Making Referrals

Dear Garden State Trust:

I am a satisfied trust customer. Recently my brother-in-law asked me about who handles my investments, and I was unsure about whether you welcome referrals. I don’t know how much he has to invest—would that matter? Do you want such cold referrals, or are they just a bother? Would you keep the details of my own trust confidential?

—Protocol Needed

Dear Protocol:

We do welcome referrals from our existing clients. Don’t worry about whether the brother-in-law would be a good fit for our services, that’s part of our job.

Please feel free to tell your friends and relatives as much or as little about our service as you are comfortable with. We will tell them nothing. Every trust in our care is administered in complete confidentiality, only the trust creator and the trust beneficiaries ever learn the details.

Thanks for thinking of us.

Do you have a question concerning wealth management or trusts? Send your inquiry to

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

Companion Animal Planning

Dear Garden State Trust:

Can I provide something for my pets in my will? Didn’t Leona Helmsley set up a trust for her dog?

—Thoughtful Animal Lover

Dear Thoughtful:

Yes, Mrs. Helmsley created a $12 million trust to care for her pet, Trouble. However, the probate court subsequently reduced the size of the trust to $2 million, reasoning that a fund of that size should be plenty to keep Trouble in doggie treats and out of mischief. More recently, there has been press speculation that Karl Lagerfeld’s cat, Choupette, may become an heiress, as Lagerfeld died childless. (Details of his estate plans are not yet available.)

More and more states are changing their laws to permit pet owners to provide lifetime financial support for their companion animals. Alternatively, you may want to explore having more specific instructions identifying the caregiver for your pets, the standard of living to be provided, the schedule of vet visits, and the plan for financial distributions.

These are matters that you should explore with the attorney who handles your estate planning. Don’t feel embarrassed to bring up the subject of planning for your pets. As the Helmsley case shows, estate planning for pets is going mainstream.

Do you have a question concerning wealth management or trusts? Send your inquiry to

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

Retirement Readiness

Dear Garden State Trust:

I’m old enough to retire, but I’m not sure I’m ready yet. I think I have strong financial resources, but I don’t know if they are enough to make me financially independent for the rest of my life. Retirement seems so terribly uncertain to me. When should I make the jump?

—Standing on the Cusp

Dear Standing:

First off, your situation is quite common, your hesitation quite understandable. Many people are working well into their retirement years, longer than they expected to when they began their careers. In some cases, financial necessity is the driver, but in other cases, a few more years of work may result in a retirement that is substantially more comfortable, making luxuries affordable.

Do you get personal satisfaction from your job? Are the daily job stresses outweighed by your sense of accomplishment? If not, do you expect that to change?

Keep in mind that for most retirees, tax obligations go down, sometimes dramatically. So the financial resources that you’ve accumulated may go farther than you realize.

Finally, how is your health? How long did your parents live? That information may help you to estimate your own longevity. What are the things that you hope to do with the rest of your life? How much time might that take?

Sorting through questions such as these may help you to determine the optimal date for beginning your retirement.

Do you have a question concerning wealth management or trusts? Send your inquiry to

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

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

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

Mutual Fund Distributions

Dear Garden State Trust:

I bought shares in a mutual fund last summer and now I’m getting a distribution of capital gains from the fund. Why? I don’t want that. Do I have to pay taxes on it?

—Buyer and Holder

Dear Buyer:

Federal law requires mutual funds to distribute nearly all of their realized capital gains to their shareholders. Fund managers may try to offset gains with capital losses, but in this long bull market that may be easier said than done. When investors sell their shares in a fund the managers must sell assets to meet the redemption, and that may generate the realized gains.

This year it is expected that mutual funds will pay out roughly 10% of their net assets to their shareholders. This is not a function of how well the fund performed, it is a function of how many gains they realized during the year.  Assets held for a long period may show a gain even in a down market.

Yes, you will have to pay taxes on the capital gain. You may reinvest the distribution in the fund if you wish. The only exception to the need to pay taxes is if the fund is held in a tax-deferred retirement account. Then you won’t owe anything until withdrawals begin, and they will be taxed at ordinary income rates.

Do you have a question concerning wealth management or trusts? Send your inquiry to

(December 2018)
© 2018 M.A. Co. All rights reserved.

Charitable IRA Gifts

Dear Garden State Trust:

I’ve heard of something called a “charitable IRA rollover.” What is that?

—Generous But Prudent

Dear Generous:

Those who are older than 70½ are permitted to arrange for a tax-free transfer of up to $100,000 per year from their IRA to the charity of their choice. This is the technique you are referring to, although strictly speaking it isn’t a “rollover.”

The other thing that those of that age must do is take required minimum distributions (RMDs) each year from their IRAs. These two things can go together. A direct transfer to a charity from an IRA counts toward the RMD for that year. Some retirees simply direct their IRA custodian to send the RMD to a charity, without worrying too much about the amount.

There’s no tax deduction when one does this, because there is also no inclusion of the distribution in taxable income, which would be the usual case with an RMD. Avoiding income inclusion is more valuable than getting a tax deduction. For example, it may avoid additional income taxes on Social Security benefits that otherwise could be triggered by an RMD.

This year many fewer taxpayers will be itemizing, thanks to the doubled standard deduction. For these taxpayers, arranging for a transfer to charity from an IRA will have better tax results than simply making a gift of cash in the same amount.

Do you have a question concerning wealth management or trusts? Send your inquiry to

(November 2018)
© 2018 M.A. Co. All rights reserved.


Dear Garden State Trust:

Which is better, the traditional IRA or the Roth IRA?

—Future Retiree

Dear Future:

There is no simple answer to your question, unfortunately.  The traditional IRA offers an immediate income adjustment and savings in federal and state income taxes.  Taxpayers who are short on cash may need the deduction to be able to make a full $5,500 IRA contribution ($6,500 for those 50 and older).  The income adjustment also may affect eligibility for other tax credits.

The downside for the traditional IRA is that all retirement withdrawals are fully taxable as ordinary income, even long-term capital gains.  If one is in a lower tax bracket in retirement, this may not be a concern, but future tax brackets are unpredictable.  What’s more, distributions from a traditional IRA are required once one reaches age 70½. Taxable IRA distributions also may increase the taxes on one’s Social Security benefits and one’s Medicare premiums.

These potential tax traps are avoided with the Roth IRA, as all distributions will be fully tax free after age 59½, provided only that the account has existed for five years.  There are no required minimum distributions.  A Roth IRA may be an especially good choice for a bequest, as tax-free distributions may be spread over the beneficiary’s lifetime. (Estate taxes will be due on the Roth IRA in very large estates.)  The difficulty with the Roth IRA is that the hit to one’s cash flow is more severe without the current deduction.

These tax considerations, although significant, are less important than making a full contribution to one or the other IRA form early in one’s career.  The more time that one is invested in the market, the better the odds of having a financially secure retirement.

Do you have a question concerning wealth management or trusts? Send your inquiry to

(October 2018)
© 2018 M.A. Co. All rights reserved.

Stock Markets

Dear Garden State Trust:

How about that stock market? Can it last?

—Happy Investor

Dear Happy:

Higher stock prices are driven by two factors: increasing earnings, and increasing investor speculation. The good news for investors is that the stock market records set in August were grounded upon increased earnings and a strongly growing economy. We do not seem to be in a bubble.

Second-quarter GDP growth was revised upward, to a strong 4.2%, by the Commerce Department. The third quarter growth looks likely to be over 4% as well. Second-quarter after-tax profits rose 16.1%, the largest year-over-year gain in six years.

Sales of the S&P 500 companies grew by 9.5% in the second quarter, leading to a 24.8% increase in earnings. A strong economy translates to increasing consumer confidence. The Conference Board reported in August that its consumer confidence index reached 133.4, the highest reading since October 2000.

Interestingly, as a result of the booming economy federal tax revenue has gone up, not down, following enactment of the Tax Cuts and Jobs Act last year. The Congressional Budget Office reports that income and payroll tax collections rose 5% through the first nine months of this fiscal year, a whopping $105 billion. This more than offset the decline in corporate tax collections of $66 billion. Overall tax receipts are up 1%.

However, this torrid rate of growth is expected to slow. The current bull market is a long one by historical standards. Eternal vigilance is the price of owning a stock portfolio.

Do you have a question concerning wealth management or trusts? Send your inquiry to

(September 2018)
© 2018 M.A. Co. All rights reserved.


Dear Garden State Trust:

I’m turning 65 this year and thinking about retirement. How long should I plan for?

—Anxious Pre-Retiree

Dear Anxious:

According to the latest data from the National Vital Statistics Reports (August 2017, reporting on 2014 experience), a male age 65 should expect to live 18 more years (to age 83) and a female 20.6 years (to age 85.6). Half of 65-year-olds will die sooner, half later.

That tells us nothing about you, of course. How’s your health? Your family history? You’ll want to take these into account, and you probably should plan for longer than you expect to live.

Here’s another way to look at the numbers from that report. For every 100,000 men, how many reach age 85? 35,518 men do. For every 100,000 women, 49,225 reach age 65. Mortality increases precipitously after that, as shown in the table below.

At AgeMenWomen

Source: National Vital Statistics Report, Volume 66 Number 4, August 14, 2017

Does that help answer your question?

Do you have a question concerning wealth management or trusts? Send your inquiry to

(July 2018)
© 2018 M.A. Co. All rights reserved.

Marital Trusts

Dear Garden State Trust:

Now that the federal estate tax exemption is over $10 million, do I still need a marital deduction trust in my will for my wife?

—Concerned Husband

Dear Concerned:

Most likely, yes. If your current will includes a trust for a surviving spouse, you probably will want to keep it.

A trust for a surviving spouse provides important asset management benefits that can be vitally important to a person who is entering widowhood. For most affluent families, a marital trust is the way to go.

Blended families are a special case for which provision may be made for a spouse and children from an earlier marriage. The tool is called the Qualified Terminable Interest Property Trust, or QTIP trust. Even if the marital deduction allowed for the QTIP trust is not needed, securing the inheritance for all beneficiaries may be an important enough consideration to employ the trust in wealth management.

If you live in one of the states that still imposes an estate or inheritance tax, you may want a marital deduction trust even if the estate isn’t large enough to incur a federal estate tax.

Finally, keep in mind that the larger exemption expires after 2025.

If you are married and don’t yet have a will, make an appointment to see an estate planning attorney soon. Your spouse will thank you for it.

Do you have a question concerning wealth management or trusts?  Send your inquiry to

(July 2018)
© 2018 M.A. Co.  All rights reserved.