Wednesday, March 27, 2013

Brooke Astor's Son Loses His Appeal

We are not convinced that as an aged felon Marshall should be categorically immune from incarceration.
The lack of a criminal history is an ordinary circumstance that does not vitiate a prison term for obtaining millions of dollars through financial abuse of an elderly victim.
      – Justice Darcel Clark, New York State Appellate Court
 So ends (barring further legal maneuvers) a saga of elder abuse first noted on this blog almost seven years ago. Anthony Marshall, elderly son of Brooke Astor, faces three years in prison, The NY Post reports.

Tuesday, March 26, 2013

“Take My Inheritance, Please!”

Today's NY Times offers a special Your Money section, a co-production with APMs "Marketplace Money." The theme: people get emotional about money. True, though not exactly breaking news.

Among Young Inheritors, an Urge to Redistribute, indicates new money isn't always welcome. One heir chose to share his $900,000 inheritance with his extended family. Others gave inheritances to worthy causes, apparently without personal cost. One gets the impression there was "plenty more where that came from."

One also suspects some heirs lack computational skills. A million dollars or so will not support "a life of leisure and luxury" for long. 

Growing Up With a Trust features Stuart Lucas. Back in 2006 this blog plugged his book.

Monday, March 25, 2013

Do Estate Taxes Face Extinction?

Despite concern over wealth inequality, estate taxation may be on the way out. See Is the Estate Tax Doomed?
For much of history, it was easier for a government to record the value of an estate than to track income on an annual basis. The lesson is clear: estate taxation first arose because it was easy, not because of concerns about inequality.
The Times op-ed drew plenty of comments. This one comes from Alice Clark in Winnetka:
The inheritance tax predates capitalism. The Romans used it. Some of my ancestors were serfs, tied to the land in Lower Saxony. At the death of the male head of household, the nobleman who owned my ancestors received one half of all of their property. I'm sure that they hid what they could, but it's hard to hide cows.

“Profitable Sunrise” – Ponzi Globalized

Like to make 2 percent or more  a day –yes, a day – on your money? Welcome to Profitable Sunrise, a  pyramided Ponzi scheme.

Ostensibly based in Manchester, England, Profitable Sunrise may originate in Eastern Europe. Somewhere I read that certain Internet operations were traced to  Virginia.

And where do clueless investors or daring "in-and-outers" wire their money? According to this post, to Baltikums Bank in Nicosia, Cyprus!

It is a small world, after all.

Ledra Street, Nicosia, Cyprus
Photo via Wikimedia Commons

(It's also a world in which everything you read on the Web isn't necessarily so. Baltikums Bank's Cyprus branch appears to be in Limassoi, not Nicosia.)

Saturday, March 23, 2013

The Jimmy Fallon tax credit

TaxProf Blog has the reports.

I think that such narrowly drawn tax provisions are very bad policy, and wonder how they can withstand constitutional scrutiny.  But they do, because as it turns out, no one has standing to object to them.

Monday, March 18, 2013

The Richest Woman In the World

Pilbara, Western Australia
Photo via Wikimedia Commons
In The New Yorker William Finnegan profiles Gina Rinehart, The Miner's Daughter. Western Australia sounds like a wild and woolly place to make billions.

Finnegan spins a fascinating tale. It includes knock-down, drag-out fights over Gina's father's estate and a family trust.

Thursday, March 14, 2013

Clothes No Longer Make the Man

In 1963 I wouldn't have worn a suit to paint the porch furniture. My father certainly wouldn't have donned one of his Brooks Brothers sack suits before touching up the trim on the barn. So why is the man in this 1963 Chase nest egg ad wearing a suit?

Because a guy wearing an old sweater and stained khakis wouldn't have looked rich.

Half a century later, rich men display a variety of looks: bespoke suit, black tee shirt,  jeans and boots, hoodie . . . . Mark Shaw, the Chase photographer, would have a tough time depicting a generic "rich man."

A decade after this Chase ad ran, Thomas Stanley began studying the affluent. After discovering that many did not look that rich, he became a popular speaker at financial marketing gatherings, gaining national prominence with his 1988 book, "The Millionaire Next Door."

Before that best-seller, Dr. Stanley wrote "Marketing to the Affluent." A generation later, aspiring brokers and investment advisers still might find it worth reading.

Postscript: Strictly speaking, Mark Twain pointed out, clothes do make the man: "Naked people have little or no influence on society."

Sunday, March 10, 2013

Former Hedge Fund Manager Arrested

… in the Uffizi Gallery in Florence.

"Florian Homm, a flamboyant former hedge fund manager who spent the last five years in hiding, was arrested in Italy," the NY Times reports. He faces extradition to the United States on securities fraud charges,

How Pigs Got Slaughtered

Why did people take money they couldn't afford to lose, and invest it in high-risk options strategies playing a single stock? Why did one person invest 50 million dollars in such strategies? And why did any of them trust a kid with no investing track record? It seems incomprehensible to me.
Felix Salmon can't figure it out, and neither can I.

 Wasn't the prospect of getting rich with Apple good enough? Why try for super-rich and lose your shirt, pants and undies?

Wednesday, March 06, 2013

The Financial Plan That Saved the Real Downton Abbey

Were this season's episodes of Downton Abbey a bit heavy-handed on the subject of wealth management? OK, the Earl of Grantham lost almost everything betting on a Canadian railway. Would he then consider sending more to that chap Ponzi?

Although The Wall Street Journal has tried to draw modern money lessons from the PBS program, we live in another world. Deciding whether to sell grandmother's place in the Berkshires is one thing. Dealing with a vast estate that's been in the family for five or six hundred years is another.

English lords of a century or more ago had to seek different solutions to their money problems. Prime example: the 5th Earl of Carnarvon, whose holdings included Highclere Castle, the inspiration and setting for the TV show.

Highclere in winter
Going for the gold
Three years after inheriting the Earldom in 1890, George "Porchy" Carnarvon found himself heavily in debt. If he hoped to preserve Highclere and his other estates and continue leading his adventurous life, he required an immense financial transfusion. He needed a fortune.

Young American heiresses helped a good number of Engish nobles meet that need. Porchy did even better: Almina, the illegitimate but beloved teenage daughter of Sir Alfred de Rothschild.

Sir Alfred desired the best for his daughter, and he had the wealth to achieve his desires. To seal the deal with the Earl, Rothschild agreed to settle all of  Porchy's debts. In addition, he agreed to provide Almina – and Porchy, if he outlived her – with wealth beyond the dreams of avarice. £12,000 a year! That's equivalent to about $10 million a year today.

Surely Highclere was well-maintained for scores of years to come – with the possible exception of World War I, when Almina converted the castle into a deluxe military hospital.
For more about Almina and Highclere, see "Lady Almina and the Real Downton Abbey," written by the current Countess.

Monday, March 04, 2013

A crack on the tax-free muni front?

Uh-oh, I'm in agreement with this NYTimes item on ending the tax freedom of muni bonds.  Admittedly, they are only attacking private activity bonds, while I prefer to end all tax exemptions as a matter of fundamental fairness. 

But it's a start.  And it would be vastly simpler than the Obama alternative of trying to cap the tax benefits at 28%. I'm against any tax provisions that can't be calculated without using a computer.

Sunday, March 03, 2013

The New Chase Approach to Nest Eggs

The Sunday New York Times front-pages a Dealbook story on Chase Private Client.

"You are not a money manager, you are an asset gatherer."

 Chase Private Client, a program aimed at those with at least half a million, uses JPMorgan brokers. Fiduciary services and investment management are no longer offered under the Chase brand.

Friday, March 01, 2013

How to Become an Art Collector

de Kooning, "Police Gazette"
Advice for would-be collectors from Lisa K. Erf, J.P. Morgan Chase:
[G]oing to see art in person so that you understand what it actually looks like is very important.
Darn! I was hoping to do it all online.