“Tony Soprano” and Your Weekly Update

This week, we review the continued upward trend in U.S. equities as well as the mounting pressure on income based investments. It’s an interesting market!

In addition, we take a moment to pay respects to recently deceased actor James Gandolfini, who so adroitly portrayed TV mob boss “Tony Soprano” in the HBO series, The Soprano’s. But while “Tony” would never put up with someone taking as much as 40% of his money, James (sadly) may have willfully allowed it.

As financial advisors we routinely assist clients in regard to their estate planning, helping them make sure their hard earned assets pass on to those they love. Sadly, the story of Mr. Gandolfini may be very instructive in learning what not to do if your goal is to minimize tax while maintaining your privacy.

We think you’ll enjoy the quick read. If you have questions, or just want to review your Estate Plan, feel free to call us.

Best always,
Lee and Jeremy

PS—Pass this along to friends, parents, and associates, especially to those over 50. Suggest they get a checkup from their doctor and their financial advisor (or a consultation with us if they don’t have one with expertise in this area).


This Week’s Quote:
“I find I have to be the sad clown: laughing on the outside, crying on the inside.”
~ Tony Soprano (played by actor James Gandolfini, 1961-2013)


JL Davis Thoughts This Week:

The recent death of renowned actor James Gandolfini from a massive heart attack at the young age of 51 is a sad loss to his family and to the entertainment world. But the resulting revelations about the massive tax his estate will pay as well as the personal details of his planning are unnecessarily troubling…especially because both could have been easily avoided with proper planning. How?

Six months to the day prior to his passing, Mr. Gandolfini signed his 17 page will, effectively insuring that at his death that same will would have to be filed with the local Probate Court—becoming a public document and allowing anyone who wishes to read it. Once filed after he died, the will indeed become part of the public domain and even available online (http://www.scribd.com/doc/151472900/James-Gandolfini-Will). It is hard to imagine that he would have wanted this. Had we been advising Mr. Gandolfini, we’d have made sure a competent estate planning attorney explained the option of a simple living trust, which could have kept all his wishes private while accomplishing everything his will does, and arguably more. Such a trust also avoids costly probate and the attendant high legal costs.

James’ 9 month old daughter Lilliana is being left 20% of his estate or about $14 million. The will stipulates that she’ll receive it in one lump sum at her age 21. Those of us who’ve seen the result of huge money dumped on young adults (almost always a recipe for frittering away the money) would have recommended a simple solution: pre-arrange a lifetime trust with the checks and balances needed to incent proper behavior, education, and conservation of the funds. At J.L. Davis, we’d have discussed the idea of carefully planning Lilliana’s access to the money as well as made sure proper institutional co-trustees and investment managers were identified. Interestingly, Gandolfini’s 13 year old son Michael will receive James’ house and land located in Italy in a testamentary trust, possibly subjecting the estate to Italian tax as well. This kind of money poses big risks for both kids in our view.

“Uncle” Sam, most likely not James’ favorite Uncle, will potentially receive as much as $30 million in federal estate tax , since he left 60% of his reported $70 million estate to his two sisters outright. We’re guessing he knew something about estate taxes because Mr. Gandolfini had wisely set up an Irrevocable Life Insurance Trust and funded it with a $7 million life insurance policy, thus effectively paying at least $7 million of estate tax for pennies on the dollar. At J.L. Davis, our regular estate planning reviews could have kept the insurance death benefits up to date, helping to preserve far more of his estate for the ones he loved. We might also have recommended lifetime gifts to the sisters, further reducing the tax.

It’s important to employ the wisdom of many counselors in estate planning in order to avoid mistakes. As well, it’s important not to delay. Sadly, Mr. Gandolfini’s untimely death reminds us of both.**

http://www.investmentnews.com/article/20130711/FREE/130719974
http://www.eonline.com/news/436137/james-gandolfini-s-will-revealed-leaves-bulk-of-70-million-estate-to-his-children
http://wills.about.com/od/celebrityestates/qt/6-Estate-Planning-Lessons-We-Can-Learn-From-James-Gandolfini.htm


Market Week: July 15, 2013

The Markets

Little news is apparently great news for stocks--that seems to be the takeaway from the week ended July 12. A week that was relatively light on economic data brought insightful minutes from the Federal Open Market Committee's (FOMC's) June meeting, encouraging follow-up comments from Fed Chairman Ben Bernanke, and a few pleasant quarterly earnings reports, all of which helped drive the Dow Jones Industrial Average, the S&P 500, and the Russell 2000 to new records.
Bond investors seemed to get a bit of relief last week as well; yields dipped by 14 basis points from the previous week's close


Last Week's Headlines

•The minutes released Wednesday from the FOMC's June meeting clarified the committee's thinking on its plan to taper bond buying in 2013. Comments indicated the committee felt further strengthening in the labor market was necessary before scaling back its economic support.

•Wednesday night, in comments made during a National Bureau of Economic Research conference, Ben Bernanke said that stimulus measures would remain in place for the "foreseeable future." This comment came as welcome relief to investors, and stocks surged on Thursday.

•Wholesale inflation was up 0.8% in June, according to the Department of Labor, the largest increase since September 2012. The increase was largely due to a more than 7% spike in gas prices.

•Oil futures marked the third straight week of increases, settling at $105.95 per barrel. This, combined with refinery problems that are causing worries about gasoline supplies, led analysts to forecast further increases in gas prices during the heavy summer travel period.

•The International Monetary Fund released a more subdued outlook for the remainder of 2013 than it originally forecasted in April. The current 3.1% growth forecast is the same as in 2012, and is a 0.2% drop from the April outlook. The IMF attributes its revision to slower growth in emerging markets and continued recession in the euro region.

•Fannie Mae released results from its monthly housing survey, finding that Americans expect both mortgage rates and home prices to increase. The agency said it anticipates these expectations will lead to an increase in home sales, as consumers rush to make purchases ahead of the expected increases. As if on cue, Freddie Mac reported that the rate for a 30-year fixed mortgage averaged 4.51% for the week ended July 11, the highest rate since July 2011.

•The American Banking Association reported that consumer delinquencies declined in 11 of 13 categories in the first quarter of 2013, pointing to an American populace that seems to be having more success at managing its debt. The reduction in bank card delinquencies was especially impressive, falling to its lowest level since June 1990.


Eye on the Week Ahead

This week will bring a lot more information with the potential to influence market movements. Data will provide insight into business, consumer, and manufacturing behavior. We'll also get a glimpse into whether expectations for higher mortgage rates may be impacting the homebuilding sector.

Key dates and data releases: retail sales, business inventories, Empire State manufacturing survey (7/15); consumer inflation, industrial production, international capital flows (7/16); housing starts, Fed "beige book" report (7/17); Philadelphia Fed manufacturing survey (7/18); options expiration (7/19).

Data sources: Includes data provided by Brounes & Associates. All information is based on sources deemed reliable, but no warranty or guarantee is made as to its accuracy or completeness. Neither the information nor any opinion expressed herein constitutes a solicitation for the purchase or sale of any securities, and should not be relied on as financial advice. Past performance is no guarantee of future results.

The Dow Jones Industrial Average (DJIA) is a price-weighted index composed of 30 widely traded blue-chip U.S. common stocks. The S&P 500 is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. The NASDAQ Composite Index is a market-value weighted index of all common stocks listed on the NASDAQ stock exchange. The Russell 2000 is a market-cap weighted index composed of 2000 U.S. small-cap common stocks. The Global Dow is an equally weighted index of 150 widely traded blue-chip common stocks worldwide. Market indexes listed are unmanaged and are not available for direct investment.

Prepared by Lee Davis** and Broadridge Investor Communication Solutions, Inc. Copyright 2013