There is a generation of individuals becoming more commonly identified as the Sandwich Generation. This generation of adults in their 40's and 50's is sandwiched between the obligation to care for an aging parent, who may be ill, unable to perform various tasks or need financial support and their children who also require financial, physical and emotional support. In addition to their parents, this sandwich generation may have loving aunts and uncles who have never married and do not have children to care for them as they age. Many rely on a niece or nephew to help them as if they were their children.

Complicating this situation even further is that families are dispersed across the country, with Baby Boomers and their grown children living at numerous locations and the Boomers' aging parents living quite a distance elsewhere. This alone presents a challenge - how do you make decisions from afar when you are not seeing this aged love one as often as you would like? Just think about the challenges involved. Your son or daughter has a job that requires their complete attention, and they have a child involved with sports activities with games played on Saturday? What to do? Take time from work, disappoint your child by not attending their big game or disappoint your parent by not attending to their needs in person?

One of our challenges when we are meeting to discuss estate and financial planning options with these aging Baby Boomers is how our thoughts are passed on to their children or nieces or nephews dispersed across the country. Experience tells us that many of our thoughts and planning options that we share get lost in conversations with their loved ones.

So, we have embarked on a project that will assure that our thoughts and ideas are passed on to these loved ones using our Website, WWW.GSTRUSTCO.COM. We have and are developing narrated slide presentations that can be viewed by family members wherever they reside. Currently there are two slide presentations live, Choosing The Right Trustee and Benefits of a Living Trust. These presentations can also be viewed on the Home Pages for our Cherry Hill, Lebanon and Linwood offices. Currently under production is a slide presentation on IRA Rollovers, with many more planned for the future.

If you get a chance, let us know what you think of these presentations or a topic you would like to see.

Hopefully we will be enjoying some nice dry fall weather soon!

Ira J. Brower, Founder
The S&P 500 stocks may be divided into sectors, as follows:

Consumer Discretionary
Consumer Staples
Health Care
Information Technology
Communication Services

Why is this important? Just as all stocks do not move in lockstep, each sector of the S&P 500 follows its own path. Some exhibit more growth characteristics; others might have less volatility and be safer in down markets. The advent of electronically traded funds (ETFs) allows individual investors to invest in sectors, instead of investing in the stock market as a whole, for example, with an index fund. In this way the investor may craft an investment management strategy that conforms to his or her risk profile and outlook on the economy.

Sectors may be further divided into industries, then to individual companies. Investing in a sector as whole gives the investor more diversification than choosing an industry or individual company.

However, S&P Dow Jones, the manager of the indices, recently revised the classification of some of the larger companies in the S&P 500, which, in turn, may affect the performance of ETFs. The telecommunications sector, for example, was expanded beyond telephone and wireless carriers, so as to reflect better the changing economy. The new Communication Services sector includes Facebook, Alphabet, Paypal, Netflix, Walt Disney, and Snap. 

Amazon remains in the Consumer Discretionary group, and Apple will anchor the Information Technology index, representing about a fifth of that sector. The IT sector had been 20% of the S&P 500, but now is about 15%.

The markets reacted calmly to these changes, but the new classifications could influence investor choices and strategies in the future.

(October 2018)
© 2018 M.A. Co. All rights reserved.
Put your beneficiaries first.

The traditional "hot button" that has motivated people to see their lawyers about estate planning is taxation. Death taxes--inheritance taxes, estate taxes, federal taxes, state taxes--have taken a notorious toll on unplanned estates over the years. With sound planning, that burden can be lightened or even eliminated. In many cases, the tax savings easily cover the cost of the attorney's fees for creating the estate plan.

That hot button has cooled considerably this year, as the federal estate tax exemption equivalent is $11.18 million per taxpayer ($22.36 million for married couples). The amount will increase for inflation through 2025, and in 2026 it will drop roughly in half. An exemption that large would seem to let most families of moderate wealth off the hook. In fact, most observers expect that there will be only about 1,000 federally taxable estates in the next few years. 

Accordingly, families with less than $11.18 million in assets may be forgiven for feeling that they are no longer a tax target. But estate planning always has been about much more than tax planning. Estate planning always has been about financial protection for beneficiaries, with tax minimization just a means to that end.

If you haven't attended to your estate planning, don't use the excuse of "my estate is too small to worry about death taxes" to put it off any longer.

To begin, you have to know what you are working with.

• Inventory assets. Your estate plan will have to dispose of everything that you own; otherwise the state's law of intestacy will apply. Bank accounts, stocks, bonds, real estate, business interests, of course. Don't overlook insurance policies and retirement plan benefits. You'll need to know how as well as what. Which property is owned jointly, which is owned outright.

• Identify beneficiaries. A surviving spouse and children are the usual persons to be protected. You may have more distant relatives to include, and you may want to remember some charities in your estate plan. Don't overlook the need to care for your pets after your death.

• Check beneficiary designations. If you have an IRA or an employer-provided retirement plan, you already started on your estate planning when you made your beneficiary designations. These designations should be reviewed periodically, especially when there have been changes in family circumstances, especially a divorce. 

• Weigh trust benefits. Trusts offer a wide range of financial benefits, especially valuable when beneficiaries need help with money management. Trusts may be established and funded during life (the living trust) or in a will (the testamentary trust). 

The next steps require the advice of an attorney and the execution of legal documents.

• Make a will. Your will contains instructions for the disposition of your property. It also nominates an executor or personal representative to manage the settlement of your estate. 

• Make a living will. This document addresses your expectations for medical care at the end of your life. You also may want to execute a power of attorney for health care to identify an individual to make medical decisions on your behalf.

• Execute a durable power of attorney. Identify an individual who can make financial decisions on your behalf.

• Create a document locator. Your family needs to know where your will and powers of attorney are kept. Your executor will need to know the location of all your other important papers, such as tax returns, account statements, property deeds, and insurance policies.

• Make arrangements for any safe-deposit box. Very often a safe-deposit box is closed upon death and cannot be opened until probate. That makes it a poor choice for keeping documents that will be important at death.

These steps are not complete; they are simply suggestive of the ranges of issues that you will need to address in your estate planning.

A great variety of financial protection strategies may be implemented with careful trust planning. Among the choices to evaluate:

Marital trusts. Several options are available to provide lifetime asset management and financial protection for a surviving spouse.

Support trust. For an adult child who needs a permanent source of financial support, with the trust principal protected from the claims of creditors, a support trust may provide a solution. The beneficiary's interest is limited to just so much of the income as is needed for his or her support, education, and maintenance.

Discretionary trust. The trustee has sole discretion over what to do with the income and principal, just as the grantor does before the trust is created. The beneficiary has no interest in the trust that can be pledged or transferred. When there are multiple beneficiaries, the trustee may weigh the needs of each in deciding how much trust income to distribute or reinvest, when to make principal distributions, and who should receive them. The trust document often will include guidelines on such matters.

Spendthrift trust. The beneficiary is forbidden to transfer any financial interest that he or she has in the trust and may not compel distributions.

We specialize in trusteeship and estate settlement. We are advocates for trust-based wealth management strategies. If you would like a "second opinion" about your estate planning, if you have questions about how trusts work and whether a trust might be right for you, turn to us. We'll be happy to tell you more.

(October 2018)
© 2018 M.A. Co. All rights reserved.
The nonprofit sector did very well in 2017, according to the June 2018 report issued by Giving USA. Total gifts to charity exceeded $400 billion for the first time, reaching $410.02 billion. Gifts from individuals are the largest component, and were $14 billion ahead of the 2016 pace. All giving sectors grew, as shown in the table below:
Some charities are concerned that 2018 may not see similar growth in giving, because tax incentives for charitable giving have been reduced. The doubling of the standard deduction means that far fewer taxpayers will be itemizing, and nonitemizers see no tax benefit from their gifts to charity. The doubling of the amount exempt from the federal estate tax might mean that fewer Americans employ charitable trusts to control their estate tax exposure. It will be years before such behavioral changes can be identified with confidence, however.

Nearly a third of charitable gifts go to religious organizations, and educational institutions come in second at 14%. The table below breaks down the categories.

There are trust-based strategies that allow an individual to create public and private beneficiaries and reap attractive tax benefits. These include:

Charitable remainder annuity trust. A private beneficiary (or multiple beneficiaries) receives a specific dollar amount from a trust for life or a number of years. When the trust terminates, a charity receives the remaining trust assets. Income, gift, and estate tax deductions are available to the trust creator.

Charitable remainder unitrust. Similar to the annuity trust, with this approach the income distribution for private beneficiaries is calculated each year as a percentage of the trust assets, rather than as a set dollar figure. This allows beneficiaries to share in the appreciation in the value of trust assets, while preserving all the rest of the tax benefits.

Charitable lead trust. This trust approach involves a role reversal, in that the charity receives the trust income distributions and the assets remain in private hands at the end of the trust term.

Interested in becoming a philanthropist? We'd be pleased to tell you more.

(October 2018)
© 2018 M.A. Co. All rights reserved.
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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.