Contrasting 1031 Exchanges with Opportunity Zones
Both are techniques used to defer capital gains taxes on the recent or planned sale of an asset. They can even potentially eliminate them over time, through a step-up in basis at death in the instance of the 1031 exchange or a 10 year holding period in the instance of the Opportunity Zone. Though there…
Read MoreHow to Implement Life Insurance Under a Fiduciary Standard
Insurance products, except for a few rare exceptions, pay commissions to licensed advisors and agents. This creates the potential for a conflict of interest between the advisor and the client, since the commission is paid by a third party (the insurance carrier) and not directly by the client. The concern is that an advisor would…
Read MoreUsing Charitable Remainder Trusts to Reduce Capital Gains Rates vs Income Deduction Planning
Charitable remainder unit trusts often are often recommended by professional advisors in situations involving clients who: 1) Are charitably inclined 2) Could use a significant income tax deduction to offset higher than normal taxable income in a given tax year or years. A typical design for this type of CRT might include: 1) A relatively…
Read MoreQualified Longevity Annuity Contracts (QLAC)- The Treasury’s Effort to Ease Managing the Risk of Outliving Retirement Funds
Actual IRS QLAC Final Regs A copy of the actual final regulations is linked above. This article is intended to provide accurate, detailed summary information about the QLAC regulations in the following areas: 1) RMD changes resulting from the use of QLAC’s 2) QLAC Definition and qualifications 3) Planning implications Longer life expectancy, the shift from defined retirement plans with…
Read More50 Years Historical Financial and Economic Data in One Spreadsheet with Illustrative Commentary
(click on the image to view the spreadsheet in full size) The purpose of this exercise initially was to help put into context the data and assumptions we, as financial planning practitioners use, such as assumed tax rates, interest rates and inflation when we are building financial plans. How do they compare to the past?…
Read MoreTaxation- is for Fiscal/ Monetary and Social Policy. Not Revenue.
During the peak of the Financial Crisis in 2008 the Federal Reserve embarked on a program called Quantitative Easing. At the time it was called the “nuclear option.” Under this plan the Federal reserve purchases assets that are falling in price or have few if any bidders. This gives the sellers (generally banks) cash in exchange for an…
Read More2014 Minnesota Estate and Gift Tax Changes
Governor Dayton signed into law changes for Minnesota’s Gift and Estate Tax laws on Friday March 21st, 2014. Below is a link to the bill enacted (HF1777)( Pages 40 to 47 contain the estate and gift tax sections), summary of changes and a table showing it’s tax impact on various sized estates: http://http://wdoc.house.leg.state.mn.us/leg/LS88/HF1777.4.pdf 1) Annual…
Read MoreWhy the Fed’s Monetary Expansion hasn’t caused excessive inflation
Expanding the monetary base can and has caused significant inflation historically.The truth is that credit long ago became a larger factor in inflation than did actual money in circulation. While the monetary base has expanded, credit has contracted. So much so that the fed’s massive QE programs have effectively offset the loss of credit banks…
Read More2013 Minnesota Estate and Gift Tax Changes
Govenor Dayton signed bill MN HF0677.4 (click the higligted link to view the bill itself) into law May 23rd, 2013. There are numerous tax changes to state treatment of property tax, income tax and estate and gift Taxation. My notes and highlights are below: State Income Tax Update 1) Changes- the bill increase the income tax rate from 7.85%…
Read MoreThe Potential Impact of Rising Interest Rates on the Equity Risk Premium
This is a brief article on the impact of Monetary policy on treasury interest rates, which impact equity market valuations through the Equity risk premium.. The New York Federal Reserve released an article by Fernando Duarte and Carlo Rosa May 22, 2013 titled “Are Stocks Cheap a Review of the Evidence” supporting the notion that the low-interest rate environment, caused by the…
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