InvestmentNews Publishes Slideshow Based on McManus’s Year-End Tax Advice

6 tax strategies for year-end planning

New U.S. tax laws should inspire some Americans to pursue year-end tax strategies that will seek to maximize their wealth, according to John McManus, founding principal of McManus & Associates. He said these strategies make sense given the new tax framework, as well as estate planning recommendations. Click through the different strategies and listen to Mr. McManus discuss these strategies here.

Give it away sooner rather than later

Given that the increased estate tax exemption is temporary, high-net-worth clients worried about future estate taxes should make $15,000 (or $30,000 for a married couple) annual exclusion gifts to children and grandchildren into flexible irrevocable trusts before Dec. 31. Right after Jan. 1, give the gift again.

Offsetting gains due to growth

If a client sold appreciated investments or a business in 2018, that will spark capital gains taxes, so offset those by donating to a family-controlled charitable vehicle like a private foundation or charitable remainder trust before Dec. 31.

Think before you sell

Given the new limitation on the state and local tax (SALT) deduction for federal income taxes, clients should think before they sell appreciated investments or a business in the next few years because those sales will lead to unusually high capital gains taxes. But if they establish a non-grantor trust in Delaware or Nevada to store assets prior to a liquidity event, they can avoid state capital gains tax.

Investment diversification with insurance?

With the SALT deduction now constrained, think more about income tax exposure on investments. Consider whole life insurance, which continues to appreciate in value without resulting in income taxes due, and represents an efficient component of a diversified portfolio.

Tax benefits of insurance

High-net-worth families who will still have state and federal estate tax exposure should be thinking about how to utilize insurance. Permanent insurance coverage owned by an irrevocable life insurance trust should be a component of smart estate plans.

Creative solutions

Here’s a three-generation plan: A grandparent could loan significant funds to their child to acquire a life insurance policy for their grandchild. That loan can be structured to be dramatically discounted upon the grandparent’s death, thus cutting state and federal estate taxes. This arrangement allows the insurance policy to be free of taxes all the way down to the grandchild.

See the InvestmentNews slideshow with photos here.

John O. McManus Honored with New Jersey YMCA State Alliance 2018 Social Responsibility Champion Award

John O. McManus, founder of trusts and estates firm McManus & Associates, was honored statewide with the New Jersey YMCA State Alliance 2018 Social Responsibility Champion Award for his devotion and passionate advocacy to the Y and the community for over 10 years. In 2005, John joined Somerset County YMCA’s (SCYMCA) Board of Directors and currently is the Vice Chair of the Board of Directors and Chair of the Board Governance Committee, as well as serving on the Financial Development Committee and Capital Campaign Leadership Cabinet. Recently, John was elected by his peers to be the next Board Chair beginning in January 2019.

See the YMCA’s release on McManus being named the New Jersey YMCA State Alliance 2018 Social Responsibility Champion Award by clicking here.

According to Somerset County YMCA Board Chair Mark Irwin:

While John has effectively raised funds throughout his service to the Y, his increased enthusiasm over the past six years has been remarkable.

From 2013 through 2018, John personally raised $279,440 for SCYMCA, which helped to surpass the campaign goal each year. In 2012, overall gifts to the Annual Campaign equaled $185,668, and in 2018 SCYMCA raised a total of $1,003,526 – a 540% increase.

Irwin continued:

Through his tenure as a volunteer, John has grown as a respected, cause-driven leader. His dedication to the Y has resulted in vital funds that help the Y to provide financial assistance and mission-based programs, which enhance quality of life and make a meaningful difference.

John strengthens community by bringing the Y’s mission to life and ensuring that everyone in the community has the opportunity to learn, grow and thrive.

John consistently demonstrates a passion for giving back to advance the Y’s mission and to address challenging community needs.

Click here to read Irwin’s full speech on McManus’ unique and outstanding contributions to the Y.

In his speech at the award ceremony, McManus shared the secret behind his success:

For my wife and me, fundraising has become second nature. It starts with a story that we believe in that must be communicated well to a group that is passionate about helping others and delivered to a consistently-engaged, ever expanding-group of patrons.

Click here to read McManus’ full speech, including the five lessons he learned while growing up in the Bronx that fashioned, as described by Irwin and others, his “gift” as a fundraiser.

For help achieving outstanding philanthropic results consistent with your values, call McManus & Associates at 908-898-0100.

Conference Call: 10 Tax Planning To-Dos to Check Off Your List before the End of 2018

With only one month left in 2018, time is running out to finish your wealth management to-dos. We’ve made your list, but it’s time to check it twice.

Today, McManus & Associates held a call with clients to provide guidance on the items below. Click to hear the half-hour discussion led by the firm’s Founding Principal John O. McManus:

 

1.  FREELY GIVE: Make annual exclusion gifts up to $15,000 for individuals and $30,000 for married couples, per chosen loved one.

2.  REAP (LOSSES TO OFFSET) WHAT YOU’VE SOWED: Harvest losses to offset capital gains in your securities portfolio.

3.  MIND YOUR HEALTH: Take advantage of this year’s lower threshold for Medical Expenses.

4.  USE A TAX RATE IN ITS INFANCY: Review your children’s portfolio income for application of the revised Kiddie Tax.

5. GIVE THOUGHT TO GIVING: Bunch your charitable deductions in the same year. The deduction for cash donations to public charities has increased to 60% of the taxpayer’s adjusted gross income.

6.   FUEL INVESTMENT VEHICLES: Establish and fund qualified plan contributions.

7.  TAKE A BREAK TO RECONSIDER BREAK-UPS: If planning to execute a divorce or separation agreement, you may want to do so before year-end. Otherwise, moving forward, the payer of alimony will no longer get a deduction on his or her tax return, and the recipient will no longer have to include the alimony as taxable income.

8.  DON’T WAIT TO COMPENSATE (YOURSELF):

An owner of an S Corp must pay themselves a reasonable compensation (what someone in a similar job would be paid). Therefore, make sure you pay yourself a salary before year- end.

9.  RESERVE TIME TO REVIEW YOUR WITHHOLDING:

The 2017 Tax Act lowered the tax rates and changed the tax bracket income ranges. Therefore, now is the time to do a “check-up” to see if your current tax withholding will be sufficient for next year’s income.

10.  MAKE A MOVE: Make distributions of income from trust accounts and estate accounts to lower their income tax liability.

McManus Answers NYT Question “Can We Disinherit Our Addicted Son?”

Recently, The New York Times published the Ethicist’s answer to a reader question, “Can We Disinherit Our Addicted Son?” Here’s a shortened version of the question to which the column responds:

Our son has been a heroin addict for 10 years…We have spent a fortune on rehab, counseling, legal fees and more, which changed nothing…

Under other circumstances, we would split everything equally among our children, but for our addicted son, this would be like throwing gasoline on a fire.

We are thinking of putting his share into a trust to be used exclusively for his future health needs, rehab and, hopefully, sobriety. But again, we love our son, and it is heartbreaking to realize we are essentially leaving him nothing tangible. What is the ethical thing for us to do?

And below is McManus & Associates Founding Principal John O. McManus’ take, which is posted alongside the article:

As a principal of an estate and trusts law firm in this New York metropolitan area, it is not uncommon to see these family struggles – you are directionally prudent in your decision. That said, the anguish often comes with discerning whether “it is fair, and could it be more destructive” if my addicted child sees that we are treating him differently from his currently higher functioning siblings. One consolation is that all your children may elegantly receive their family gift into trust. For your other children, the trust serves to protect their assets from others, but each can serve as their own trustee and enjoy the protection of “driving their own armored truck,” making investments and distributions to themselves as necessary. For your currently addicted son, he will have another “driver” (other than himself) to serve as trustee until he reaches emancipation from his addiction one day. It may also be prudent that the trustee not be one your other children, but someone who both knows your son and your wishes for his very best welfare. In the meantime, your other children’s strain will not be compounded by taking his calls as he seeks to achieve access to the trust assets during his period of vulnerability. In the end, your other children will love and protect him by quietly possessing the power to appoint and remove any independent trustee and can regularly remain in consultation to ratify the trustee’s decisions.

For help with setting up a trust to protect your children from asset attacks by others (as well as to protect them from themselves, when necessary), call McManus & Associates at 908-898-0100.

Advice for Seniors from McManus Meets the Big Screen, Thanks to WealthManagement.com

WealthManagement.com/Trusts & Estates published the below byline by John O. McManus as a slideshow! Click here to read John’s advice, accompanied by entertaining movie stills.

John O. McManus | Oct 29, 2018

As clients age, there’s a significantly greater risk of incapacity. The failure to prepare a healthcare directive and living will, authorization for release of protected health information, and durable general power of attorney means that family members will be compelled to seek court intervention if your client becomes unconscious, has diminished capacity, or experiences some other emergency. This results in unnecessary delay and expense and will be completely inadequate if a client’s loved ones need to make a healthcare decision or act on their relative’s behalf with respect to financial, legal or personal matters. It’s essential to ensure basic protections are in place so that loved ones can act immediately in the event of these issues.

The need for the court to oversee the administration of an estate can be time-consuming, costly and frustrating. Proper planning will allow for the probate process to be completed with greater expediency. This includes the preparation of revocable living trusts, the assets of which will not be subject to court review (even if the property is owned in another state) and updates to the titling and beneficiary designation of your client’s assets to ensure a far more efficient estate administration.

Dramatically reduce a client’s future potential federal estate tax by utilizing the temporary increase to the lifetime gift exemption. The Tax Reform and Jobs Act enacted at the beginning of 2018 significantly raised the federal estate tax exemption, but the current law will expire no later than Dec. 31, 2025. Furthermore, Congress can take action sooner to reduce the increased exemption. Therefore, high-net worth individuals and families must strongly consider leveraging the exemption while it’s available in order to remove appreciating and/or discountable assets from the taxable estate.

Help a client understand the tax implications of the transfer of wealth across multiple generations to preserve their legacy for the descendants. The generation-skipping tax and the use of the GST exemption are among the most sophisticated planning concepts, but it’s essential to consider this issue as part of the larger estate plan. Bequests in trust to grandchildren, the design of a dynasty trust and the proper reporting of gifts are all connected to the deployment of the GST exemption and avoids the imposition of additional tax when an inheritance is received by more remote descendants.

Evaluate strategies to avoid a potential increase in federal income taxes due to limitations on state and local tax deductions. Different types of out-of-state trusts (particularly those based in Delaware and Nevada) provide planning opportunities before the liquidation of an appreciated investment or business. Furthermore, life insurance, Roth IRA conversions and contributions to charitable vehicles (including private foundations and charitable remainder trusts) afford clients opportunities to mitigate state income tax exposure.

Review the power of a step-up in basis upon death, reducing capital gains tax and delivering income tax savings your client’s loved ones can enjoy. Families must consider proper planning in advance of death. Asset transfers to an ailing spouse, community property trusts, asset swaps from existing irrevocable trusts and asset upstream gifting to parents are all options to put the surviving spouse, children and other heirs in the best position to sell an appreciated asset tax-free.

The cost of long-term health care could drastically deplete an estate, but strategies may be available to mitigate the attrition of assets. In addition to traditional long-term care policies, life insurance policies can be structured with an accelerated death benefit to cover the cost of nursing home care and/or provide wealth replacement if other resources are diminished. Medicaid trusts and supplemental needs trusts also afford the possibility that assets may be preserved for the use of a surviving spouse or provide a meaningful legacy for children without sacrificing the ability to qualify for governmental benefits.

Protect the inheritance of your client’s heirs and ensure wealth is not diverted, in case a child’s marriage fails or there’s some other attack by a plaintiff’s lawyer. A properly structured trust for the benefit of a child or grandchild under a will or revocable trust can serve to secure an inheritance from an estranged spouse. It’s also important to evaluate how these benefits can be enhanced through a prenuptial agreement or other prenuptial planning measures. Such a trust can insulate the assets from attacks resulting from personal or professional liability, creditors and other legal claims.

Ensure the inheritance of your client’s children and grandchildren will be used to enhance their standard of living, while preserving their ability to receive Social Security or Medicaid. If a client’s child or grandchild directly receives from the estate or benefits from a conventional trust, it will likely disqualify them for needs-based government benefits, forcing the funds to be used for basic living expenses and health care. Incorporating a supplemental needs trust into the estate plan will prevent the inheritance from being treated as a resource of that child or grandchild, which will allow for the continuation of payments from these programs. The assets of the trust can then be sheltered for uses not covered by the government, including social, cultural, entertainment activities, travel, visitation with family members, educational and vocational programs, and other quality of life considerations.

Aid your client’s loved ones in the effective deployment of the wealth they pass along by imparting their family mission and values, including the intrinsic benefits of philanthropy. As a first step, encourage adopting a family mission as part of the estate plan as a means of conveying these wishes and expectations. Recognize the importance of gradually integrating children and grandchildren into the estate plan through periodic family meetings with the family’s professional advisors, which will help them to understand the purpose of the estate plan and the various considerations that go into preserving wealth for the next generation. Finally, those families who adopt charitable giving as a core tenet of the estate plan should include children in the implementation of those activities, including the continued support of causes supported by the family, the identification of new causes that align with donative intent and the development of relationships in the philanthropic community to ensure charitable gifts will have the greatest impact.

Reuters Turns to McManus for Guidance on Giving

The article below, for which John O. McManus was interviewed as an expert source, was published by Thomson Reuters Regulatory Intelligence:



INSIGHT: New red flags for investment firms as charitable season meets donor fund boom

Oct 30 2018 Richard Satran, Regulatory Intelligence

The end of the year is high season for charitable donations — and with investment firms assuming a leading role in philanthropic giving, they face red flags and challenges. Compliance risk is rising for wealth managers trying to match the philanthropic clout of Fidelity, Vanguard, Goldman Sachs and others that have created charitable funds.

The vehicle of choice is the donor-advised funds that have boomed in recent years by offering investors a simplified one-step vehicle for tax-advantaged philanthropy. Some investment professionals have run into problems by assuming that a lack of rules hard rules for giving away money makes it easy: Specialists, however, warn that philanthropic giving is a complex venture that poses risks for investment professionals crafting their own tax-advantaged vehicles for clients.

Securities regulators have taken an increasing number of disciplinary actions against a more than a dozen investment professionals over the past year in an enforcement arena that had largely been the domain of state regulators and the Internal Revenue Service.

Hundreds of thousands of accounts

Enforcement cases have ranged from violations of marketing and sales practice rules of the Financial Industry Regulatory Authority to a Securities and Exchange Commission $9 million investment adviser’s fund diversion scheme last December using a charitable foundation as as vehicles for fraud.

Compliance teams at brokerage firms and investment advisories are seeing a flood of new clients seeking advice on philanthropies and private foundations. With 10,000 Americans reaching age 65 each day, new controls will be needed as clients shift gears from accumulating assets to managing and passing on wealth. Investment firms are looking for ways to remain relevant as trillions of dollars in assets hit the transition point.

“There is a large group of financial advisers who have begun to feel their business is a commodity, and to solve for the commoditization they feel a need to become more involved in ancillary issues,” said John O. McManus, attorney for the estate planning law firm, McManus & Associates. “We see a lot of mistakes and mismanagement and firms needing help fixing issues.”

“Mass affluent” become most philanthropic

Problems arise when investment professionals overstep their expertise in offering services that involve far more complex legal and accounting requirements than transactions and retirement planning. Some are misled by the fact philanthropic ventures are relatively free of regulatory oversight. But there is deceptive complexity in managing charitable activities for clients, and increasing scrutiny on investment and advisory professionals dealing with senior investors making difficult choices.

Setting up private foundations has been the routine for high net-worth individuals with the money to hire professionals in accounting, law and finance. The industry is being hit with a growing wave of middle-income or “mass affluent” who are increasing their giving while wealthier, tax-conscious individuals have slowed their charitable contributions, which have been made less attractive by tax cuts and revisions.

“Fuse is lit” at end of year

The end of the year brings the scramble for clients and firms to decide contributions. The “fuse is lit at the end of the year,” as they race against a deadline to put funds to work to take advantage of tax breaks for the next year’s taxes. The initial setup work for a private foundation may be relatively simple and quick, but follow-up reporting can place an continuing burden that can be onerous for firms and perilous for clients. Privately-funded charities, for example, must report every transaction separately, unlike retirement accounts. Private foundations require board meetings and minutes carefully documented.

“There are ever-changing laws and operations need to be updated to meet them,” said Tamara Surratt, president and chief executive officer of Legacy Family Office. “People think that there are all kinds of rules on who you can give to. It’s true, you have to be careful about giving to a apolitical organization or campaign, or for anything that gives you a personal benefit. But that is not the biggest concern.”

The boom in donor-advised funds offered by most large brokers and fund companies has provided a way for individuals to avoid the complication and cost of a private foundation, and hundreds of thousands have used the alternative. Fidelity’s donor fund has become the largest charitable foundation, surpassing United Way two years ago. The assets of the donor advised funds are expected to top $100 million this year after quadrupling over the past five years.

Funds get “gift that keeps on giving”

The funds themselves have found a comfortable niche, although the philanthropic community has viewed them anxiously and criticized the fund sponsors for being lured by “the gift that keeps on giving” — since firms collect fees on funds they can hold and manage for years without any requirement to give them to away. They are not bound, as non-profit foundations are, to put 5 percent of their assets into the hands of beneficiaries. They have on average paid out about 20 percent, but there is no legal obligation to do so.

“The donor advised funds are really offering a service to their clients. The fees are low, and it’s not a big profit center for them. It’s a perfect choice for smaller charitable contributions, ” said McManus, although individuals with over $500,000 to contribute to tax-advantaged charities can justify the accounting and legal professionals costs required of a private foundation.

“I would hope the UBSs and Merrill Lynchs of the world would educate their advisers on the pitfalls that could befall managing a foundation,” said Surratt. “It should be flagged and there should be resources allocated to that individual. There are a whole host of things to be considered. The average investment professional is schooled in managing investments, or gathering assets. Not running a private foundation.”

Single missed payment

Wealth managers often look for ways to partner with accountants and law firms to manage the wealthy client who sets up private funds. The agreements are ripe for problems if the reporting responsibilities are not made clear from the start, said McManus. A single missed disclosure or missed payment can jeopardize the foundation’s status, he added. But the private fund route allows the wealth manager and client more control over the process and allows for “an enduring charity, with a family ethos, with participation that keeps families together.”

The donor advised funds give control to the firm managing the account and take care of compliance issues on the fund level, providing a practical way for small investors to do tax-advantaged contributions. Charitable gift annuities are another way that small investors can make donations directly to a qualified charity. Tax law changes have made possible qualified charitable distributions from individual retirement accounts, which are a simple way to covert required minimum distributions into a tax-advantaged contribution without itemizing deductions.

The increasing popularity of such investments will place demands on compliance to make certain clients interests are being served at a time when retail protection of seniors is a top priority for securities regulators.

Firms need conversation with clients

“It is one of the biggest issues facing the industry and it is important to understand the implications of the huge wealth transfer coming over the next 10 to 20 years,” said Surratt. ”It’s incumbent on advisers to be thoughtful and think of what is the best interest of clients and to think long term about what legacy they wish to leave.”

Firms need to make certain that brokers are having conversations with clients to make certain the right choices are being made and that they understand the complex transactions involved.

“These are really important conversations to have,” said Surratt “It will be difficult at firms where brokers are managing large books of clients, but it is absolutely those are really important conversations on a regular basis and for firms’ leadership to set the culture to make it possible.”

(By Richard Satran of Thomson Reuters Regulatory Intelligence.)

Richard Satran is a financial journalist covering daily and emerging issues for Thomson Reuters Regulatory Intelligence.

Conference Call: 6 Strategies for Smart Year-End Planning under New Tax Laws

Before we know it, the calendar will turn to 2019. Today, McManus & Associates Founding Principal John O. McManus held a conference call with clients to impart insight on year-end tax strategies, in light of the new tax laws, to implement by December 31st. McManus also covered annual end-of-year essentials. Listen to a recording of the discussion by clicking below:

 

 

1.    TAKE ADVANTAGE OF A LIMITED-TIME OPPORTUNITY: Since the estate tax was not repealed at the end of last year and the increased estate tax exemption is temporary, what can high-net worth families do to minimize future estate tax?
2.    GET SET TO OFFSET: If you’ve already sold appreciated investments or a business in 2018 and will incur significant capital gains taxes, what can you do to enjoy a deduction and aid in offsetting the gain?
3.    PLAN TO SAVE: The drastic limitation on the State and Local Tax (SALT) Deduction for Federal income tax purposes means that those who anticipate selling appreciated investments or a business in the next few years will experience unusually high capital gains taxes—but what can you do so that State capital gains taxes will not be imposed?
4.    ADD TO YOUR INCOME TAX TOOLBOX: In spite of the marginal reduction of the Federal income tax rates, now that the Federal deduction on SALT has been significantly constrained, we will all have even more income tax exposure on investments. Can life insurance function as an income tax planning solution?
5.    ENSURE YOU’RE UTILIZING INSURANCE: High-net worth families will continue to have State and Federal estate tax exposure, so what must remain an essential component of any well-constructed estate plan?
6.    THINK OUTSIDE THE BOX: For those who have Estate Tax vulnerabilities but are elderly or in poor health, the acquisition of a life insurance policy may be uneconomical or impossible for those individuals, but how can life insurance reduce State and Federal Estate Tax while also creating wealth for future generations?

 

ADDITIONAL YEAR-END ESSENTIALS

 

THE ABCs OF ESTATE PLANNING PROTECTIONS: Regardless of tax law changes, it’s important to go back to the basics with estate planning on an annual basis. Proper year-end planning should always consider the following:
·     Incapacity concerns
·     The dangers of passing away without a will
·     Probate pitfalls
·     Insurance as creditor-protection planning
·     Foreign reporting requirements
·     U.S. estate tax exposure for non-resident aliens
·     Business succession issues

Conference Call: Top 10 Dangers and Opportunities for Seniors

Unique challenges face us all as we grow older and become “seniors,” but with proper planning, you and your loved ones can be well-prepared to successfully navigate this stage of life.

Today, John O. McManus held an educational conference call with clients to discuss the “Top 10 Dangers and Opportunities for Seniors” – whether it’s you, your parents or your grandparents. Click below to listen to the enrichment call recording, which covers the following topics:

 

1.    Anticipate, Before It’s Too Late: As we age, there is a significantly greater risk of incapacity. It is essential to ensure basic protections are in place so that loved ones can act immediately in the event of an emergency.

2.    Spend a Little Time Planning to Save a Lot of Time Doing: The need for the Court to oversee the administration of an estate can be time-consuming, costly, and frustrating. Proper planning will allow for the probate process to be completed with greater expediency.

3.    Take Advantage of the Opportunity of a Lifetime (Gift Tax Exemption): Dramatically reduce future potential federal estate tax by utilizing the temporary increase to the lifetime gift exemption.

4.    Don’t Skip Over Generation-Skipping Tax: Understand the tax implications of the transfer of wealth across multiple generations to preserve your legacy for your descendants.

5.    Decrease Your Chances of an Increase in Federal Income Taxes: Evaluate strategies to avoid a potential increase in federal income taxes due to limitations on state and local tax deductions.

6.    Step Up Your Planning with a Step-Up in Basis: Review the power of a step-up in basis upon death, reducing capital gains tax and delivering income tax savings your loved ones can enjoy.

7.    Plan for Long-Term Care in Short Order: The cost of long-term health care could drastically deplete an estate, but strategies may be available to mitigate the attrition of assets.

8.    Expect the Best, Plan for the Worst: Protect the inheritance of your heirs and ensure wealth is not diverted, in case a child’s marriage fails.

9.    Pay Special Attention to Special Needs: Ensure the inheritance of your children and grandchildren can be used to enhance their quality of life, while preserving their ability to receive governmental benefits.

10. Prepare Your Heirs: Aid your loved ones in the effective deployment of the wealth you pass along by imparting your family mission and values, including the intrinsic benefits of philanthropy.

Real Daily Relays Insight from McManus on Self-Directed IRAs

 

Real Daily, which seeks to enrich, enlighten and empower readers to make informed choices that will positively impact their financial lives, recently published the article, “5 Reasons You Need a Self-Directed IRA.” The piece, which cites insight from McManus & Associates Founding Principal John O. McManus, begins with an overview:

·           Self-directed retirement accounts, known as a self-directed individual retirement arrangement (IRA), were created in 1999 by an act of Congress after intensive lobbying of small business owners and associations.

·           The beauty of a self-directed IRA is it allows you to invest up to $6,500 into a tax-deferred account where you control the investments. Many of those investments include alternative vehicles not available in a traditional IRA.

·           These alternative investments include real estate, private mortgages, private company stock, oil and gas limited partnerships, precious metals, horses, and intellectual property.

The first reason why one should consider opening a self-directed IRA is higher returns. Per the article, “The number one reason investors use self-directed IRA accounts is the ability to pursue much higher returns compared to stocks and bonds. If you make a 25% return on a real estate investment and are able to build on that profit cumulatively for 10, 30, or 30 years it can be life-changing.” The story goes on to quote McManus:

“If you understand investments, particularly in certain segments, you can take advantage of higher yields and maybe less volatility,” John O. McManus of the estate-planning firm McManus & Associates in New York and New Providence, New Jersey told NerdWallet.

McManus has invested in real estate and other assets through a self-directed IRA for about 15 years, he says.

A self-directed IRA also lets McManus invest in companies that aren’t publicly traded, which “a mutual fund will not allow you to do,” he says. But, he warns, “this is not a game for the unsophisticated.”

The following four reasons to consider a self-directed IRA include:

·       Better diversification

·       Investing in private equity

·       Putting assets to work

·       Investing in cryptocurrencies

Click here to read the full article, including more information about the five arguments in favor of a self-directed IRA, as well as the risks of self-directed IRAs.

To discuss your investment strategy as it relates to your wealth management plan, call McManus & Associates at 908-898-0100.

Forbes Shares Invaluable Advice from McManus and Widow Clients

Founding Principal of McManus & Associates John O. McManus recently spoke with Ashlea Ebeling, who writes about how to build, manage and enjoy your family’s wealth for Forbes, to share his pre and post-mortem planning advice for spouses, based on his experience working with numerous high-net-worth widows over nearly three decades. McManus also connected Ebeling with two of his clients who shared how they navigated the challenges following the passing of their partners, from managing complexities of portfolios that fell on their shoulders, negotiating with lenders and insurance carriers, how long it took before they turned a corner from a grief standpoint, and more.

The article, “A Widow’s Advice to Her Younger Self,” starts with an invaluable piece of advice: don’t let your spouse do all of your family’s financial planning without your involvement; tell him or her, “This is stuff I need to know!” Those words of wisdom came from McManus & Associates client Bridget Wilson, whose husband passed away from cancer.

From the story:

Unfortunately, the Wilsons’ case is one their estate planner, John O. McManus, says happens all too frequently. He’s helping another financially unsophisticated spouse in her 40s sort out the estate of her late husband, a real estate investor, who committed suicide. “Each one was surprised and unprepared,” he says of the widows. “They simply were not ready.”

Here are the pre-mortem key takeaways that McManus, Wilson and McManus & Associates’ other client who participated in the story hope will be helpful to others:

Do a dry run. Wilson’s husband never signed their will, “so McManus had to petition the probate judge to admit it. ‘All of that would have evaporated if the will hadn’t been validated,’ McManus says.”

Talk to your spouse. Don’t sign things no questions asked. McManus & Associates’ client urges, “Don’t be embarrassed. Don’t be ashamed. Just ask for help.”

Plan for liquidity. “Review investment and retirement accounts for potential income streams,” writes Ebeling.

And after the death of a spouse? Here are important to-do’s from the story:

Revisit your estate plan. From the article, “McManus’ first piece of advice to Wilson was to write her own will as well as a financial power of attorney and healthcare proxy. And to sign everything.”

Seek outside experts. “A good estate administrator will know his or her limits and call on experts as needed,” says Ebeling. Citing McManus’ help to the widow who lost her husband to suicide, “On behalf of the other widow, McManus hired a real estate lawyer to stop the house foreclosure, and a real estate agent to rent it out while she downsized. He introduced her to a financial advisor who negotiated with the private school that was going to kick out her kids for being behind on tuition.”

Find your purpose. In short, ask yourself what will give your life new meaning, and go do it!

Read the full Forbes story here.

For help with pre and post-mortem estate planning, reach out to McManus & Associates at 908-898-0100. We look forward to supporting you.