stories as one for which the world was not yet ready. Apparently, the world was never ready for the story, because the author died without having written about a giant rat, from Sumatra or elsewhere.

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Published: April 27, 2008

This was the remark made by John D. Rockefeller when he learned how much J.P. Morgan had at his death. I guess it’s all relative. Two recent reports on wealth in the world and America contain some interesting insights in those considered wealthy, whatever Mr. Rockefeller might have thought.

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Published: April 27, 2008

There are so many books, guides, television shows, magazines and web sites on investing that it amounts to information overload. Sometimes, the reaction to so much information is to do nothing. The Morningstar web site has a short article with the author’s (David Kathman) suggestion for a handful of books for the beginner (which is most of us) who wants some guidance on investing:

The Only Investment Guide You’ll Ever Need, by Andrew Tobias

Buffet: The Making of an American Capitalist, by Roger Lowenstein

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Published: April 21, 2008

Every so often, a partner in my firm will approach me in a sheepish manner to say he or she hasn’t done any estate planning recently or, in extreme cases, doesn’t have a will at all. Sometimes clients admit the same. I suppose this has to do with a belief that planning for the inevitable brings it that much closer. No one has ever suggested that buying homeowner’s insurance makes it more likely that your house will burn down.

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Published: April 20, 2008

The IRS has just issued Revenue Ruling 2008-22. The ruling states that giving a grantor of a trust the authority to substitute property of equal value will not, by itself, cause the trust to be included in the grantor’s estate for federal estate tax purposes. What’s going on here?

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Published: April 14, 2008

For many people, their largest financial asset will be the balance in their retirement plan. The growth in 401(k) plans and the increases in the limits on deductible contributions to retirement plans have resulted in growth of such plans to overall levels of trillions of dollars. This growth has generated a number of issues, but a requirement covering all such plans and raising many issues is the necessity of taking withdrawals from such plans beginning at a specified age and at a specified rate.

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Published: April 8, 2008

In 2001, Congress passed, and the President signed, a strange law regarding the federal estate tax. The plan was to gradually reduce the tax rate and gradually increase the exemption from tax. In 2010, the tax was to disappear entirely, but only for people who died in that year. You can imagine the planning that was contemplated. In the following year, 2011, the tax was to be restored to where it was before the change in the law, a much higher rate and a much lower exemption. This couldn’t be right.

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Published: April 4, 2008

Unless you’ve been on a deserted island for the past two weeks (today is April 3, 2008), you will know of the near-collapse of the investment bank Bear Stearns.  Bear Stearns stock closed at $169.61 per share on January 12, 2007. The initial sale price to JP Morgan was $2 per share, since raised to $10, but this still represents a 94% decline from the high to the sale price. Many very wealthy investors in Bear Stearns are much less wealthy.

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Published: March 31, 2008

Megatrends is a name given to important changes in the economy or in the behavior of many people. People write books and articles about megatrends, hoping to identify them before others do and to benefit in some way (usually by selling more books). There are several megatrends that have a definite impact on trusts and estates work, and that will be discussed in future blogs:

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Published: March 19, 2008

We now know what will consume the time and efforts of many thousands of people over the next ten to fifteen years: surveying people about their retirement plans. How long will you work? Where will you live? Who will handle your investments? What can I sell you? We already see almost daily surveys from all corners, attempting to find out what will actually happen to the Baby Boom generation. Of course, there’s a simple explanation for this trend: whatever this generation does, it will have a lot of money to spend, and many people want to know where that money will be spent.

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Published: March 16, 2008

We’re seeing another aspect of the Baby Boomer syndrome: whatever stage of life baby boomers are in, there are massive resources created and applied to meet their needs. There are now many organizations, both commercial and educational, dedicated to the issues arising out of the impending retirement of this generation. For example, Boston College has a Center for Retirement Research (http://crr.bc.edu).

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Published: March 16, 2008

The American Association of Individual Investors has an interesting article on retirement myths on its web site: www.aaii.com/features/retirementplanning.cfm. It lists some misconceptions people have about what they will do in retirement. Here are a couple of them.

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Published: March 15, 2008

We’ve written before about the number, which is the amount you’ll need for retirement and the title of a book on the subject. There is a new advertising campaign from ING on the subject, with a web site to assist in determining the number: www.ingyournumber.com. It’s an interesting calculation process, but there are others, at www.bloomberg.com and www.moneycentral.msn.com.

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Published: March 9, 2008

While we’re working, health insurance is a relatively simple thing: most of the time, our employer provides it. It might be complicated, but we know where the rules are, and there’s usually someone at the office who can help us. But post-retirement health insurance is a different matter: we’re on our own. The National Association of Insurance Commissioners (www.naic.org) has issued a list of 10 tips to consider regarding health insurance after retirement, and it would repay careful review. Here are a couple of them:

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Published: March 7, 2008

The use of prenuptial agreements is becoming more frequent, especially in the case of second marriages where there are children from the first marriages. Here are three simple things to remember when considering a prenuptial agreement:

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Published: February 24, 2008

As lawyers, we don’t recommend investments, which is probably a very wise decision. But we find it interesting to see what others are saying. One of the most successful investors in the US is certainly David Swensen, who manages the endowment of Yale University. In a recent article in the New York Times, on February 17, 2008, Mr. Swensen cautioned against individual investors trying to duplicate the investments he makes with an endowment in excess of $20 billion. In his book, “Unconventional Success: A Fuindamental Approach to Personal Investing”, Mr.

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Published: January 6, 2008

When a retirement plan participant died and named the surviving spouse as the beneficiary of death benefits, the spouse had several options, one of which was to roll the benefits out of the plan and into an IRA, permitting a long stretchout of benefit payments, if that was desired. But if the beneficiary was not the spouse, perhaps children instead, there was a good chance that all of the benefits would have to be distributed almost immediately- and subjected to federal income tax.

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Published: January 6, 2008

Retirement planning for lawyers was the title of a series of seminars at which I spoke last fall, under the sponsorship of the Pennsylvania Bar Institute. PBI is planning a similar seminar in Philadelphia in April. On the same topic, there is an excellent website sponsored by the American Bar Association, titled Second Season of Service. It repays viewing by any lawyer, especially those over 55.

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Published: November 26, 2007

An organization called the Economic Policy Institute, which is tied to the American labor movement, has sponsored several papers dealing with improvement to the strength of the Social Security system. Building on Social Security’s Success, by Virginia P. Reno, Guaranteed Retirement Accounts, by Teresa Ghilarducci, and Protecting Social Security’s Beneficiaries, by Nancy J. Altman, deal with various techniques to ensure that Social Security will be available for us and our children.

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Published: November 18, 2007

We have frequently heard people explain their plan to accumulate retirement assets as follows: I’m putting all of my money into my home. Real estate is appreciating much faster than ordinary investments. When I retire, I’ll sell my large home for a huge profit, move to a smaller, less expensive home, and live on the difference. This probably worked for a few people, but, in most cases, people who sold their large homes bought a smaller home that ended up costing them as much or more.

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Published: November 11, 2007

An interesting column, dealing with ethics in everyday situations, appears each Sunday in the New York Times magazine. This week’s (November 11, 2007) edition includes a story about two children with different circumstances in life. One has done reasonably well financially, while the other has chosen a career path that has necessitated continuing financial assistance from parents. The more affluent child asks if this should be mentioned to the parents while they do their estate planning, with a view to “evening out” for the financial assistance provided during life.

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Published: November 5, 2007

There are many mistakes that people make in plannning their estates, but we have a candidate for the all-time worst mistake. It doesn’t involve federal estate tax planning or the appropriate beneficiaries for retirement benefits. It’s this simple: the failure to decide what to do with your estate and to tell family members what you want. We have seen an increasing number of family disputes that arose because parents left vague instructions as to the disposition of personal property and other assets.

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Published: November 5, 2007

In a previous post, we described the new rules that permit beneficiaries of death benefits from qualified retirement plans to roll them over to IRAs, a technique that was formerly available only to spouses. One problem with this technique was that the sponsor of the plan had to permit such rollovers. After much criticism, the IRS has now reversed its position and announced that non-spouse rollovers, while remaining optional for 2007, will be mandatory in 2008 and later years.

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Published: October 23, 2007

A limited opportunity for making charitable gifts was added to the law in 2006 and will expire at the end of 2007. Under this provision, which is contained in Section 408(d)(8) of the Internal Revenue Code, individuals who have reached age 70 1/2 can distribute up to $100,000 per year, for each of 2006 and 2007, to charitable organizations. The organizations must be public charities (other than donor-advised funds and supporting organizations) or private operating or pass-through foundations.

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Published: October 22, 2007

Each year, at about this time, the Internal Revenue Service and Social Security Administration issue numbers for various transactions and planning for 2008. Here are a handful of those numbers:

Social Security wage base for 2008: $102,000, up from $97,500 in 2007.

Cost of living Social Sceurity benefit increase: 2.3%

Maximum Social Security benefit at full retirement: $2,185 per month, up from $2,116.

Maximum contribution to defined contribution retirement plans: $46,000 per year, up from $45,000.

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Published: October 7, 2007

For many of us, it’s difficult to imagine that having money is a problem. Most of us work diligently to acquire wealth, and don’t shrink from having more. But the experience of lawyers and other advisers to those who have been successful financially demonstrates that wealth can be both a blessing and a curse to families. A recent talk in Philadelphia by Charles W. Collier, the senior philanthropic advisor at Harvard University, was very enlightening on this subject. Without offering solutions, because no solution can cover every situation, Mr.

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Published: October 7, 2007

A previous post made reference to a clearly written discussion of funding problems with Social Security and the pros and cons of various solutions to the problems, which discussion can be found at www.bc.edc/crr. One of the solutions suggested was to raise the retirement age for receiving full benefits.  It appears that a delay of only a few years would provide substantial relief for the funding pinch. Rather than just pushing people into starting benefits later, why not give them an incentive to do so?

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Published: October 7, 2007

An important theme of these blog entries is the subject of retirement, and it’s impossible not to see the widespread discussion of retirement issues in news media and in advertisements from businesses that provide services and products related to retirement.  There are also scholarly publications and web sites reviewing retirement issues. One of these that repays some study is a web site of the Center for Retirement Research at Boston College. The web site address is www.bc.edu/crr.

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Published: September 30, 2007

For many members of the Baby Boom Generation, retirement is now approaching, and it’s a good idea to look more closely at what needs to be done in the few years before retirement:

1. Have wills been updated? At this point, they should be reviewed at least every three yers.

2. In addition, are the durable general powers of attorney to cover financial matters and healthcare directives up-to-date?

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Published: September 30, 2007

Taxes remind me of the Woody Allen joke about the guy who complains to a friend that his brother thinks he’s a chicken. When asked why he doesn’t take his brother to a psychiatrist, the guy says he would, “but we need the eggs.” Taxes have a negative effect on the growth of the economy, but we need the money to do all the things we expect government to do. Some people complain, and perhaps rightly, that government tries to do too much, but what they really mean is that government tries to do too much for other people.

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Published: September 30, 2007

What is a fair rate of tax and exemption for the federal estate tax? It’s a matter of opinion, of course, but, based upon experience with many business owners and others who have accumulated wealth, here’s a suggestion: the tax rate should permit someone who has worked to acquire a substantial level of wealth to have enough to pass on to the next generation, so that they can enjoy some of the fruits of the labor of the older generation, but not so much that their need to have productive lives is taken away.

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Published: September 30, 2007

Several more pressing issues, including the Iraq war and the Presidential campaign, seem to have pushed discussion of the federal estate and its possible repeal off the radar in Washington, D.C. and in the rest of  the country. We’re now at a point of having a $1,000,000 lifetime gift tax exemption and a $2,000,000 federal estate tax exemption at death, with rates still in the mid-40% range.

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Published: September 28, 2007

A humorous document has appeared on numerous web sites, purporting to be issued in the form of a Notice published by the Internal Revenue Service, which provides a definition of the term “death” for the purposes of Section 409A of the Internal Revenue Code. For those of you uncertain about the meaning of death (or life), this notice can be found at http://benefitslink.com/articles/guests/notice_2007_90_rev.pdf.

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Published: August 29, 2007

A recent news report contains some detail on the will of Leona Helmsley, who died recently. While two of her four grandchildren got nothing under the will, and two others get something only if they visit their father’s grave once a year, Mrs. Helmsley’s dog has done quite well. A $12,000,000 trust is to be established for the dog, ensuring its care for the rest of its life. But such a trust would be subject to federal estate tax. Where will little Fido get the money to pay the tax? It might come from the residue of the estate, but what if Fido has to pay the taxes?

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Published: August 15, 2007

Bob Louis spoke at a series of programs presented by the Pennsylvania Bar Institute on the topic of Retirement Planning for Lawyers. As more lawyers in the Baby Boom Generation approach retirement age, they are facing issues about their desire and ability to retire. Retirement planning includes lifestyle choices, financial and investment planning, retirement benefit planning, and health and long term care coverage. These considerations are very interrelated, and the result for one lawyer will not be appropriate for another.

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Published: July 15, 2007

One of the greatest impediments to retirement by an older generation of a family business is concern about maintaining an adequate income stream in retirement. The owner/managers of a business generally rely upon the business to provide a comfortable income and to cover many expenses. There might be a reluctance to give that up, which could lead to a postponement of retirement beyond what would otherwise be an appropriate time.

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Published: July 14, 2007

In a prior post, I suggested using your money to set up an IRA for your children, with contributions equal to whatever they earned from summer, or schooltime, jobs. That kind of planning is very valuable, because saving at an early age permits many years of compounding. But there’s a way to make it even better. Most kids who work don’t earn enough from their jobs to generate more than a very small federal income tax or, more often, none. So the IRA tax deduction is of no value. If that’s the case, why not set up a Roth IRA for children’s earnings?

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Published: July 14, 2007

Back when my children had summer jobs, I urged them to save some of the money they earned in a retirement account, an IRA. “If you save now, it will grow into a large amount of money by the time you are 65.” Somehow, promising children age 18-20 wealth when they reached age 65 didn’t sound like an attractive proposition. So they spent their earnings. But I could still set up an IRA for each of them, which I did, and deposited an amount equal to what they earned during the summer (which was less than the maximum that could be contributed).

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Published: June 27, 2007

This post was written by The Beringer Group:

In the US, the family business has, since the end of WWII, been one of the great producers of both jobs and wealth.  And yet, if one reads the literature, one knows that most family businesses don’t last beyond two generations.  This can be due to many causes, but one of the most prevalent is the lack of planning to tax-effectively pass the business from one generation to another.

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Published: June 21, 2007

Last year’s big revision of the retirement plan rules, the Pension Protection Act of 2006, made an important change in the way in which death benefits paid from a retirement plan are taxed.

In many retirement plans maintained by employers, there is a provision stating that if the employee dies before all benefits are paid, the balance will be paid in a lump sum promptly after the employee’s death. There is a simple reason for this: the employer doesn’t want to remain responsible in any way for the balance remaining- better to get it out of the plan.

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Published: June 11, 2007

After doing the calculating called for in the prior posts, you now know the remaining living expenses needed to provide the baseline retirement, and now need to calculate whether the retirement account you expect to have at retirement will be adequate to pay those expenses. You can make an estimate of what your account will be at retirement by assuming a certain level of contributions and a rate of return similar to that you’ve experienced over a substantial period of years.

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Published: June 11, 2007

By using the template in the prior post, you can get a good idea of your current living expenses. It’s amazing how many people spend without any idea of what daily life costs them. If you have the approximate number of your current expenses, how do you get to the number you will need in retirement? You can begin with the baseline assumption that, when you retire, you will live just about as you are now, with a few changes:

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Published: June 10, 2007

I often ask clients how much they are spending now, and almost always the answer is “don’t know”. This comes up most often when one spouse has died and that spouse handled most of the financial matters. The surviving spouse isn’t sure that he or she has enough to live on, or perhaps enough extra to begin making gifts to family members. Often, surviviors can afford to make gifts to children and grandchildren, but don’t realize it because they don’t know what they need for living expenses and, sometimes, seem paralyzed by the need to calculate it.

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Published: June 10, 2007

We often see commentary about how much a person needs to retire, and often that commentary suggests the need for some percentage of pre-retirement income, such as 70% or 80%. It’s not easy to predict what someone will need in retirement, but pegging it to some fixed percentage of income earned during working years is clearly wrong. This is either sloppy journalism or an effort to encourage people to deal with a brokerage firm. It’s probably fair to say that any generalization as to the amount needed that is supposed to cover all situations is guaranteed to be incorrect.

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Published: June 8, 2007

A recent dispute over a Washington will highlights the necessity for clients to frequently review their estate plans, especially when those plans include wills or trusts that bequeath significant assets to charitable organizations. The Washington case involved a decedent who left $264 million in his will to eight charities, including the Salvation Army and Greenpeace.

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Published: June 5, 2007

I think there are two reasons why there is now so much interest in planning for the future in family-owned businesses:

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Published: May 31, 2007

In recent years, several tax laws have reduced federal income tax rates and added to the ability to set aside amounts for retirement in a tax-advantaged way. At the same time, other changes in tax law, by limiting deductions, for example, have actually increased tax burdens. And, the inattention to the growth of the alternative minimum tax has resulted in millions of people having to pay that additional tax. A tax bill just passed by Congress, that will shortly be signed by the President, provides another example of this.

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Published: May 31, 2007

A recent article in the Financial Times reports that over the last few years there has been an increase in the use of postnuptial agreements to protect assets and plan for the orderly distribution of property in the case of divorce.  Interestingly, the article focuses on a growing trend among hedge funds where partners are required to sign these agreements to protect the fund from claims by ex-spouses.

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Published: May 23, 2007

There is no single answer to this question, of course. It varies depending on your current and hoped for lifestyle.  An investment adviser named Bill Landberg sent me a book on the subject that’s worth a look. It’s called “The Number” and it’s written by Lee Eisenberg. It doesn’t tell you the answer, but it helps you to start thinking about your own Number. In future blogs, we’ll discuss some tools that you can use to do your own calculations.

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Published: May 23, 2007

Much has been written lately about the short and spectacular life of Anna Nicole Smith. Her recent death and its aftermath have only increased the media feeding frenzy. Rather than comment on the salacious and sordid details of Ms. Smith’s life and death, we are instead interested in what these events can teach us about estate planning and avoiding estate litigation.

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Published: May 23, 2007

Congress passed a law in 2001, which the President signed, that creates a fabulous tax benefit for those who die in 2010.  If you’re lucky enough to pass on during that year, your heirs will pay zero federal estate tax.  By contrast, if you die in 2009, the tax rate is 45% and, if you stay with us until 2011, you could pay as much as 55%.  What aim of tax policy is satisfied by this crazy quilt tax system?  None, of course, it’s just a product of budgetary rules.

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