Quote for the Day: Lincoln has Something to Say about Today

From Lincoln’s Address before the Young Men’s Lyceum of Springfield, Illinois, a speech well worth reading in full:

At what point shall we expect the approach of danger? By what means shall we fortify against it? Shall we expect some transatlantic military giant to step the ocean and crush us at a blow? Never! All the armies of Europe, Asia, and Africa combined, with all the treasure of the earth (our own excepted) in their military chest, with a Bonaparte for a commander, could not by force take a drink from the Ohio or make a track on the Blue Ridge in a trial of a thousand years.

At what point, then, is the approach of danger to be expected? I answer, If it ever reach us it must spring up amongst us; it cannot come from abroad. If destruction be our lot we must ourselves be its author and finisher. As a nation of freemen we must live through all time, or die by suicide.

 

I’m a Fan, of Both Nino and Kagan

Scalia was possibly the best writer on the Supreme Court–ever. Kagan, almost his political polar opposite, will likewise rank as one of its best writers. These are generous, kind thoughts and a worthy example to emulate when we speak of someone we may otherwise disagree with.

Quote for the Day

“An often-neglected requirement of federal crop insurance is that the insured producer maintain complete records of crop production, harvesting, disposition, and inputs.  Farm clients should be advised that they are to keep records of production and marketing for each crop by insurance unit.  These records are an extremely valuable asset to the modern row crop operation, as records of production may be needed to validate farming practices or the production history of an individual farm or farm operation.  The failure to provide these records when requested can lead to claim denial or revision of insurance guarantees, impacting the level of protection a policy provides the policyholder.”

Grant Ballard, “Farm Clients & Federally Reinsured Crop Insurance: What Clients Need to Know,” WealthCounsel Quarterly, July 2015

Quote for the Day

A lot of wisdom in this quote and just one more reason to consider leaving your children’s inheritance in trust rather than giving it to them outright:

“Those who inherit fortunes are frequently more of a problem than those who made them.”

 Congolese Proverb

Quote for the Day

Need a good story for a speech? Here’s one, courtesy of Bessemer Trust’s Steve R. Akers speaking at a CLE seminar I attended today at the Utah Bar in Salt Lake City. He got the story from Conrad Teitell, who spoke at this year’s Heckerling Institute (an annual estate planning conference) in Orlando:

A son wanted to get his mother a special gift for her birthday. He decided on a parrot to keep her company. He called his mother later to ask how she liked her birthday present. She said, “It was delicious. My friend Louise and I got together and . . . ” The son exclaimed, “Mother, that was a rare parrot, taught by an interpreter at the United Nations to speak 14 languages.” His mother quietly responded, “He should have said something.”

Have a nice day.

Quote for the Day

“A trust can be an effective foundation for asset protection planning. Trusts have been utilized for centuries as a means of conserving and protecting property for the beneficiaries of the trust. However, most domestic trusts do not provide protection from creditors. The typical revocable living trust, where the trustors are the lifetime beneficiaries and retain the power to revoke, amend and invade the principal of the trust, provides no protection whatsoever against the creditors of the trustors. Accordingly, absent specific legislation to the contrary, self-created or so-called self-settled trusts are ineffective for asset protection planning purposes.”

“A Primer On Asset Protection Planning,” Jeffrey Matson and Jonathan Mintz, WealthCounsel Quarterly, April 2015

Quote for the (Business) Day

The headquarters of General Motors Corp. stands in Detroit, Michigan, U.S., on Monday, March 30, 2009. U.S. President Barack Obama's administration forced GM Chief Executive Officer Rick Wagoner to resign after concluding the Detroit-based automaker hadn't done enough to prove it can survive amid the worst U.S. auto market in 27 years. Photographer: Jeffrey Sauger/Bloomberg News

Professor, attorney, and author of Business Planning: Closely Held Enterprises, Dwight Drake has some useful advice for would-be entrepreneurs:

“When the entrepreneurial bug bites a group of charged-up business owners, they usually are focused on making the business succeed, maximizing revenues, and minimizing expenses. They have little interest in discussing potential breakups, the risks of the three big “Ds”— death, disability and divorce — and all the other issues that should be addressed in a well-structured buy-sell agreement. A good advisor will help the owners look at the big picture and consider the entire life cycle of the business.

“Business owners need to prepare early for the day when they will part company for whatever reason. At some point down the road, they are each going to want to or have to cash out their equity interest in the business. Somebody is going to leave the business, die, become disabled, or experience a messy divorce. Plus, the owners should acknowledge the simple reality that no matter how good they feel about one another going into the enterprise, tough business decisions may create friction along the way. Friction often leads to a buyout or, worse yet, a legal blowup.

“Potential separation issues are best addressed in a calm, planning-oriented atmosphere, not at the point of crisis. Preferably, the job should be done at the outset of the business when all parties are making important decisions to devote capital and energy to the business enterprise. Encouraging clients to collectively think about the key issues up front often will bring to the surface diverse expectations that may surprise everyone. It usually helps to have these expectations out in the open before irrevocable commitments are made to the venture. Too often, the parties plunge ahead with little regard for the consequences of their inevitable separation down the road.” (emphasis added)

Consider yourself warned. (It’s not a large leap to apply this advice to estate planning as well.)

Quote for the Day

One of 12 reasons Edwin P. Morrow III, J.D., LL.M. gives for keeping assets in a trust rather than distributing them outright to beneficiaries at death, from his outline, The Optimal Basis Increase and Income Tax Efficiency Trust:

A trust allows the grantor to make certain that the assets are managed and distributed according to his/her wishes, keeping funds “in the family bloodline”. Sure, spouses can agree not to disinherit the first decedent’s family, but it happens all the time – people move away, get sick and get remarried – the more time passes, the more the likelihood of a surviving spouse remarrying or changing his or her testamentary disposition.

Quote for the Day

From the article “Communicating an Estate Plan to Heirs,” posted at Successful Farming at Agriculture.com:

“For some children, money equals love. Therefore, if they receive fewer dollars, they assume they are loved less. With farm distribution, there are times when the farming heir appears to get a financial advantage on paper. Sometimes this may be very legitimate if the farming heir has worked hard and helped to grow the farm. Other times, the truth is that person has just hung around waiting for the farm to fall into his or her lap. Know the difference and be honest with that in your planning, and it will be much easier to explain to all.”

Quote for the Day

Shot:

“For clients who are planning to stay in their homes, a reverse mortgage can be a good source of needed cash flow. This allows them to tap their home equity and supplement their retirement income.

“Additionally, most reverse mortgages are Home Equity Conversion Mortgages (HECM), which are non-recourse loans insured by the FHA. If the balance outstanding exceeds the value of the property, the government covers the difference and the homeowner will not be evicted from his or her home.”

Chaser:

“Fees and costs associated with many reverse mortgages are common and in some cases can be pretty steep. There can also be servicing fees during the life of the loan. They will be included in the amount owed when the mortgage comes due.

“Many reverse mortgages have variable interest rates. The amount you owe could increase significantly if inflation returns and interest rates rise drastically from current low levels. Note that an adjustable rate can work in the borrower’s favor as well in terms of allowing them to borrow funds both at closing and at a later date in some cases.

“The interest on a reverse mortgage is deductible, but only to the extent that it is actually paid. Most reverse mortgages are never repaid, so there is no interest deduction unless the borrower actually writes a check for payment, of which some will be interest and principle. The limit to which an interest deduction can be taken is up to the repayment of $100,000 in principle. If the loan is paid off after the death of the borrower, than whoever pays off the loan—generally either the heirs or the estate—can deduct actual interest paid.

Both quotes are from Reverse Mortgages: When They Make Senseby Roger Wohlner

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