Roll up your sleeves, fiduciaries and estate planners. 2011 should keep you hopping.
Remember Jeremy Bentham? As we mentioned recently, he's still sitting pretty at University College London, thanks to instructions he left in his will.
Despite the bad press heaped on Universal Banks and Wall Street manufacturers of faulty investment products, the field of financial services does contain unsung heroes. Prime examples: the men and women laboring in personal trusts and investments at banks and trust companies across the country.
The Democrats voted for Obama’s deal, but Obama’s deal consisted of endorsing the tax rates proposed by George W. Bush in toto. Not just the income tax rates, either, but also the capital-gains tax rates that Obama insisted on raising during the 2008 campaign to either 20% or 28%. In the end, those tax rates got more votes last night in a Democratic-controlled House (277) than they did in the GOP-controlled House in 2001 (230), and more Democrats voted to extend them than Republicans, 139-138.
The final vote in the House was 277 to 148 after liberal Democrats failed in one last bid to change an estate-tax provision in the bill that they said was too generous to the wealthiest Americans and that the administration agreed to in a concession to Republicans. The amendment failed, 233 to 194.What was all the fuss about?
million exemption, some family businesses will continue to face steep death taxes. The Wall Street Journal cites the example of a family-owned lumber company in Arkansas. In addition to owning timberland of unspecified value, the company operates five mills, valued at $150-$250 million.
1. "I expense everything." Circa 1960 somebody actually said this to me. He tied vacations to business trips, drove a company car and rarely ate a meal that lacked a business purpose. (If he were a Midwesterner required to hang out at corporate headquarters in New York, he might have lived tax free, in housing provided "for the convenience of the employer.")
ear winds down, hedge fund managers have good reasons to Deck the Halls. Last I heard, the tax-extender legislation will not tax the "carried interest" portion of their earnings as ordinary income. And The New York Times reports that hedgers and other "sophisticated distressed investors" have a new asset in their sights. Claims of Madoff victims.GleeSlothDissensionPossible masterpiece in the closetWealth
But a hefty portion of the $858 billion tax package will benefit middle- and upper-middle-income Americans — precisely the demographic that felt neglected the last two years as the White House and Congress focused on the major health care law and on helping the unemployed and people facing foreclosure.Better late than never.
Unlike too many humans, they don't squabble over the estate.Confessed Ponzi schemer Sean Mueller received a 40-year prison sentence last week.It's a jungle out there – which is why many investors need a fiduciary on their side.***Since Aug. 16, the [U.S. Department of Justice] has rounded up 343 criminal defendants and 189 civil defendants, many accused of running schemes similar to Mr. Mueller's. The department tallied 120,000 victims and $10.3 billion in losses.
Barack Obama won the great tax-cut showdown of 2010 — and House Democrats don’t have a clue that he did. In the deal struck this week, the president negotiated the biggest stimulus in American history, larger than his $814 billion 2009 stimulus package.
It will pump a trillion borrowed Chinese dollars into the U.S. economy over the next two years — which just happen to be the two years of the run-up to the next presidential election. This is a defeat?
If Obama had asked for a second stimulus directly, he would have been laughed out of town. Stimulus I was so reviled that the Democrats banished the word from their lexicon throughout the 2010 campaign. And yet, despite a very weak post-election hand, Obama got the Republicans to offer to increase spending and cut taxes by $990 billion over two years — $630 billion of it above and beyond extension of the Bush tax cuts.
Residents of New York, New Jersey and New Hampshire know the most about managing their personal finances, while denizens of Kentucky and Montana know the least, according to nationwide survey sponsored by Finra.Know which state's residents are most likely to live beyond their means? According to the study web site, it's Delaware.
Estate taxes must be paid to the U.S. Treasury within a year of the testator's death. In cash.
Back in 1931, the liberal son of an immigrant banker knew what to call this kind of business. Matthew Josephson wrote The Robber Barons to argue that the industrial giants of the 19th century had not created wealth in the right way. They had acted like the feudal barons who for centuries had dominated the mountain passes through the Alps. The great corporations of the Gilded Age "monopolized strategic valley roads or mountain passes through which commerce flowed" just like the old barons-of-the-crags.
Hello, Warren? Isn't your business model exactly the one that so offended young Matthew back in the Great Depression after he got back from a decade living la vie bohème as an ex-pat in Paris? Aren't your businesses sitting at an economic choke-point, exploiting the unintended consequences of bad government economic policy, gouging successful family businesses both coming and going, and exploiting grieving widows?
Jeremy Bentham, the great English legal philosopher and political radical, died in 1832. In his will he directed that his skeleton be preserved, "wearing his usual clothes and sitting on his favorite chair," with his embalmed head placed on top. The head was damaged and replaced with one fashioned from wax, but Jeremy is still said to attend an occasional council meeting at University College London, where he is recorded as "present but not voting."
[T]he five largest financial institutions are 20 percent larger than they were before the crisis. They control $8.6 trillion in financial assets — the equivalent of nearly 60 percent of gross domestic product. Like it or not, these firms remain too big to fail.As for the argument that we need humongous banks to compete globally, Hoenig doesn't buy it.
How is it possible that post-crisis legislation leaves large financial institutions still in control of our country’s economic destiny? One answer is that they have even greater political influence than they had before the crisis. During the past decade, the four largest financial firms spent tens of millions of dollars on lobbying. A member of Congress from the Midwest reluctantly confirmed for me that any candidate who runs for national office must go to New York City, home of the big banks, to raise money.
More financial firms — with none too big to fail — would mean less concentrated financial power, less concentrated risk and better access and service for American businesses and the public.How would you characterize our largest financial institutions? 800-pound gorillas … or 800-pound stumblebums?
Taxwriters assured Shulman in a November 9 letter that there will be no such scramble this year. Congress would "do everything possible" to enact an AMT patch by the end of the year, with exemption amounts for 2010 at $47,450 for individuals and $72,450 for joint filers, lawmakers wrote.Apparently, the IRS has gone ahead and reprogrammed their computers with these numbers. Now it's beginning to look like Congress would rather argue than legislate. If nothing is done, Republicans will pass new tax legislation with retroactive dates when they take over in January. Sounds easy, but it isn't. IRS will have to proceed on what the law is, not what it was promised to be. They will have to reprogram for the unpatched AMT.
"It would be an unprecedented and daunting operational challenge to open the tax filing season under one set of tax laws with respect to AMT and extenders, begin accepting tax returns, and then have the law change," Shulman wrote to Democratic and Republican taxwriters in the House and Senate.At a minimum, refunds will be delayed as the computers are reprogrammed for a third time for the 2010 AMT.
This provocative pair of graphs accompanies Leonhardt's article. Only seriously high-income taxpayers were in the top bracket back in the 1960s. Trouble is, the near-the-top brackets were almost as onerous. In 1960 couples making the equivalent of $250,000 or more today generally faced a top rate of 50% or higher. See tax brackets and rates for selected years, (and remember to adjust for inflation). Tax addicts can also browse through Forms 1040 from times past.The meeting will simply be the beginning of negotiations, White House Press Secretary Robert Gibbs said during a briefing with reporters.So, not serious.
"I do not expect that we'll come out after an hour, an hour-and-a-half, and have full agreement on this," Gibbs said. "I hope there is agreement on the notion of how important it is to get this done by the end of the year."
Gold is expensive and the price of French Hens has gone through the roof.One effective way to prevent beneficiaries from following in the footsteps of the Martins is to place the gifted assets into a trust rather than giving it to them outright.But now I'm not so sure. Mr. Martin was in his late 40s when his liquidity event occurred. Mr. Weyrich was probably of similar age – a mature businessman. At some point a person ought to be old enough to blow a fortune if he or she really wants to.
Commission Co-Chair Erskine Bowles said November 18 that based on the week's discussions, the commission will refine the draft proposal he and Co-Chair Alan Simpson released the previous week, and that the final product would focus on what he called "earmarks in the tax code."Uh huh. Prominent examples of tax earmarks that were snuck into the tax code at midnight without a vote when no one was looking include the home mortgage deduction and the exclusion from income of employer provided health insurance. Yeah, those must be earmarks.
raise doubts that the fiduciary standard can stretch that far. Maybe there's a simpler solution: Require brokers to call themselves brokers – not "financial advisers" – and stop misusing the term "wealth management."… the question [is] whether ALL investment advice - even broker-rendered advice that is "solely incidental" to that broker's "conduct of his business as a broker or dealer and who receives no special compensation therefor" [Investment Advisors Act of 1940, Sect. 202(a)(11)(C)] - ought to be subject to the FIDUCIARY standard that generally applies to "investment advice". Sect. 913 of Dodd-Frank specifically states that the charging of commissions is not, per se, a violation of fiduciary duty. But the question remains as to whether the rendering of advice by someone compensated by commissions is subject to that fiduciary duty.Related post: Dogs and Cats, Fiduciaries and Brokers
Temporary!Give me a break! In my lifetime the Internal Revenue Code has never achieved long-term stability. Never. "Improvements" to the last serious effort at income tax reform, in the 1980s, began metastasizing almost immediately.
Permanent!
Some temporary!
Others permanent!
All temporary!
All permanent!
The Bush tax-cut extension has lawmakers so tied up that they have pushed the estate tax to a back burner. According to BNA's Daily Tax Report, Senate Finance Committee Chairman Max Baucus (D., Mont.) said on Nov. 16, "We're barely talking about it, let alone ready to make a decision."Could this all be a bad dream?
Republicans, of course, will take over the majority in the House in January, at which point they would vote to extend all of the lower rates if Congress has not already resolved the issue.Yes, in the House. But in the Senate? Will the Democratic majority there even bring such a bill up for a vote? Doubtful. Might Obama veto it?
The Hoyer aide said no decisions have been made about the bill's structure, its timing, or if the vote would be held under regular order or under suspension of the rules. Bills brought under suspension cannot be amended but require a two-thirds majority to pass. Using that approach would prevent Republicans from adding "poison pill" provisions to the bill, but because Democrats hold less than two-thirds of the chamber's seats, it would also enable the GOP minority to vote the bill down.Senate Democrats haven't settled on their strategy yet.
Lawmakers convened a lame-duck session of Congress November 15 with no clear path forward on big-ticket tax items that expire at the end of the year.
Senate Finance Committee Chair Max Baucus, D-Mont., had no conclusive announcements after a meeting with committee Democrats to discuss the year-end tax agenda.
A place set aside for special use, in particularHope this doesn't mean millionaires are an endangered species.
- an area designated as a habitat for a native people.
- a protected area for wildlife.
Dr. Dichter's motivational techniques made a lot of people nervous, including a little-known writer, Vance Packard. While I mumbled about my job, Packard was writing what would prove to be a surprise best seller: The Hidden Persuaders.
GOLD NUGGETS FROM ARIZONAWells Fargo Private Bank, which requires more than $1 million in investable assets, offers an Elder Services program. It will coordinate a variety of services, from dealing with medical claims, taking the cat to the veterinarian and paying the bills, while keeping a close eye on the accounts for fraudulent activities. The service is included in the bank’s investment management fees, which range from 0.80 to 2 percent of assets. Let’s hope we see more such services — and not just for the wealthy.Sunday's Times offered Richard Thaler's lucid report on the looming estate tax debate, to be conducted by a lame-duck Congress. Subjecting estates of $1 million to $3.5 million t
o estate tax would impact "middle-class households," Thaler observes, confirming our suspicion that the middle class isn't what it used to be.We live in Fairfield County, Conn., one of the more affluent areas of the country. I joke that, for all the money here, there are still three classes of people: upper middle class, upper class and hedge-fund rich.In other words, marketers of trust services, imagine a set of suburbs exceeding your wildest dreams. Every household contains a prospect!
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