Putting Money in Context

Seth Godin is a best-selling author that writes a blog we follow religiously.  His blog post today spoke to a money challenge that everyone deals with- how do you put money decisions in an appropriate context so as to make the best possible decision? 

Through relationship-based wealth planning we work with our clients to illustrate to them the tradeoffs when it comes to big money decisions.  Not whether to upgrade that stereo in your new car but when to retire, how to grow and exit your business, how to spend your assets, what goals are realistic, etc. 

We hope you enjoy Seth’s post as much as we did: http://tinyurl.com/cvyerf6

Indiana Inheritance Tax Bill Signed

Yesterday Governor Mitch Daniels signed the bill into law that will completely eliminate the Indiana inheritance tax after 2021.  Until then, the tax will gradually phase out by applying an increasing credit against any liability.

A higher $250,000 exemption (formerly $100,000) is now available for each Class A beneficiary retroactive to January 1, 2012.  Class A beneficiaries typically consist of lineal ancestors and lineal descendants such as a child, grandchild, parent, etc.  The new law additionally defines a child’s (or stepchild’s) spouse as a Class A beneficiary to receive this increased exemption.  This is a substantial benefit since a daughter-in-law or son-in-law previously only received a Class B beneficiary exemption of $500 and was then subject to more progressive tax rates.

As an example, an individual with two married children can potentially bequeath a $1 million estate free of Indiana inheritance tax ($250,000 to each child and $250,000 to each child’s spouse).  Previously, this same estate would have paid approximately $51,000 in Indiana inheritance tax.

This is a significant development in the wealth and estate planning arena, and our wealth planning team continues to monitor details of such activities to evaluate the impact on our clients’ personal wealth plans.

Indiana Lawmakers Pursuing A Repeal of the State’s Inheritance Tax

The Indiana Senate and House of Representatives recently voted to repeal, in its entirety, the Indiana inheritance tax (AKA state death tax) by the year 2022.  If signed by Governor Mitch Daniels, the legislation will also gradually reduce this tax over the next 10 years, leading to a complete repeal.

Previously, the first $100,000 left at death to each Class A beneficiary (children, grandchildren, parents, etc.) was received free of this tax.  If an individual with a $1 Million estate had 4 children receiving an equal portion of the estate, only $600,000 would be subject to the Indiana inheritance tax ($1 Million minus the $100,000 exemption for each of the 4 children).  If the bill becomes law, this exemption will increase to $250,000 per Class A beneficiary starting this year.  Thus, the $1 Million estate described above would be free of Indiana inheritance tax.

This is a significant development in the wealth and estate planning arena, and our wealth planning team continues to monitor details of such activities to evaluate the impact on our clients’ personal wealth plans.

Three Years Since Market Lows – What Was Key Driver of Returns?

March 9, 2012 provides us with an opportunity for reflection back to exactly three years ago.  On March 9, 2009, the S&P 500 index had declined to a low of 677 as a result of the 2008-09 financial crises.  At that point in time, the financial system was extremely fragile and many were concerned that we were heading into a depression.   Upon hitting this low, the S&P 500 index had declined 57% from its peak of 1,565 which was reached on Oct. 9, 2007.  Now for the good news - since that low, the S&P 500 has recovered substantially and earned a total return of 112%.  Over the same time period the Barclays Aggregate Bond Index has achieved a total return of about 23% and the typical money market fund has returned about 0.2%. 

February 2012 Market and Planning Update

THE WEIGHT OF WEALTH

We often hear from our clients and prospective clients that some of the toughest decisions they face have to do with responsibility surrounding their financial wealth. While it would be easy for someone unfamiliar with wealth to assume that it brings nothing but good things, this really isn’t the case in reality. READ MORE

MARKET COMMENTS & OBSERVATIONS

Stock markets around the world are off to an impressive start in 2012. Emerging Market Equities, which declined the most during 2011, have led the rebound with a gain of 17.8%. U.S. stocks, as measured by the S&P 500 Index, are up 9% for the first two months of 2012. Most bond categories, which provided the strongest returns in 2011, are showing much more modest returns so far this year. READ MORE