Insights: Blended family estate issues, Alternative Minimum Tax, charitable giving + the Wright brothers
Good reads:
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·???????? Weekly Investment Strategy
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Best quote of the week:
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"Behind every stock is a company. Find out what it's doing." – Peter Lynch
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Best soundbites of the week:
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All too often, families don’t get specific enough with their estate goals. They may have a general idea of how they want their assets distributed, but when it comes time to actually put pen to paper, documents often end up with too much room for interpretation. Below is an excerpt that is largely focused on blended families, but the concepts are applicable to everyone. In it, Barron’s explains why it’s so important to get specific with your wishes:
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It’s important to be as specific as possible. Patel has seen documents broadly written to say everything should be distributed equally between the decedent’s spouse and children from a prior marriage. But not detailing how assets should be divided can create uncomfortable and sometimes contentious situations for everyone, especially when dealing with multiple assets, such as a business, home, and a vacation home.
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If everything is divided equally, are the spouse and stepchildren going to become co-tenants? Who gets to make the decision about whether to sell or keep a particular asset or assets?
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There can also be issues if assets are directed to a particular party, without taking liquidity into account.
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Patel gives the example of a $5 million home that’s left to a spouse and liquid assets of the same amount left to children from a prior marriage. It might seem equal on its face, but the surviving spouse may not have the means to pay the mortgage and property taxes and could be forced to move, possibly selling at a depressed price.
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There has been plenty of talk lately about the new Alternative Minimum Tax (AMT) regime and how it will impact high-income individuals. While there are many intricacies to it, a lot of attention has been focused on how it will impact philanthropic goals (and ultimately, the various charities who would also be impacted). Below is a summary, but the key takeaway that I’d highlight: if you’re considering donating shares, it may be best to do them in 2023 vs. 2024.
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Certain high-income clients looking to make a large donation might consider doing so before 2024, when the federal government’s proposed changes to the alternative minimum tax (AMT) are set to become effective, Power said.
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Under the proposed revamped AMT, only half of the donation tax credit can be applied against the AMT, down from 100% under the current rules. Meanwhile, 30% of capital gains on the donation of publicly listed securities would be included in adjusted taxable income for the purposes of the AMT.
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“If there are investors who are trying to decide, ‘Should I make an in-kind donation [this year], should I wait until next year?’, and AMT applies to them, it is likely better for them to make that donation in 2023,” Power said. – Investment Executive article
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Best visual of the week:
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The last few months have certainly been bumpy for the markets. September and October were rather dismal for global markets, but November was the exact opposite. But, as the chart below shows, gains or losses over very short time periods are pretty much meaningless.? What matters over the long-run is an investor’s time horizon. As historical numbers have shown, the longer your time horizon, the better your odds for success and the less variable your range of returns are.
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“There are no guarantees when investing in the stock market. Bad things can and will happen. But if you have a time horizon that is measured in decades as opposed to days, months or years, you’re going to be better off than most investors.” – A Wealth of Common Sense article
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You’re Invited: Ten Themes for 2024
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Please join us for a special zoom webinar with Raymond James’ Chief Investment Officer, Larry Adam.?
This presentation details our ten themes for the next investing year, highlighting the key trends and opportunities we see.
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Date: January 11, 2024
Time: 10:00 am PT/ 1:00 pm ET
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Guest Speaker: Larry Adam, CFA, CFP, Chief Investment Officer of Raymond James Financial? Inc.
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Contact me for a registration link: [email protected]
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2024 TFSA contribution limit:
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领英推荐
Good news, the TFSA contribution limit for 2024 has been officially released and the amount that you can invest tax-free has gone up. The 2024 limit is $7,000, up from $6,500 in 2023 and $6,000 in 2022.
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The total contribution room available in 2024 for someone who has never contributed and has been eligible for the TFSA since its introduction in 2009 is $95,000.
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In case you missed it:
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In my most recent TV interview, I discuss some important year-end tax considerations, charitable giving, and some of the potential positives for markets over the near-term. Watch the full interview here:
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I’d love to hear from you:
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Do you have a question about the markets? Or perhaps you’d like to learn more about a particular financial planning topic? Maybe you’ve got a question about your own personal situation?
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Send me your question, and I’ll include it as a topic in an upcoming newsletter: [email protected].
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Beyond the markets:
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Last week I wrote about the random Douglas DC-3 aircraft that I discovered in the middle of the forest during one of my hikes. I thought I’d continue with the aviation theme and bring you some interesting facts about the famous Wright brothers.
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·???????? Wilbur and Orville Wright were fascinated by flight from an early age and attributed their interest in aviation to a small helicopter toy given to them by their father.
·???????? Neither of them graduated high school.
·???????? The Wright brothers once published a newspaper. When he was 15 years old, Orville launched his own print shop from behind his house and he and Wilber began publishing The West Side News, a small-town neighborhood paper. It eventually became profitable, and Orville moved the fledgling publication to a rented space downtown.
·???????? They owned a bike store called the Wright Cycle Company, where Wilbur and Orville fixed clients’ bicycles and sold their own designs. It grew into a profitable enterprise, which eventually helped the Wright brothers fund their flight designs.
·???????? The Wright brothers chose Kitty Hawk, North Carolina for many test flights because it provided wind, soft sand, and privacy.
·???????? To see who would pilot the 1903 Wright Flyer first, the brothers flipped a coin—and Wilbur won. His initial flight took place on December 14 but ended with a crash. Three days later, on December 17, 1903, Orville hopped into the pilot seat of the repaired Flyer and flew for 120 feet. After that, the brothers took turns.
·???????? When Neil Armstrong took his giant leap on the moon alongside Buzz Aldrin in July 1969, he carried with him a swatch of fabric from the 1903 Flyer’s left wing and a piece of its wooden propeller inside his spacesuit.
·???????? Neither brother ever married, either. Orville said it was Wilbur’s job, as the older sibling, to get hitched first. Meanwhile, Wilbur said he “had no time for a wife.”
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Source: Mental Floss
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Thanks for reading, and I wish everyone a great weekend!?
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Cheers,
Kim
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Kim Inglis, BCom, CIM, PFP, FCSI, RIAC
Portfolio Manager
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T: 416.777.6417 (Toronto)
T: 604.654.1160 (Vancouver)
T: 250.979.1803 (Kelowna)
TF: 1.877.363.1024
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The opinions expressed in this newsletter are those of the Financial Advisor Kim Inglis, BCom, CIM, PFP, FCSI, CAFA and not necessarily those of Raymond James Ltd. (“RJL”) or Raymond James (USA) Ltd. (“RJLU”).? Statistics, factual data and other information presented are from sources, believed to be reliable but accuracy cannot be guaranteed. It is furnished on the basis and understanding that Raymond James Ltd. and Raymond James (USA) Ltd. is to be under no liability whatsoever in respect thereof. It is for information purposes only and is not to be construed as an offer or solicitation for the sale or purchase of securities. Raymond James Ltd. and Raymond James (USA) Ltd. financial advisors may only transact business in provinces and/or states where they are registered. Follow-up and individualized responses involving either the effecting of or attempting to effect transactions in securities, or the rendering of personalized investment advice for compensation, will not be made to persons in provinces or states where the financial advisor is not registered. Raymond James Ltd. is a member of the Investment Industry Regulatory Organization of Canada (IIROC) and the Canadian Investor Protection Fund. Raymond James (USA) Ltd. is a member of FINRA/SIPC. Raymond James (USA) Ltd. (RJLU) and advisors may only conduct business with residents of the states and/or jurisdictions for which they are properly registered. This provides links to other Internet sites for the convenience of users. Raymond James Ltd. is not responsible for the availability or content of these external sites, nor does Raymond James Ltd endorse, warrant or guarantee the products, services or information described or offered at these other Internet sites. Users cannot assume that the external sites will abide by the same privacy policy which Raymond James Ltd adheres to.