Wednesday, October 28, 2015

Should the Fed Declare the Party Over?

Is the U.S. economy healthy enough for the Fed to raise short-term interest rates from practically nothing to nearly nothing? The pundits' answers are"Yes," "No," "Maybe," depending on the day of the week.

We raise the question mainly as an excuse to introduce you to the artistic creation above. The art mania isn't limited to works on canvas. Installations such as this are much admired, though difficult to store in a free port, much less hang on the wall.

Created by two Italian artists, Sara Goldschmied and Eleonora Chiari, their post-party scene refers to the corrupt high life of Italy in the 1980s. The artwork made news because a museum cleaning crew swept it up and threw it away.

The work's creators were not amused: "It cannot be possible for an installation to end up in the rubbish bin.”

Tuesday, October 27, 2015

A Canvas Craze?

Delaware Freeport
Art collectors are being replaced by investors. Where collectors might safeguard  prize works by placing them on long-term loan at a museum, tax-averse art investors hide away their masterpieces in free port warehouses. In Switzerland, perhaps. Or right here in the States, in Newark, Delaware.

Wonder what financial historians a century from now will say about our art craze. Will they be able to figure out why investors paid tens of millions of dollars, even hundreds of millions, for products that consisted of no more than a few hundred dollars worth of wood, canvas and pigment?

Maybe they'll call it just another Tulip Mania.

Sunday, October 25, 2015

Brits Can't Necessarily Disinherit Their Kids

The European notion of forced heirship seems to have seeped across the English Channel. Could it eventually spread to this side of the pond?

The Guardian describes a case where an estranged daughter eventually won a share of her mother's estate, aided by a 1975 Inheritance Act designed to protect adult children.

Estranged offspring hate being cut out of their parents' wills, as the Daily Mail illustrates here.

Will disputes continue to increase in the UK. Here, too? 

Wednesday, October 21, 2015

How to Avoid Probate: Leave Connecticut!

Fifty years ago Norman Dacey, a Connecticut financial planner, shook the estate planning world by publishing How to Avoid Probate. Living trusts became the will substitute of choice.

Now the State of Connecticut has struck back, substituting painfully high probate fees for state funding of its probate courts. The "fees," amounting to an estate tax in drag, are levied on the gross taxable estate, not the probate estate.

If the northeast portion of I-95 seems even more crowded than usual, it's probably Connecticut's hedge fund elite, departing for friendlier tax climes.

Tuesday, October 13, 2015

Phishing for Phools

Walked into Barnes and Noble and bought a book. Can't get more retro than that.

The volume is Phishing for Phools, authored by two Nobel-Prize-winning economists, George A. Akerlof and Robert J. Shiller. They want us to take behavioral economics more seriously, though their slim volume is intended to entertain as well as inform.

Because people are easily bemused, confused and enticed, the authors believe, free markets need more rules and regulations to function fairly. They're surely right about the human propensity for irrational economic behavior. Whether manipulation and deception is involved is another question. Playing the slots, the authors' first example of irrationality, comes easily to many people. So does the latest gambling craze, fantasy football.

Phishing for Phools is a sign of the times. (I suspect Senator Elizabeth Warren just found the answer to, "What shall I give everybody for Christmas?") For a preview, see Shiller's op-ed in the NY Times. Harvard's Cass Sunstein offers an extensive review here.

Thursday, October 08, 2015

Philanthropy's Name Game Takes a Hit

"Can you tell me the way to the lecture in Higglestone Center?"
"Yes, sir. Continue down Bubba Burns Hall to Axel Turner Door. Turn the Emma Branson Doorknob and walk through to the Prince Abbadabba Arcade. Follow the Arcade to  the Jim and Patsy Gotrocks Archway. You'll see Higglestone on your right, just beyond the Hugh Networthy Terrace."
The Name Game has gotten out of hand. Donors expect their names on buildings and wings of buildings and floors and rooms and equipment and playing fields and (excuse the expression) you name it.

Worse, old donor names are being replaced by new ones. At New York's Lincoln Center (not yet renamed Trump Center) Avery Fisher Hall just turned into David Geffen Hall.

Now comes a possible road block. A New York Court just ruled that Paul Smith's College may not change its name in order to qualify for a $20 million gift from Joan Weill, wife of Sandy Weill, the retired Citi tycoon.

The college, situated within Adirondack Park, was created more than 75 years ago with a bequest from Phelps Smith. His will required the school to “be forever known” as Paul Smith’s College of Arts and Sciences, in honor of his father.

The Weills, philanthropists par excellence, deserve lasting recognition. However, they already have their names on numerous benefactions. Does the court decision suggest that the Name Game may be reaching its limits? Or will "lasting recognition" become merely temporary?

Paul Smith's College

Wednesday, October 07, 2015

Digital Assistants for the Individual Executor

If you're the executor of your rich uncle's estate, you can hire a trust company to handle much of the drudgery. Executors of smaller estates may find help online. charges $99 a year, EstateExec has a $79 one-time fee. Both encourage the amateur executor to keep good records.

Do you know of other noteworthy sources of online assistance?

Thursday, October 01, 2015

How to Prosper by Living Long: the Tontine

You and a lot of others each invest a set amount in a pooled fund.  The fund pays out, say, 4 percent a year, equally divided among you and your fellow investors. As other investors die off, your payments rise. By the time half have died off, your payment should double. And if you live long enough….

The tontine "might be the iPhone of retirement products,” says Moshe Milevsky, an associate professor of finance at York University in Toronto. Is he on to something?

Earlier post: Bring Back the Tontine.