Join Tom for a CE Event on July 25!

On July 25, Financial Planning Advocate, LLC will be hosting a CE event with Tom Tillery as the presenter and will address the subject of Updates in Estate Planning: A Review of 2014 Changes and Their Impact on Clients’ Estate Plans.

Topics to be addressed will be: an overview of the estate planning process: regulatory updates on the DOMA decision and it’s continuing impact on the personal financial planning process; standalone retirement trusts and asset protection; continued use of GRATs; the use of discounts for lack of marketability in estate planning. The Webcast will be held on Friday, July 25, 2014 at 1:30 PM EDT. The course is approved for one hour of CPE and CE. To register for the class, please email us at Virtual Seating is limited.

Having your cake and eating it too!


Please forgive my abuse of the popular English idiom “You can’t have your cake and eat it too.” I have discovered over the years that in estate planning one may indeed have “your cake and eat it too!”

I received a telephone call from an adviser in the mid-Atlantic region. The adviser has a client who was a German national and became a U. S. citizen through marriage. Both the client (former German citizen), and the client’s spouse, are successful and well established in life. Both spouses are in their early 30’s and have young children!

The former German national’s parents are wealthy and an inheritance is inevitable. The adviser’s conundrum is what to do for estate planning. The clients already have a taxable estate, and the receipt of an inheritance only compounds their situation. Read more…

Snake Oil!


There are many benefits that come with age. As we grow older our palate becomes broader and we have a deeper appreciation of good food. We are also able to recognize charlatans easier, as our wisdom grows. Since charlatans are not the brightest bunch, their schemes tend to be repeated. Today’s posting is in response to a request from a CPA firm in the Southeast. A charlatan attempted to perpetrate fraud on one of their clients with an old “technique” that does not quite rise to the level of fraud or criminal intent, but it comes pretty close to it.

Snake Oil – noun: something that is sold as medicine but that is not really useful or helpful in any way.

This concept is being promoted by a large life insurance company. The premise is this: the registered representative/insurance broker can help your children qualify for student aid for college by making you (the parent) appear to be impoverished, or in financial need. All of this ”magic” may be accomplished by the refinancing of your home and “cashing out the equity” and “investing it” in a brand new life insurance policy. And while you are at it, let’s take you from a 15 year mortgage to a 30 year mortgage and use the additional cash flow (lower mortgage payments) to use as life insurance premium payments. There is more, a great deal more, however, I do believe that I have made my point. Read more…

Are you providing Multidisciplinary Advice


What do the following questions have in common?

“Our son and his wife are making an offer on the purchase of a new home.  What is the most effective way to help them with the down payment?”

“I am about to sell my interest in a jointly owned business to my partner; we are considering a payment structure and the release of a personal guarantee to our bank.  What issues should we be aware of in this transaction?”

“My wife and I plan to retire within five years: have we saved enough money to be financially independent and what do we need to do to prepare for this transition?”

Time’s up! The answer is that each of these questions—at their core—is multidisciplinary in nature. They each require input from an attorney, financial adviser and tax professional.  However, a singular response from one of the disciplines would be woefully inadequate, or prohibited by regulatory mandates. Allow me to illustrate: Read more…

The American Dream


I strongly believe that home ownership will continue to be a big part of the American Dream. Anyone who heard me speak has picked up on a ‘Tilleryism’ — lease rhymes with fleece. For a variety of reasons I believe that for the majority of individuals property ownership is the way to go: it builds character, creates communities and establishes credit. And in today’s extremely low interest rate environment, mortgage payments are often lower than lease payments.

Today I received the following email:

“Our son and his wife [Millenials I might add] are looking at buying a house. They are about to sign a contract on one they just found. What is the maximum gift allowed without paying gift taxes for children? Grandchildren? Can that be used for down payment on a home? Please advise. Thanks!” Read more…

Pennies from Heaven & Inherited IRAs


Recently an adviser sent me the following email. The email had an attachment that indicated that a named beneficiary was to receive a taxable distribution as a result of the death of an IRA owner. The amount was small – relatively speaking – $38,000. The adviser’s question was:

“Tom, it looks like this company is going to give this guy a 1099-R on the death benefit.  Can that be avoided if he transfers the funds to another institution as an inherited IRA (option C) before year end?”

And the short answer, which I studiously avoid, is “Yes.” However, there is much more going on in the facts and circumstances which I do want to visit. The beneficiary has a singular opportunity which is now being offered to him, the waiver of the 10% early withdrawal penalty. A distribution made to a designated beneficiary of an IRA, after the death of the IRA owner, is not subject to the 10% premature withdrawal penalty, regardless of the age of your beneficiary: in this instance, a savings of $3,800. Read more…

Been to any good “events” lately?


Oh my, there must be something in the water – nationwide, or perhaps just the Piedmont region. Recently while visiting our offices in Washington, DC and Raleigh, NC, I had the opportunity to opine on Event Liability Insurance (ELI) with several of our clients. In each case the fact patterns were very similar.

One client had invested heavily in income producing real estate. There were a variety of properties in different locations; all geographically diversified (diversification is an excellent risk management technique). Additionally, limited liability companies (LLCs) were created for each of the properties, and there was even a master LLC as a member for each of the LLCs holding the real estate. Finally, each of the properties had General Liability Insurance coverage as did the Master LLC, and the client’s trust was named as an additional insured. Our office had done a very good job on managing the risk associated with income producing real estate. Read more…

Making a difference


This past week I was visiting Ashley Thiem, CPA / PFS in our new Paraklete® Financial, Inc. office in Charleston, SC. As we were making the rounds, I continued to be amazed by the number of individuals, and advisers, who want to retain the services of our firm. There is a definite desire on the part of consumers to engage a financial planning firm that does not manage assets or sell products.

One of the venues we visited was a large manufacturing operation. The business had been in the family for several generations and the next generation was about to “step up to the plate.” Their concerns were business continuity planning, income tax savings and better cash flow for the company—not that there wasn’t enough cash flow; but rather there was too much, which resulted in higher income taxes. Read more…

Boot Camp

Boot CampWeb

Well it’s that time of year again. Presently at the firm we are transitioning from the Income Tax Review season into the CPA / PFS Live Review season. This tax season was particularly difficult for our clients and their advisers. The reality of the reinstatement of the Personal Exemption Phaseout and the limitation on Itemized Deductions became quite apparent to many of our clients. Also, the Net Investment Income tax, created to support the Affordable Care Act, gave shocking results to our clients, to say the least! Long story short, taxes are higher for almost everyone. Read more…

Stock pickers, market timers, and crystal balls


“The worst months to invest money in the stock market are October, January, and May. The others are February, June, November, March, August, April, September, July, and December.

Mark Twain’s sense of humor is reflected in his quote on investing – unfortunately, his investing experience was far from humorous. While his writing was very profitable, he lost a great deal of money as a result of his attempts at market timing and security selection. His initial foray into investing resulted in bankruptcy. Read more…