Family-focused advisors offer personal touch

Editor’s note: President and co-founder of Paraklete ® Financial, Inc., Susan Tillery CPA, PFS, CFP, was recently interviewed by Reuters concerning the rising demand for financial services.

(Reuters) – Baltimore financial adviser Lyle Benson describes his work as that of “Personal CFO” or chief financial officer.

His boutique financial planning firm manages money, but it also does everything from bill paying to estate planning, even assisting clients’ adult children negotiate terms for their first automobile purchase or mortgage.

“We coordinate and work with all of our clients’ advisers” including attorneys, accountants and insurance agents, says Benson. “We make sure everyone is on the same page and working together.”

The services necessary to quarterback a client’s complete financial life, often referred to as family office services, are not just for the ultra-rich. Benson says anyone with investable assets of more than $2 million can benefit from such comprehensive oversight. At his firm, those services are used by more than 30 percent of clients. Please click here to continue reading

Debt & Moderation

I typically begin a posting with a quote. Today’s posting on the need for, and the responsible use of debt, provided several challenges in the quote department. One challenge is current popular opinion which states that all debt is Biblically and morally wrong. The second challenge, and perhaps very revealing, is that quotes on the responsible use of debt, outside of economic circles, is very limited.

In our practice we use debt with our clients in a variety of ways: asset protection, short term cash flow needs, and as an investment. The ‘true north’ in the application of debt in financial planning is moderation. Moderation as a quotable phrase provided a more substantial harvest. [Read more…]

The Buck Stops Here!

The Recession of 2007 – 2009 generated a great deal of blame and finger pointing. In my mind I visualize the recession as a “multi-car accident” with everyone fleeing the scene and pointing their fingers at the “other guy” as the responsible party. No one hung around to be accountable.

Actually in U.S. history, no one is more accountable than President Harry S. Truman, the haberdasher from Independence, Missouri. He inherited the “multi-car accident,” World War II, the Cold War, and global inflation. But on his desk was a reminder of a strong truth: “The Buck Stops Here.” Many do not know that prisoners in the Federal Reformatory at El Reno, Oklahoma, made this sign. On the reverse side of the sign are the words “I’m From Missouri.” [Read more…]

Unbridled Optimism!

I must confess I am an unbridled optimist. I have always been the glass runneth over type, as opposed to a half full or half empty—kind of person. At social events, I will not shy away from the “doom and gloomers.” I usually confront them with a positive comment. The conversation goes something like this: “I can’t wait till so and so is out of office because they are ruining the country.”

My response is, “the only way to ruin a country is for its citizens to abandon it.” William James said, “Pessimism leads to weakness, optimism to power.” Dietrich Bonhoeffer felt that “The essence of optimism is that it takes no account of the present, but it is a source of inspiration, of vitality and hope where others have resigned; it enables a man to hold his head high, to claim the future for himself and not to abandon it to his enemy.”

Here is more good news to confront the “naysayers.” The IRS has just released the “Fall 2013 Statistics of Income Bulletin.” And the news is good—go figure. For tax year 2011, taxpayers filed 145.4 million individual income tax returns. This is an increase of 1.7 percent from tax year 2010. Even better, the adjusted gross income reported on these returns is up 3.5 percent from the previous year. And the icing on the cake is taxable income for 2011 rose 4.4 percent. And knowing the taxpayers predilection for understating income and overstating expenses, I would say the news is even better.

So, has the U.S. government rescued it citizens? I would say, “No.” It’s the citizens of the United States that not only rescued themselves but saved the planet during 2007 – 2009. More particularly, it was the U.S. small business owner, who regardless of economic circumstance—famine, war, or recession—is able to make a living for themselves and their families.

If you are looking for optimism to begin the New Year, then look no further than your neighbor and all those who embrace the “can do” attitude of America. And the next time bad news is heralded at an event, share some good news. Automobile sales are up. Housing sales are up. We have a surplus of oil and we are about to export natural gas. Just being an American is cause for optimism.

Home Sweet Home

Once again the ‘Good ol’ US of A’ has weathered another storm. The recession is behind us and the economy is again moving forward. The employment numbers are rising, the stock market is doing well and home prices are recovering.

Regarding home price recovery, I have just finished reviewing Household Wealth in the U.S.: 2000 to 2011. I do enjoy statistics, and this brochure by the Census Bureau is chock full of fun factoids. An item of note, for the majority of U.S. households, home equity continues to remain their single largest asset

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The Right Perspective of the S Election

There are many questions circulating regarding the S election for a corporation. I always welcome the opportunity to put into writing the financial planning issues, which an S election creates. I also want to address the down side, too. Let’s begin with what an S corporation is: an S corporation is a corporation treated for tax purposes, as a pass-through entity. In a pass-through entity all items of income and expense “pass through” to the shareholder: this is the genesis of the problems in planning with an S corporation.

I do want to acknowledge that from a planning perspective, S corporations do fit in a limited set of facts and circumstances:  the need for a corporate veil to provide asset protection and the “pass through” of losses to the shareholder’s form 1040. Frankly, in 20 years no one has said to me, “I really need some pass-through losses on my 1040.”

Distributions, also called pass-through income, from an S corporation have been under IRS scrutiny for several years. Why is this? S corporation pass-through income enjoys an employment tax advantage. This advantage was created in Revenue Ruling 59-221, which held that a shareholder’s undistributed share of S corporation income is not treated as self-employment income.

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Small Things Count!

Today, we are going to start with a word study. A little etymology always livens up a party. According to West’s Encyclopedia of American Law, “De minimis” is an abbreviated form of the Latin phrase maxim de minimis non curat lex, which means, “the law cares not for small things.” This is a legal doctrine by which a court refuses to consider trivial matters.

While De minimis fringe benefits are excluded from an employee´s income and wages, they are deductible by the employer. But the value of the de minimus benefit is not subject to withholding of income, FICA or FUTA taxes.

As you might expect, the IRS is hesitant to specifically classify an item as a de minimis fringe benefit. In the current economic environment, this classification is becoming increasingly relevant as employers think of new and interesting ways to keep employees happy without incurring the costs of raising salaries.

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