Thursday, October 27, 2011

Parenthood: A Lose-Lose Financial Quandary?

Here's the parental dilemma:
A. Put the kids through college
B. Save enough to retire
    Choose one
About 50 percent of parents choose plan A. Conventional financial planning wisdom says that's usually a mistake. See Will Kids Ruin Your Chance at Retirement?

Choose B and the kids will rack up a mountain of debt, currently averaging somewhere around $25,000 for new grads and growing yearly.

Those who have already chosen Plan A may benefit from SmartMoney's imaginative new guide to retirement destinations: places mostly likely to offer part-time jobs.

Those who chose plan B at least know where their children are: either back living at home or Occupying Wall Street.
Warning: Readers who have recently seen their kids graduate with minimal debt should not assume they have dodged the bullet. Grandkids ahead.

Wednesday, October 26, 2011

It’s the Top 0.1%, Stupid!

Occupy Wall Streeters may think of the top 1% as filthy rich. Most are merely overachieving professionals and executives. For truly fat cats, Look to the top 0.1%. And even higher.
Top 1% = $368,238 (20.9% of income)
Top 0.5% = $558,726 (16.8% of income)
Top 0.1% = $1,695,136 (10.3% of income)
Top 0.01% = $9,141,190 (5% of income)
The graphic accompanying this NY Times article shows today's one percenters to be salary and bonus rich, in contrast to the dividend collectors of the 1920s. Note the greatest income disparities existed back in the Gilded Age: "In the late 1890s, when the average American worker’s weekly wage was less than $10, John D. Rockefeller was earning about $192,000 a week."
Will a growing desire to "soak the millionaires" doom any chance of sensible tax reform and simplification? 

Most Americans Don't Have Wills

Neither do about 70 percent of  Brits, according to The Telegraph's salute to National Write a Will Week. 

According to a Harris Interactive study, about 55 percent of Americans die without a will.

Tuesday, October 25, 2011

Rush Limbaugh’s Estate Plan

Rush Limbaugh, during a discussion of the possible estate tax on Steve Jobs' billions:
Every year estate planners want to talk to me about estate planning and it seems that they think that the primary objective of any estate planning is going to be to keep money away from the government.  So they want to structure trusts, charitable donations, foundations, any number of things, and I always say to 'em, "Yeah, but the problem with doing that is I am getting rid of all my money before I die." 
Four times married, Mr. Limbaugh has no children.

Monday, October 24, 2011

Steve Jobs postscript

Last week, Apple closed their retail stores worldwide so that employees could participate in a company-wide remembrance of their founder. Apple has now posted the video of that event here.  Note, this seems to only work with Safari.  Norah Jones was delightful, and the speeches were thoughtful and moving.

60 minutes did a piece related to the upcoming Jobs biography. AppleInsider has links to that video, plus links to extra material, here.

Tuesday, October 18, 2011

Higher Incomes = Greater Giving

Almost one out of every four charitable dollars comes from donors with incomes over $500,000. This elite subset of The One Percent accounts for an even larger share of giving to charities other than religious organizations. Economix illustrates with charts.

Saturday, October 15, 2011

"There Is Nothing Like a Trust Fund”

From five decades ago, October 1961, here's an enthusiastic ad for living trusts. Prosaic art and headline, but the body copy starts strong, "Money and trust funds were made for each other," and ends stronger: "There's nothing like a trust fund to keep families and family funds together. "

You can almost forgive the copywriter for addressing "the man" and ignoring the woman.

Wednesday, October 12, 2011

Secretary 3.0

In the days of Mad Men (and now Pan Am and The Playboy Club) the boss had a secretary.

Times change. In recent decades many minor executives have had to fend for themselves, while CEOs have relied on Secretary 2.0: the executive assistant.

Times are changing again. Meet Secretary 3.0.

(You didn't think Steve Jobs would stop changing the world just because he died, did you?)

Tuesday, October 11, 2011

Jobs and taxes

Steve Jobs, that is.  Much speculation already about his estate plan.

This item from the NYPost is, well, just stupid.  Essentially, it says basis step-up will apply to all of Jobs' estate assets, so capital gains taxes will be avoided by an early asset sale.  That supposedly justifies the promise of their headline, but they are silent on the more important question of death taxes.

Yahoo points out an intriguing factoid.  Before Steve went for the liver transplant, he and his wife created two trusts and transferred all their real estate to them, according to California land records.  Those trusts could be the receptacles for the rest of his wealth. If he already transferred the assets, he may have achieved true financial privacy.

Finally, surprisingly, the Trust Advisor Blog also overpromises with its headline that the Jobs estate plan will be tax free.  They don't have any access to the will or trust documents, so this is just speculation. However, they add the interesting twist that:
Completely under the radar, SEC filings reveal that Jobs was also busy moving the rest of his material wealth — 5.5 million shares of Apple stock and 138 million Disney shares, a memento of his other baby, the animation company Pixar — out of his estate and into a trust.
 That could be one or both of the trusts holding the real estate.  If the trusts qualified for the marital deduction, or perhaps the charitable deduction, then yes, there may not be much in the way of federal estate tax.  The commenters to the article point out the lack of info for making such a supposition.

Friday, October 07, 2011

Thursday, October 06, 2011

John Markoff on Steve Jobs

John Markoff must have been determined to produce an obituary worthy of its subject. In the print edition of the NY Times, his tribute to Steve Jobs starts on a quarter of the front page and continues for a full page inside.

Markoff reminds us that Jobs was very much a child of the countercultural late 1960's and early 1970's. Some CEOs get to the top by going to Harvard. Steve went to India, sampled LSD and never looked quite right wearing a suit.

There are those of us who, like Steve Jobs, think Steward Brand's Whole Earth Catalog was the greatest paperback ever published. Keep that in mind when client-facing with older Boomers. Especially Californians.

Tuesday, October 04, 2011

Inheritance Reduces Wealth Inequality

From Barron's Penta blog:
According to a major wealth study produced earlier this year, inheritances are an equalizing force that mitigates the inequalities found in American household wealth.

Interesting notes on the Durbin amendment and debit card fees

From Richard Epstein.

I use credit cards myself, but I should probably switch.

The Top One Percent Revisited

Who's the "Top One Percent"? links to charts showing how much wealth or income Americans at the top enjoyed in the aggregate. What about the individual income and net worth threshholds?

Incomewise, you need north of $380,000 a year to rank as a One Percenter.

For net worth, you need a lot more than $1 million. Last year, Spectrem estimates, about 7% of U.S. households possessed a net worth of a million or more. About 0.9% of households possessed $5 million or more, so you would need almost that much to rank as a net worth One Percenter.

 Most likely, a number of "Occupy Wall Street" protesters are the offspring of millionaire households. They still want to see the unemployment rate go down. And some wouldn't mind seeing the One Percenters who packaged  subprime mortgages go to jail.

Monday, October 03, 2011

Who’s the “Top One Percent”?

What a social-networked mush-up "Occupy Wall Street" turns out to be. Cursory browsing among the protest supporters took me to faith-based foundations, socialist groups  and academia, now joined by such mainstreamers as Hollywood celebs, labor unions and  Move On. The WP's Ezra Klein offers a primer, including a link to We are the 99 Percent.

And who is the other One Percent? Depends on whether you're talking income or net worth, as Catherine Rampell explains in this Economix post. Note that income inequality has increased significantly in recent years; the more extreme imbalance in net worth has changed little for decades.

Sunday, October 02, 2011