Category: Wisdoms

Thanatology Makes Us Think

I am honored that Marian University accepted me into the Masters of Thanatology program this past Fall. “Thanatology? What is that?” is the common remark I hear when I tell people of my new adventure.

A thanatologist is a designated thinker about death. They help people die better than they otherwise might.

I believe every estate-planning attorney is a thanatologist. But we, like many of our clients, allow the underbrush of life, such as tax and probate, to cover up what we really face — our mortality.

In his book, A Commonsense Book of Death: Reflections at Ninety of a Lifelong Thanatologist, Dr. Edward Shneidman sets out 10 Criteria for a Good Death (page 132). Of the 10 criteria, two directly relate to estate planning.

First, it is common sense and good manners to complete the administrative chores associated with death, specifically to have a certified will and, if possible, a living trust. “Every responsible adult should assist his loved ones by doing these thanatological chores.”

Dr. Shneidman refers to the second criteria that directly relates to estate planning as “generative.” He states that a good death has a quality of being generative because, living between your parents and grandchildren, you take pains to relay family stories to the younger generation before you die.

Please consider taking on this thanatological chore of making your estate plan. Take the time to pass on family stories.

Stephen B. Yim, Attorney at Law
2054 S. Beretania St., Honolulu HI 96826

808-524-0251 | stephenyimestateplanning.com

I am honored that Marian University accepted me into the Masters of Thanatology program this past Fall. “Thanatology? What is that?” is the common remark I hear when I tell people of my new adventure. A thanatologist is a designated thinker about death. They help people die better than they otherwise might. I believe every…
Making the Call for Help

On average, I get one to three calls a day from the public seeking advice about elder abuse. Fortunately, only about 20 percent of the calls involve matters needing my office’s involvement. The rest are from people that see “elder abuse” in our name and hope we can help with their situation. It is a learning experience for me as I research various resources available to seniors. (These are real calls with minor facts changed to protect the identity.)

“Hi. My wife has spent over $30,000 on a gifting program. She doesn’t think it is a scam but she has given these people a lot of money and hasn’t gotten anything in return. I think it is pyramid scam.”

Pyramid/Gifting Scams are considered investment frauds and can be reported to the Department of Commerce and Consumer Affairs (DCCA) office at 1-877 HI-SCAMS (1-877-447-2267). Additionally, you can report it to the Financial Crimes Unit at the Honolulu Police Department (HPD) at 808-732-3609.

“I want to report a timeshare company that signed up my dad. He didn’t know what he was signing and wants to get out of the contract. He is on a fixed income and should have never been qualified to make the purchase.”

For complaints against individual companies, DCCA’s Consumer Protection Division (808-587-4272) can investigate claims and seek civil restitution in certain instances.

“We just discovered that my brother stole $20,000 from my dad, but he doesn’t want to do anything about it. What can we do?”

This is a common call we get, and unfortunately, if the victim — the parent — doesn’t want to prosecute, law enforcement can’t really get involved (in most situations).

“Can someone from your office speak to our group about elder abuse?”

Yes. We have done over 400 presentations to various senior groups and organizations in the past 10 years.

“I live in the mainland and just discovered my father gave over $400,000 to two men he hired to do some house repairs. He says they are nice men who bring him lunch when they stop by. He doesn’t believe they are con men and doesn’t want the police involved.”

This is similar to the situation above concerning the son stealing from the dad. If he doesn’t want to prosecute the matter, the police can do very little.

What we see happen a lot is that the children will berate the parent to the point that the parent will stop speaking to the child. This then allows the con artist free rein to continue taking advantage of the senior. I caution children to adopt a non-judgement tone with their folks in order to get more information regarding the situation. In this situation, the daughter was able to convince her dad that these men didn’t have the father’s best interest at heart, and he allowed law enforcement to get involved.

To report suspected elder abuse, contact the Elder Abuse Unit at 808-768-7536 | ElderAbuse@honolulu.gov

On average, I get one to three calls a day from the public seeking advice about elder abuse. Fortunately, only about 20 percent of the calls involve matters needing my office’s involvement. The rest are from people that see “elder abuse” in our name and hope we can help with their situation.
Love, Honor and a Final Resting Place

Disney theme parks receive millions of visitors each year. Many park-goers repeat their visits annually, if not more often. Most of the time, their visits are routine (or as routine as they can be in a magical place). From time to time, however, guests do the unexpected. Disney cast members have a code language they use when referring to unusual events. The purpose of the code is to avoid alarming other guests. For example, if someone vomits on property, Disney staff refer to it as a “protein spill.” A particularly rude or difficult visitor is referred to as a “treasured guest.” The phrase, “Have a magical day,” even when uttered with a Disney smile, can mean the opposite when a guest has been especially troublesome.

One Disney code phrase is particularly interesting. A “white powder event” might sound like a staff member has discovered illegal drugs on property or there was a potentially dangerous chemical spill from which guests must be shielded. However, the phrase is used when someone attempts to spread the ashes of a deceased loved one on park premises. Many people ask to have their ashes spread at places that hold treasured memories for them, and Disney theme parks are not the exclusive venue for these requests.

More often than you realize, human ashes are scattered covertly at sports stadiums, concert halls and golf courses. Of course, these activities are inappropriate, and they are generally unlawful.

Disposing of your cremated remains on your own private property is generally not a problem, at least within the United States. Each state has its own laws when it comes to the practice, and federal laws and regulations apply when remains are scattered within the ambit of federal jurisdiction. Not surprisingly (as every Disney cast member knows), many people proceed without checking the applicable rules. While a “white powder event” may go unnoticed, it is important to realize it can be the subject of criminal prosecution.

In Hawai‘i and other states blessed with beautiful coastal areas, it is common for ashes to be scattered at sea. While this is a beautiful gesture, it may violate the federal Clean Water Act, which requires cremated remains be scattered at least three nautical miles from land in water that is at least 800 feet deep. This means no scattering at beaches or wading pools. On top of this, the EPA requires 30 days advance notice of a scattering at sea. If you have lived in Hawai‘i for any length of time, you know that these rules are rarely observed or enforced. However, this does not give anyone license to flout the law.

If you would like your ashes to be spread somewhere special after you pass away, get advice from your attorney as you complete your estate plan. That way, you can tailor your request to ensure that none of your loved ones will end up in jail for carrying out your wishes.

SCOTT MAKUAKANE, Counselor at Law
Focusing exclusively on estate planning and trust law.

est8planning.com
O‘ahu: 808-587-8227 | maku@est8planning.com

Many people ask to have their ashes spread at places that hold treasured memories for them, and Disney theme parks are not the exclusive venue for these requests.More often than you realize, human ashes are scattered covertly at sports stadiums, concert halls and golf courses.
Are You Ready for Emergencies?

The wrath of natural disasters has been on full display in recent weeks as hurricanes, earthquakes, wildfires and floods have ravaged large swaths of the world. While our first thoughts go to the victims of these tragic events and the challenges ahead for recovery, it may also cause you to step back and think about your own preparedness for a natural disaster. If you’re feeling under prepared, from a financial standpoint, for the possibility of an unwelcome weather event, consider creating an emergency plan.

Create A Plan. Just as you plan ahead for your retirement or children’s college tuition, you need to prepare for risks related to a financial emergency. Any type of unforeseen event could jeopardize your financial security. Work with your financial advisor, estate planner and attorney to identify and address potential financial risks.

Protect Your Property. One common concern in such events is catastrophic damage to your home. Start by making sure your property is appropriately insured. Review your homeowner’s insurance policy to make sure there is sufficient coverage for unforeseen events. Remember that typical home insurance does not include coverage for flood damage, which needs to be purchased separately. Homeowners may assume they are not at risk of such damage, but unusual circumstances might mean your risk is greater than you think, so it’s best to double check. Those who rent their living space should consider renter’s insurance.

In the case of disasters like a flood or tornado, you want to make sure you have sufficient coverage for possessions, including valuables, vehicles (e.g. cars, boats, ATVs), and technology. Maintain good records of the valuable items you own and keep them in a safe place. It can be helpful to take pictures of your property before and after an event to help the insurance claims process.

Establish An Emergency Fund. A general rule of thumb is to have at least three-to-six months’ worth of expenses saved in case of an emergency. Consider saving more if you have children or live in an area where severe weather threats are more common. Keep these funds in accounts that offer liquidity like a money market fund or in bank savings. Make sure you have some cash on hand in case power outages or other issues prevent ATMs from working.

The money you set aside could be used for temporary housing, medical care or to cover your essential expenses if you’re unable to return to work. The funds can also jump-start your relief and clean-up efforts.

Safeguard Your Information. When unanticipated events occur, you will need access to your financial information and personal identification documents. Store copies of your insurance policies, financial account statements, medical information, Social Security cards, driver’s licenses, passports and other important records in a secure location, such as a bank safety deposit box or a secure electronic vault. Having documentation readily available allows you to quickly verify your identity and work through your emergency plan after disaster strikes.

Recent events remind us of the importance of having an emergency financial plan in place to help protect against worst-case scenarios.

MICHAEL W. K. YEE, CFP
1585 Kapiolani Blvd., Ste. 1100, Honolulu HI 96814

808-952-1222, ext. 1240 | michael.w.yee@ampf.com

Michael W. K. Yee, CFP®, CFS®, CLTC, CRPC ®, is a Financial Advisor, Certified Financial Planner ™ practitioner with Ameriprise Financial Services, Inc. in Honolulu, HI. He specializes in fee-based financial planning and asset management strategies and has been in practice for 33 years.

Investment advisory products and services are made available through Ameriprise Financial Services, Inc., a registered investment adviser.

Ameriprise Financial Services, Inc. Member FINRA and SIPC.

© 2017 Ameriprise Financial, Inc. All rights reserved. File #1892811

The wrath of natural disasters has been on full display as hurricanes, earthquakes, wildfires and floods have ravaged large swaths of the world. While our first thoughts go to the victims of these tragic events, it may also cause you to step back and think about your own preparedness for a natural disaster.
Part II: Zero Chance of A Lottery Win

In the October/November issue of Generations Magazine, I explained that it is better to make a logical and legal argument against someone being a winner of a lottery, as opposed to showing them they are a victim of a lottery scam.

The following facts prove that you have a zero percent chance of winning a lottery if you live in Hawai‘i.

There are no registered lotteries in Hawai’i. Businesses that operate in Hawai’i must register with the Department of Commerce and Consumer Affairs’ Business Registration Division. This allows the state to regulate businesses and ensure compliancy with local laws. The only states that don’t have state lotteries or don’t participate in multi-state lotteries are: Hawai’i, Alabama, Alaska, Arkansas, Oklahoma, Utah and Wyoming.

Tax liability only occurs after the money is received. Once you receive a lottery payout, Uncle Sam wants a fair share, because prize winnings are considered income. The state and federal governments collect taxes after, not before, you receive your money (either earned or won).

In lottery-participating states, you must buy the ticket yourself and in person. Lotteries were created to generate revenue for states conducting the lotteries. These states receive a portion of the purchase price of the lottery ticket and place taxes on the prize money.

If you want to participate in the lottery, you must physically go to that state and buy a ticket yourself. It is illegal for businesses to buy tickets for non-residents. If tickets were bought online, there would be no control over who won the lottery. You cannot win the lottery if you didn’t enter the contest yourself.

It is illegal to play foreign lotteries while in the United States. Governments from every country (including the U.S.) want to regulate funds that enter and leave their economies. This includes lottery winnings. No government wants to lose millions to someone outside their country. Therefore, lotteries are specific to residents.

You have time to collect your money. Lottery-participating states allow ticketholders a set amount of time, typically one year, to receive winnings. For every day that a state holds the unclaimed lottery money, interest is collected on the money. States benefit when money isn’t claimed right away.

You are required to notify the lottery that you won. The lottery doesn’t notify you. Millions of dollars have not been claimed in lottery winnings because no one went to the lottery office in the participating state to present the winning ticket.

If you live in Hawai’i and are contacted by a lottery or sweepstakes, you now know the truth. And you also know how to break the news to a scam victim.

To report suspected elder abuse, contact the Elder Abuse Unit at 808-768-7536 | ElderAbuse@honolulu.gov

In the October/November issue of Generations Magazine, I explained that it is better to make a logical and legal argument against someone being a winner of a lottery, as opposed to showing them they are a victim of a lottery scam. The following facts prove that you have a zero percent chance of winning a…
Family Peacekeeping Methods

Central to the Hawaiian culture is the value of ‘ohana,’ or family. Maintaining the “family health” was of utmost importance and was achieved through the regular practice of ho‘oponopono. In the article, “To Set Right Ho‘oponopono A Native Hawaiian Way of Peacemaking,” Manu Meyer discusses how families practice ho‘oponopono.

Traditionally, ho‘oponopono discussions were facilitated by a haku, who assisted the family in working out problems through a series of discussions. This led to understanding of each family member’s perspectives and resulted in mutual forgiveness and resolution.

Ho‘oponopono has been compared to the modern-day Alternative Dispute Resolution. A key difference is that ho‘oponopono was not only used to resolve dispute, it also was used to prevent disputes within the family.

According to Roy William & Vic Pressor of Preparing Heirs, “Sixty percent of transition failures were caused by a breakdown of communication and trust within the family unit.” The potential influx in trust litigation is foreseeable, due to the aging demographic of baby boomers, Hawai’i’s high cost of living and the increase in multigenerational homes.

Encouraging clients to partake in often difficult and sometimes messy family discussions, while everyone still is alive and able, is integral in preventing unwanted litigation. A haku or a ho‘oponopono facilitator may be effective in resolving family disputes.

Stephen B. Yim, Attorney at Law
2054 S. Beretania St., Honolulu HI 96826

808-524-0251 | stephenyimestateplanning.com

Central to the Hawaiian culture is the value of ‘ohana,’ or family. Maintaining the “family health” was of utmost importance and was achieved through the regular practice of ho‘oponopono. In the article, “To Set Right Ho‘oponopono A Native Hawaiian Way of Peacemaking,” Manu Meyer discusses how families practice ho‘oponopono. Traditionally, ho‘oponopono discussions were facilitated by…
An Estate Plan For your Digital Assets

You have a digital estate if you send emails, participate in Facebook and other social networking sites, do online financial transactions, play internet games, or store photos and other important files in the “cloud.”

What happens to your digital estate if you become incapacitated or die?

There are both federal and state laws that come into play, along with the agreements you “signed” when you created your digital assets. When you set up your various internet accounts, do you remember checking a box on each website concerning the “terms of service?”

Unless you acknowledged having read and agreed to each vendor’s terms of service, you would not have been able to create those ‘online accounts.’ Who really reads all of that legal gobbledygook fine print? If you do, you are exceptional. The rest of us are stuck with agreements we never read and probably would not understand if we did.

The typical “terms of service agreement” says that you are the only person who can access your digital assets. If you are incapacitated or dead, that could be tricky. If somebody tries to get information about your digital assets pretending to be you, he or she is probably violating federal law that defines such activity as “fraud.”

This is true even if the person trying to access your accounts is your personal representative who needs information about your digital assets to do his or her job. The applicable federal law does not take noble motives into account.

Most of the 50 states now have laws on the books that give someone the authority to access your digital asset while acting under a properly drafted durable power of attorney, or under court appointment as your conservator or personal representative. Those laws have gone through a painful evolution. The various internet providers, the public and the government have grappled with issues of privacy and personal freedom versus the need for your fiduciaries, and sometimes, the government, to look into your digital estate.

The state laws differentiate between the content of what the law calls your “electronic communications” and the catalog of your electronic communications. Under the law, accessing a list of your communications is much easier than accessing what you said in those communications, but there are hurdles to be addressed either way.

Generally, your fiduciaries can get the catalog of your electronic communications even if you did not expressly permit them to do so in your terms of service agreements. When it comes to email, the catalog includes the name of each sender, the email address of each sender, and the date and time each message was sent. It does not, however, include the subject lines or contents of your email messages.

Even if you do consent to your fiduciaries being able to access the content of your digital assets, most internet vendors will require not only proof of your death or incapacity, but in many cases, a court order.

So stay tuned as the law continues to evolve, and (we hope) order emerges from the chaos.

SCOTT MAKUAKANE, Counselor at Law
Focusing exclusively on estate planning and trust law.

www.est8planning.com
O‘ahu: 808-587-8227 | maku@est8planning.com

You have a digital estate if you send emails, participate in Facebook and other social networking sites, do online financial transactions, play internet games, or store photos and other important files in the “cloud.” What happens to your digital estate if you become incapacitated or die? There are both federal and state laws that come…
Keep Stock Market in Perspective

The stock market has enjoyed an extended period of strong performance that dates back to the end of the last bear market in early 2009. While stock market performance can be measured in myriad ways, it’s the Dow Jones Industrial Average that has surpassed several 1,000-point milestones so far in 2017: The Dow first topped the 20,000 mark on Jan. 25, before passing the 21,000 level just over a month later.

Then in early August, it broke through the 22,000 mark. As August ended, the seemingly smooth sailing market rally hit a few bumps. While no one can predict the future, market strategists and analysts suggest that we could see some additional market volatility in the months ahead.

How do investors keep all of this in perspective while trying to manage their portfolios? Here are three points to keep in mind as you follow the stock market:

The real value of each underlying move in the Dow index diminishes as the market rises.

While the Dow Jones average is often used to provide a general reading on the state of the market, the index includes the 30 largest company stocks. When the Dow Jones Industrial Average climbs higher, the actual impact of each change in its price is reduced. For example, when the Dow broke through the 2,000 barrier in January 1987, it marked a notable 100 percent increase from the 1,000 level first reached nearly 15 years earlier. By contrast, when the Dow moved 1,000 points to reach 22,000 between March and August of this year, it represented just a 4.5 percent increase.

The same perspective applies to day-to-day market moves. The stock market makes headlines when the Dow Jones average moves up or down 100 points in a day. Twenty years ago, when the Dow stood at about 8,000, a 100-point move in the market represented a 1.25 percent change in value. Today, a 100-point move is equivalent to less than a half-percent change. In short, 100 points in the Dow Jones Industrial Average doesn’t mean what it used to.

Markets can retreat from record levels.

Just as stock markets can rise, history shows they can fall as well. In the spring of 1999, the index reached the 11,000 mark. It moved higher for a few more months before a severe bear market occurred. The Dow dropped to 7,286 in 2002 before returning to the 11,000 level in 2006. Similarly, the market topped 14,000 in 2007 just before the start of another severe bear market. It fell and did not reach that level again until early 2013.

No one can guarantee what will happen to stocks over the next week, month or year. Stock markets are unpredictable in the short-term, as fluctuations are part of the market’s behavior over time. Price swings are a reality for stock investors, but over time, stocks historically have recovered.

Indexes may not represent your portfolio.

While indexes often generate headlines, their performance may not be reflective of your own portfolio. Emotions run high when there are market swings, but don’t let fear get the best of you. Stock market swings can act as a reminder to review your financial position, making sure that your asset mix matches your long-term goals. The most important factors of your investment success are your goals, the time you have to invest, your risk tolerance and your commitment to save.

Reacting to the stock market or speculation about events that may happen in the future might make for interesting dinner conversation, but remember that it’s not a proven investing strategy.

If you need financial planning help, consider working with a financial advisor you trust.

MICHAEL W. K. YEE, CFP
1585 Kapiolani Blvd., Ste. 1100, Honolulu HI 96814

808-952-1222, ext. 1240 | michael.w.yee@ampf.com

Michael W. K. Yee, CFP®, CFS®, CLTC, is a Financial Advisor, Certified Financial Planner™ practitioner with Ameriprise Financial Services, Inc. in Honolulu, HI. He specializes in fee-based financial planning and asset management strategies and has been in practice for 30 years.

Investment advisory products and services are made available through Ameriprise Financial Services, Inc., a registered investment adviser.

Ameriprise Financial Services, Inc. Member FINRA and SIPC.

©2017 Ameriprise Financial, Inc. All rights reserved. File #1875690

The stock market has enjoyed an extended period of strong performance that dates back to the end of the last bear market in early 2009. While stock market performance can be measured in myriad ways, it’s the Dow Jones Industrial Average that has surpassed several 1,000-point milestones so far in 2017: The Dow first topped…
Zero Chance of Winning the Lottery

Over the years, I have spoken to countless people who believed they had won the lottery. They told me on the phone that they knew it was the real thing or they stopped by my office to show me letters, emails, credit cards or business checks proving they had struck it rich and beat the odds.

The chance of winning the lottery is 296 million to one.

They were confident about their soon-to-be riches, but their families advised them to meet with me because these “winners” had already spent thousands of dollars on alleged taxes and fees to support the purported prize.

In past issues of Generations Magazine, I have highlighted these scams, identifying earmarks proving the non-existence of lotteries, sweepstakes, government grant money giveaways and insurance bonus payments.

Those telltale signs included:

◆ Instructions to keep a secret that they won money (so no one could verify the truth)

◆ Instructions to act very soon or the money would be lost (to create a sense of urgency)

◆ Advance payment (for alleged taxes or fees) before they received money

When I explained these signs, many seniors politely nodded their heads, but they still believe they had won. They went through the motions of listening only to placate the person who brought them into my office. After hearing the shtick from the con men who informed them of their lottery winnings, they believed they were of that .000006 percent of the public who wins.

My approach to these victims changed when I met “Edith.” Over the course of six months, she had sent $135,000 to someone claiming to represent a mainland lottery. Edith was very guarded and skeptical that our discussion applied to her.

She had developed a relationship with the alleged lottery worker and trusted him enough to follow his instructions. Edith believed that despite all the warning signs I pointed out to her, she was extremely lucky to have won a lottery in Hawai‘i.

Talking to Edith gave me an idea: What if I could prove she didn’t win the lottery instead of telling her she was a scam victim? As a trial attorney, isn’t my job to convince people, using the law and objective facts? I thought that I could undo scam artists’ brain washings using this logic. And I made a case to Edith to prove she had a zero percent chance of winning a lottery.

In the Dec/Jan 2018 issue of Generations, I will cover the legal arguments that prove that winning the lottery in Hawai‘i is impossible.

To report suspected elder abuse, contact the Elder Abuse Unit at 808-768-7536 | ElderAbuse@honolulu.gov

Over the years, I have spoken to countless people who believed they had won the lottery. They told me on the phone that they knew it was the real thing or they stopped by my office to show me letters, emails, credit cards or business checks proving they had struck it rich and beat the…
A Wise Estate Plan Includes the ‘Whys’

Estate-planning attorneys offer three types of estate plans: the one-size-fits-all, default “state plan;” the standard “black and white” plan; or the “meaningful” estate plan.

If you do nothing, the State of Hawai‘i has the Guardianship and Probate Court, which is a plan for each Hawai‘i resident upon incapacity and death. The state also has the Table of Consanguinity, listing your beneficiaries — to decide who will be in charge of handling your estate.

The standard “black and white” estate plan carefully crafts legal documents, while focusing on avoiding probate and minimizing taxes. Most often, these plans resemble every other estate plan, with the lawyers focused mainly on the “form” of the plan.

People may believe that because they consulted a lawyer, everything is complete and will not cause undue stress or conflict when they die.

But the sad fact is that there is more trust litigation occurring now than ever before and fractures in family relationships appear to be on the rise.

The simple reason? When we provide the foundation of the estate plan, we focus on the “how to” and diminish the “why,” meaning our intentions, feelings and hopes for our loved ones. In other words, our “voice.”

The “meaningful” estate plan incorporates the client’s own voice in the foundation of the estate plan. Statistics show that not only are the client’s choices honored and respected, family relationships are stronger and family fights are fewer.

It’s not too late to start a plan that reflects your “whys”— for you and your loved ones.

Stephen B. Yim, Attorney at Law
2054 S. Beretania St., Honolulu HI 96826

808-524-0251 | stephenyimestateplanning.com

Estate-planning attorneys offer three types of estate plans: the one-size-fits-all, default “state plan;” the standard “black and white” plan; or the “meaningful” estate plan. If you do nothing, the State of Hawai‘i has the Guardianship and Probate Court, which is a plan for each Hawai‘i resident upon incapacity and death. The state also has the…
Charitable Giving: Is It for You?

Public charities are not shy about asking us for money — they depend on our gifts to carry out their philanthropic purposes.

Deciding which charities to support can be a difficult task, because there are many worthy causes and most of us do not have unlimited bank accounts from which to draw.

Giving your retirement assets to your loved ones or to a nonprofit charity leads to many benefits. How will you divide your wealth?

The following are some suggestions for wise, charitable giving:

Do Your Homework

The good works of charities often overlap and some groups are more effective than others. To help you rate and compare established charities, visit websites such as www.charitynavigator.org and www.charitywatch.org. Know how much of your gift will go to charitable work versus administrative and fundraising overhead. Of course, running a charity costs money. Raising money also costs money. If these expenses exceed 25 percent of a charity’s revenue, you should ask why. If the charity cannot offer a good explanation, you may want to consider giving to other groups, instead.

Don’t Sell an Appreciated Asset for Cash

If you own Apple stock that you bought in 2006 for $10 per share, don’t sell it now at $150 per share to raise the cash for a charitable gift. You will be allowed an income tax deduction for your cash gift, but you also will be liable for capital gains tax on the difference between the $150 sale price of the stock and the $10 spent to buy that stock.

As a result, you will have less after-tax cash for the charity and your deduction will be limited to the amount of your gift. Instead, think about giving the stock to the charity and receive a larger deduction. The charity then can sell the stock and convert to cash.

The charity will not have to pay capital gains tax and you will receive a deduction for the full, fair-market value of the stock at the time you bestow the gift.

Give from Your Retirement Plan Assets

If you give retirement plan assets to your loved ones upon your death, they’ll likely pay income tax on those assets, resulting in less cash in their pockets. However, if you give those same assets to charity, there will be no income tax payable. To the extent that you can, name charities as beneficiaries of your retirement plan assets and use your non-taxable assets for making gifts to individuals.

If you have reached the age of 70-1/2 and have taken required minimum distributions (RMDs) from your retirement plan, you can give up to $100,000 of your annual RMD to charity. You will not get a deduction for your gift, but you will not have to pay income tax on the gifted portion of your RMD. This works out to be a “win-win” for you and the charity.

SCOTT MAKUAKANE, Counselor at Law
Focusing exclusively on estate planning and trust law.

www.est8planning.com
O‘ahu: 808-587-8227 | maku@est8planning.com

Public charities are not shy about asking us for money — they depend on our gifts to carry out their philanthropic purposes. Deciding which charities to support can be a difficult task, because there are many worthy causes and most of us do not have unlimited bank accounts from which to draw. The following are some suggestions…
Adjust Your Portfolio for a Soft Landing

Think about this analogy: When an airplane is preparing to land, it doesn’t descend 30,000 feet in a matter of seconds. Rather, it happens gradually. The pilot adjusts to the landscape and weather conditions to assure a soft landing.

In the years leading up to retirement, treat your investment portfolio in a similar manner. Prepare to protect your assets. Adjust as dictated by market and economic conditions to help assure a soft landing in retirement.

Adjusting your portfolio means taking steps to downshift as retirement nears, reducing some of the risks that may exist in your asset mix. While you were focused on building wealth in the years leading up to retirement, your focus should change as you approach the end of your working years. It’s important to protect your hard-earned wealth, while positioning your portfolio to generate your retirement paycheck.

Dealing with Unpredictability

Money invested in assets that vary in value — including stocks and bonds — are subject to periodic fluctuations. In prior years, you may have had time to ride out market turbulences and overcome short-term losses once markets recovered. But, if you wait until retirement to adjust your portfolio, you may be unpleasantly surprised by an untimely market downturn. This unpredictability could result in a “hard landing” for your portfolio, leaving you with less money in retirement, compared to your plans.

For example, a couple with $1 million saved for retirement may plan to withdraw $40,000 annually from that account (assuming they withdraw 4 percent of the principal value annually to sustain 25 years in retirement). If all the money was invested in stocks and the portfolio sustained a 25 percent decline prior to retirement, the value would drop to $750,000, leaving the couple with $30,000 a year. In contrast, if they had strategically positioned the portfolio prior to their retirement, they may have protected themselves from the market’s downturn.

A Gradual Process

The shift from wealth accumulation to income generation in your portfolio should happen over time. One approach is to gradually reduce your positions in assets that are subject to greater market volatility in the years leading up to retirement. That may mean reducing your portfolio’s exposure to stocks and increasing positions in fixed-income investments.

However, not all your money needs to be moved out of stocks, even in retirement. Equities historically have offered more growth potential than many other types of investments. Given today’s long-life expectancies, you want to be prepared for the likelihood that living costs will be higher 20 or 30 years from the time you begin retirement. For this reason, stocks may make sense for you. You may want to reduce your emphasis on investments that maximize capital appreciation and instead, emphasize stocks that tend to be less volatile and pay competitive dividends.

Other strategies may come into play, too, such as annuities that provide lifetime income in retirement, or alternative investments that can diversify your portfolio. A financial advisor can help you determine an appropriate strategy as you prepare for a smooth landing in retirement.

MICHAEL W. K. YEE, CFP
1585 Kapiolani Blvd., Ste. 1100, Honolulu HI 96814

808-952-1222, ext. 1240 | michael.w.yee@ampf.com

Michael W. K. Yee, CFP®, CFS®, CLTC, is a Financial Advisor, Certified Financial Planner ™ practitioner with Ameriprise Financial Services, Inc. in Honolulu, HI. He specializes in fee-based financial planning and asset management strategies and has been in practice for 30 years.

Investment advisory products and services are made available through Ameriprise Financial Services, Inc., a registered investment adviser.

Ameriprise Financial Services, Inc. Member FINRA and SIPC.

© 2017 Ameriprise Financial, Inc. All rights reserved. File #1822778

Think about this analogy: When an airplane is preparing to land, it doesn’t descend 30,000 feet in a matter of seconds. Rather, it happens gradually. The pilot adjusts to the landscape and weather conditions to assure a soft landing. In the years leading up to retirement, treat your investment portfolio in a similar manner. Prepare…