Tracie Dawson

When people are updating their estate documents, they frequently leave assets in trust for someone else. The key concept behind the idea of a trust is separating use and beneficial enjoyment from control of the asset. Some common reasons for creating trusts are:

1. desiring someone with greater financial skills to manage the assets.
2. wanting to control or influence who receives the assets after the trust beneficiary dies.
3. having asset protection for lawsuit or divorce.
4. reducing potential estate taxes.

Frequently people decide they want to use trusts as part of their plan but are left scratching their heads when they try to select a trustee.

A trustee is the person or entity who administers the property held inside the trust.

Some considerations for selecting a trustee are listed below. Think through these items in advance of your meeting with your attorney to provide a richer, clearer conversation.

Individual or Corporate?

The first decision in selecting a trustee is choosing between an individual or corporate trustee. Individuals have appeal because they can be more hands on and customized to the needs of the beneficiary. An individual may have a better understanding of your wishes and the beneficiary’s needs. The benefits of a corporate trustee are the potential for professional management as well as continuity-even if the trust company goes out of business, there will likely be a qualified successor ready to step in.

Choosing an Individual

If you select an individual to serve as trustee, below are some considerations:

• If the trust is for a minor child, do you want the child’s legal guardian to also be trustee? One person filling both roles is convenient, more efficient, and could help avoid conflict between the guardian and the trustee. However, the person who is best at managing money may not be the best guardian, and you may lose potential third-party oversight by having one person fill both roles.
• If the trust is for a minor child, do you want the child to eventually become his/her own trustee or co-trustee at a certain age (or after learning certain skills)?
• Consider relationship dynamics. Do the potential trustee and beneficiary currently have a good relationship? Would serving as trustee sour this relationship or other relationships?
• Could the trustee serve as a teacher or mentor to the beneficiary? Is the trustee appropriately assertive in being able to say “no” to the beneficiary?
• In addition to having financial skills, does the potential trustee share your values around money and spending?
• Consider the age of the trustee and the potential length of the commitment.

Trustee fees?

You will also want to consider the costs associated with your selected trustee. Corporate trustees have minimum account sizes, and fee schedules may be high relative to the size of the trust. If you decide a corporate trustee is best for you, obtain a fee schedule and be sure to receive periodic updates as fees and minimums change. An individual trustee may offer to serve at no cost. Give this offer serious consideration. If someone serves with no fee, they are doing you a favor and could be more likely to shirk responsibilities. Trusts may last for many years, and serving as trustee requires a commitment of time and energy. A trustee who does good work will earn his/her fee.

If all of this seems overwhelming, you may take comfort knowing there are some options. You can name several potential trustees, so that if someone is unwilling or unable to serve, that person can resign and the alternative trustee you named will be able to step in. Your attorney may also talk to you about giving the trustee the power to appoint a successor trustee or giving the trust beneficiary the power to remove a trustee.

Thinking through these questions in advance of appointing a trustee will provide for a deeper, more thoughtful conversation when you meet with your attorney.

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Jonathan J. Robertson

Abacus’s clients joined political strategist Greg Valliere for a conversation about the impact of the 2016 pending presidential and congressional elections on the markets, international trade, and monetary and fiscal policy.

Listen to An Evening with Greg Valliere – A View from Washington

“If there be any truer measure of a man than by what he does, it must be by what he gives.” – Robert South

While many of us are personally involved with charities or philanthropic opportunities, involving your business in giving back has the power to create a positive impact on both the charities you support and your business. Building and executing a philanthropic plan for your business allows you to identify and share your core values, engage employees, enhance team dynamics, and build your community.

The process of determining an intentional philanthropic plan for your company will naturally facilitate vital conversations about the core values of your organization. Based on these values, you can create a strategy for giving back. Along with helping your organization identify values internally, your philanthropic work allows you to share your values with those outside the organization. Publicly sharing your values provides potential clients and future employees with a glimpse of what your organization values and can attract like-minded individuals. To start the process, consider the following: 1] What issues are important to your team? 2] What resources do you have available? and 3] What are your long-term goals for giving?

Philanthropy creates a platform for engaging employees in meaningful work and allows teams to work together in environments different from those of their typical day. Employees desire a connection with the company they work for; contributing to a cause that both employees and employers care about can make employees feel more engaged in their work and more committed to the company.

As a business owner, you are likely already active in your local community, which provides you with firsthand knowledge about the needs and priorities of your community. When developing a plan for charitable involvement, maximize your impact by focusing on the intersection of your company’s core values and those of the community. Whether your business is committed to giving time, money, talent, or a combination of those assets, giving back is a key element in building a strong culture in your company.

Companies have unique resources that allow a variety of philanthropic opportunities:

1

Time | Volunteer as a group to work at a food bank such as Harvest Hope or spend an afternoon flexing your muscles with Habitat for Humanity. By offering your employees the chance to work together outside of their normal routines, you create an opportunity to build more collaborative teams and grow leadership skills. A philanthropic project is also a great way to include family members in working to help others. Allow employees to take a day or two off work (without using their leave) to volunteer.

2

Money | Whether through donations to a food drive, school supplies, or fundraising through the combined efforts of the office, well-spent donations can make a big impact. Consider creative giving strategies like a matching program for employee donations.

3

Talent | Companies have the opportunity to share their unique skills and expertise with charitable organizations—from marketing, to web design, to financial analysis. To consider how your skills could benefit others and to explore your opportunities, check out A Billion + Change, which is a national campaign to mobilize pro bono and skills-based volunteerism.

Once you have created a plan for giving back, take time to periodically reassess. Use your assessment to consider what is working well, what you could do to improve the plan, and how to share the outcome of the past year’s efforts. Philanthropy is a public expression of private values. What is your company expressing?

For more tools and resources on creating your philanthropic plan, visit www.BusinessDoingGood.com.

Cheryl R. Holland

A popular saying in the world of finance is that liquidity, or the ability to sell something, exists until you need it. Understanding the liquidity of the investments you own and how liquid your balance sheet is can be the difference between joy and despair.

For a brief moment let’s pretend that the only way to buy something is with dollar bills. In this fictitious world imagine that you have two investments dollar bills and a house. One day you head to the grocery store and all your dollar bills are gone. Now what? Can you sell your house? What is the correct price for your house? How long will it take to sell your house? If you price your house to low it sells quickly and you left money on the table. If you price your house to high it takes a long time to sell. To make matters worse while your house is on the market and you are trying to make a very important decision you are starving. This is an extreme version of liquidity but if you own art, a limited partnership, real estate, a private business, an exchange traded fund (ETF), a stock, or a bond you need to know:

• How liquidity impacts each of these investments.
• How you can use liquidity to meet your current cash flow needs while maximizing your long term return.

Creating an exact estimate for liquidity is impossible. In the stock and bond market the bid/ask spread is a current measure of liquidity for stocks, bonds, and ETFs. The bid is the price that someone is willing to pay for your investment. The ask is the price that someone is willing to sell you an investment. The difference between the bid and the ask is a measure of liquidity.

If a stock or ETF is not traded often the bid/ask spread will be large meaning that you will sell the stock for less than you think, buy the stock for more than you think. In addition to selling for less and buying for more a large bid/ask spread can create rapid price changes. The problem with bid/ask spreads is that they are also dependent on the market mood. When anxiety plagues the market bid/ask spreads swing wildly and your liquid ETFs can become dangerous to your financial health. While bid/ask spreads can and do change based on moods certain classes of stocks have more liquidity than others. Small company stocks typically have lower liquidity than large company stocks. When times are good small company stocks can still pose liquidity challenges, but when times turn bad and even large company stocks see liquidity drying up small company stocks and thinly traded ETFs can become as liquid as a ten year old car. There are numerous trading strategies that you can use to help manage price and speed, but knowing the investment’s liquidity before you buy and how the investment changes your balance sheet’s liquidity profile is the best trading strategy.

The speed at which you can get out of a decision measured against the emotional pain experienced during the process is what liquidity is all about. The attributes of liquidity are time, size, and popularity. All of these factors are dynamic resulting in the need to view liquidity on a continuum with assets being at different locations at different points in time. To maximize the growth of your balance sheet and minimize your emotional stress pay attention to liquidity at both the investment level and the balance sheet level and make sure that your balance sheet can provide for your essential spending needs in a variety of market environments.

Charles B. Flowers

The new Social Security law that passed late last year, the Bipartisan Budget Act of 2015, helped buoy the Social Security system by eliminating two claiming methods: 1) the “restricted” application, and 2) the “file and suspend” application. These strategies, which have been used by many couples of full retirement age to maximize lifetime benefits, will no longer be available. Depending upon your age and circumstances, you may be grandfathered under the old rules and able to take advantage of these eliminated strategies before the window of opportunity closes. Final deadlines are based on your full retirement age and may require that you take action now to avoid a decrease in lifetime benefits for yourself and your family.

The “restricted” application allows a spouse (or qualifying ex-spouse) to switch between their own work record and their (ex)spouse’s work record when claiming Social Security benefits. This strategy maximizes lifetime payouts by paying benefits under one record while the other record earns delayed credits of 8% per year. This filing option is being phased out and is no longer available to anyone born after January 1, 1954. However, if you were age 62 on or before January 1, 2016, and are eligible for Social Security benefits under your own and a spousal record, you remain eligible to file a restricted application at you full retirement age. Upon filing, be sure to request that your payment be “restricted” to one record so that delayed credits can accrue under the other record.

The “file and suspend” application for Social Security benefits allows one spouse to collect a spousal benefit without the other spouse also collecting benefits. This strategy helps a married couple maximize their lifetime payouts by collecting a spousal benefit and earning delayed credits under the same record. Under the new rules, a spouse can no longer collect Social Security benefits under a suspended record; however, if you were born before May 1, 1950, you remain eligible to suspend your own benefits without denying benefits to your spouse. To secure the option of your spouse collecting benefits at full retirement age under your suspended record, file for your own benefits now (or no later than April 29, 2016.) Upon filing, request that your benefits be suspended so that delayed credits can accrue under your record.

While only those grandfathered under the Bipartisan Budget Act retain the “restricted” and “file and suspend” options, many other strategies can affect your Social Security claiming decision. Your potential maximum lifetime benefit is just one factor to consider. Other equally important factors for consideration are: your need for income, personal life expectancies, and what other assets are available to meet your financial needs. Social Security rules are complicated; it is always advisable to analyze the trade-offs unique to you.

For more information about Social Security claiming strategies or to file a claim, go to www.ssa.gov.

Susan A. McCants

Family businesses often have competing goals of the family and the business because the family side of the company (i.e., members of the family) usually wishes for stability and continuity, while the actual business requires constant adaptation and change. Without the business, there is no family business, but without the family there is also no family business.

The “three-circle model of family business” (Gersick, et al) is generally accepted as the standard model for family businesses. This particular model includes family, business, and ownership. Often, these circles are constantly intertwined and thus can result in poor communication among people, resentment, and a lack of commitment to the future—the very things the business should be trying to prevent.

The “three-circle model of family business” may be a valuable visual aid to facilitate future family business conversations, once each person within the business recognizes and understands both their perspective as well as others in the model.

Gersick’s model suggests that it is not the “business aspect” that makes a family business unique from other business arrangements; the family does. Different perspectives by each person concerning the business can create conflict among members. Each person’s perspective depends upon that person’s perceived gain or loss within the system. Each member of the business must recognize the three circles.

According to the diagram, the family business system is broken into 3 circles with 7 different zones. The interdependence of the three entities becomes more evident after the people within each circle are identified by the model. Members of the family, company employees, and company shareholders may be focused on the health of the business, while a non-family member executive may be focused on reinvestment in the business (which will decrease shareholder distributions to family owners).

Each zone is represented and includes the following people within the company:

Zone 1

Family member neither working in the business nor owning shares.

Family members not active in the business who are still affected by the business and what it provides and takes away from them.

Zone 2

Non-family shareholder.

People who have invested capital in the business and are expecting a return on their investment. (Their goals may not include the well-being of all family members, especially those not productive in the business.)

Zone 3

Business employees.

Business health and longevity is more important to these people than ownership distributions or the needs of the family. They are concerned about a future in the business beyond their current role (since they are not family members).

Zone 4

Family member shareholder not working in the business.

Family members who own shares in the company but do not work for the business. These people are often more interested in the dividends they can receive in the short term, rather than in the long-term performance of the company.

Zone 5

Non-family member shareholder working in the business.

Often an executive who has been recruited by the company with global leadership responsibilities. This shareholder’s focus is on business health and growth rather than on the needs of individual family members.

Zone 6

Family member working in the business.

People who are family members and employees of the company, but do not own shares of the company. In some aspects, this family member is like any other employee; however, this family member may eventually aspire to receive company ownership.

Zone 7

Shareholder family member working in the business.

Perhaps the most important person in the system who can make decisions with the best interest of both the family and the business in mind.

To ensure that ALL members of a “family business” (family or not) are focused on a positive outcome for the business, be sure to have discussions about the role of each person in the business as it relates to each member’s interest. When both employees and non-employees are involved, the best decisions for both the family and the business can be achieved.

For more information about making optimal decisions in your family business consult your attorney, tax advisor, or financial advisor.

X. Alexandra Chastain

Financial advisers can use so-called interest-based negotiating to help couples address disagreements and shape a shared plan.

We negotiate all day long, with our team members and with clients, and we also listen to and help clients negotiate with each other. When helping clients negotiate, one of the best ways of facilitating a discussion is through so-called interest-based negotiating.

In this approach to negotiation, we help clients uncover what their interests—rather than their positions—are, to help discussions and planning move forward.

To be an interest-based negotiator, you have to be an active listener, being open and present during discussions. When you sense a client is expressing concern, offer a response. In your response, don’t use the phrase, “I think.” Rather, say, “It sounds like” or “It seems like.” That phrasing opens a door to further discussion.

Even getting what you heard the client say wrong is powerful information. If the client says, “No, that’s not what I meant,” you can say, “Tell me a little more about that,” and that clarifies the issue. Ask open-ended questions, affirm what clients say, and when emotions are clarified, you can start solving problems.

Here’s an example: Say a husband and wife have a family business. The wife doesn’t like taking risks and feels uncomfortable borrowing money for the business. The husband is comfortable with risk and borrowing money. They own things together and need to make decisions as a family. With opposite positions, it might seem that the husband and wife are at an impasse. However, with interest-based negotiating, you may find they actually have common goals.

First, try to get the wife to talk about what makes her uncomfortable about borrowing. Maybe it’s her family history or maybe it’s an adage like “never borrow for what you can save up for.” Her basic interest is knowing that there will always be money to support her and her husband, and debt could put that in jeopardy.

Next, talk to the husband. He may say that to keep the family business alive, they need to take risks so that they can support themselves 25 years from now. As an adviser, you find that they both have the same basic interests, so now you can work on a plan that works for both of them and gets them to this common goal.

Our job is all about helping clients be successful and identifying how they define being successful. If you can bring active listening and interest-based negotiation skills to client meetings, then the clients can achieve a much higher level of success.

This article originally appeared on The Wall Street Journal.

Cheryl R. Holland

We continue to hear about major retailers and governments having large data breaches. Security threats are growing as we continue to spend more of our lives online. According to a Duo Security report published this year, 62% more security breaches occurred in 2013 than in 2012, with an astonishing 594% increase in stolen identities. What can be done to improve your financial safety online?

Implementing the following best practices will help to keep your finances safe online:

1

Use strong unique passwords and change them frequently.

More sites now require you to use a password that contains both uppercase and lowercase letters, numbers, and special characters. (The downside is they have no way to know if you are using the same password for every login you have.) A good password manager can be used on all of your devices and will check for any duplicate passwords. Most password managers will generate a complex unique password for you when you set up a new account. The most popular password managers include: Lastpass, 1Password, Roboform, and Dashlane.

2

Use two-factor authentication.

This method uses both a password and some other piece of information, maybe a code from a text message or from an app that randomly generates a code. More financial websites have started allowing two-factor authentication, a good practice on other sites as well. Your password manager should also have an option for two-factor authentication.

See www.twofactorauth.org to learn more.

3

Keep your antivirus and regular software up to date.

Keep the software and applications you use current by installing their most recent versions. Programs are constantly improving security and adding fixes for known threats. Set your applications to update automatically.

4

Monitor your accounts and credit card statements for unusual activity.

While credit card companies have advanced systems for detecting fraudulent activity, they are not able to flag every suspicious transaction. Review all of your transactions on a monthly basis to identify any purchases for which you are not responsible.

5

Use bank and credit card notifications.

Many financial institutions, including some third party websites like www.mint.com, allow you to set up alerts if a large transaction or any unusual activity has taken place in one of your accounts. By setting up these alerts, you can be aware of any usual activity on your account.

6

Find the website yourself or use a bookmark.

Everyone receives a large amount of emails daily, and it can be difficult to distinguish between legitimate and phony communication. If you receive an email from one of your financial institutions asking you to review or confirm some information, it is a good idea to not click any links in that email. Instead, visit that institution’s website.

7

Make sure your web browsing is secure.

When you are accessing your financial information or making a purchase on the web, be sure to look for https in the web address bar. The “s” means that the link between the browser you are using and the server is secure and encrypted. Many common sites, such as Google and Facebook, use https as the default; any time you are entering or browsing your personal information, check that you are on an https site. Web browsers, such as Firefox and Google Chrome, have free add-ons that will force all website to use https.

See https://www.eff.org/https-everywhere for the add-on information.

8

Use the financial company’s mobile app when possible.

Most of us use mobile devices to access financial data when away from home. If you need to look at your finances on one of these devices, be sure to use an app from your financial institution, which has more security than the mobile web browser. Mobile apps are also implementing high-level security features, such as biometric authentication, where you have you use your face or voice to access your account information.

9

Use common sense.

This is the most important tip. Be cautious while providing personal or financial data online. You can use every security program and tool and still be vulnerable. Simple things like always logging out of websites when you are done or not using the same password for every website can go a long way to making your online usage a safe and enjoyable experience.

Stephen “Scotty” J. Scott

While a large salary may seem like the most important thing for you to consider, the additional benefits offered can be equally important. A job offer is typically referred to as a “package,” or the salary plus the benefits. Many applicants focus on one part or the other, such as the salary, and fail to view the offer comprehensively. While no situation can be perfect, it is always best to consider the entire “package.”

Whether you’re living at home or moving across the country, cost of living is an important consideration. When examining the salary, consider expenses particular to the job location. A general rule is that cities cost more than suburbs. However, the reason certain places are more expensive than others may be due to varying factors such as tax rates, housing costs, gas prices, etc.

A cost of living calculator compares salaries across different regions and provides a breakdown of expense comparison. For example, an individual earning $50,000 in Columbia, SC, would need an equivalent salary of approximately $79,000 to live in Washington, D.C., to expect the same lifestyle. The cost of living calculator provided by bankrate.com below shows that your rent is twice as expensive in D.C. as Columbia, while your electric bill would be less.

The next part of the package is the benefits. Many people view benefits as secondary to the salary, but a better benefits package can replace the need for a significant chunk of salary.

When looking at the list of benefits offered, ask yourself three questions:

What types of benefits are offered?

• Are health insurance, life insurance, retirement plans, etc. included?
• If not, how could you provide these?

Who pays for the benefits?

• Will the employer pay the premium, or does the employee bear the cost?
• Does the employer contribute to the retirement plan?

When are you eligible to receive these benefits?

• Are you covered under the plan the first day, or after a period of months? *
• Do you receive an employer match immediately or after a year?
note * especially important consideration for any disability benefits

Evaluating a job offer involves more than judging the salary at face value. Keep in mind that any benefits not covered by an employer will have to be covered out of pocket! After taking into account the number of expenses you could be facing due to an absence of certain benefits and cost of living, that “large” salary could look smaller. The benefits provided add to the salary, as well as help prepare for more pressing future expenses.

For more information about cost of living calculators, the following websites may be helpful:

http://www.bankrate.com/calculators/savings/moving-cost-of-living
-calculator.aspx

http://www.payscale.com/cost-of-living-calculator

http://www.bestplaces.net/cost-of-living/

Carolyn A. Stewart