Illinois Estate Planning & Elder Law Blog

The Wall Street Journal had a piece this week about the Gramm-Leach-Bliley (GLB) Act of 1999. This is the first time I have read a detailed explanation of why GLB was not a contributing cause of the current financial crisis.

GLB repealed part of the Glass-Steagall Act (from Great Depression times) and allowed banks, securities companies and insurance companies to affiliate under a financial services holding company.

The WSJ article points out:
1) If GLB were the problem, the crisis would have originated in Europe where they never had Glass-Steagall;
2) The financial firms that failed, like Lehman, were the least diversified while those that survived, like JP Morgan, were the most diversified; and
3) GLB did not deregulate anything but established the Federal Reserve as a super-regulator overseeing all Financial Services Holding Companies. All activities of financial institutions continue to be regulated on a functional basis by the regulators that had regulated those activities prior to GLB.

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A personal representative is the individual who handles the matters of an estate as it makes its way through the probate process. If there is a will, the personal representative is the executor. If there is no will, the personal representative is the administrator.

The personal representative has specific powers even before the Probate Court issues his Letters of Office. He can carry out any gift the decedent has made of his body; arrange the burial of the decedent; make payment of funeral charges; and take acts necessary to preserve the estate.

After his Letters of Office are issued, the representative can exercise all powers given to him in the will. In addition, the representative can lease, sell or mortgage the estate’s property; borrow money with or without security; continue the decedent’s unincorporated business; perform any contract of the decedent; and take possession, administer and grant possession of the decedent’s real estate.

For a complete list of powers of a representative, check out 755 ILCS 5/, which is the Illinois Probate Act.

Continue reading "The Role of Representative in Illinois Probate" »

Posted by Anne Rabuck | Permalink | Email This Post

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Hoping to give investors a chance for their accounts to recover from the losses incurred in 2008, Congress recently suspended the law requiring owners of IRAs and 401(k)s who are over age 70 1/2, and those who have inherited such accounts, to make a minimum withdrawal in 2009. But this simple idea -- a one year break from required withdrawals -- is turning out to be not so simple in its execution.

The particulars are set out in the Wall Street Journal article New IRA Law Bewilders Investors. Problems are arising because the IRS and the Treasury Department haven't provided adequate guidance.

401(k) plan sponsors must get approval from the federal government for their plan documents. These sponsors fear that their suspension of payments will violate their documents and feel compelled to get government approval before enacting any suspension of payments. This government approval is not something quick and easy to come by.

The article includes the following advice:

1) Contact your IRA custodian or the administrator of your 401(k) directly and ask what steps are needed to suspend distributions in 2009;

2) Regarding 2010, ask the custodian or administrator what steps are needed to get the automatic distributions started again; and

3) You may want to roll your traditional IRA assets into a Roth IRA so that in the future you have no required distributions or taxes on future earnings.

Continue reading "New IRA Law Affects Mandatory Withdrawals " »

Posted by Anne Rabuck | Permalink | Email This Post

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For those of us who find the stock market far more interesting than politics, there's a great book by Joel Greenblatt, The Little Book That Beats The Market, (2006, John Wiley and Sons, ISBN 0-471-73306-7), which provides a proven method for picking stocks which will outperform the Dow . . . and then some.

This is a method which takes the earnings yield (earnings per share divided by price per share) and the return on capital (net operating profit divided by invested capital) for every stock listed on all of the U.S. stock exchanges. These two numbers are used to rank stocks according to those with the best combined earnings yield and return on capital.

It sounds simple, and it is. Plus, you can go to Mr. Greenblatt's website, and the calculations have already been made for you. All you choose is the minimum market capitalization size of the companies.

The most difficult part, as Mr. Greengblatt points out, is sticking with the system. You must be willing to stay with the formula and keep reinvesting using the formula year in and year out.

It's everything I am looking for as an investor -- a proven system with understandable parameters that allows me to choose from a selection of individual stocks. And as we all know, one of the few ways to get a return on your investment that will exceed what inflation and taxes take away is to invest in the stock market. Anyone serious about preserving wealth of any size and planning an estate of any size must develop and implement a winning investment strategy.

Posted by Anne Rabuck | Permalink | Email This Post

Posted In: Estate Planning , Estate Planning

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