August 5, 2008
 

Articles on
Somerset's Wealth Management Web Site

Surviving the Estate Tax with Survivorship Life - Despite Scheduled Repeal, Death Levy Could Surprise in 2011
Under current law, the first $2 million of an estate is exempt from the federal estate tax in 2008. The exemption rises to $3.5 million in 2009. These amounts are probably generous enough for most families to avoid the estate tax altogether until 2010, the one year in which the tax is scheduled to be eliminated. But unless Congress changes the law, the estate tax will be back in 2011 with a $1 million exemption amount. This means that families who never expected to be liable for the estate tax may suddenly find the opposite is true. Read more...

Get Schooled on Saving for College
A record 3.3 million students are expected to don caps and gowns this year and collect their high school diplomas. Predictably, this mass of educated humanity is crowding the college admissions process. For many applicants, even top students, the race to get into their colleges of choice has become the race to get into any college. Read more...

For the full version of these and other articles, visit the Wealth Management section of Somerset's web site.
 
  • Here are some interesting statistics drawn from Met Life Mature Market Institute.  They did a survey of 56 to 65 year olds who are thinking about retirement. 49% believe that their income needs will drop by half after they retire. Our experience shows us that most people want to maintain their current income levels. 43% believe that they can withdraw 10% or more per year from their retirement accounts without ever exhausting their capital. Most financial planners suggest a draw down rate of 4% being the maximum that young, healthy retirees should be taking from their investment accounts each year. 38% of those surveyed believe that long-term care is provided by health insurance, Medicare or disability insurance.  Medicare has very limited long-term care benefits, and only if you preceded a long-term care stay by a hospital stay. We are not aware of any health insurance or disability insurance programs that provide long-term care. An individual long-term care policy is required. 56% of those surveyed believe that longevity risk is the greatest financial risk for retirees. They are correct. Having said that, 60% of those surveyed believed that at age 65 they would only have a 25% or less chance of living beyond age 85. The reality is that there is a 50/50 chance that once you reach age 65 you will make it to age 85.
     
  • Any offshore investment that indicates that it can avoid paying income taxes to the United States is a scam, is illegal or both. Nonetheless, many Americans have believed some of the promoters from Switzerland, Liechtenstein, and in some cases, the Caribbean, especially the Caymans, with the government running significant deficits, they are now doing everything they can to collect money. The Senate Finance Committee has been conducting some very public hearings about this issue for the past few months, and it wouldn’t surprise us to see some laws enacted with much better “teeth” to them than what is currently on the books.
     
  • At the end of June 2008, the Consumer Price Index was up 5% for the previous 12 months.  In the 12 month period ending June 30, 2007, inflation was up 2.7% (Source:  Department of Labor). Much of the increase from 2007 to 2008 was driven by higher energy and food prices. All of us paid more at the pump, and of course, increased energy costs also found their way into different aspects of the economy.  With the recent abatement of oil prices, we should see some adjustment in the price of gasoline, etc. However, much of the higher fuel costs are here to stay (Source:  Department of Labor).
     
  • While the closure of IndyMac Bank certainly created a lot of headlines and caused people to examine their own savings & loans and banks, it is important to put it into perspective. So far this year, seven banks have failed and been taken over by the FDIC. This is the highest number of bank failures to occur since 2002. There are 90 banks currently listed as “problem banks” by the FDIC.  In the last “banking crisis,” during 1987 through 1991, a total of 1,901 banks and savings & loans failed in the U.S. Although this is around one per day during that period of time, it pales in comparison to the 9,096 banks that went under during the three and a half years that followed the 1929 stock market crash (Source:  FDIC).

Somerset's Wealth Management Team is pleased to provide this reprint with permission from ProVise Management Group, LLC, a SEC Registered Investment Advisor

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Larry Dykes, CLU, ChFC, AAMS
317-472-2112
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317-472-2174
 Valerie K. Brennan, CPA, PFS*
317-472-2266
Steven T. Dum, CLU, ChFC, CFP*
317-472-2105


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