Tuesday, August 23, 2016

A Meltdown for Family Limited Partnerships?

The family limited partnership, Wealth Management declared back in 2000, is the ice cream sundae of estate planning strategies.

By using a partnership to pass portions of a family business, real property or even a portfolio of marketable securities to family members, wealthy donors can generate substantial valuation discounts for gift or estate tax purposes.

Could the ice cream social be nearing an end? That's the threat posed by newly proposed regulations. Some observers think the regs will be finalized before we have a new president in the White House.

Last weekend Paul Sullivan in The New York Times and Laura Saunders in The Wall Street Journal offered briefings on the potential meltdown. Both columns may prove helpful to wealth managers as they urge wealthy clients to enjoy their sundaes before the feds turn up the heat.

Sunday, August 21, 2016

The Collectible Trump

certificate vignette
For $149.95, down from $189.95, you can buy a certificate for one share in Trump Hotels and Casino Resorts, issued in 2004. If Trump wins the presidency, you might make a quick buck.

Wednesday, August 17, 2016

The Dead Hand Lives On

From the WSJ: Dynasty Trusts Make Sense for Certain Wealthy Families.

Weren't the really rich turning toward philanthropy rather than endless wealth preservation? Not entirely. Perhaps hopes for estate tax repeal are fading along with the Republican presidential campaign.

Thursday, August 11, 2016

The Case of the Bloated Retirement Plans

Once upon a a time, 401(k) plans and their ilk seemed relatively simple, with a mere handful of investment options. Sometimes employers even helped to pay plan expenses.

Gradually but inexorably, investment choices proliferated and plan expenses expanded, cutting deeper into participants' returns.

Now the times are a-changin'. Young investors have learned that the surest way to increase returns is to lower costs. Bewildering arrays of investment choices now draw complaints, not kudos. Latest sign of the times: a federal lawsuit aimed at employee retirement plans sponsored by Yale, N.Y.U. and M.I.T.

Like previous litigation aimed at corporate plans, also steered by attorney Jerome J. Schlichter, the new suits allege that the schools' plans incur needlessly high administrative expenses and offer investment choices that are mindlessly numerous and sometimes inferior to lower-cost options. (Do N.Y.U,'s employees really want to put their nest eggs into variable annuities?) M.I.T. also draws criticism for choosing New England's investment titan, Fidelity, as plan provider. (Fidelity's CEO has served on M.I.T.'s board of trustees.)

Participants in 401(k) plans and their non-profit equivalent, 403(b) plans, need all the cost-cutting help they can get. Still, older alumni may feel a tinge of sympathy for institutions that find themselves behind the times.

Related post: In deluge of Funds, Investors Sink or Swim

Monday, August 08, 2016

The NY Times Looks at Wealth-Shielding Trusts

Nevada is the star of this Times story. Here in New Hampshire, we resent being called a "wannabe" in the wealth-sheltering business.

Comments on the article are mostly unkind to the 1%. Yet as one commentator observed, there's little reason for jealousy: 

"I don't know too many happy wealthy people or lawyers, and I know a lot of wealthy people and lawyers."

Saturday, August 06, 2016

A Rosy Future for Tax-Exempts?

From 1991 (just after Congress had raised taxes) comes what may be the prettiest ad ever created for municipal bond funds.  The copy is equally rosy: 

"Taxes…You already pay them on your income. Should you have to pay them on your investments as well? Such anxieties dull the joy of having money. Before long life's little pleasures begin to suffer."

If investors suffer from higher taxes next year, will munis bloom? Or could rock-bottom interest rates lead Congress to decide that municipalities and states no longer need a federal tax subsidy?

Friday, August 05, 2016

Monday, August 01, 2016

Saving and Investing For College

Why tolerate byzantine financial-aid rules that discourage families from saving and investing for college costs? What if families could put aside as much as possible and still qualify for student loans as needed?

Good idea? Sheila Bair, former chair of the FDIC and now a college president, thinks so. See her WSJ op-ed.
Bair's column drew a curious assortment of comments: some pertinent, others blaming student aid for soaring tuitions. A few illustrate the value of The Bill of Rights: Americans are free to offer their opinion of articles without actually reading them.