Monday, June 24, 2019

State taxation of trusts curtailed

The U.S. Supreme Court has affirmed that a state cannot impose an income tax on the worldwide income of a trust based only upon the fact that a contingent beneficiary resides in the state.

Good news for trust administrators everywhere.  The notion that beneficiary residency alone creates enough nexus for income taxation was a minority rule, and now it has been laid to rest.  However, given the unquenchable thirst for tax revenue, issues of the income taxation of trusts will rise again.

The "Robin Hood Tax"

That's the name Bernie Sanders has for a new tax required to pay for free college for everyone, plus cancel all existing student loan debt.  The key element is "a Wall Street speculation fee on investment houses, hedge funds, and other speculators of 0.5% on stock trades (50 cents for every $100 worth of stock), a 0.1% fee on bonds, and a 0.005% fee on derivatives."

By its terms, the new tax would also apply to 401(k) plans and IRAs, unless they limit their investments to certificates of deposit. So the impact would go far beyond the wolves of Wall Street, reaching the retirement savings of ordinary Americans.

This is a terrible idea.

Saturday, June 22, 2019

Can You Tell the Broker From the RIA?

Meet Tom and Jerry. One's a broker; the other's a Registered Investment Adviser. Both of them have studied the SEC's new Customer Relationship Summary and will describe their proposed relationship with you, the investor, exactly as the SEC prescribes:

Can you tell which is which?

Tom: "When we act as your investment adviser, we have to act in your best interest and not put our interest ahead of yours."

Jerry:  "When we provide you with a recommendation, we have to act in your best interest and not put our interest ahead of yours.”

Yup, Tom's the RIA. Obvious, wasn't it? Can't imagine the slightest risk of investor confusion.

Whatever happened to the fiduciary standard?

Wednesday, June 19, 2019

When a Frequent Flier Dies . . . all those frequent-flier miles die as well?  Or can that mileage be converted, formally or otherwise, into tickets for heirs?

Rules vary from one airline to another, The Wall Street Journal warns.  And rules change. (Delta used to be heir friendly but now isn't.)

Some tips for increasing the odds of getting heirs into the air:

The frequent flier's will should include explicit instructions.

Heirs should know how to access account info and passwords.

The FF should sign up for family pooling if the airline (JetBlue, for instance) offers it.

Act quickly! "The best move is to use the miles before an airline figures out the member has died."

Act promptly even if the airline knows it has lost a faithful passenger. The airline may require formal estate procedures to claim the miles, and there may be time limits.

 Be aggressive. Airline rules aren't always ironclad. Yelling or sobbing has been known to work.

Monday, June 17, 2019

Social investing?

Calpers is have second thoughts, per The Wall Street Journal.

Individuals can inject politics into their investment strategy freely, but those responsible for public pensions need to put rate of return first. 

Friday, June 14, 2019

Thousands and Thousands of Apps for Investors

Number of Android and Apple apps in 2018 that mentioned investing in their descriptions.
Millennials are reputed to shun person-to-person phone conversations – too intense and stressful. Imagine how glad they must be to discover investing apps, the relatively simple, low-stress alternative to going face to face with a financial adviser.

Helping fuel the proliferation of investing apps, the WSJ observes, is the rise of socially-conscious investing.

Does the investment business really need thousands and thousands of apps? Maybe not. But as Mae West once said, "Too much of a good thing can be wonderful."
Bankrate's recent list of 5 best investing apps contains one oddity: an app intended not for actual investing but for game playing. Millennials may not take  phone calls, but they're ever ready to socialize online.