Forbes Writer Ashlea Ebeling recently brought a very important topic to light with the help of John O. McManus and one of his clients: elder financial abuse. In her new article “Inside A Lottery Scam,” Ebeling tells the harrowing story of a McManus & Associates client, who – in her 90’s – was targeted strategically and relentlessly by unscrupulous phone fraud. From the piece:
“There was a man who was very friendly, very charming.” So begins the tale of a socialite widow from New Jersey horse country who lost nearly $1 million in a lottery scam. Call her Penny. She’s ashamed. “I can’t believe I was so ignorant; nobody can condemn me more than I do myself,” she told me on the line with her lawyer, John O. McManus of New Providence, N.J. “What’s funny is I’m a penny picker-upper; when I think of the amount of money that I gave away to an unknown person, it’s unbelievable,” she says.
How did the scammer convince Penny to part with a lot more than just pennies? “If she sent money, the caller said, she would have a chance to win big.” She started sending checks in hopes of hitting the sweepstakes jackpot, which would give her more money to make a big impact on the community by setting up a charitable foundation to honor her husband and carry on their family tradition of giving.
Recently, the New York Times ran a story by Nelson D. Schwartz, titled “In an Age of Privilege, Not Everyone Is in the Same Boat (A1, April 24).” John O. McManus – McManus & Associates’ founding principal who grew up in the Bronx but has worked with high net worth families for 25 years – penned the Letter to the Editor below in response:
Bankrate, which has more than 2.75 million readers, recently turned to McManus & Associates Founding Principal John O. McManus for advice on investments and IRAs. His thoughts are included in the publication’s feature slideshow, “Traditional or Roth IRA: Find out which IRA is better-suited for high-return investments.” From the slideshow:
Pay upfront, watch Roth explode later
Do you benefit from having an extra-long time horizon? Then going full throttle in the Roth IRA is apropos, says John O. McManus, founding principal of McManus & Associates in New York City.
“If you can take a long-term view, opt for a Roth IRA and take an aggressive approach with asset allocation and investing,” he says. “Roth IRAs buy you a lot more time to allow the market to recover, absent the mandatory distributions of traditional IRAs. Create a self-directed Roth IRA and pour significant capital in it to build horsepower. Then smartly pursue alternative investments to generate the biggest returns,” he says.
“Private equity and real estate are the 2 best areas where real leverage can be achieved with a Roth IRA. The idea is to pay your taxes up front, then really watch returns from your investments explode.”
To address our clients’ burgeoning international interests, from investments to regular travel, inheritances, and family members overseas, McManus & Associates created an International Practice Group. These professionals are devoted to keeping our clients compliant by meeting proper filing requirements, including those outlined under the Bank Secrecy Act.
The Bank Secrecy Act gave the Department of Treasury the authority to collect information from US persons who have a financial interest in, or signatory authority over, accounts maintained with financial institutions located outside of the US. This provision of the Bank Secrecy Act requires that, if the aggregate maximum value of the foreign financial accounts exceeds $10,000 at any time during the calendar year, you are required to report the accounts annually to the Department of Treasury by electronically filing a Financial Crimes Enforcement Network (FinCEN) 114, Report of Foreign Bank and Financial Accounts (FBAR).
Currently, for the 2015 tax year, owners of foreign accounts must e-file by June 30th, with no extensions permissible. However, beginning with the 2016 tax year, the FBAR will be due on April 15th, and the taxpayer will be allowed to request an additional six months to file (October 15th deadline).
Scrambling as we approach April 18th? Here are three last-minute tax strategies to harness for proper management of the deadline.
If you need additional time to file your personal income tax return, file an extension:
The deadline to file your tax return is April 18, 2016 (April 19, 2016, if you live in Maine or Massachusetts).
If you cannot file your return on time, apply by the due date of the return for an extension. You can receive an automatic six-month extension for your personal income tax return if you file Form 4868 by the tax filing deadline. (If you are mailing the extension, you should mail it certified with a return receipt, so that you have proof of the mailing date.) The extension gives you until October 17, 2016 to file your 2015 return.
This extension is for filing only and does not allow you more time, without penalty, to pay your tax liability for 2015. Although the extension will be allowed without payment, you will be subject to interest charges and possible late payment penalties on 2015 taxes not paid by April 18th (or April 19th in Maine or Massachusetts).
If the amount paid with Form 4868, plus withholding and estimated tax payments for 2015, are less than 90% of the amount due, you will be subject to a late payment penalty (one-half of 1% of the unpaid tax per month).
Today GOBankingRates, which has nearly 350,000 readers, launched an interesting slideshow, “21 Ways the Rich Waste Their Money.” For #6 and #7 on the list, journalist Lia Sestric shared two examples of wasteful spending flagged by John O. McManus, founding principal of McManus & Associates.
Last Friday, Brian O’Connell penned a piece for TheStreet on what millionaires being down on the stock market means for regular investors. Here are thoughts from John O. McManus, founding principal of McManus & Associates:
With the wealthy keeping a tight rein on their dollars, the market remains flat to down. Because millionaires feel poorer, they’re spending less on creature comforts, which can cause the economy to slow. We saw this in the Great Recession – fewer vacations and pricey dinners, less frequently cut lawns and cleaned pools, and fewer wallets opened for cars, high-end fashion, jewelry and more. When millionaires are soured on the market, regular investors should view this as a red flag, because the rich tend to spend the most on guidance from top-notch advisors and can afford to be patient and invest for the long-haul. If millionaires are pulling out of the market or not investing, there’s no reason regular investors should do the opposite. That said, many millionaires may still be invested in the market, because they can afford to take a long view.
5 ways to protect your estate from capital gains taxes
Published: Dec 25, 2015 6:04 a.m. ET
Traditional estate planning is being turned on its head
By JOHN O. MCMANUS
The time-honored approach to estate planning is being turned on its head by significant tax law changes that have taken effect in recent years.
Long-term capital gains tax rates now range from 25% to 33% (when you add together the top federal, state and local rates and Obamacare’s Medicare surtax). So now that the federal estate tax exemption is $5.43 million ($10.86 million for a couple’s combined exemptions), many Americans may no longer be exposed to federal estate taxes, making taxes on income and capital gains more prominent.
In fact, some legal practitioners who spent the first half of their careers zealously transferring assets out of their clients’ estates to avoid estate taxes now expect to spend the second half pushing assets back into their clients’ estates because the estate planning paradigm has changed.
What are the best ways to strategize around capital gains taxes to keep them as low as possible?
Rundown of the tax rules for gifts
To answer that, it helps to first understand the rules about gifts and taxes.
Are intra-family loans now a steal? According to a recent story from Ashlea Ebeling of Forbes, the answer is a resounding “yes!” John O. McManus recently spoke with Ebeling on the topic, of which you should take note. From the article:
The terrifically low rate you can use for a short-term intra-family loan is just 0.56% for loans up to three years. Go out up to 9 years and the rate is 1.68%. For loans of 10-years-plus, it’s just 2.61%.
As Ebeling points out, intra-family loans are a good option for parents and grandparents who want to help buttress future generations with buying a house or opening a professional practice, for example. And what if you were to loan $1 million to a family member who then uses it for a private equity investment that doubles to $2 million? From the story:
“I’ve just made $1 million on her balance sheet instead of mine,” explains John McManus, an estate lawyer in New Providence, N.J. who just helped a developer father loan his son the money to invest in distressed commercial real estate in Newark.