|
|
IN THIS ISSUE
IS THE ROMANCE GONE?
ADOPTEE INHERITANCE RIGHTS
PREFERRED STOCK
ARTICLES OF INTEREST
|
|
Our Blog for September concerning the tax treatment of collectibles was interesting and I thought I would share parts with you.
The one and only Yogi Berra once said "records and achievements are meant to be broken". His words were probably meant more to apply to actions of new players rather than to the value of baseball cards of earlier players. Yet, his words are applicable as another baseball record is surpassed: the most ever paid for sports memorabilia. A mint condition Mickey Mantle baseball card sold for $12.6 million last month.
The collectibles market seems to continue to grow both in what is considered a collectable and how much collectors are willing to pay for those assets. Although it is incredible to think of the profit that was gained in this market by Anthony Giordano, who purchased the card at an auction in 1991 for just $50,000, it should also be considered that the vast majority of the millions of baseball cards that have been printed did not end up increasing in value. In fact, even among the most valuable, the difference in valuation can be quite stark.
Last year, the History Channel put together a story on the most valuable baseball cards. At the time, the most valuable card was a Honus Wagner that sold for $6.606 million. In contrast, the 9th most valuable card at the time was a Ken Griffey Jr. card which sold for $23,100 in March 2021. Pretty enormous difference.
All the same, there is potential for great profits in the collectibles market, and that means potential for big taxes too. Collectibles are taxed differently than stocks and bonds, but they do follow some of the same guidelines. The IRS defines collectibles as:
- Any work of art,
- Any rug or antique,
- Any metal or gem with limited exceptions,
- Any stamp or coin with limited exceptions,
- Any alcoholic beverage, or
- Any other tangible personal property that the IRS determines is a "collectible" under IRC Section 408(m).
Similarly to stocks and bonds, the tax basis for gains is determined by subtracting the original cost basis (original purchase cost plus any costs, fees, or associated commissions) from the sale. If the collectable item is inherited, then the cost basis would be stepped up at death, so that an appraisal should be done at that point that could be relied on in the case of an eventual sale.
So, the taxes on Anthony Giordano's recent sale could end up as more than $3.5 million dollars, which last year could have bought the IRS the 5th, 6th, 7th, 8th, and 9th most valuable baseball cards with more than half the revenue still left.
If you have any childhood memories stored at your home or the home of your parents or grandparents that you think could be a collectible, I would certainly take the time to look through these items and possibly even have them appraised. Who knows what valuable collectibles could be lurking in some nondescript box?
|
|
CLICK THE NAME TO READ
CLICK THE NAME TO READ
|
|
The Last Will and Testament of Anna Nicole Smith (1967 - 2007) (born Vickie Lynn Hogan, then taking the name Vickie Lynn Marshall after her marriage to oil tycoon J. Howard Marshall) left her entire estate to Howard Stern to be held in trust for the benefit of her son, Daniel Wayne Smith. Unfortunately, her son predeceased her, and Anna Nicole Smith's Last Will and Testament makes no provision for other heirs. ©LIVING TRUST NETWORK
|
|
In the Informational Article, Adoptee Inheritance Rights, an appellate court voids an attempt to bar adoptees, their ancestors, and their descendants as permissible recipients of trust assets upon termination. In the Article, Is The Romance Gone the Federal Trade Commission reports that romance scams originating from online dating sites are a growing problem.
In one of our Of Interest Articles from Kiplinger.com read Why Do I Need A Trust? A simple will works for some people, but maybe not for you. Are you in a second marriage? Have minor children? Concerned about fraud? These are just a few of the many reasons to consider a trust.
Hard to believe summer is soon to be behind us. We all look forward to a wonderful and colorful Fall season. Lastly, Happy New Year, Shanah Tovah, to those celebrating Rosh Hashanah this month.
Sincerely,
|
|
The epidemic of financial fraud shows no sign of abating. Perhaps the saddest example is the "romance scam." Reportedly some 30% of Americans have tried online dating. Too many have found fraudsters instead of soulmates, people who prey on the lonely to steal money and identities. According to the Federal Trade Commission (FTC), citizens have reported losing $1.3 billion to romance scams during the last five years, growing steadily from under $100 million in 2017 to about $550 million in 2021. It's the largest category of online fraud, larger than identity theft or online shopping fraud. Because falling prey to a scam is so embarrassing, it is thought that many scams go unreported, so the actual losses could be far higher.
Scamsters often go to great lengths to create a false identity. They may claim to be oil rig workers, in the military, doctors with an international organization, among other alluring vocations. They may be patient, grooming the target for many months, becoming familiar with the target's social media accounts, before asking for money. When the request finally comes, the money may be "needed" for emergency surgery, medical expenses, plane tickets, even to pay off gambling debts, according to the FTC. The means of transfer is typically by wire transfer or by gift cards, because those are almost impossible to reverse and harder for the authorities to trace.
Not much is known about the victims of romance scams, but according to a recent item in The Wall Street Journal women seem to be more vulnerable than men, most are older than 40, with the 50 -59 age bracket having the most victims. Also, financial losses tend to be larger as the age of the victim increases.
Rule number one, per the FTC, should be: Never send money to someone you haven't met in person. However, that rule may not be sufficient, as the romance scamster sometimes will agree to face-to-face meetings. The FTC suggests doing a reverse image search of the person's profile picture--if the results include other names or inconsistent personal details, a fraud is likely.
(September 2022)
© 2022 M.A. Co. All rights reserved.
|
|
Adoptee Inheritance Rights |
|
Rucker Todd created a trust for the benefit of his two adult children in 1996. Neither of those children had children of their own, but the son, Dr. Todd, had formally adopted his step-daughters in the 1970s. Those were Rucker Todd's only grandchildren.
Rucker amended his trust five times. Dr. Todd originally had a testamentary power to direct the trust property to anyone through his will. In 2011, Rucker added an amendment that forbade the exercise of the power of appointment in favor of any person adopted by another person or their descendants or ancestors. The reasons for this change are unknown.
After Rucker died, Dr. Todd filed a lawsuit seeking a judicial declaration that he could exercise the power of appointment in favor of his adopted daughters. The lower court ruled against him, holding that Rucker's intentions were unambiguous with the amendment, and it is the intent of the person creating the trust that controls the outcome.
The appellate court of Kentucky unanimously reversed, holding that any attempt to disenfranchise an entire class of persons, such as all adoptees, their descendants, and their ancestors, is unenforceable and void as against public policy. The court noted that Rucker had the right to disinherit his granddaughters, but if that was the result he desired he should have done so by naming them.
Other portions of the trust were inconsistent with the idea that Rucker wanted to keep the trust away from the granddaughters, but the court did not need to rule on that argument. It may have been that he wanted to disinherit adoptees other than the granddaughters for some reason.
(September 2022)
© 2022 M.A. Co. All rights reserved.
|
|
Preferred stocks occupy a place between common stocks and bonds. These shares are "preferred" because their dividends must be paid before any dividends are declared on common shares. They also have a preferred position in the event of a dissolution of a company, compared to the common shareholders, but inferior to the bondholders. Preferred shareholders generally do not have voting rights over company policies.
Unlike bonds, in which interest payments are not optional, the dividends on preferred stock may be suspended by the company during periods of financial stress. Dividends on some preferred shares are cumulative, which means that any missed dividend payments must be made up before any dividends are paid on common shares. Preferred dividends may be fixed or floating with changes in the general interest rate. Some preferred issues begin life with fixed dividends and convert to floating dividends after a set time period. Bonds have a fixed time to maturity, while preferred stock usually has a perpetual life.
With these greater risks, preferred shares tend to have higher yields than bonds. In most cases, dividends on preferred shares are Qualified Dividend Income, eligible for preferential tax treatment in taxable portfolios. Bond interest is taxed as ordinary income.
Financial and utility companies account for the majority of preferred stock issues. Growth companies tend to not pay dividends and not issue preferred shares of stock. Preferred stocks are usually expected to weather bear markets better than common shares, but market history does contain exceptions to this observation.
Preferred stock has low correlation to other investment asset classes, and so may be a useful approach to adding diversification to a portfolio. They provide some predictability of income similar to bonds, with the tax advantages of stocks.
If you would like to learn more about the role preferred stocks could play in your portfolio, please call to arrange for an investment review at your convenience.
(September 2022)
© 2022 M.A. Co. All rights reserved.
|
|
When it is time to retire, picking a spot to settle down is a top priority. Read More
A simple will works for some people, but maybe not for you. Read More
The best hotels in the world span every continent except Antarctica, though Travel + Leisure readers show an affinity for properties in Europe and their own backyard: the United States. Read More
|
|
WALL - MAIN OFFICE
732-255-5000
SOUTH JERSEY REGIONAL OFFICE
856-281-1300
|
|
LEBANON REGIONAL OFFICE
908-287-7188
LINWOOD REGIONAL OFFICE
888-323-5535
|
|
Because of the rapidly changing nature of tax, legal or accounting rules and our reliance on outside sources, Garden State Trust Company makes no warranty or guarantee of the accuracy or reliability of information contained herein nor do we take responsibility for any decision made or action taken by you in reliance upon information provided here or at other sites to which we link. ©2022. All rights reserved. |
|
|
|
|
|
|
