Tuesday, November 26, 2013

Freeport Tax Havens?

Imagine places where investors with overstocks of fine art, gold coins, historic tapestries or vintage automobiles could sell or swap their hard assets without worrying about taxes.
Such havens may exist in Luxembourg, Geneva, Singapore and other free ports, The Economist reveals: : Uber-Warehouses for the Ultra-Rich. 

Friday, November 22, 2013

The Law's Delays

2013. Contested Inheritance Goes on Sabbatical. 

Less than a year before her death at 93 in 2012, Geraldine Webber largely disinherited the beneficiaries of her earlier will in favor of a young policeman. The resulting will contest (a trust contest, really) is unusual in that the aggrieved beneficiaries are charities, not relatives. For an earlier newspaper report and a link to a video of Webber executing her will, see Will Contest Goes to the Video.

When will the case go to trial? Not soon. The judge has approved a one-year sabbatical, perhaps to give the contending parties more time to reach a settlement.

1913. The Game

Big-time college football contests drawing vast crowds are now commonplace. A century ago, nothing compared to The Game. When Yale played Harvard, even justice was delayed.

The New York Sun, November 21, 1913

Thursday, November 21, 2013

Seeking a Fiduciary? Good Luck!

Jill and Joe Investor should look for investment guidance from someone acting as a fiduciary, not a commissioned salesperson. Sound advice? In reality it's becoming harder and harder to act upon.

When advisers work on commission they may pledge to "demonstrate our commitment to putting customers first." But as Reuters notes, it's a commitment with an asterisk. And increasingly, brokers aren't working for commissions alone. Instead they have become "fee-based" advisers. That's not the same as "fee only." But not necessarily so different, either. The WSJ ($) cites an Aite Group study of almost 400 registered representatives (who traditionally work on commission) and registered investment advisers (who traditionally work for fees). The results show that Jill and Joe Investor face a daunting challenge:

Brokers working on commission reported getting, on average, about 20% of their revenue from advisory and consulting fees.

"Fee-based" advisers got almost 60% of their revenue from commissions.

And advisers most closely resembling "fee-only" got over 15% of their revenue from commissions.

In real life, Jill and Joe don't pay much attention to the distinction between fiduciaries and investment salespeople. Can we blame them?

Wednesday, November 20, 2013

Could Ryan O’Neal Take Back His Farah Fawcett Portrait?

Warhol: Farah Fawcett
Andy Warhol silkscreened two copies of his photo-portrait of Farah Fawcett, one for her, the other, apparently, for Ryan O'Neal. After the couple broke up, O'Neal seems to have given his copy to Farah. After she died, he took it back. Does the Warhol belong to him, or did it pass from Fawcett's trust to a museum? The lawssuit we mentioned two years ago is finally going to trial.

Skakel Family Trusts

Trusts have figured prominently in the estate planning of the Skakel family. See the NY Times: Family's Tenacity and Wealth Put Skakel at Cusp of Freedom.

Michael Skakel's 2002 conviction for the 1975 murder of Martha Moxley recently was overturned.

Friday, November 15, 2013

Subconscious Influences on Financial Decisions

Do investors prefer stocks with pronounceable ticker symbols? 

How can people sense a dollar bill is fake even when they don't notice the bill is fake? 

I'm not sure TWTR, the symbol for Twitter shares, is perceived as unpronounceable. Nevertheless, Adam Alter's The Secret Science of Stock Symbols is a fascinating read.

Wednesday, November 13, 2013

Was Nobody Wealthy Before 1980?

Thanks to John Mauldin for sharing Dylan Grice's The Language of Inflation. Brice enlivens his critique of the Great Credit Inflation with examples of changing word usage as charted by Google's Ngram Viewer.

The term "wealth management," for instance, surged in the 1990s. Before that, memories of the Great Depression made people wary of flaunting their wealth. Besides, it wasn't good form.

Today, "wealth management" often has little to do with real wealth or real management. Grice illustrates with a story:
[W]e attended a lunch recently in which one … “wealth manager” was promoting his services to those around the table. An Italian gentleman claimed to be relieved to have finally found someone who could help him. “At last!” He gasped after the banker’s pitch, “I could really use some help managing my family’s wealth. We own vineyards and a processing plant in Italy, some land and a broiler farm in Spain, some real estate scattered around Europe and the Americas... We are fortunate indeed to have such wealth, but managing it all is increasingly challenging. Can you help?” 
The poor banker looked forlorn. Of course, he didn’t mean that kind of wealth, the old-fashioned, productive kind of stuff. He meant the modern, papery, electronic kind. The stuff that blinks at you all day from a screen.
Grice offers food for thought, although I can't get my head around his reference to"no inflation over the last thirty years." Do I pay more than twice as much today because everything is more than twice as good?

One Bottle Equals More Than 200 Million Cans of Coke

At Christie's Francis Bacon's triptych sold for a record $242 million. Other prices were pretty impressive, too. This Warhol, for instance, went for a $57.3 million.

The other day I bought 36 cans of Coke (three fridge packs) for $10. At that rate, the Warhol is valued at 206,280,000 cans of Coca-Cola.

Sunday, November 10, 2013

Should Gore Vidal Have Left a Nicer Will?

If a famous author wants to leave the bulk of his wealth ($37 million, by one estimate) to Harvard, fine.
Vidal in 2009,
two years before altering his will.
But wouldn't it be nice to leave something to his half-sister and her son? And surely he'd want to pension off his longtime housekeeper-chef?

Not Gore Vidal.  “I’m exactly as I appear," he once said. "There is no warm, lovable person inside. Beneath my cold exterior, once you break the ice, you find cold water.”

Result: yet another celebrity will contest. Nina Straight, Vidal’s half sister, "is challenging her half brother’s will on the grounds that Mr. Vidal was not mentally competent when he changed the terms of his will the year before he died."

Do you get the feeling that Vidal would have been sorry if his estate planning had not provoked a legal battle?

Photo via Wikimedia Commons

Thursday, November 07, 2013

Dynasty Trusts: Rename or Remarket?

Have you noticed? The trade name for very long-term family trusts seems to be changing from Dynasty Trusts to Legacy Trusts.

"Dynasty," it seems, reminds too many Boomers of the old prime-time TV soap opera, best remembered for Joan Collins' performance as Blake Carrington's evil ex wife. The Carringtons were hardly exemplars of family values.

The current TV hit, Duck Dynasty, doesn't help either. Too much hair.

Unfortunately, "Legacy Trusts" is an awkward substitute. The label could be attached to any trust extending beyond a trustor's lifetime. Besides, financial marketers have already borrowed "legacy" to stand for the handing down of family values: work hard…be kind…never draw to an inside straight.

Joan Collins
Wouldn't it be better to reburnish the luster of Dynasty Trusts? 

How can we make the name evoke less Joan Collins, more Queen Nefertiti?