November is a time to reflect on the year as we head into the holidays and a time to be thankful for the blessings in our lives.

We give special thanks on Veteran’s Day to our courageous armed forces and our beloved veterans for placing service above self so that all of us may continue to enjoy the freedoms we often take for granted as citizens of this great country. 

And, Thanksgiving provides us an opportunity to give thanks for those who have helped to make 2017 another successful year for Garden State Trust Company. From all of us we extend to all of you and your loved ones our best wishes for a warm and enjoyable Thanksgiving Day filled with family and friends.

  Ira J. Brower, Founder
The October 9, 2017, issue of The New Yorker included a shocking article titled "How the Elderly Lose Their Rights." The author, Rachel Aviv, was interviewed by National Public Radio. This article should be read carefully by everyone who is 65 or older, and by everyone who has a relative who is 65 or older. In short, it should be read by everyone.

The short answer to the article’s title is that the elderly lose their rights through involuntary guardianship. A pervasive system is described in which professional guardians obtain legal control over elderly persons. These are not just people who have no family and need help, but folks who are self-sufficient and who have family nearby, but who are not capable of fighting the legal system. The case studies described in the article, of guardians liquidating the property of the elderly prematurely and getting rich from their "profession" are heartbreaking.

There are an estimated 1.5 million adults under the care of a guardian in the U.S., and they have an estimated $373 billion in assets. That data comes from an auditor for a guardianship fraud program in Palm Beach County, Florida. Unfortunately, states do not have uniform oversight of guardianships, and in some jurisdictions the guardianship records are sealed anyway.

One important benefit of revocable living trusts is that they remove the need to have a guardian appointed to handle financial affairs. The trustee, who is already known to the family, has complete legal authority over the finances. That should prove one defense against these modern bounty hunters.

(November 2017)
© 2017 M.A. Co. All rights reserved.
Beneficiary designations—for life insurance or retirement plans, for example—are an often overlooked aspect of estate planning. A change in life circumstances may suggest a need to change those beneficiaries. Beneficiary designations can be the source of estate litigation, as a recent case demonstrates.

Ronald and Heidi Lee had been married for ten years when Heidi sought a divorce. In the divorce proceedings, Heidi asked for and received $2,000 monthly maintenance and a lump sum of $35,384. To secure the payments, Ronald agreed to leave Heidi as the beneficiary of his $150,000 life insurance policy.

He didn’t do that. Ronald changed the beneficiary to his daughter, Abriel. When he died two years after the divorce was finalized, Ronald was current on his maintenance payments but still owed some $32,000 on the lump sum. 

Both Heidi and Abriel claimed the insurance proceeds, and the inevitable lawsuit began. The insurance company deposited the proceeds with the court and was released from the case. Abriel offered to pay Heidi the $32,000 still owed to her, but Heidi believed that the terms of the divorce decree meant that she should get all of the $150,000 insurance proceeds, because she should have been the sole beneficiary on the policy.

Examining the terms of the decree carefully, the trial court concluded that Abriel had the better argument. The insurance policy was meant to guarantee the payments to Heidi, not to provide a bonus in the event of Ronald’s premature death. The Washington appellate court now agreed with this judgment.

(November 2017)
© 2017 M.A. Co. All rights reserved.
We like to think that since the advent of modern portfolio management practices, investing in stocks and bonds has become a cerebral, analytical process with no room for emotion. The truth is that most investors, even institutional investors, are buffeted by emotional turbulence from time to time, and that truth is reflected in the volatility of the financial markets.

But if a little emotionalism when it comes to investments is unavoidable, too much emotion can be hazardous to your wealth. Here are four symptoms of problem emotions, financial behavior that is inconsistent with sound investment practice.

Fear of loss. Investors are generally motivated by fear or by greed. Behavioral scientists have learned that, for many people, the pain of loss is larger than the sense of satisfaction from a gain of the same size. Similarly, some investors will accept larger risks in order to avoid a loss than they will in seeking a gain.

Taken to an extreme, fear of loss leads to investment paralysis. An excessively risk-averse investor may park funds in ultra-safe, low-yielding bank deposits or short-term Treasury securities until a decision is made, accepting long periods of low returns. Or winning investments may be sold off too quickly in an attempt to lock in gains, while losing investments manage to stay in the portfolio indefinitely.

Following the herd. It’s difficult to be a contrarian, to find value that everyone else has overlooked. Many people find it easier to go with the crowd, to own the current hot stock or hot mutual fund. At least that way, if the investment does poorly, one has plenty of fellow sufferers with whom to commiserate.

But when "crowd" is defined as one’s family and friends, the crowd’s investment goals may be very different from one’s own.

Hair-trigger reflexes. Markets move on news. In many cases, the first market response is an overreaction, either to the up side or to the down. Sometimes “news” is only new to the general public, and it’s already been reflected in the share price through trading by those with greater knowledge. The true importance of any news event can only be discerned over the longer-term.

Generally, it’s better to watch the market react to news than to be a part of the reaction. Remember that market dips may present the best buying opportunities but they’re also the toughest times, emotionally, for making a commitment to an investment.

Betting only on winners. Some 85% of the new money going into domestic equity mutual funds goes to funds with MorningStar ratings of four or five stars, according to one estimate. This may be one reason that the government requires this disclosure for investment products: Past performance is no guarantee of future results. The disclosure is required because it is true. High returns are usually accompanied by high risks; ultimately, those risks may undermine performance.

Abnormal returns, whether they are high or low, tend to return to the average in the long run. Investing on the basis of the very highest recent returns runs a significant risk of getting in at the top of the price cycle, with a strong chance for disappointment.

The alternative approach

To avoid impulsive decisions that may be tainted with emotion, one needs an investment plan. The best way to moderate the impact of stock and bond volatility in difficult markets is to own some of each. Assets do not move up down in lockstep. When stocks rise, bonds may fall. Or at other times, bonds also may rise when stocks do. The movements of each asset class can be mathematically correlated to the movements of the other classes. Portfolio optimization involves the application of these relationships to the investor’s holdings.

Expected returns need to be linked to the investor’s time horizon. Longer time horizons give the investor more time to recover from bad years, more chances to be in the market for good years.

(May 2017)
© 2017 M.A. Co. All rights reserved.
Three major hurricanes have changed tourist behavior, but many are still flocking to unscathed Caribbean islands for Thanksgiving and Christmas. read more...

It takes Craig Miller just 30 minutes to get out the door on a powder day. “I keep a lot of my gear in one of my vehicles,” said Mr. Miller, an avid skier...  read more...

Some Thanksgiving dishes are cross-country staples – pumpkin pie, stuffing and of course, turkey recipes are popular in every state in November.  read more...
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Because of the rapidly changing nature of tax, legal or accounting rules and our reliance on outside sources, Garden State Trust Company makes no warranty or guarantee of the accuracy or reliability of information contained herein nor do we take responsibility for any decision made or action taken by you in reliance upon information provided here or at other sites to which we link. ©2017. All rights reserved.