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Understanding the Proposed Regulations for FLPs and Family Businesses

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If you’re a family business owner or you created a family limited partnership (FLP), you may be wondering about the proposed Treasury Regulations that were released earlier this month.  You may have even tried to read an article or two on the topic.  If you’re wondering whether you should care about the proposed regulations and why, please read on. Background Valuation discounts for transfers of business interests between family members can be a powerful gift and estate tax planning tool.  Most discounts relevant to this discussion can be put into two general classifications: (1) lack of control, and (2) lack…
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mortgage invest

What to Expect When You’re Taking on Debt

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My wife and I recently purchased our first home, which was not nearly as fun as an episode of HGTV’s House Hunters makes it out to be. After actively searching for months and putting offers in and losing out on six different houses, we finally grabbed the brass ring with our new home. To do that we had to beat out seven competing offers after seeing the home for only 20 minutes during an open house on its first day on the market. Overall it was a stressful experience, but we ended up with a beautiful home that will serve…
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Demystifying Standard Deviation

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Pop quiz:  Investment X and Investment Y have each returned 10% over the last 5 years.  Which one is better? It is tempting to claim neither, as their returns are equal.  But how does your response change if we also provide this fact: Investment X went up slowly and steadily each year, while an investment in Y was a wild ride – down 10% in two of those five years.  Our guess is that most people would strongly prefer Investment X with this new information.  The moral: when evaluating investments, one must assess both returns and risk together. Standard deviation…
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disability planning

Basics of Disability Planning

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Currently over 37 million Americans are classified as disabled, statistically the average American worker has a 1 in 4 chance of becoming disabled during their career. Nearly everyone can benefit from the creation of a basic disability plan. A basic disability plan should allow your chosen representative to make financial and medical decisions on your behalf if you are incapable of doing so. It is a position of extreme power and you should consider many factors when choosing your representative. The basic building blocks of disability planning typically involve the signing of a power of attorney, health care proxy and…
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Basics of Property Ownership

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Tenants in Common, Joint Tenants with Rights of Survivorship and Tenants by the Entirety The way in which you hold title to your assets can have a major impact on your estate plan. Different ownership types grant various levels of authority to titleholders and dictate what happens after an owner passes away.  Two common types of ownership are “tenants in common” (TIC) and “joint tenants with rights of survivorship” (JTWROS). Individuals who own property as TIC own a percentage of the property. These percentages can be equal or unequal.  When one tenant dies, her percentage interest would generally pass to…
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revocable trust

What is a Revocable Trust?

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A Revocable Trust – sometimes referred to as a “Living Trust” – is a lifetime trust that can be amended or revoked at any time during the creator’s life.  The creator (or “grantor”) of the trust typically also serves as trustee and is also a trust beneficiary during his or her life.   At the grantor’s death, the terms of the Revocable Trust direct how the grantor’s assets are to be distributed, essentially acting as a substitute for the Will. Nonetheless, the grantor still executes a Will.  This is because the grantor may have failed to transfer title of certain assets…
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planning

Basics of Estate Planning

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Lifetime and testamentary planning Contrary to popular belief, estate planning typically involves more than just signing a Will. It generally involves two sets of considerations: lifetime planning and testamentary planning. Lifetime planning may involve choosing decision-makers to make health or financial decisions on your behalf should you become incapacitated. For higher net worth individuals, lifetime planning may also involve establishing tax-efficient gifting strategies during life. A testamentary plan, on the other hand, will designate the individuals or charities who are to inherit your assets at death, and in what capacity (e.g., outright vs. in trust). In addition, a testamentary plan…
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life insurance

How Much Life Insurance Do I Need?

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The prospect of our inevitable journey to the pearly gates is a tough conversation to have in any context, let alone attaching a dollar amount to our existence. However, for many people, life insurance is the backbone of any strong financial plan. Without it, all your other financial goals can easily fall apart. Life insurance can replace lost income, pay off debts, leave a charitable legacy, and create an income and estate tax-free pool of capital, if structured correctly. But how much life insurance do I need, if any? As with most questions, the answer depends on the facts and…
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impact investing

Socially Responsible & Sustainable Investing

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Dating back to the 16th century, investors have expressed their social views by avoiding investments that are contrary to their individual values.  While this investment style is still employed today, the discipline has expanded to include the analysis of non-monetary factors that may have an impact on a company’s long-term sustainability.  These factors are commonly referred to as ESG (Environmental, Social and Governance).  However, there are many common misconceptions and applications of ESG analyses. In this blog and its corresponding white paper, we attempt to demystify socially responsible and sustainable investing. Definitions & Nomenclature CSR: Corporate Social Responsibility (also known…
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Should you own bonds in this low interest rate environment?

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Recently there have been a multitude of articles concerning how low interest rates are going to negatively impact investors. The conclusion of many of these articles is that your bond holdings should either be jettisoned or drastically changed in favor of riskier bond strategies that can earn higher returns. Below, we will highlight our view on why this is the wrong conclusion. The Role of Fixed Income in Your Portfolio Please note: the following applies to investors who seek a “balanced” long-term allocation, whether it be 75%/25% equity-fixed or vice versa, and does not apply to portfolios that are equity-only.…
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