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Financial Independence by John J. Vento
Affordable Care Act / Obamacare, Albert Einstein, asset allocation, diversification, diversified portfolio, estate planning, financial independence, fixed income, high net worth, Home mortgage interest deduction, money market fund, mortgage debt, mortgage tax deduction, oil shock, Own Your Own Home, passive income, risk tolerance, the rule of 72, time value of money, transaction costs, young professional, zero day
The money you may spend today on a qualified estate attorney may save your estate significant dollars in both estate taxes and administrative costs down the road. Estate planning can give you peace of mind by assuring your family’s financial security will continue even after your death. It can significantly reduce estate taxes, administrative costs, and assure that your loved ones will be taken care of. It allows you to dispose of your assets as you see fit, with consideration given to your heirs’ Financial Independence ( Getting to Point X ) : An Advisor’s Guide to Comprehensive W ealth Management © 2013 John Vento.. Published 2013 by John Wiley & Sons, Inc. John J. Vento 251 c10.indd 251 26/02/13 2:47 PM 252 Financial Independence (Getting to Point X ) individual needs. It is important to understand that estate planning is not just for the wealthy. The Federal Gift and Estate Tax System The federal gift and estate tax system is a unified system that works hand-in-hand with virtually the same rules and tax rates that are applicable.
In order to ensure that you preserve your estate for your intended beneficiaries, it is important to stay on top of the everchanging rules of the game. Working closely with a trusted tax advisor is perhaps one of the best ways to ensure that you can take advantage of these tax law changes when they arise. Legal Documents to Consider for Estate Planning Regardless of the size of your estate, you should consider addressing your own individual planning issues, in order to preserve your estate and make your wishes known, preferably in writing. I recommend meeting with a qualified estate planning attorney to determine if you need a will prepared, based on your particular facts and circumstances. If you have no minor children, or if all of your assets are held jointly with your spouse, or if you have no assets to speak of, then your estate may not need to go through probate.
In my opinion, everyone should consider their own particular needs; then you should determine what legal documents are most appropriate for you, whether it is a will, a trust, a health care proxy, a living will, or durable power of attorney (or some combination thereof)—all of which I will explain in this chapter. Please note that the names of some of these documents vary from state to state. Before I discuss the details of estate planning techniques, it is important to understand some of the key legal documents that may be needed in this planning process. An effective estate plan may need to include one or more of these documents that may cover all three phases of your life. Phase I is while you are alive and well, Phase II is in the event that you become disabled, and Phase III is after your death. To preserve your estate and allow your loved ones to share in your success of reaching point X, you will need to address numerous legal forms so that your legacy can be transferred with ease.
Your Money: The Missing Manual by J.D. Roth
Airbnb, asset allocation, bank run, buy low sell high, car-free, Community Supported Agriculture, delayed gratification, diversification, diversified portfolio, estate planning, Firefox, fixed income, full employment, Home mortgage interest deduction, index card, index fund, late fees, mortgage tax deduction, Own Your Own Home, passive investing, Paul Graham, random walk, Richard Bolles, risk tolerance, Robert Shiller, Robert Shiller, speech recognition, traveling salesman, Vanguard fund, web application, Zipcar
If you really need help, your best bet is to get advice from a professional tax adviser. Yes, it'll cost money, but you'll usually find it's worth the fee—and then some. A Brief Overview of Estate Planning Nobody likes to think about death—especially their own. Most people don't think about creating wills until they hit middle age. But you can't always see death coming and, in addition to the emotional trauma, it can wreak financial havoc on your family. You can make things a little easier for your family and friends by planning ahead and creating a will. A will is for anyone who wants to distribute their money and possessions according to some plan. (All that you own, including physical property and investments, is known as your estate. An estate plan is a strategy for passing your money and Stuff on to your heirs.) Wills are extremely important. They give clear, legally-binding instructions about what you want done with your assets.
Nolo.com is an excellent source for books and software about legal topics. The site offers info on a variety of subjects, including estate planning. (Most public libraries have a good selection of Nolo books and other resources to help you prepare a will and other documents.) Using resources like these, you can put together a simple will in under an hour. But be warned: These tools are aimed at those with basic needs. The documents they produce are certainly better than nothing, but if you have a complicated estate (if you own a business or have children by a previous marriage, for instance), your best bet is to contact an attorney. If you use software or pre-printed forms to create your will, be sure to follow the signing instructions for your state. For more on do-it-yourself estate planning, read this article from the New York Times: http://tinyurl.com/NYT-wills.
Once the attorney has an idea of what you own and where you want it to go after you die, he'll draw up the paperwork. Though most wills share certain features, the attorney will customize it for your specific needs. Tip If you want to know how much an estate plan will cost, ask. The price depends on where you live and how complicated your estate is. In a way, preparing a will is sort of anti-climactic. There's not a lot of legal mumbo-jumbo or red tape. You simply gather info, answer a few questions, and sign on the dotted line. For some people, there's more to estate planning than just creating a simple will, but for many, it really is this easy. Once you have a will, keep it someplace safe and accessible, like a safe-deposit box, and let trusted family members know where it is. If your family can't find your will, they can't follow your wishes.
Freedom Without Borders by Hoyt L. Barber
accounting loophole / creative accounting, Affordable Care Act / Obamacare, Albert Einstein, banking crisis, diversification, El Camino Real, estate planning, fiat currency, financial independence, fixed income, high net worth, illegal immigration, interest rate swap, money market fund, obamacare, offshore financial centre, passive income, quantitative easing, reserve currency, road to serfdom, selective serotonin reuptake inhibitor (SSRI), too big to fail
The OES covers banks; banking services; investments; investment services; global economics; financial, tax, and estate planning; asset protection strategies; offshore citizenship; offshore business and e-commerce; tax havens; foreign real estate investment; expatriating; tax problems; professionals; and more. For more information visit www.barberglobalfinancial.com or www.barberfinancialadvisors.com. BANK RESOURCES Bank Websites Worldwide. Website: www.qualisteam.com. Financial Standing of Banks Worldwide. Website: www. Fitchratings.com. Secrets of Swiss Banking: An Owner’s Guide to Quietly Building a Fortune, by Hoyt Barber. John Wiley and Sons, Inc., Hoboken, NJ. 2008. Switzerland is still the global vanguard for asset and investment management and for its financial-related insurance products for excellent estate planning, investment diversification, asset appreciation, maximum financial privacy, asset protection, and more.
The remaining chapters will help you flesh out your structure and connect you up in the areas needed to move forward safely. Chapter 2 The Best Offshore Structures Our country is wherever we are well off. — John Milton, 1666, 17th-century English poet Author of Paradise Lost, an epic poem For privacy and asset protection, offshore is the answer. If you wish to hold assets and cash, gain maximum financial privacy protected by law, operate an offshore business, or create the best estate plan anywhere, the preferred means is to utilize one or a combination of offshore structures. Although you can certainly hold bank and investment accounts in your personal name with financial institutions in foreign countries, you will find that it is far wiser and more private and that you will be better able to insulate your wealth from domestic predators, including your own government, if you maintain these important accounts in the name of legal entities that you control or which are yours by design and part of your offshore estate.
ASSET PROTECTION TRUST (APT): BELIZE, NEVIS, COOK ISLANDS The three best jurisdictions for asset protection trusts in the world are Belize, Nevis, and the Cook Islands. The following describes the Belize APT. Nevis and the Cook Islands share many of the same advantages and similarities. Belize’s trust law is one of the strongest and most flexible asset protection trust legislations in the world, and Belize is highly favored by this author, along with Nevis and the Cook Islands, for offshore estate planning, asset protection, and investment purposes. The combination of a Belize asset protection trust and an IBC or LLC under the APT umbrella allows the principal(s) to maintain and enjoy the benefits of ownership and control while still procuring the impermeable protection and privacy of the trust. In this combination, the trust owns the stock of the IBC or is Managing Member of the LLC, while assets and accounts are in the name of the IBC or LLC, which is managed by the principal(s).
The Bogleheads' Guide to Investing by Taylor Larimore, Michael Leboeuf, Mel Lindauer
asset allocation, buy low sell high, corporate governance, correlation coefficient, Daniel Kahneman / Amos Tversky, diversification, diversified portfolio, Donald Trump, endowment effect, estate planning, financial independence, financial innovation, high net worth, index fund, late fees, Long Term Capital Management, loss aversion, Louis Bachelier, margin call, market bubble, mental accounting, money market fund, passive investing, Paul Samuelson, random walk, risk tolerance, risk/return, Sharpe ratio, statistical model, survivorship bias, the rule of 72, transaction costs, Vanguard fund, yield curve, zero-sum game
• Help you decide if you need to enlist the services of an estate planning attorney. Calculate if it's better to take a lump-sum payment or monthly distributions on a windfall such as a retirement package. Give you a clearer picture of how the windfall can help you achieve your long-term financial goals. The American Institute of Certified Public Accountants has a PFS designation for CPAs specializing in personal financial services. To locate one nearby, you can call the AICPA at 888-999-9256 or go to www aicpa.org to do an online search. Once again, we recommend asking a CPA at the outset if he or she sells financial products, or is in any way compensated by the people they recommend, and steering clear of those who do. Other possible advisors you may wish to hire are an estate planning attorney and a financial planner.
Remember, it's the tax regulations, not you, that determine who's rich. Therefore, the estate tax laws that are in effect at the time of your death will establish the level at which your estate will have to pay additional taxes on your accumulated assets for being too rich. Although it's beyond the scope of this book to offer legal advice (that's what estate planning attorneys are for), we will touch on a number of things you need to consider regarding estate planning and passing your assets on to those you want to have them. That is a better option than simply leaving those decisions up to the intestate law of your state, and perhaps leaving a major portion of your assets to the taxman. We'd all like to think that we're special, that perhaps we're somehow even immortal. While we may, indeed, be special, we are all mortals and thus have to deal with the reality of our eventual demise.
DOCUMENTS WE'LL NEED In some ways, it would be nice if we knew in advance when our time on this planet was up so that we could have everything in perfect order. But since we don't know the date of our demise, we need to plan now for any number of eventualities, including the distribution of our assets after our death. It's important to know that getting our affairs in order involves so much more than just estate planning. There are a number of other legal issues that we'll have to deal with and documents that we'll want to have in place. These issues and documents are often handled by your attorney at the same time he or she is preparing your estate planning documents. Let's take a look at some of the documents you might need and some things you'll need to consider about each of them. A Will You should have a will, even if you have a trust. If you have minor children, here's where you'd name the person you want to designate as the children's legal guardian in the event that both you and your spouse are deceased.
The Handbook of Personal Wealth Management by Reuvid, Jonathan.
asset allocation, banking crisis, BRICs, collapse of Lehman Brothers, correlation coefficient, credit crunch, cross-subsidies, diversification, diversified portfolio, estate planning, financial deregulation, fixed income, high net worth, income per capita, index fund, interest rate swap, laissez-faire capitalism, land tenure, market bubble, merger arbitrage, negative equity, new economy, Northern Rock, pattern recognition, Ponzi scheme, prediction markets, Right to Buy, risk tolerance, risk-adjusted returns, risk/return, short selling, side project, sovereign wealth fund, statistical arbitrage, systematic trading, transaction costs, yield curve
. _______________________________ INHERITANCE TAX, WILLS AND ESTATE PLANNING 111 ឣ Other insurance products These are outside the scope of this chapter, but may be useful planning tools for some individuals. Assets that qualify for relief If an individual owns business or agricultural property at the date of his or her death, the property may attract relief at either 100 per cent or 50 per cent (depending on the exact nature of the property in question and the period of ownership). As business property includes AIM investments, it is possible for a well-managed AIM portfolio to be a satisfactory investment in itself, whilst also attracting IHT relief at 100 per cent. Gifts to charities It is worth noting that gifts to charity qualify for 100 per cent relief from IHT. Conclusion Inheritance tax, wills and estate planning are a very complex subject and this chapter can do no more than set out general guidelines and limits.
The Isle of Man benefits from a strong reputation based on quality and security and is supported by professional advisers both locally and from around the world. The Isle of Man is the natural choice for private clients. To find out how the Isle of Man can enhance your personal and business wealth, please contact Isle of Man Finance on +44 (0)1624 686400. www.isleofmanfinance.gov.im You can in the Isle of Man ឣ X CONTENTS ___________________________________________________________ Part 3: Taxation issues 103 3.1 Inheritance tax, wills and estate planning for the high-net-worth individual 105 Carole Cook, Forsters LLP Inheritance tax and when it is payable 105; Rates of tax 106; How an individual can reduce the burden of IHT on death 106; Assets that should be given away 108; Lifetime gifts to trusts 108; Tax-efficient wills 109; The family home 110; Other planning points 110; Conclusion 111 3.2 Estate and succession planning 113 Tom Hewitt, Burges Salmon LLP Introduction 113; Inheritance tax (IHT) 113; Capital gains tax (CGT) 114; The use of trusts 116; Wills 117 3.3 Taxation of UK resident non-domiciliaries 121 Patrick Harney, Forsters LLP Overview 121; The difference between residence and domicile 122; The remittance basis of taxation 122; Temporary non-residence 125; Exempt property 126; Non-domiciled settlors of overseas trusts 126; Non-domiciled beneficiaries of offshore trusts 127; Non-domiciled shareholders in overseas companies 127; US citizens 127; Planning for non-domiciliaries after April 2008 127; Conclusion 129 Part 4: Pleasurable investment 131 133 4.1 Investing in wine Nick Stephens, Interest in Wine Who we are 133; Why invest in wine?
Guy Conroy was co-founder of Oxigen Investments, and has more than six years experience in sustainable forestry investment. Guy was instrumental in the company’s formation and funding and was Managing Director until 2008. He has now become Managing Director of Oxigen Plantations (Priv) Ltd, Sri Lanka. Carole Cook is a partner at Mayfair-based solicitors Forsters LLP. Forsters is widely recognized as a leading law firm specializing in tax and trusts. Carole’s expertise includes tax and estate planning for both UK and international clients, in particular entrepreneurs, offshore and onshore trust advice and creation, will drafting and advice to charity trustees. She is a member of the Technical Committee of the Society of Trust and Estate Practitioners (STEP). John Davey studied chemical engineering at the University of Bath before commencing his career in finance. He has held various positions for wealth managers, including Andersen Charnley, and national groups establishing portfolio management services and providing due diligence on tax mitigation schemes.
What this book does is point out areas of potential problems, but as readers can appreciate, it cannot cover all detail and cases as they are potentially so numerous. Legal advice in these instances is recommended. In researching this book it has become clear that, under English law, provided an estate is relatively straightforward, xxviii ■ Preface complicated trusts are not involved, and extensive estate planning is not needed, then there is nothing to stop the individual from handling his or her relation’s or friend’s affairs – whatever the size of the estate. Despite this, only a minority of people do so. Scotland is another matter. I have explained briefly the position in Scotland, dealing with small estates, the differences when writing a will and gaining Confirmation. The information given is not exhaustive since in Scotland solicitors’ help is often required by the authorities.
This book cannot help in alleviating the suffering that will be felt with the loss of a loved one – dealing with grief is a very individual matter. What it can do is to provide information about what will be needed and what matters have to be dealt with in as straightforward and uncomplicated a manner as the subject allows. It tells you what to do and why, and how to go about it. It takes a step-by-step view of the necessary procedures from writing a will to estate planning and proving a will. The first part of the book will be concerned with how to write a will. Basically you ‘make’ a will because you want to direct who receives your assets following your death. Occasionally, you may even want to ensure that certain people do not receive a share in your estate. You may have already made your will either with the help of a solicitor or on a standard proprietary will form available from most large newsagents.
How to make an addition to your will (a codicil) is also shown. Approximately one in every five persons writes their own will. In London the number is higher, one in every three, while in Scotland the figure is approximately one in every four. However, most people still go to a solicitor, not because their affairs are complex but because they do not know where to start or find the task daunting. Estate planning and inheritance tax are examined in Chapter 6. For the inexperienced and unsure this subject can be not only bewildering but frightening too. You may feel more confident arranging for a consultation with a solicitor or tax consultant before planning your will. House prices in 2008 and so far in 2009 have shown a decrease of circa 17.9 per cent. This puts house values back to 2005. However, despite spousal/civil partner transfers on death, the threshold itself has not kept pace with the rising personal wealth over the last decade.
How to Retire the Cheapskate Way by Jeff Yeager
asset allocation, car-free, employer provided health coverage, estate planning, financial independence, fixed income, pez dispenser, rent control, ride hailing / ride sharing, risk tolerance, Ronald Reagan, Zipcar
Cheapskate Retirement Principle #19 It doesn’t cost any more to create a will and make other estate plans earlier in life rather than later. But if you wait just a minute too long, not having them in place can cost your loved ones and estate dearly. Don’t Put Off Until Tomorrow What You Might Not Be Able to Do Tomorrow Getting your final affairs in order—whether it’s creating a will or trust, or telling the people in your life what they really mean to you (for better or worse!)—isn’t likely to be one of the most enjoyable exercises of your lifetime, but it is a necessary one. It’s also one that’s best done sooner rather than later. And once it’s done, it’ll put your mind at ease and let you get on with enjoying the rest of your life and retirement. Here are some thoughts on estate planning, the cheapskate way: Wills Obviously a last will and testament is the cornerstone of any estate plan, even though roughly 60 percent of adult Americans don’t have a will of any kind, according the legal news website www.Findlaw.com.
Even for a cheapskate, it’s usually worth the few hundred dollars an attorney should charge you to draw up a will, particularly if you have a good-size estate, complicated arrangements in terms of beneficiaries, or reason to believe that someone may try to contest your will after your death. A qualified attorney (see the National Association of Estate Planners & Councils, www.naepc.org) can also provide you with other estate planning advice, which could prove extremely valuable and save you serious money in the long run. Often at least some basic estate planning advice is provided without additional charge when you hire an attorney to prepare your will. But if you have few assets and straightforward plans for your estate, then you shouldn’t rule out a simple, inexpensive do-it-yourself will. Websites like www.Legalzoom.com, www.Nolo.com, and www.LegacyWriter.com walk you through the process of preparing a will (and other estate documents), and for fees averaging $40 to $100 allow you to create a will online. The document is then printed out, signed by at least two witnesses, and notarized.
However, being a cheapskate, I’m pretty sure that if I see a blinding white light at the end of a tunnel, the first thing I’ll say when I get there is, “Do we really need to have so many lights on?” In a way, we’ve come full circle from where this book began. We’re back to the same question Bob Johnson asked me in the park that day: What do you really, really want? If anything, that question may be even more important when considering your final wishes and estate plans, because once you’re gone, there ain’t no changing your mind. Speaking of Bob Johnson, I’ll make no further drama of it. Nor will I leave you wondering: my friend and mentor Bob (formally Robert B. Johnson) died of colon cancer one sunny April morning in 1988, at the way too early age of forty-one. By that time, Bob was the executive director of the American Youth Hostels. The last communication I had with him was a message he left on the Code-A-Phone message recorder at our home, the day before he died.
How to Form Your Own California Corporation by Anthony Mancuso
The assets of the business normally pass under the terms of the deceased owner’s will or trust, or by intestate succession (under the state’s inheri tance statutes) if there is no formal estate plan. warning Don’t let business assets get stuck in probate. The court process necessary to probate a will can take more than a year. In the meantime, it may be difficult for the inheritors to operate or sell the business or its assets. Often, the best way to avoid having a probate court involved in business operations is for the owner to transfer the assets of the business into a living trust during his or her lifetime; this permits business assets to be transferred to inheritors promptly on the death of the business owner, free of probate. For detailed information on estate planning, including whether or not it makes sense to create a living trust, see Plan Your Estate, by Denis Clifford and Cora Jordan (Nolo).
It is also common, but not legally necessary in California, to add the words “with right of survivorship” (for example, “Carolyn Kimura and Sally Sullivan, as joint tenants with right of survivorship”). tip As an estate planning measure, consider using a living trust. This allows the beneficiary of the trust to receive title to the shares upon the death of the shareholder, without the necessity of probate. Some shareholders may wish to transfer their shares to this type of trust for the benefit of another person rather than taking title to their shares in joint tenancy with the other person (married shareholders may also wish to transfer shares held as community property to this type of trust). If you do transfer your shares to a trust, you will need to make out new share certificates showing the trust as the owner of the transferred shares. For more details on this and other estate planning techniques, see Plan Your Estate, by Denis Clifford and Cora Jordan (Nolo).
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All About Asset Allocation, Second Edition by Richard Ferri
activist fund / activist shareholder / activist investor, asset allocation, asset-backed security, barriers to entry, Bernie Madoff, capital controls, commoditize, commodity trading advisor, correlation coefficient, Daniel Kahneman / Amos Tversky, diversification, diversified portfolio, equity premium, estate planning, financial independence, fixed income, full employment, high net worth, Home mortgage interest deduction, implied volatility, index fund, intangible asset, Long Term Capital Management, Mason jar, money market fund, mortgage tax deduction, passive income, pattern recognition, random walk, Richard Thaler, risk tolerance, risk-adjusted returns, risk/return, Robert Shiller, Robert Shiller, selection bias, Sharpe ratio, survivorship bias, too big to fail, transaction costs, Vanguard fund, yield curve
That may occur while you are still alive, and it will definitely occur after you’re gone. It is a common for mature retirees to do detailed estate planning. One of the decisions to make is who will manage their affairs when they are no longer able too. This chore is normally taken over by the healthy spouse while both husband and wife are still living. When there is only one person, the job is typically taken on by a son or daughter, a relative, or a professional representative. I highly recommend that if you choose a son or daughter to handle your finances, you give them fair warning far in advance. Once a helper has been chosen, that person will need to become informed of your financial situation. This includes an understanding of your estate plan, your investment accounts, and your insurance documents, including knowing where all these things are located in your home.
This stage spans a group of people who are getting ready to retire, transitioning into retirement, and living an active lifestyle in retirement. The stage typically covers people ranging from age 60 to 79. Mature retirees. These fully retired investors are not as active as they used to be usually because of their own health concerns or those of a spouse. The needs for mature Building Your Portfolio 245 retirees are different from the needs of any other group. Their needs range from health planning, to long-term care, to estate planning. At this stage, financial matters are often discussed with children, other family members, or a professional trustee. Investors in all stages have some similar financial goals and similar concerns. Similar goals include a desire for financial security and the desire to pay less income tax. Similar concerns include the fear of running out of money and the fear of not having adequate health-care coverage when it is needed.
Utkus, Lessons from Behavioral Finance for Retirement Plan Design, Wharton School and Vanguard Center for Retirement Research, November 24, 2003. This page intentionally left blank CHAPTER 14 When to Change Your Asset Allocation KEY CONCEPTS ● ● ● ● Asset allocation decisions are typically not permanent. Life changes lead to asset allocation changes. Too much risk in a portfolio should be managed downward. Estate planning needs eventually set asset allocation. Asset allocation changes can take two forms. The first is based on changing needs, and the second is the result of an assessment mistake. Asset allocation changes based on changing needs should be done only after careful consideration. Adjustments are needed as we go through life with the intent to balance our assets to our changing long-term liabilities.
The Power of Passive Investing: More Wealth With Less Work by Richard A. Ferri
asset allocation, backtesting, Bernie Madoff, capital asset pricing model, cognitive dissonance, correlation coefficient, Daniel Kahneman / Amos Tversky, diversification, diversified portfolio, endowment effect, estate planning, Eugene Fama: efficient market hypothesis, fixed income, implied volatility, index fund, intangible asset, Long Term Capital Management, money market fund, passive investing, Paul Samuelson, Ponzi scheme, prediction markets, random walk, Richard Thaler, risk tolerance, risk-adjusted returns, risk/return, Sharpe ratio, survivorship bias, too big to fail, transaction costs, Vanguard fund, yield curve, zero-sum game
These include individual investors and their families, trustees of charities and private accounts, pension trustees and those who select investment options for employer sponsored pension plans, and professional investment advisors. Each of these four groups has special reasons why implementing a passive investment strategy is better for them. Individual investors should select a strategy that has the highest probability of reaching their retirement and estate planning goals. There is no reason to believe that an individual investor will find a top money manager who will outperform the markets. That’s why it’s undoubtedly in the best interest of an individual to create and maintain a portfolio of index funds and ETFs for the long run. Substantial time is spent explaining why passive investing is a prudent choice for trustees who have a legal responsibility to act in the best interest of the accounts they oversee.
When a new asset class is added to the portfolio, or an asset class is eliminated, the composite index should also be adjusted as of the change date. Policy Changes Changing an investment policy is a major decision. Any change requires deep thinking and an evenhanded judgment and should not be made in a time of duress. There are several good reasons to change an investment policy. The following are four prominent reasons. 1. The account owner’s financial needs change. 2. Estate planning considerations change. 3. A bull market puts a portfolio close to its financial goal. 4. A bear market exposes more risk than an investor can handle. Financial needs change for all of us during life’s journey. There are periods when cash flow needs are high and periods when cash flow needs are low. In addition, unexpected things happen in our life (both good and bad) that may affect our need for cash.
This is the value of potential earnings power over one’s lifetime. The next step is generally the purchase of a home, which often coincides with starting a family and all the costs associated with raising children. Sometime during middle age, focus shifts to securing adequate retirement income. During retirement, focus can shift again to a policy of giving. This is the distribution of wealth to family members and loved ones as well as favored charities. Estate planning takes care of the rest upon our demise. Accordingly, an investment policy review during different stages of life ensures that it is up to date with these changing priorities. Estimating Future Obligations We all have a limited time on Earth, and the government is kind enough to tell us about how much time that is. The Internal Revenue Service (IRS) publishes mortality tables for singles and married couples.1 The IRS table currently shows that a 21-year-old should expect to live another 62 years until age 83.
P1: OTA/XYZ P2: ABC c08 JWBT413/Weltman October 13, 2010 20:7 Printer Name: Yet to Come CHAPTER 8 Estate, Gift, and Generation-Skipping Transfer Taxes hile much of the focus of this book has been on income taxes (with a little attention given to Social Security and Medicare taxes), don’t ignore the other taxes that may affect your financial picture. These include estate, gift, and generation-skipping transfer taxes. In 2010, there were dramatic changes affecting each of these taxes, which are levied on transferring wealth. This chapter explains the changes in these transfer taxes for 2010 and what may lie ahead. This area of tax law is about to experience additional changes that certainly will affect your estate planning for years to come. There also may be state estate or inheritance taxes to deal with; state-level taxes are not covered in this chapter but should be discussed with your financial advisor. W Estate Tax Changes If your property (called your “estate”) at the time of your death is worth a certain amount, your estate usually has to file a federal estate tax return and your estate may owe federal estate taxes on the value of your assets.
., an insurance settlement, lottery winnings, or an inheritance), you may find yourself vulnerable to the federal estate tax. Or if the value of your assets rises (e.g., the stock market recovers and the value of your stocks and stock mutual funds held both personally and in retirement accounts increases), again you may find that the size of your estate is large enough to fall victim to estate tax—or at least the need to plan to minimize or avoid it. Until now, a common estate-planning strategy for married couples with sufficient assets to be subject to the federal estate tax was to set up a credit shelter or by-pass trust so that the exemption amount could be fully used in the estate of the first spouse to die. It worked like this: A will provided that a credit shelter trust (also called a by-pass trust) would be created with an amount equal to the maximum exemption amount.
For example, if your estate is $3.7 million and the exemption amount is fixed at $3.5 million for the year in which you die, the credit shelter trust based on the maximum exemption amount ($3.5 million) would absorb almost your entire estate—this may be more than you’d envisioned. Discuss with your tax or legal advisor new ways to limit the amount of assets passing into a credit shelter or by-pass trust. For example, you may wish to limit the funding of a credit shelter trust to a set dollar amount or a percentage of the estate, or some combination of these two limits. Most important, you’ll want to review any current estate plans in light of estate tax changes that may be enacted for 2011 and future years. Miscellaneous Estate Tax Changes There are a number of changes that can affect the computation of the federal estate tax. Some of these changes are minor or merely technical in nature, but others can have a significant impact on the amount of taxes that will be paid by an estate. Special Use Valuation If an estate includes a farm or property used in a business, it can be valued for estate tax purposes at its special use rather than at its highest and best use (assuming certain conditions are met).
Affordable Care Act / Obamacare, Amazon Web Services, asset allocation, autonomous vehicles, bank run, bitcoin, Bob Noyce, Brian Krebs, buy low sell high, Capital in the Twenty-First Century by Thomas Piketty, combinatorial explosion, computer vision, corporate governance, crowdsourcing, en.wikipedia.org, Erik Brynjolfsson, estate planning, Flash crash, Gini coefficient, Goldman Sachs: Vampire Squid, haute couture, hiring and firing, income inequality, index card, industrial robot, information asymmetry, invention of agriculture, Jaron Lanier, Jeff Bezos, job automation, John Markoff, John Maynard Keynes: Economic Possibilities for our Grandchildren, Loebner Prize, Mark Zuckerberg, mortgage debt, natural language processing, Own Your Own Home, pattern recognition, Satoshi Nakamoto, school choice, Schrödinger's Cat, Second Machine Age, self-driving car, sentiment analysis, Silicon Valley, Silicon Valley startup, Skype, software as a service, The Chicago School, The Future of Employment, Turing test, Watson beat the top human players on Jeopardy!, winner-take-all economy, women in the workforce, working poor, Works Progress Administration
Common commercial contracts, from leases to loans to licenses to incorporation papers to purchase agreements, are well structured enough to allow a first draft, if not a final one, to be written by a computer program. Consider the legal-tech startup FairDocument.33 By focusing on estate planning, a well-defined and fairly routine area of law, the company is able to “interview” clients on its website and prepare initial draft documents. Potential clients answer some initial questions, then attorneys bid to get their business. Most of the time, if the case is relatively straightforward, attorneys opt for the standard recommended bid of $995 for an estate plan prepared through Fair-Document, for a service that might otherwise typically cost $3,500 to $5,000. You might think this simply reduces the lawyer’s pay, but attorneys still come out ahead because of what happens next.
Instead of conducting the usual phone or in-person interview to educate the new client and collect the needed information, then spending several hours drafting documents, the attorneys let FairDocument walk the client through a lengthy, structured online consultation, explaining the required concepts and collecting the client’s particulars. The software then delivers an initial draft to the lawyer, calling out areas that are likely to require his or her additional judgment or attention. Jason Brewster, the company’s CEO, estimates that FairDocument reduces the time required to complete a straightforward estate plan from several hours to as little as fifteen to thirty minutes, not to mention that his company is doing the prospecting for new clients and delivering them to the attorneys. A more sophisticated example of synthetic intellects encroaching on legal expertise is the startup Judicata.34 The company uses machine learning and natural language processing techniques to convert ordinary text—such as legal principles or specific cases— into structured information that can be used for finding relevant case law.
., 114 Egypt, ancient, 115–16 elderly people, 168–69 electrical engineering, 41–42 electricity, 41, 46, 47 electromagnetic radiation, 41 electronic domain, 40, 41–45, 46, 62, 203 human competition with, 73–75 stock transactions moved to, 52 surveillance by, 9, 64–75. See also computers Ellison, Larry, 115 emissions trading (cap and trade), 168 empathy, 81, 82 employees. See labor market; workplace Energy Star program, 178 entrepreneurship, 44, 95–96, 200, 223–24n15 environmental protection, 168, 195 Environmental Protection Agency, 168, 178 equal opportunity, 170 estate planning, 146–47, 175 ethics, 9–10, 74–75, 79, 81–82, 87. See also moral agency European Union, 143 Experience Music Project Museum (Seattle), 114 expertise, 22–23, 29 expert systems (computer programs), 23 Facebook, 48 face-recognition capability, 40 Fairchild Semiconductor, 223–24n15 FairDocument, 146–47 Fair Labor Standards Act (1917), 171 fairness, 74–75, 102, 162–63 families. See households farmworkers: forged laborer replacement of, 39, 133–34, 143–44 historical average income of, 164, 222n3 Federal Communications Commission (FCC), 45 federal government.
The New Elite: Inside the Minds of the Truly Wealthy by Dr. Jim Taylor
British Empire, call centre, dark matter, Donald Trump, estate planning, full employment, glass ceiling, income inequality, Jeff Bezos, Louis Pasteur, Maui Hawaii, McMansion, means of production, passive income, performance metric, Plutocrats, plutocrats, Plutonomy: Buying Luxury, Explaining Global Imbalances, Ronald Reagan, stealth mode startup, Steve Jobs, Thorstein Veblen, trickle-down economics, women in the workforce, zero-sum game
But in many respects, wealth brings with it new challenges, new complexities, and new risks, and the do-it-yourself approach that has served them well often becomes a disservice. Four in ten acknowledge that they are not as on top of their ﬁnances as they should be. In fact, about half get no professional wealth management advice, relying only on themselves, friends, spouses, and other relatives. This causes problems in areas as basic as estate planning. Over a quarter don’t have an updated will, and they question whether there will be a smooth transition after their death. Nearly one in ﬁve expects serious conﬂict among their relatives after their passing. And consider risk management. Threefourths know that there are property insurance companies that specialize in the challenges faced by wealthy households. Yet only onefourth have made a conscious decision to change to an insurance provider with appropriate expertise.
Professionally, they are least likely to have a solid exit or succession plan for their business. On a personal level, three-quarters feel they are not as in control of their ﬁnances as they would like to be—by far the highest of any segment. Many struggle with the fear that they could lose all their money and have to start rebuilding their lives all over again, despite their average of nearly $20 million in assets. Less than one in four feels he or she has an organized estate plan and many believe that the distribution of their assets will be a major source of family turmoil and conﬂict after their death. Virtually none of their kids have a good understanding of the value of their Flavors of Wealth 135 estate. Heck, forget the kids—over half of wrestlers haven’t told their spouses of the degree or nature of their ﬁnancial empire! On average, wrestlers aren’t miserably unhappy; 88 percent describe themselves as ‘‘very happy,’’ although this is the lowest of any of the ﬁve segments.
In a retail context, they don’t look for an exclusive or luxurious sales environment, nor do they want to be made to feel like they are the most important customer in the store. Instead, they want sales staff who are knowledgeable, are down to earth, and treat them like ‘‘any other person off the street.’’ Mavericks are living in the moment, and are inherently selffocused; as a result, they tend to be less worried about the legacy of their money. In a sense, their estate plans are more often in their minds than on paper. While they are relatively likely to say they envision passing their companies to their children, they are among the least likely to have actually communicated any kind of plan for what would happen in the event of their injury or death. They are so psychologically entwined with their businesses and their ambitions they often ﬁnd it difﬁcult to think in concrete terms about any kind of exit or succession plan.
asset allocation, Bernie Madoff, Cass Sunstein, Credit Default Swap, David Brooks, delayed gratification, diversification, diversified portfolio, Donald Trump, Elliott wave, en.wikipedia.org, estate planning, financial innovation, Flash crash, game design, greed is good, high net worth, impulse control, income inequality, index fund, London Whale, Mark Zuckerberg, money market fund, mortgage debt, oil shock, payday loans, pension reform, Ponzi scheme, quantitative easing, Ralph Nader, RAND corporation, random walk, Richard Thaler, Ronald Reagan, Saturday Night Live, too big to fail, transaction costs, Unsafe at Any Speed, upwardly mobile, Vanguard fund, wage slave, women in the workforce, working poor, éminence grise
According to an AARP survey conducted in 2009, one in ten Americans over the age of fifty-five—that’s 5.9 million people—had attended a free lunch or dinner offered by someone pitching investment opportunities within the previous three years. These mixes of food and finance are so common that when I plug the words “Ruth’s Chris Steak House” and “seminar” into Google, I turn up investment seminars on everything from risk management to estate planning in California, Virginia, Massachusetts, Florida, and Rhode Island—and that’s just on the first results page. These “free” meals almost always follow the same pattern. Financial columnist Humberto Cruz, who attended half a dozen such seminars in 2007, found almost all the speakers “scaring and pressuring the mostly elderly audience with half-truths and distortions” all designed to “pressure them into high-commission products.”
A country-western star whose lack of spending discipline almost led her to bankruptcy court, Judd became a poster child for the financial therapy movement after taking Onsite’s week-long retreat, which offers attendees everything from such experiential therapy staples as psychodrama and visualizations to sessions devoted to teaching such basics of personal finance as cash flow management and tax and estate planning. Judd claims it was a life-altering experience, allowing her to shed both psychic trauma and unnecessary possessions. “I’ve liquidated all the vehicles down to the ones we actually use,” she proudly recounted in the New York Times. “If I can do it, anyone can.” Wynonna Judd as Financial Everywoman would be hilarious if it was a one-off with little in the way of consequences. But that’s not the case.
A Vanguard study found: John Ameriks, Jill Marshall, Liqian Ren, “Equity Abandonment in 2008-2009: Lower Among Balanced Fund Investors,” Vanguard, December, 2009, https://institutional.vanguard.com/VGApp/iip/site/institutional/researchcommentary/article?File=InvResEquityAbandon20082009. None of this should come as news: Brad Barber and Terrance Odean, “Too Many Cooks Spoil the Profit: Investment Club Performance,” Financial Analysts Journal, vol. 56, no. 1, 2000. As Financial Finesse CEO: Liz Davidson, “Nice Girls Talk About Estate Planning,” Forbes.com, http://www.forbes.com/northwesternmutual/3-reasons-why-men.html; “Financial Finesse Special Report: The Gender Gap in Financial Literacy,” June 15, 2011. In 2009, the researchers behind this theory: Sheelah Kolhatkar, “What if Women Ran Wall Street?” New York Magazine, March 21, 2010, http://nymag.com/news/businessfinance/64950. John Coates, please meet: John Cassidy, “Mary Meeker Moves On,” Rational Irrationality, New Yorker, November 29, 2010, http://www.newyorker.com/online/blogs/johncassidy/2010/11/mary-meeker-moves-on.html According to Hearts & Wallets: “Are Women Investors Hard-Hearted: Why Women Expect More than Men From Financial Services Firms and What They Want,” Hearts & Wallets.com, February 7, 2012, http://heartsandwallets.com/are-women-investors-hard-hearted/news/2012/02.
affirmative action, Affordable Care Act / Obamacare, American Legislative Exchange Council, anti-communist, Bakken shale, bank run, battle of ideas, Berlin Wall, Capital in the Twenty-First Century by Thomas Piketty, carried interest, centre right, clean water, Climategate, Climatic Research Unit, collective bargaining, corporate raider, crony capitalism, David Brooks, desegregation, diversified portfolio, Donald Trump, energy security, estate planning, Fall of the Berlin Wall, George Gilder, housing crisis, hydraulic fracturing, income inequality, Intergovernmental Panel on Climate Change (IPCC), invisible hand, job automation, low skilled workers, mandatory minimum, market fundamentalism, mass incarceration, Mont Pelerin Society, More Guns, Less Crime, Nate Silver, New Journalism, obamacare, Occupy movement, offshore financial centre, oil shale / tar sands, oil shock, Plutocrats, plutocrats, Powell Memorandum, Ralph Nader, Renaissance Technologies, road to serfdom, Ronald Reagan, school choice, school vouchers, The Bell Curve by Richard Herrnstein and Charles Murray, The Chicago School, the scientific method, University of East Anglia, Unsafe at Any Speed, War on Poverty, working poor
He remained vehemently opposed to estate taxes, and told Charles that he feared the U.S. government would tax him so heavily it might force him to sell the family business, diminishing his sons’ inheritances. To minimize future taxes, Fred Koch took advantage of elaborate estate planning. Among other strategies, he set up a “charitable lead trust” that enabled him to pass on his estate to his sons without inheritance taxes, so long as the sons donated the accruing interest on the principle to charity for twenty years. To maximize their self-interest, in other words, the Koch boys were compelled to be charitable. Tax avoidance was thus the original impetus for the Koch brothers’ extraordinary philanthropy. As David Koch later explained, “So for 20 years, I had to give away all that income, and I sort of got into it.” Fred Koch’s estate plan treated each son equally, but according to Coppin, to ensure that his offspring would continue to obey him, he arranged to pass his fortune on to them in two stages, with the second half passing on only after his death.
He was required, though, to pay back taxes, which was a humiliation and indignity for the patrician family. Three years after the 1929 stock market crash, against this backdrop of class conflict and financial chicanery, Richard Mellon Scaife was born. His family, and later he himself, would continue to portray their embrace of low taxes and limited government as matters of high principle, as Andrew Mellon had. But his parents’ elaborate estate planning in order to minimize their own tax bills suggests that they had more than an abstract interest in the subject. Scaife’s parents created the largest of the family’s tax-exempt, charitable foundations, the Sarah Scaife Foundation, in December 1941, days after the Japanese attack on Pearl Harbor. It appears to have been timed to shelter the family’s wealth from anticipated tax increases. Scaife writes, “I don’t know what my parents’ specific motives were,” but he notes that because of the impending war “there was talk…of a top income tax rate of above 90 percent.”
“it bordered on anarchism”: Rick Perlstein, Before the Storm: Barry Goldwater and the Unmaking of the American Consensus (Nation Books, 2009), 113. “there are certain laws”: Wenzl and Wilson, “Charles Koch Relentless.” Early on, the Internal Revenue Service: Coppin, “History of Winkler Koch,” 29. He remained vehemently opposed: Wilson and Wenzl, “Charles Koch Relentless.” Among other strategies: Gary Weiss, “The Price of Immortality,” Upstart Business Journal, Oct. 15, 2008; “Estate Planning Koch and Chase Koch (Son of Charles Koch): Past, Present, and Future,” Repealing the Frontiers of Ignorance, Aug. 4, 2013, http://repealingfrontiers.blogspot.com. “So for 20 years”: Weiss, “Price of Immortality.” he arranged to pass his fortune: In his letters, Fred Koch described his concerns about children given family fortunes at young ages who disowned their fathers, according to Coppin.
asset allocation, call centre, diversification, estate planning, fixed income, Home mortgage interest deduction, index fund, knowledge economy, money market fund, mortgage tax deduction, payday loans, random walk, risk tolerance, Skype, Steve Jobs, transaction costs, women in the workforce, zero-sum game
Retirement: Everyone needs to have retirement savings, but if your kids are all gone and you’re still working, now would be a good time to focus your finances on your retirement savings. The key rule for retirement savings is the sooner the better. Making an extra-large deposit in your retirement savings years before you retire will have a bigger impact than saving the same amount of dollars over the remaining years to retirement. Estate planning: If you have accumulated a net worth (assets minus liabilities) of more than $1.5 million (congratulations by the way) you may need to talk to an estate planning attorney to help you organize your wealth for the most tax efficient way to move those assets to the next generation. Charitable giving: Of course, you can and should make charitable giving a part of every year’s financial planning. If your retirement is funded, the kids have completed college and your estate is in order, this year may be about organizing major charitable giving, to leave a legacy of having made the world a better place.
J.K. Lasser's Your Income Tax by J K Lasser Institute
Affordable Care Act / Obamacare, airline deregulation, asset allocation, collective bargaining, distributed generation, employer provided health coverage, estate planning, Home mortgage interest deduction, intangible asset, medical malpractice, medical residency, money market fund, mortgage debt, mortgage tax deduction, passive income, Ponzi scheme, profit motive, rent control, Right to Buy, telemarketer, transaction costs, urban renewal, zero-coupon bond
Starting in 2013, instead of a deduction, an estate can claim a limited tax credit for state death taxes. Periodically review your estate plan. No estate plan is ever really final. Economic conditions and inflation constantly change values. For this reason, your plan must be reviewed periodically as changes occur in your family and business, as when a birth or death occurs; when you receive a substantial increase or decrease in income; when you enter a new business venture or resign from an old one; or when you sell, retire from, or bring new persons into your business. A member of your family may no longer need any part of your estate, while others may need more. Material changes may occur in the health or life expectancy of one of your beneficiaries. Furthermore, tax law changes may require you to adjust your estate planning, Part 6 Business Tax Planning In this part, you will learn how to report your income from a business or profession, and how to reduce your tax liability by claiming expense deductions.
- - - - - - - - - - Caution Reduced Credit for Some States If you are in a state that owes money to the federal unemployment fund, your FUTA credit for state unemployment taxes is reduced on Schedule H. - - - - - - - - - - For wages paid to a household employee in 2012, you will generally report FUTA on Schedule H, which you attach to your Form 1040. If you have regular business employees, see 38.2 for more reporting options. Chapter 39 Gift and Estate Tax Planning Basics Gift planning can be an important part of estate planning. This chapter provides an overview of the federal gift tax and estate tax. Developing an estate plan for your assets requires professional assistance, but the basic guidelines in this chapter can help you begin to estimate your potential estate and start thinking about property transfers that may reduce or avoid the estate tax. Relatively small gifts can completely avoid gift tax (39.2) because of the annual gift tax exclusion, which for 2012 is $13,000 per donee.
The key benefit of the Roth IRA is that tax-free withdrawals of contributions may be made at any time and earnings may be withdrawn tax free after a five-year holding period by an individual who is age 59½ or older, is disabled, or who pays qualifying first-time home-buyer expenses. - - - - - - - - - - Caution Roth IRA Contribution Deadline The deadline for making Roth IRA contributions for 2012 is April 15, 2013, the regular due date for your 2012 return. This is the contribution deadline even if you obtain a filing extension for your 2012 return. - - - - - - - - - - A Roth IRA can provide attractive retirement planning and estate planning opportunities. Although annual contributions to a traditional IRA are barred once you reach age 70½ (8.2), contributions to a Roth IRA are allowed after age 70½, provided you have taxable compensation for the year and your modified adjusted gross income does not exceed the annual limitation (8.20). Also, the minimum required distribution rules that apply to traditional IRAs after age 70½ (8.13) do not apply to Roth IRAs.
Investment: A History by Norton Reamer, Jesse Downing
activist fund / activist shareholder / activist investor, Albert Einstein, algorithmic trading, asset allocation, backtesting, banking crisis, Berlin Wall, Bernie Madoff, break the buck, Brownian motion, buttonwood tree, California gold rush, capital asset pricing model, Carmen Reinhart, carried interest, colonial rule, credit crunch, Credit Default Swap, Daniel Kahneman / Amos Tversky, debt deflation, discounted cash flows, diversified portfolio, equity premium, estate planning, Eugene Fama: efficient market hypothesis, Fall of the Berlin Wall, family office, Fellow of the Royal Society, financial innovation, fixed income, Gordon Gekko, Henri Poincaré, high net worth, index fund, information asymmetry, interest rate swap, invention of the telegraph, James Hargreaves, James Watt: steam engine, joint-stock company, Kenneth Rogoff, labor-force participation, land tenure, London Interbank Offered Rate, Long Term Capital Management, loss aversion, Louis Bachelier, margin call, means of production, Menlo Park, merger arbitrage, money market fund, moral hazard, mortgage debt, Myron Scholes, negative equity, Network effects, new economy, Nick Leeson, Own Your Own Home, Paul Samuelson, pension reform, Ponzi scheme, price mechanism, principal–agent problem, profit maximization, quantitative easing, RAND corporation, random walk, Renaissance Technologies, Richard Thaler, risk tolerance, risk-adjusted returns, risk/return, Robert Shiller, Robert Shiller, Sand Hill Road, Sharpe ratio, short selling, Silicon Valley, South Sea Bubble, sovereign wealth fund, spinning jenny, statistical arbitrage, survivorship bias, technology bubble, The Wealth of Nations by Adam Smith, time value of money, too big to fail, transaction costs, underbanked, Vanguard fund, working poor, yield curve
Separate account management is usually highly customized and responsively provided, which means that qualifying clients normally ﬁnd such investment services attractive and convenient. In the past few decades, a broad system of private wealth management has been created, bringing the features of a family office to a wider, albeit still limited, audience. This system takes into account the complicated needs of wealthy individuals, providing for estate planning and, importantly, keeping an asset base secure. Unlike a dedicated family office, private banking does not involve an entire organization devoted to the wealth of a single individual or family. However, private banking does require investors to have a high level of assets, and it provides personally tailored investment advising and other services that commercial bank branches and retail brokerages do not offer.52 J.
., 280 Elizabethan Act of 1571, 36 Employee Retirement Income Security Act (ERISA), 92, 112, 113, 282; impacts of, 292–93; rewriting of, 275 Index 421 endowments, 123–25, 145; educational, 124–25; in Greece and Rome, 56–57, 57; taxes and, 124; university, 257, 271, 296, 328 enforcement, improved, 147 England: Act of 1545, 36; banking in, 70, 73–75; joint-stock companies in, 64–66, 86; stock market in, 86–87; sugar consumption in, 75, 77 English Poor Law of 1601, 100 Enron, 68 Equitable Life Assurance Society, 132 equities markets, 114 equity index funds, 285 equity premium puzzle, 252–53 Erie Railway, 178–79 Erie War, 177–79 ERISA. See Employee Retirement Income Security Act estate planning, 138 estates: land and, 14–21; management, in Greece, 18–19; management, in Rome, 19–21 estates (ousiai), 21 ETFs. See exchange-traded funds Europe: medieval, 53–54; population growth in, 71 European Commission, 95 event-driven strategies, 265 exchange-traded funds (ETFs), 10, 284, 286–88, 287 expense fees, 304 Fama, Eugene, 235, 245, 249 Fannie Mae, 266, 321–22 farmland, agriculture and, 282 Federal Deposit Insurance Corporation (FDIC), 136–37 Federal Express, 277 Federal Housing Administration (FHA), 321 Federal Reserve: data from, 137; ﬁnancial crisis of 2007–2009 and, 214; Great Depression and, 205–7; Great Recession and, 217– 18, 220–21, 225; Greenspan and, 213; interest rates and, 198; as lender of last resort, 216; policy of, 333; Strong and, 201 Federal Savings and Loan Insurance Corporation, 135–36 Federal Trade Commission (FTC), 211–12 feedback effects, 253 fees: event-based, 304; expense, 304; hedge funds, 261, 262, 270–71, 273, 301–2, 304–6, 308–9, 313, 314; implication of high, 311–12; management, 261, 270, 273, 304– 5; as misleading proxy for quality, 309–10; performance versus, 312– 15; premature withdrawal, 114.
Small Space Organizing: A Room by Room Guide to Maximizing Your Space by Kathryn Bechen
Keep one copy of the list in the unit and one copy at home so that if you wonder what you did with “File X,” you can easily find it. Remember to update the list if you add or subtract a box from the unit. Also, buy a portable battery-operated camping lantern for lighting since most storage facilities don’t have lighting inside individual units. And be sure to get two keys to your unit so that more than one family member has access to the files. It’s also a good idea to leave a key with your estate planning attorney. And of course, once a year go through your archive files and shred what no longer needs to be kept. Relocation Storage Unit Just a word about renting a storage unit temporarily while you’re relocating. Be sure to think through how you will stack your household items in your unit and don’t just shove them all in there. Put least important or least used items in the back and items used most often in the front.
Apple's 1984 Super Bowl advert, barriers to entry, belly landing, discounted cash flows, estate planning, Jeff Bezos, Network effects, new economy, Sand Hill Road, Silicon Valley, Silicon Valley startup, Steve Jobs
"We'll make it easy for communities to form around someone's dying and death," Lenny said. "We'll bring together family members and friends, wherever they are in the world, and give them an opportunity to grieve, remember, mourn, and show their support in ways not possible until the Web. At the same time we'll help the dying cope with their own deaths and give them the resources to make plansfinancial arrangements and estate planning, for instancefor the families they leave behind. We need to deal with death and dying much better as a society. This business can help." "We want to make one's last moments as meaningful as possible," Allison continued, "by providing people with the Page 164 opportunity to connect to those who have given their lives meaning and purpose and, in the end, to make sense of their lives, in an intimate and caring community."
So Wall Street has specialists that advise people on what they should do with their salary and assets: how much they should save every year and how much they should put in stocks or bonds in order to meet their financial goals. They also talk about really boring—but really M i d d l e m a n : W ha t W a l l S tr e e t R e a l l y D o e s | 9 important—things like retirement plans, tax and estate planning, and insurance. Kind of like a guidance counselor. Naturally, all of this advice is useful, so it costs money, more fees. In fact, many people pay for an initial consultation (an “introductory” fee), the ongoing advice (an annual “wealth management” fee) and individual transactions (commissions or “transaction” fees). And—you’ve guessed it—none of this is new. It’s been happening for a long time.
Rigged Money: Beating Wall Street at Its Own Game by Lee Munson
affirmative action, asset allocation, backtesting, barriers to entry, Bernie Madoff, Bretton Woods, buy low sell high, California gold rush, call centre, Credit Default Swap, diversification, diversified portfolio, estate planning, fiat currency, financial innovation, fixed income, Flash crash, follow your passion, German hyperinflation, High speed trading, housing crisis, index fund, joint-stock company, money market fund, moral hazard, Myron Scholes, passive investing, Ponzi scheme, price discovery process, random walk, risk tolerance, risk-adjusted returns, risk/return, too big to fail, trade route, Vanguard fund, walking around money
If the only form of compensation your money manager receives is the fees you pay him or her, you are on the right track. Does this mean that a person who makes money selling commission products is a horrible person? Not necessarily, but why take the chance if you don’t need to? Sure, there are some very specific reasons why you would need to generate a commission for an adviser. Some of the top reasons include the sale of insurance for estate planning purposes. While I don’t get involved in selling insurance directly, it is a normal part of high-end financial planning. In my experience, I see insurance products misused and improperly sold to unsuspecting investors. Insurance is a unique asset class since it is simply a contract with a corporation. After hundreds of years, there is still no way to access insurance products without generating a plain vanilla commission.
Andrei Shleifer, asset allocation, asset-backed security, Bernie Madoff, bitcoin, Black Swan, BRICs, Carmen Reinhart, cleantech, compound rate of return, credit crunch, diversification, diversified portfolio, equity premium, estate planning, fixed income, high net worth, implied volatility, index fund, intangible asset, invisible hand, Kenneth Rogoff, market bubble, money market fund, passive investing, pattern recognition, prediction markets, risk tolerance, risk/return, Robert Shiller, Robert Shiller, selection bias, sovereign wealth fund, too big to fail, transaction costs, Vanguard fund, yield curve, zero-coupon bond
Particularly those without a great amount of savings to see them through their remaining years typically have a far lower risk tolerance as there are fewer options to make up a shortfall if markets turn against them. At the risk of over-simplifying, if you don’t share the upside of having more savings (with limited years left to enjoy them), but would experience the painful downside, then don’t take risk and stay with minimal risk bonds. Of course estate planning and passing on assets to the next generation will play a major role here in terms of the exact structuring of your portfolio. Also think about what non-investment income you can expect in the form of company pensions, social security, etc. and compare that to your expected outgoings. The difference between the two will need to come from investment income, or liquidating part of your portfolio.
Groundswell: Winning in a World Transformed by Social Technologies by Charlene Li, Josh Bernoff
business process, call centre, centre right, citizen journalism, crowdsourcing, demand response, Donald Trump, estate planning, Firefox, John Markoff, knowledge worker, Silicon Valley, skunkworks, Tony Hsieh
Unless you and your whole management team can answer with an unequivocal yes, then you might not be ready to energize the groundswell. 2. check the social technographics profile of your customers You need research to determine how actively and in what numbers your customers are participating in the groundswell. If you’re selling smart phones or baseball mitts—anything that skews young and technologically savvy—then your customers are already heavily into the groundswell, and you can expect them to take naturally to a collection of community and social features. If you’re selling mattresses or estate planning, then rein in your expectations accordingly—it’s no use starting a community if your best customers have the wrong profile and won’t be participating. 3. ask yourself, “what is my customer’s problem?” Remember, except in rare cases like Lego’s, communities don’t form around your products. If you have trouble believing this, just remember Procter & Gamble’s beinggirl.com community from chapter 6, which was built around girls’ problems, not feminine care products.
The Clash of the Cultures by John C. Bogle
asset allocation, collateralized debt obligation, commoditize, corporate governance, corporate social responsibility, Credit Default Swap, credit default swaps / collateralized debt obligations, diversification, diversified portfolio, estate planning, Eugene Fama: efficient market hypothesis, financial innovation, financial intermediation, fixed income, Flash crash, Hyman Minsky, income inequality, index fund, interest rate swap, invention of the wheel, market bubble, market clearing, money market fund, mortgage debt, new economy, Occupy movement, passive investing, Paul Samuelson, Ponzi scheme, principal–agent problem, profit motive, random walk, rent-seeking, risk tolerance, risk-adjusted returns, Robert Shiller, Robert Shiller, shareholder value, short selling, South Sea Bubble, statistical arbitrage, survivorship bias, The Wealth of Nations by Adam Smith, transaction costs, Vanguard fund, William of Occam, zero-sum game
But I’m not at all sure that we are getting the right information to investors. We focus on past performance, knowing that, if it is not negatively correlated with future returns, the linkage is anything but causal. To earn their keep, advisers should focus their clients not on “picking winners” but on factors such as sound asset allocation, broad diversification, low cost, tax-efficiency, simplicity, and even estate planning. But when investors have already paid sales commissions to own the funds involved in the scandals—especially if they have done so recently—they should consider reinvesting in funds that don’t carry commissions. They’ve already bought the ticket for their investment voyage, and they shouldn’t have to buy it again. So they should seek out funds that meet the standards of stewardship that have been, to some degree at least, ignored in the funds they held.
Only Humans Need Apply: Winners and Losers in the Age of Smart Machines by Thomas H. Davenport, Julia Kirby
AI winter, Andy Kessler, artificial general intelligence, asset allocation, Automated Insights, autonomous vehicles, basic income, Baxter: Rethink Robotics, business intelligence, business process, call centre, carbon-based life, Clayton Christensen, clockwork universe, commoditize, conceptual framework, dark matter, David Brooks, deliberate practice, deskilling, digital map, Douglas Engelbart, Edward Lloyd's coffeehouse, Elon Musk, Erik Brynjolfsson, estate planning, fixed income, follow your passion, Frank Levy and Richard Murnane: The New Division of Labor, Freestyle chess, game design, general-purpose programming language, Google Glasses, Hans Lippershey, haute cuisine, income inequality, index fund, industrial robot, information retrieval, intermodal, Internet of things, inventory management, Isaac Newton, job automation, John Markoff, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, Khan Academy, knowledge worker, labor-force participation, lifelogging, loss aversion, Mark Zuckerberg, Narrative Science, natural language processing, Norbert Wiener, nuclear winter, pattern recognition, performance metric, Peter Thiel, precariat, quantitative trading / quantitative ﬁnance, Ray Kurzweil, Richard Feynman, Richard Feynman, risk tolerance, Robert Shiller, Robert Shiller, Rodney Brooks, Second Machine Age, self-driving car, Silicon Valley, six sigma, Skype, speech recognition, spinning jenny, statistical model, Stephen Hawking, Steve Jobs, Steve Wozniak, strong AI, superintelligent machines, supply-chain management, transaction costs, Tyler Cowen: Great Stagnation, Watson beat the top human players on Jeopardy!, Works Progress Administration, Zipcar
Stepping aside to perform tasks that computers don’t do well is a viable prospect for many financial advisors. Grant Easterbrook, who covered financial technology firms as an industry analyst (he’s now moved to a financial technology startup) told us that, while creating an investment portfolio is relatively easy to automate, it still requires a human touch to provide complex financial planning for individuals with substantial assets. Such broad planning includes tax planning, estate planning, life insurance, and other decisions that not only require nuanced information gathering but are also interrelated. Human advisors can “motivate the client to gather all of that information,” says Easterbrook, and correct for the fact that clients “are often overly optimistic about their finances and undisciplined about following up.” David Port, who has written on the rise of robo-advisors, also emphasizes the value of advisors who care about their clients’ goals.
The Meritocracy Myth by Stephen J. McNamee
affirmative action, Affordable Care Act / Obamacare, Bernie Madoff, British Empire, collective bargaining, computer age, conceptual framework, corporate governance, deindustrialization, delayed gratification, demographic transition, desegregation, deskilling, equal pay for equal work, estate planning, failed state, fixed income, gender pay gap, Gini coefficient, glass ceiling, helicopter parent, income inequality, informal economy, invisible hand, job automation, joint-stock company, labor-force participation, low-wage service sector, marginal employment, Mark Zuckerberg, mortgage debt, mortgage tax deduction, new economy, New Urbanism, obamacare, occupational segregation, old-boy network, pink-collar, Plutocrats, plutocrats, Ponzi scheme, post-industrial society, prediction markets, profit motive, race to the bottom, random walk, school choice, Scientific racism, Steve Jobs, The Bell Curve by Richard Herrnstein and Charles Murray, The Spirit Level, The Wealth of Nations by Adam Smith, too big to fail, trickle-down economics, upwardly mobile, We are the 99%, white flight, young professional
That means that only individuals receiving inheritances of more than $5.12 million and for couples $10 million (easily less than 1 percent of all estates) will be subject to an inheritance tax over that amount at a rate of 40 percent. Assets left to a surviving spouse or charitable organizations are not generally subject to estate taxation. In addition, estate taxation can be avoided or drastically reduced through inter vivos giving and careful estate planning. States can also level estate taxes independent of federal estate tax, but only about 20 percent of all states have any estate tax, often with complicated provisions for exemptions and exclusions. In short, existing estate taxes are currently not large enough and do not affect enough of the total amount of wealth transferred intergenerationally to make much difference in reducing the nonmerit effects of inheritance on who gets what and how much.
How to Speak Money: What the Money People Say--And What It Really Means by John Lanchester
asset allocation, Basel III, Bernie Madoff, Big bang: deregulation of the City of London, bitcoin, Black Swan, blood diamonds, Bretton Woods, BRICs, Capital in the Twenty-First Century by Thomas Piketty, Celtic Tiger, central bank independence, collapse of Lehman Brothers, collective bargaining, commoditize, creative destruction, credit crunch, Credit Default Swap, crony capitalism, Dava Sobel, David Graeber, disintermediation, double entry bookkeeping, en.wikipedia.org, estate planning, financial innovation, Flash crash, forward guidance, Gini coefficient, global reserve currency, high net worth, High speed trading, hindsight bias, income inequality, inflation targeting, interest rate swap, Isaac Newton, Jaron Lanier, joint-stock company, joint-stock limited liability company, Kodak vs Instagram, liquidity trap, London Interbank Offered Rate, London Whale, loss aversion, margin call, McJob, means of production, microcredit, money: store of value / unit of account / medium of exchange, moral hazard, Myron Scholes, negative equity, neoliberal agenda, New Urbanism, Nick Leeson, Nikolai Kondratiev, Nixon shock, Northern Rock, offshore financial centre, oil shock, open economy, paradox of thrift, Plutocrats, plutocrats, Ponzi scheme, purchasing power parity, pushing on a string, quantitative easing, random walk, rent-seeking, reserve currency, Richard Feynman, Richard Feynman, Right to Buy, road to serfdom, Ronald Reagan, Satoshi Nakamoto, security theater, shareholder value, Silicon Valley, six sigma, South Sea Bubble, sovereign wealth fund, Steve Jobs, survivorship bias, The Chicago School, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, trickle-down economics, Washington Consensus, wealth creators, working poor, yield curve
There are forty items on it, and they are hilarious, though perhaps you shouldn’t show them to your left-wing aunt if she’s suffering from high blood pressure: Russian sable fur coats from Bloomingdale’s, shirts from Turnbull and Asser, Gucci loafers, handmade John Lobb shoes, a year at Groton boarding school, a yacht, a horse, a pool, a Learjet, a Roller, a case of Dom Perignon, forty-five minutes at a psychiatrist’s on the Upper East Side (!), an hour’s estate planning with a lawyer, and, amusingly/annoyingly, a year at Harvard.36 In 2012, the CLEWI went up 2.6 percent but the CPI went up only 1.4 percent. That means the gap is narrowing! Oh wait, no it doesn’t. The net worth of the 400 richest people in America went up by 11 percent, from $1.53 trillion to $1.7 trillion. forward guidance A policy in which central banks say in advance what they are going to do, as a way of introducing greater levels of confidence into the market.
Composing a Further Life: The Age of Active Wisdom by Mary Catherine Bateson
affirmative action, Berlin Wall, Celebration, Florida, desegregation, double helix, estate planning, feminist movement, invention of writing, Ronald Reagan, Rosa Parks, sexual politics, Silicon Valley, Thomas Kuhn: the structure of scientific revolutions, urban renewal, War on Poverty, women in the workforce
Not the marriages of our daughter’s friends or the children of our contemporaries—those peaked out several years ago, although there are more to come, most of them after two or three years of living together. No, the marriages we are seeing today are marriages of people in their sixties and seventies, often after decades with the same partner but often, too, with someone new. Sometimes there are strong legal arguments for the decision, as estate planning becomes an issue, but what begins as a practicality often becomes an emotional turning point, and the word forever still retains its ancient force, both terrifying and reassuring, in the face of the need to make a new commitment or reaffirm an old one. After all, most of us have lived lives based on commitments made without any way of knowing where they would lead. The uncertainty is an essential element in commitment, the acceptance of consequences an essential element in fidelity.
The Four Pillars of Investing: Lessons for Building a Winning Portfolio by William J. Bernstein
asset allocation, Bretton Woods, British Empire, buy low sell high, carried interest, corporate governance, cuban missile crisis, Daniel Kahneman / Amos Tversky, Dava Sobel, diversification, diversified portfolio, Edmond Halley, equity premium, estate planning, Eugene Fama: efficient market hypothesis, financial independence, financial innovation, fixed income, George Santayana, German hyperinflation, high net worth, hindsight bias, Hyman Minsky, index fund, invention of the telegraph, Isaac Newton, John Harrison: Longitude, Long Term Capital Management, loss aversion, market bubble, mental accounting, money market fund, mortgage debt, new economy, pattern recognition, Paul Samuelson, quantitative easing, railway mania, random walk, Richard Thaler, risk tolerance, risk/return, Robert Shiller, Robert Shiller, South Sea Bubble, survivorship bias, The inhabitant of London could order by telephone, sipping his morning tea in bed, the various products of the whole earth, the rule of 72, transaction costs, Vanguard fund, yield curve, zero-sum game
Another interesting fact: The average plumber retires far sooner than the average lawyer, even though lawyers make more money than plumbers. Why? Because the attorney “must” drive a nicer car, live in a nicer part of town, buy more expensive clothes, and take more exotic vacations than the plumber. The message is obvious. The easiest way to get rich is to spend as little as possible. Other Goals This book is not intended as a financial planning guide; topics such as mortgages, debt management, insurance, and estate planning are well beyond its brief. But there are a few financial planning topics pertaining to basic portfolio mechanics and financial theory that are worth mentioning: Emergencies. This falls under the mantra of the financial planner: “five years, five years, five years.” That is, you should not put any money at risk that will be needed within five years. In addition, you should have at least six months of living expenses on hand in safe liquid assets—short-term bonds, CDs, money market, checking, and savings accounts.
To Serve God and Wal-Mart: The Making of Christian Free Enterprise by Bethany Moreton
affirmative action, American Legislative Exchange Council, anti-communist, Berlin Wall, big-box store, Bretton Woods, Buckminster Fuller, collective bargaining, corporate personhood, creative destruction, deindustrialization, desegregation, Donald Trump, estate planning, Fall of the Berlin Wall, Frederick Winslow Taylor, George Gilder, global village, informal economy, invisible hand, liberation theology, market fundamentalism, Mont Pelerin Society, mortgage tax deduction, Naomi Klein, new economy, New Urbanism, post-industrial society, postindustrial economy, prediction markets, price anchoring, Ralph Nader, RFID, road to serfdom, Ronald Reagan, Silicon Valley, Stewart Brand, strikebreaker, The Wealth of Nations by Adam Smith, union organizing, walkable city, Washington Consensus, white flight, Whole Earth Catalog, Works Progress Administration
The government, Benson recalled in disgust, could not protect the missionaries, and even “Chinese businessmen lived in constant fear of being captured and held for ransom.”90 Benson returned to the United States with a new appreciation for his home 164 EVANGELIZING FOR FREE E N T ERPRI S E country and undertook to train missionaries at Harding College.91 When the institution’s presidency was offered to him in the midst of theÂ€ Depression, he put the fundraising experience he had learned in mission work at the disposal of the seriously indebted, struggling little campus. Benson’s new cause quickly came to the attention of Clinton Davidson, a co-Â�religionist from Kentucky who made a fortune selling life Â�insurance to wealthy New Yorkers. Inspired by his reading of the Bible as a fiÂ�nanÂ�cial manual, Davidson went on to plan the ultimate disposition of estates totaling over 3 billion dollars. Through his connections to Davidson’s Estate Planning Corporation, Benson began “selling” Harding to men like Lammot du Pont and Alfred Sloan as a good buy for their potential donations.92 As a way of cultivating business support, he started inviting executives to campus as speakers. In 1941, lobbyist friends of Davidson’s arranged for George Benson to testify before the House Ways and Means Committee, then weighing proposed tax increases as defense expenses loomed.
Everybody's Guide to Small Claims Court by Ralph E. Warner
The federal government may not be sued in any state court without its consent. Suits against the federal government normally must be filed in federal district court. I. How to Sue the Estates of Deceased People Death does not prevent lawsuits from being brought and judgments from being collected against the deceased’s estate. However, it does present a number of technical legal hurdles. Assuming the defendant made a will (or died without a will or other estate planning device such as a living trust), a probate proceeding will be held. All claims against the estate should be made promptly, in writing, to the personal representative of the deceased person’s estate and directly 130 everybody’s guide to small claims court to the probate court. If the personal representative knows about the debt owed to you, you should receive a formal notice to file your claim—but this won’t happen if your debt isn’t known.
Kathy said, “When we were kids, we thought our dad was just like all the other farmers here. Now, finally—his gift is truly apparent.” The surprise success of Matsui Nursery has made Andy reconsider what he ought to do with it. Should he leave it to his children after all? But what do they know about farming? He discussed the possibility with Teresa, but he quickly realized that bringing someone without experience into the business would doom it. When he began to look into estate planning, he discovered that dying is more trouble than living. He didn't want to burden his children with the mess of selling off parts of the business to pay the taxes. “Whom do I really owe?” he wondered. “To whom am I indebted?” The answer was in his heart. He loved his company and the 160 people who worked for him, most of whom were Mexican immigrants in the very situation he was in forty years ago.
Factory Girls: From Village to City in a Changing China by Leslie T. Chang
anti-communist, Deng Xiaoping, estate planning, financial independence, index card, invention of writing, job-hopping, land reform, Mason jar, mass immigration, new economy, Pearl River Delta, risk tolerance, special economic zone
One of the assistants was young and soft-spoken; the other, Xiang Yang, was a middle-aged woman of imposing bulk, with a red face and a fur hat with aggressive-looking bristles. Both women were single, and they appeared to be working at the company in part to advance their marriage prospects. The managing director planned to set up matchmaking offices around the city using a franchise model. But from his business card I learned that he was also hedging his bets. COMPREHENSIVE PLANNING TOURISM BUSINESS REAL ESTATE PLANNING TUTORS AND HOUSEKEEPERS LICENSE APPLICATION AGENCY CREATIVE DESIGN ARTS TRAINING MARKETING AGENCY PROPERTY AGENCY ANNUAL ASSET INSPECTIONS CIS INPUT RITES AND CEREMONIES HEADHUNTING LEGAL CONSULTING FINANCIAL ACCOUNTS MANAGEMENT CONSULTING WEDDING PLANNING JOBS CENTER CIVIL INVESTIGATIONS TAX AUDITING As we were talking, a middle-aged woman walked in off the street to inquire about the club’s services.
Plutocrats: The Rise of the New Global Super-Rich and the Fall of Everyone Else by Chrystia Freeland
activist fund / activist shareholder / activist investor, Albert Einstein, algorithmic trading, assortative mating, banking crisis, barriers to entry, Basel III, battle of ideas, Bernie Madoff, Big bang: deregulation of the City of London, Black Swan, Branko Milanovic, Bretton Woods, BRICs, business climate, call centre, carried interest, Cass Sunstein, Clayton Christensen, collapse of Lehman Brothers, commoditize, conceptual framework, corporate governance, creative destruction, credit crunch, Credit Default Swap, crony capitalism, Deng Xiaoping, don't be evil, double helix, energy security, estate planning, experimental subject, financial deregulation, financial innovation, Flash crash, Frank Gehry, Gini coefficient, global village, Goldman Sachs: Vampire Squid, Gordon Gekko, Guggenheim Bilbao, haute couture, high net worth, income inequality, invention of the steam engine, job automation, John Markoff, joint-stock company, Joseph Schumpeter, knowledge economy, knowledge worker, liberation theology, light touch regulation, linear programming, London Whale, low skilled workers, manufacturing employment, Mark Zuckerberg, Martin Wolf, Mikhail Gorbachev, Moneyball by Michael Lewis explains big data, NetJets, new economy, Occupy movement, open economy, Peter Thiel, place-making, Plutocrats, plutocrats, Plutonomy: Buying Luxury, Explaining Global Imbalances, postindustrial economy, Potemkin village, profit motive, purchasing power parity, race to the bottom, rent-seeking, Rod Stewart played at Stephen Schwarzman birthday party, Ronald Reagan, self-driving car, short selling, Silicon Valley, Silicon Valley startup, Simon Kuznets, Solar eclipse in 1919, sovereign wealth fund, stem cell, Steve Jobs, the new new thing, The Spirit Level, The Wealth of Nations by Adam Smith, Tony Hsieh, too big to fail, trade route, trickle-down economics, Tyler Cowen: Great Stagnation, wage slave, Washington Consensus, winner-take-all economy, zero-sum game
Tired of being dragged down by the parasitic, envious, and less talented lower classes, Galt and his fellow capitalists revolt, retreating to “Galt’s Gulch,” a refuge in the Rocky Mountains. There, they pass their days in secluded splendor, while the rest of the world, bereft of their genius and hard work, collapses. That was, of course, a fiction, and one with as much bodice ripping as economics. But versions of Galt’s Gulch are starting to show up in more sober venues. James Duggan, a founding principal of a Chicago firm of tax and estate planning lawyers, believes “wealth is fleeing the country.” Some of the self-exiled rich are, Mr. Duggan argues, “conscientious objectors”: “There are those who are simply going offshore to make a statement. Their level of discontent with the current circumstances in our country, coupled with attacks on the wealthy, has created a distinct sense of rebellion among many wealthy citizens. While they may love the country, they are objecting to the current trends and responding by moving themselves or their assets, or both, away from the cause of the problem.”
All the Money in the World by Peter W. Bernstein
Albert Einstein, anti-communist, Berlin Wall, Bill Gates: Altair 8800, call centre, corporate governance, corporate raider, creative destruction, currency peg, David Brooks, Donald Trump, estate planning, family office, financial innovation, George Gilder, high net worth, invisible hand, Irwin Jacobs: Qualcomm, Jeff Bezos, job automation, job-hopping, John Markoff, Long Term Capital Management, Marc Andreessen, Martin Wolf, Maui Hawaii, means of production, mega-rich, Menlo Park, Mikhail Gorbachev, new economy, Norman Mailer, PageRank, Peter Singer: altruism, pez dispenser, popular electronics, Renaissance Technologies, Rod Stewart played at Stephen Schwarzman birthday party, Ronald Reagan, Sand Hill Road, school vouchers, Search for Extraterrestrial Intelligence, shareholder value, Silicon Valley, Silicon Valley startup, stem cell, Stephen Hawking, Steve Ballmer, Steve Jobs, Steve Wozniak, the new new thing, Thorstein Veblen, too big to fail, traveling salesman, urban planning, wealth creators, William Shockley: the traitorous eight, women in the workforce
., classic $1,875 Loafers: Gucci $410 Shirts: 1 dozen cotton, bespoke, Turnbull & Asser, London $3,600 Shoes: Men’s black calf wing tip, custom-made, John Lobb, London $4,128 School: Preparatory, Groton, 1-year tuition, room, board $39,850 University: Harvard, 1-year tuition, room, board, insurance $43,655 Catered dinner: For 40, Ridgewell’s, Bethesda, MD $7,469 Opera: 2 tickets, 8 performances, Metropolitan Opera, Saturday night, parterre box $5,440 Caviar: Tsar imperial beluga, 1 kilo, Petrossian, Los Angeles, CA $7,600 Champagne: Dom Perignon, case, Sherry-Lehmann, NY $1,559 Filet mignon: 7 pounds, Lobel’s, NY $231 Dinner at La Tour d’Argent: Paris, estimated per person (including wine and tip) $402 Piano: Steinway & Sons, concert grand, Model D, ebonized $103,400 Flowers in season: Arrangements for 6 rooms, changed weekly, Christatos & Koster, NY, per month $8,175 Sheets: Set of linen lace Figna, Pratesi, queen-size $3,940 Silverware: Lenox, Williamsburg Shell pattern, 4-piece place setting for 12 $5,424 Hotel: 2-bedroom suite, Four Seasons, NY $3,450 Face-lift: American Academy of Facial Plastic & Reconstructive Surgery $14,500 Hospital: VIP, Washington Hospital Center, Washington, D.C., 1 day, concierge, security, gourmet meals $1,315 Psychiatrist: Upper East Side, NY, 45 minutes, standard fee $300 Lawyer: Established NY firm, Schlesinger, Gannon & Lazettra, average hourly fee for estate planning by partner $750 Spa: The Golden Door, California, basic weekly unit $7,500 Perfume: 1 oz. Joy, by Jean Patou $400 Sauna: Finnleo Sauna and Steam, 8-by-10-by-7 feet, 8-person, Nordic Spruce/Abachi $14,580 Motor yacht: Hatteras 80 (with 1550-HP CAT C-30s) $4,870,000 Sailing yacht: Nautor’s Swan 70 $4,070,661 Shotguns: Pair of James Purdey & Sons (12 gauge Side-by-Side), Griffin & Howe, Bernardsville, NJ, & Greenwich, CT $185,655 Thoroughbred: Yearling, average price, Fasig-Tipton Saratoga summer select sale $323,731 Swimming pool: Olympic (50 meters) Mission Pools, Escondido, CA $1,312,500 Tennis court: Clay, Putnam Tennis and Recreation, Harwinton, CT $55,000 Train set: Christmas Passenger starter set, LGB, at Miller’s Toys, NY $400 Airplane: Learjet 40XR, standard equipment, certified, 7 passengers $8,750,000 Helicopter: Sikorsky S-76C++, VIP options $11,000,000 Automobile: Rolls-Royce Phantom $333,350 Telephone call (without calling plan): 10 minutes, AT&T, NY–London $30 Cigars: Aniversario No. 1, Dominican Republic, 25 cigars, Davidoff, NY $708 Magazine: Forbes, 1-year subscription $60 Duffel bag: Louis Vuitton, Keepall Bandouliere, 55 centimeters $1,060 Watch: Patek Philippe classic men’s gold, leather strap (Ref#3520 yellow gold on leather strap) $17,600 Purse: Hermès, Kelly Bag, calfskin, rigid, 28 centimeters $6,250 * * * In Veblen’s day12, when the Vanderbilt family was at the pinnacle of New York society, perhaps the most visible sign of wealth and power was the handful of enormous mansions built by the family along New York’s prestigious Fifth Avenue, as well as a half dozen spectacular holiday homes in the countryside, plus a private railroad car for travel.
assortative mating, Atul Gawande, Bernie Madoff, call centre, cognitive dissonance, David Brooks, delayed gratification, Edward Glaeser, epigenetics, Erik Brynjolfsson, estate planning, facts on the ground, game design, happiness index / gross national happiness, indoor plumbing, invisible hand, Mark Zuckerberg, medical residency, Menlo Park, meta analysis, meta-analysis, neurotypical, Occupy movement, old-boy network, place-making, Ponzi scheme, Ralph Waldo Emerson, randomized controlled trial, Ray Oldenburg, Silicon Valley, Skype, Steven Pinker, The Great Good Place, The Wisdom of Crowds, theory of mind, Tony Hsieh, urban planning, Yogi Berra
But he and Nelles’s father had had a falling out in the early nineties. Until he approached them at the funeral, Ginny and the rest of the family hadn’t seen much of him for ten years. Reminding the siblings that he was an estate planner, Jones told them, “If I can help you in any way, I’m here for you.” He reassured Ginny’s mother, Wendy, “Don’t worry. I’ll take care of you.” Five days after the funeral, Jones persuaded Wendy Nelles to move her husband’s estate planning from the bank to Jones’s own account. “He told her ScotiaBank wasn’t doing much with the money and that the laws had changed. He was a vulture. He swooped in,” Ginny said ruefully. Four years after that, Jones persuaded Wendy to remortgage her paid-off home for $327,000—to be paid off over forty years. The money was ostensibly invested in her account with Earl to give her an immediate high rate of return; Wendy wanted to share this income with her children and grandchildren.
In-N-Out Burger by Stacy Perman
anti-communist, British Empire, commoditize, corporate raider, El Camino Real, estate planning, forensic accounting, Haight Ashbury, Maui Hawaii, McJob, McMansion, new economy, Ronald Reagan, Silicon Valley, Upton Sinclair
In the event that Rich died without any living descendants, the majority shares of the trust—in effect the majority of In-N-Out—were to be transferred to Guy Snyder. Rich and Christina did not have any children of their own, and Rich had not adopted his wife’s daughter, Siobhan. Among the many tragedies and pieces of unfinished business that resulted from the crash was the fact that Phil West was onboard the Westwind that day; that was the crucial event that turned control of the company over to Guy. The matrix of trusts and estate planning instruments created to protect In-N-Out and ensure its succession through Rich unraveled. West was named as the successor trustee of the Esther L. Snyder Trust after Rich, as well as a cotrustee of Rich’s own trust. Had he not died on the plane, West would have administered the majority of the company shares that comprised the core of that trust, set to roll over in three years. Regardless of the buyout, the move would have prevented Guy from gaining control over the company.
Confessions of a Wall Street Analyst: A True Story of Inside Information and Corruption in the Stock Market by Daniel Reingold, Jennifer Reingold
barriers to entry, Berlin Wall, corporate governance, estate planning, Fall of the Berlin Wall, fixed income, George Gilder, high net worth, informal economy, margin call, mass immigration, new economy, pets.com, Robert Metcalfe, rolodex, Saturday Night Live, shareholder value, short selling, Silicon Valley, stem cell, Telecommunications Act of 1996, thinkpad, traveling salesman
Fidelity Investments, the world’s largest mutual fund manager, wasn’t a big fan of mine. Or more accurately, the new telecom analyst there, Nick Thakore, wasn’t. Nick was a young, very smart MBA from Wharton who a year earlier had replaced Abby Johnson as Fidelity’s telecom specialist. Abby, the daughter of Fidelity’s founder, Ned Johnson, became president of Fidelity Management & Research Co. in 2001 and is now worth roughly $12 billion, thanks to her dad’s astute estate planning. Not bad for a former telecom analyst. In the spring of 1997, I went to visit Thakore during one of my Boston marketing trips and found myself being ripped a new one by this 20-something man-child. Mark Kastan remained the lead analyst on WorldCom, rating it Neutral. I agreed with Mark’s caution about WorldCom. Mark also felt strongly, as I did, that the Baby Bells’ entry into long distance was going to hurt all the existing long distance players, including WorldCom.
British Empire, clean water, colonial rule, discovery of the americas, distributed generation, Donner party, estate planning, Etonian, full employment, Hernando de Soto, hive mind, invention of radio, invention of the telegraph, James Watt: steam engine, Khyber Pass, Menlo Park, Plutocrats, plutocrats, transcontinental railway, Works Progress Administration
Scores of millions of cattle could be farmed in the prairies. “The destiny of the American people is to subdue the continent,” he declared—and anyone and anything who stood in the way, be they Sioux or be they buffalo, could be swept aside. He was a firm believer in the climatologically nonsensical theory that “rains follow the plow.”* And with this as his principal sales pitch, he peddled huge acreages of Western real estate—planning cities like Gilpintown and Centropolis, which in fact never got built—and made millions out of the gullible and the hopeful. He died in Denver, a very rich man. Then there was a sometime imposter and mountebank named Samuel Adams, who almost managed to wheedle $20,000 from the US Congress as compensation for the hazards of an expedition he supposedly took along the Colorado, from which he sent back reports filled with blatant absurdities.
Unreal Estate: Money, Ambition, and the Lust for Land in Los Angeles by Michael Gross
Albert Einstein, Ayatollah Khomeini, bank run, Bernie Madoff, California gold rush, clean water, corporate raider, Donald Trump, estate planning, family office, financial independence, Irwin Jacobs, Maui Hawaii, McMansion, mortgage debt, Norman Mailer, offshore financial centre, oil rush, passive investing, pension reform, Ponzi scheme, Right to Buy, Robert Bork, Ronald Reagan, Silicon Valley, stem cell, Steve Jobs, Steve Wozniak, The Predators' Ball, transcontinental railway, yellow journalism
We pulled her through and from then on have had her home with nurses around the clock. The doctors have not specifically diagnosed her condition as Alzheimers, however, the symptoms seem similar. It is a dementia of some kind.… Dolly hallucinates and seems to be living in her own little dream world.” What Logan didn’t tell Stockmar was that in August 1986, when Logan felt she was already failing, her brain going, Dolly had changed her estate plans one last time. In a new codicil to her will, many of her bequests changed radically. Elinor Logan and Maria Rivera were willed $3 million each, accountant Hugh Mullen and a maid named Yolanda each got $2 million, two chauffeurs who doubled as bodyguards got $1 million each, and, in what appeared to be a last-minute change of heart, one recipient of Dolly’s largesse was eliminated: A $300,000 bequest to Diane Hunt Stockmar, though included in the typewritten document, was crossed out by hand.
Albert Einstein, British Empire, business intelligence, centralized clearinghouse, City Beautiful movement, estate planning, glass ceiling, In Cold Blood by Truman Capote, indoor plumbing, Livingstone, I presume, new economy, Plutocrats, plutocrats, refrigerator car, transcontinental railway, traveling salesman, women in the workforce, Works Progress Administration, young professional
Since he didn’t have easy access to $250,000 in currency, he gifted family members with stocks, bonds, even personal promissory notes, including several from loans he had made to some of Kansas City’s wealthiest men when they were short on cash. Minnie was given two $25,000 notes from Charles W. Armour, a partner in one of the country’s largest meatpacking plants and a contemporary of Ford and Dave’s. Armour had borrowed the money from Fred over a four-week period. Yet such moments of levelheadedness and estate planning on Fred’s part would often be interrupted by well-meaning friends and relatives convinced they had found some miracle remedy. One day Ford received an urgent telegram, which his father had sent just before midnight, saying people were telling him to see a Chinese doctor they had heard about as a last-ditch attempt to cure his cancer. Fred wanted to do it, “unless mamma and you object,” he explained.
Conspiracy of Fools: A True Story by Kurt Eichenwald
Asian financial crisis, Burning Man, computerized trading, corporate raider, estate planning, forensic accounting, intangible asset, Irwin Jacobs, John Markoff, Long Term Capital Management, margin call, Negawatt, new economy, oil shock, price stability, pushing on a string, Ronald Reagan, transaction costs, value at risk, young professional
The job offer with KKR wouldn’t, and shouldn’t, wait for him. He had to decline. From his office, Lay telephoned George Roberts. “George,” he began, “I’m sure you’ve seen the news.” Skilling was home, putting together a list on a pad of quadrille paper. He had blown out of the office immediately after the announcement, leaving the packing to his secretary, Sherri Sera. Now, he was plotting his new life. Finances. Office. Estate Planning. Those needed to be organized. His brother Mark would help him out there. Reputation. Make sure his departure hadn’t damaged his image with the business world. Family. Spend more time with his kids, arrange some trips with them. Health. Obvious. Community. Reach out into Houston, play a bigger role in the city. There were plenty of details needed, but that was basically it. A business plan, just without a business.
State of Emergency: The Way We Were by Dominic Sandbrook
anti-communist, back-to-the-land, banking crisis, Bretton Woods, British Empire, centre right, collective bargaining, Corn Laws, David Attenborough, Doomsday Book, edge city, estate planning, Etonian, falling living standards, fear of failure, Fellow of the Royal Society, feminist movement, financial thriller, first-past-the-post, fixed income, full employment, German hyperinflation, mass immigration, moral panic, Neil Kinnock, new economy, New Urbanism, Norman Mailer, North Sea oil, oil shock, Own Your Own Home, sexual politics, traveling salesman, union organizing, upwardly mobile, urban planning, Winter of Discontent, young professional
The disco soon succumbed to endemic racial violence, and when a kaftan-wearing hippy tried to organize hand-holding ‘encounter sessions’ to dissipate the tension, the teenagers beat him up so badly he ended up in hospital. It would have been funny if it were not so sad: by the time the researchers left in 1974, all they could foresee for the children of the estate was violence, racism and unemployment.47 Like so many of the council estates planned and built in the 1940s and 1950s, the Monmouth estate had originally been a symbol of modernity and opportunity, the embodiment of the reforming spirit that was going to turn Britain into the New Jerusalem. The transformation in the estates’ image, however, was astonishingly quick: by the early 1970s, writes one historian, they had already become symbols of ‘dependence on state benefits, of a morass of indebtedness to the council and the moneylender, of isolation from neighbour and kin and society at large’.
Power at Ground Zero: Politics, Money, and the Remaking of Lower Manhattan by Lynne B. Sagalyn
affirmative action, airport security, Bonfire of the Vanities, clean water, conceptual framework, corporate governance, deindustrialization, Donald Trump, Edward Glaeser, estate planning, Frank Gehry, Guggenheim Bilbao, high net worth, informal economy, intermodal, iterative process, Jane Jacobs, mortgage debt, New Urbanism, place-making, rent control, Rosa Parks, Rubik’s Cube, Silicon Valley, sovereign wealth fund, the built environment, the High Line, time value of money, too big to fail, Torches of Freedom, urban decay, urban planning, urban renewal, white flight, young professional
Even though relocating to Vornado’s midtown site was going to cost as much as $1 billion more than either of the two downtown options, Merrill’s CEO had made up his mind. The unexpected, however, was about to radically reshape the firm’s options. The real estate decision was on the agenda of the firm’s two-day board meeting the third week of October 2007. Standing outside the boardroom in the foyer waiting to make the midtown recommendation to the board was Mark E. Brooks, the managing director in charge of real estate planning and transactions. Inside the boardroom O’Neal was informing directors for the first time that he had had a conversation about selling the company! He had to explain to the board quarterly losses of $2.24 billion, the firm’s first quarterly loss in six years. Hours later, still waiting to make his presentation, Brooks was told real estate was no longer on the agenda. Days later Merrill reported $7.9 billion in write-offs due to aggressive bets on mortgage-related securities.