Be Careful Relying on Online Retirement Calculators

The Wall Street Journal highlighted a recent academic study at Texas Tech University WSJ Article, Damato & Tergesen that found the results misleading and incorrect in two thirds of the thirty six free or low cost tools which the researchers tried.  In the examples highlighted, the online calculators significantly overstated the level of confidence which the data indicated would be safe for a secure retirement. The researchers recommended being careful to avoid oversimplifying a process which requires commitment and effort to 1) provide an analysis that suits your individual circumstances and needs, and 2) understand the strengths and weaknesses of results obtained, and how to use them wisely. The Will Doctor notes that our growing faith and dependence on automated simple solutions to complicated lifestyle questions is […]

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Assumptions for Risk and Investment Returns

The effectiveness of any effort to assess your future financial security depends on using assumptions about many variables.  These include your life expectancy, saving and spending levels over time, inflation, and hypothetical investment returns on your savings.  Each variable must be considered very carefully, and the results need to be viewed under multiple scenarios.  This gets complicated, especially since there are competing methodologies about how to build the variables, and much of this guesswork is getting more scientific (and accurate) on a daily basis. Of course, it is very obvious to everyone that there will be a lot of room for disagreement about future investment returns, depending on how the computations are made, and the weight of historical returns over different time periods.  Bessemer Trust […]

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John Lennon on Planning

Just ran into this quote-it’s becoming more true, every day: “Life is what happens while you are making other plans.” In the 21st Century, assumptions that are required for prudent analysis of our future financial security, and the attendant recommendations, becoming much harder to stand behind.  Someone famous once called these “known unkowns”.  Consider the following: Geopolitical risk Theological/religious conflict Terrorism Vastly increased mobility and ability to change domicile/vast refugee migrations The emergence of global citizens not tied to specific nationalities Globalization of Trade vs. Inceased Protectionism Currency fluctuations (often expressed in martial terms) The digitization of work and commerce and everything Automation of professional services Technology and the Internet Digital privacy, security and Cyberwarfare Increased Longevity Changing gender and sexual identities The rise of […]

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New Data on Life Expectancy

Courtesy of Jonathan Blattmachr and Marty Shenkman for the Heckerling Institute, last month we provide the following: ‘Over the past three decades, life expectancy of male workers retiring at age 65 has risen six years in the top half of the income spectrum, but only 1.3 years in the bottom half.  The age for peak financial decision making is age 50.  Financial decision making ability begins to decline by age 60 and is significantly impacted by age 80.  Even more worrisome is that the same studies indicated that people’s perceptions of their abilities do not decline.  At what age are most estate plans crafted?  Likely much older. Creating and implementing a plan at an earlier age to protect clients is important to properly protect them […]

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Tax Thresholds for 2016 vs. 2015

The Tax Thresholds, 2016 table provides some important federal tax information for 2016, as compared with 2015. Many of the dollar amounts are unchanged or have changed only slightly due to low inflation. Other amounts are changing due to legislation.  Please click on the highlighted text to access the document, and Happy 2016 from the Will Doctor.

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New York Attempts Statutory Solution to Problem of Posthumously Conceived Children

On Nov. 21, 2014, Governor Cuomo signed into law EPTL §4­1.3 and amendments to EPTL §11­1.5 to provide a statutory solution to inheritance rights of a posthumously conceived child in New York.  New EPTL §4­1.3 introduces four requirements for a posthumous child, referred to in the statute as a “genetic child,” to inherit from the genetic parent in intestacy or under a will or trust. First, the genetic parent storing the sperm or ova (a/k/a an egg cell) must expressly consent to the use of the genetic material for posthumous conception and authorize a person to make decisions about the use of the genetic material after his or her death.   Such consent and authorization must be in a written instrument, which is executed not more […]

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House Kills the Death Tax

On April 16, the House passed, by a vote of 240-179, the “Death Tax Repeal Act of 2015,” which would repeal the estate tax and the generation-skipping transfer tax. The Obama Administration previously indicated that if the President were presented with H.R. 1105, which would add $269 billion to the deficit (over ten years). The Will Doctor notes the wildly gyrating revenue losses attributable to the repeal of the Estate tax, thrown about from time to time by all the parties.  The amount of revenue to be raised, on the other hand, by the taxation of capital gains on gifts, or at death, will likely more than offset the revenue lost from estate tax repeal.  This presents the politicians with an opportunity to do a […]

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Boehner Calls for Repeal of Estate Tax

House Speaker John Boehner, R-Ohio, said on April 14 that the House will move to pass legislation to abolish the federal estate tax. “Estate tax repeal is long overdue,” Boehner said at a news conference in Washington, D.C. The Death Tax Repeal Bill of 2015 was approved by the House Ways and Means Committee on March 26. The bill is expected to come shortly to the House floor. On April 13, a White House official said that estate tax repeal legislation would cost $270 billion over 10 years. “The bill would only benefit households that have, or couples that have, more than $11 million of assets, because everyone else is fully exempt from the estate tax,“ Jason Furman, director of the Council of Economic Advisers, said […]

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Death Tax Repeal Act of 2015

The House Committee on Ways and Means reported on a straight party-line vote H.R. 1105, 114th Cong., 1st Sess. (March 6, 2015), introduced by Rep. Kevin Brady (R-Tx) and referred to as the Death Tax Repeal Act of 2015. The bill would reduce the top gift tax rate to 35 percent, and keep the gift tax lifetime exemption at $5 million, adjusted for inflation after 2011. The bill would retain the present basis adjustments for property received from a decedent, and provide that a transfer in trust will be treated as a completed taxable gift, “unless the trust is treated as wholly owned by the donor or the donor’s spouse under [the grantor trust rules]”, except as provided by regulation. The bill seems likely to […]

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