Market Volatility

Dear Garden State Trust:

Yikes!  What happened to the stock market last fall?  Should I be getting out of the market now?

—Dizzy and worried

Dear Dizzy:

The economy remains sound.  The labor market is strong, unemployment is low, retail sales were generally up during the holiday season.  We may have had GDP growth of 3% or more in 2018—if so, it would be the first time in over a decade.  Few economists are predicting a recession in 2019, which suggests staying in the market.

Having said that, stock prices have become more volatile.  In December they were rocked by uncertainties over the effect of tariffs on global trade, the consequence of another interest rate bump from the Fed, and the ongoing polarization of national politics.  Price/earnings ratios of some companies have been quite high by historic standards.  Few market observers are predicting a reduction in market volatility.

If increased stock price volatility is keeping you up at night, then yes, perhaps you should consider a change in investment strategy.  Portfolios may be structured to reduce the risk of loss.  But the tradeoff is a lower upside opportunity.  It all depends upon your time horizon and your risk tolerance.

Before you make any move, a consultation with an investment professional, such as ourselves, about your holdings and your investment goals would be a good idea.

Do you have a question concerning wealth management or trusts? Send your inquiry to contact@gstrustco.com

(January 2019)
© 2019 M.A. Co. All rights reserved.

Designate a Destination with a Travel Trust

As the holidays wind down, many of us are already starting to look back with fondness at family traveling long distances to see and bond with one another.

We may not all look forward to getting on an airplane, or car, or train, but we generally look forward to what’s at the end of that day of travel: The destination.

Some of the time, everyone gathers around a member of the family such as a parent or grandparent, and it is difficult to justify the travel expense otherwise. Some of the time, the expense of travel limits some family members from participating, and so a parent or grandparent may help subsidize that cost.

Is there a way to make it easier to reach that destination using a trust?

Yes. A trust may be created with a travel provision to provide that the funds could only be utilized for travel by the beneficiaries. Here’s a fictionalized example:

Jeanette’s parents came to America when she was a child.  The family kept in close touch with their European relatives, and two of Jeannette’s children settled there. 

 To facilitate family reunions, one year Jeannette announced that she would provide $25,000 every year to help defray travel expenses.  Some years the get-together was in the U.S., some years in Europe, but each year the $25,000 would cover the transatlantic airfares plus incidental expenses for the extended family.  The reunions became so important to the family that Jeanette built them into her estate plan.

 At her death an irrevocable trust was created with the express purpose of funding family travels.

Though it was one part of the overall plan, this additional provision would ensure that this tradition continues for many years to come.

Why not just give them the money, and let them decide?

The largest reason to favor a trust over a direct gift is to direct the inheritance toward creating a specific experience or memories, and there are many ways travel can be a factor. Your impact would continue though the experiences directly tied to your wishes.

Such experiences could include creating the opportunity for children to connect with their heritage or religion, study abroad, or even promote doing philanthropic work in another country. Another great use of leaving inheritance for travel could be to provide for travel expenses if the family members are separated into different states or countries, designating a way to have family reunions, relieving the burden of paying for flights and tension that comes with it.

Perhaps your beneficiaries are workaholics, and you want to make sure they reduce their anxiety levels and take a break so you designate places you’ve been inspired by —such as the Grand Canyon— and a fund that encourages them to share in that experience.

Can the trust designate the use of funds toward other goals?

That depends entirely on the values of the trust creator, and what is set forth in the terms of the trust. Trusts are created so that the desires and values of the creator are repeated. Most trusts don’t have restrictions placed on them at all, but some suggest the funds can only be used for specific purposes to ensure they create positive change for the beneficiaries. This wouldn’t have to be travel — more conventional examples include categories such as education, or a home purchases.

There are a variety of imaginative and appealing ways that one might be able to provide for one’s heirs. We can provide some ideas to achieve different goals, and would be happy to discuss how a trust could help.