Sunday, March 10, 2019

People with grantor trusts do need to pay attentiont to their "manifest observable behavior"



One other point of caution has come up recently for people who inherit money through trusts.

Of course, the portion that remains undistributed in trust is supposed to be held for the future use by beneficiaries, especially after the main trustee’s own death.

Trusts are often set up as grantor trusts for simplification of filing taxes with the IRS.  But often in practice trustees have the ability to move money around at will, which can get them into trouble. Some banks allow a limited number of moves a month (typically six).

It would seem logical that there could be a problem if the trustee runs a business predicated on asking for money from patrons (rather than having them pay for things – that is, normal subscriptions in the case of Internet channels).  This might even extend to running fundraisers for non-profits from one’s own social media account, which Facebook often prods users to do. It might be necessary to set up a blind trust first.

Because there have been a few cases where Internet personalities have suddenly had bank accounts closed, we wonder if this could be a factor – beyond just SJW activism against “conservatives”.

Tuesday, March 05, 2019

Atlantic article encouraged seniors to settle for 75-year life span



I don’t think I shared this Atlantic article before, back in September 2014, a piece by Ezekiel J. Emmanuel, “Why I Hope to Die at 75”. That’s my age.

  I think he was 57 at the time.  He will have a memorial service before that birthday while still alive.

People who can achieve much after their 60s are real outliers, he thinks.  The increasing lifespan are simply producing aged population with more disabilities.

On the young side, he doesn’t recognize the fact that some teenagers real are very accomplished very young (Jack Andraka and David Hogg, to name two;  I have a feeling Sandmann will pleasantly surprise us, too.)

On the old side, well, how about Jimmy Carter.  Or Bernie Sanders (whether or not you agree with their politics).

I rather agree that at 75 you don’t need to start colonoscopies (Cologuard is worth it, though.)  I don’t think you need to do emasculation for prostate cancer (my father died of it at 82 and lived well up to the last four weeks; he wouldn’t hear of some of the treatments).

But he doesn’t want old people to take flu shots, and that sounds wacky.

But he’s right that now we have more extended families with people in their 60s taking care of parents in their 90s.

Saturday, March 02, 2019

Experts diverge on how bad the retiree personal saving situation really is; maybe not so much


MSN has featured a lot of second-hand stories recently on how retirees should behave.

This one, by Maurie Blackman, says that retirees seriously harm their own stability by helping adult children buy their first houses (although mortgage companies frown on the practice).  It’s a little better if the adult kid had work experience in college (helping deal with the debt) – college students sometimes work in managing apartments, and that could be a good place to start in learning how to manage property.



On Feb. 28 Andrew Biggs (in the Wall Street Journal) wrote about the “phony retirement crisis”: private savings increase while the federal safety net weajebs and public pension plans get in trouble

Anne Tergen had written about the same issue in 2017 and gotten different interpretations, from two different subject matter experts. This is a matter of  "Economic Invincibility" (Martin is too young to do a video on retirement savings, maybe).


Tuesday, February 19, 2019

How many people can save ten times their final salary in a working career?



Christy Bieber rolls out the “economic invincibility” advice on MSN, with three questions that would test whether your retirement is in trouble.

Most of all, you need to save 10 times your final salary, and use dollar cost averaging.

I wondered, though, how most workers will be able to do this, unless they are talented enough.
 
People approaching retirement need to decide how they feel about the “individualism” v. “interdependence” question.  David Brooks spoke about this recently in Sarasota, FL, where he denigrated “tribalism” (based on common enemies) and recommended “community”.  But he warned that “unrooted” persons will find themselves becoming “unremembered” as their worlds move from competitiveness (the traditional workplace) much more toward cooperation and recognizing need in “retirement”.  People will pray for you.
 
In the meantime, “the young people will win”.  At competition. That includes "Martin".

Tuesday, February 12, 2019

Motley Fool gives a crash course on obscure facts about Social Security



Dan Caplinger of the Motley Fool (a favorite site when I worked at ING) lists ten quirky facts about Social Security you probably don’t know. MSN/Bing offered this today on Microsoft Edge on Windows signon.

A lot of them have to do with remarriages or unusual dependency situations, returns to school, even prison.





The article also gives the mathematical formula showing how your benefit amount is calculated.

Saturday, February 02, 2019

Some state government employees who did not have FICA deducted might have Social Security benefits further reduced



Congress reportedly is looking at reducing Social Security payments to retirees who held jobs (often with state or local governments) where social security tax was not withheld, according to the Massachusetts Retires site. 

I had about 19 months employment with the Navy Department from 1971 to late 1972 where Social Security was not withheld (but it would have been after 1983).  It helped me buy a new car.   However my own benefit already takes this into account.

Monday, January 21, 2019

How should trusts handle (implicit) special needs beneficiaries, especially after an unexpected political or natural disaster crisis (the federal shutdown may matter!)



Should executors of inherited trust money be concerned that they might be asked to become involved in helping federal employees (and contractors) tide over during the “partial” government shutdown?
  
It sounds like a preposterous, shocking question, but I’m not being facetious.  It’s true, many federal employees are well-paid and ought to have savings, but some (like TSA agents) are not.

Presumably, credit unions can help for a while, although some say they can’t handle it all. Banks and financial institutions are offering forbearance programs.  By February 1, many employees will have hefty rent or mortgage payments. The media really hasn’t covered landlord (at least large apartment complexes) attitudes toward this. People who own rental properties might well be asked to accept much later rental payments.  And there is the whole world of payday loan companies, which I know nothing about (but got calls about during my post-employment period of the 2000’s).
  
For Coast Guard active duty members, if deployed they may be OK, but their families might not. 

There are specialty insurance companies, most of all USAA, whom one would expect to help them. 

The company I used to work for, Voya (which was ING-ReliaStar then) has a subsidiary, USL (United Services Life) which caters to the military and which might have unusual products that can help.

I won’t get into detail about my own trusts here (check my WP site).  But I can say what is common in many trusts passed on as inheritances.  Typically there are declared beneficiaries, and the executor has some fiduciary responsibility to protect the money (beyond necessary personal living expenses like housing) for them. Sometimes there a provisions for small incremental distributions.  Often there is attention to special needs beneficiaries. 


Normally, being targeted in political extortion would, in my book, qualify as a “special need”.  So if that does happen to a member of a family of a beneficiary, it would be common that the beneficiary could request a grant of up to 1% of the estate value per year (with multiple beneficiaries it would only work until used up, and it might only apply to non-real estate)   It is also possible for a charity (a non-profit) to request this for a client (or minor child of a client), but the client has to have an unusual need with compared to others of the charity, in a way that is meaningful to the trustee. 
In a sense, the inherited estate is expected to act as a private micro insurance policy to back up those in need when other systems fail them.  This is not (from an ‘Economic Invincibility” perspective) a particularly good place to be, but inherited wealth is not as morally secure as earned wealth.
  
Another idea to look at is socially responsible investing.  Right now I’ve stayed in conservative stocks and bonds and notes (I have some Dominion Power because I want to keep an eye on the power grid security issue). Some people like to assist small businesses, especially overseas, with kiva or microloans.  I am not in the business of playing micro-bank, but I have wondered if any intermediaries exist that could help trusts make loans in the cases of sudden special needs, even from political or natural disaster issues.  The novel nature of the current crisis might preclude the likelihood that much exists now, because it wouldn’t have been anticipated. However, in my case, the trust language explicitly allows making loans personally, even for ventures like real estate or perhaps AirBnb.

Wednesday, January 16, 2019

How to choose (or replace) an executor of a trust



I am in the position of having two trusts (my deceased mother’s and my own) with a previous executor who passed away.


Here are some considerations in picking another one, from the ABA. 

It is possible to hire a professional (like a law firm) as an executor.
  
Courts will appoint a disinterested party (a law firm) when the trustee (me) passes away before a replacement can be named.

Thursday, January 03, 2019

Apple report alone stokes more market volatility, and then there is the shutdown



Business Insider, for whom I recently signed up for the premium subscription, reports that a major Wall Street credit hedge fund, Marathon Asset Management, has hired a “veteran distressed debt trader”. That means that many of these funds expect a recession, according to a story by Dakin Campbell. 

Apple CEO Tim Cook reported lower earnings than expected his behemoth company just after the market close Jan. 2, and got up early in California this morning. Much of the problem seems to loop back to the trade war with China; but Apple seems to have bet its fortune and much of the entire stock market on our relationship with a Communist, post-Marxist country (in the middle of implementing a social credit score on all citizens). CNN's story is here.  "Your" retirement is tied to Communism and Xi Jingping.
   
 Maybe he could run for president in 2020 as he can move markets.  (OK, we’ll lowkey that “no place on our platform” speech.)  That was the reason for the initial drop, rather than the intransigence over the border issue between Trump and Congress. But it’s hard to believe that a deal wouldn’t help the markets. This Yahoo! report suggests that stock market pricing already has a 2019 recession start factored in. 


Both parties should talk to ranchers and businesses in the southern border states and find out what kind of security is most cost effective.  Most of these businesses are in Trump’s base. But it’s probably not a wall everywhere.