i Life Insurance 2013: June 2015

Thursday, June 18, 2015

10 Wealth Planning Tips for a Post-DOMA World: Aspiriant

When the U.S. Supreme Court overturned the Defense of Marriage Act (DOMA) on June 26, that was just the beginning of the story for many wealth managers who serve same-sex couples.

San Francisco-based wealth management firm Aspiriant LLC, for example, has provided a checklist to help its more than 40 financial advisors in seven cities nationwide re-set the clock with clients whose lives will change as a result of DOMA’s repeal.

“I wrote a checklist internally for our advisors, who should take a fresh look at how the law’s repeal affects clients’ financial plans,” said Aspiriant Director of Planning Sandi Bragar (left) in a telephone interview with ThinkAdvisor on Thursday. “We have worked with a lot of same-sex couples in the Bay Area, and it’s something we’ve been watching very closely.”

Reviewing a same-sex couple’s financial plan can reap tremendous benefits for the client, Bragar said.

“In terms of tax benefits, we always found that same-sex couples didn’t get the same tax rights that other married couples get,” she noted. “If your marriage is recognized by the federal government, there is no estate tax. But if somebody in a same-sex partnership died and had an estate of more than $5.25 million, the surviving partner would have to pay tax above that $5.25 million. So for an estate of $10 million, you subtract $5.25 million, and that leaves $4.75 million that’s taxed at 40%, almost $2 million in tax, which is a huge penalty.”

Bragar, a CFP who serves 40 to 45 families, including a few same-sex couples, said Aspiriant has dealt for years with tricky wealth management issues involving same-sex couples, including estate planning, taxes and insurance. Aspiriant, with approximately $7 billion in assets under management, in 2013 was named No. 11 on Forbes’ list of Top 50 wealth managers.

Read Bragar’s 10 wealth planning tips for same-sex couples in a post-DOMA world on the following pages.

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“The implications of the overturn of DOMA on same-sex clients living in states where marriage is legal is HUGE,” writes Bragar, who joined Aspiriant in 1999 and became a firm principal in 2002. She now chairs Aspiriant’s wealth planning committee, and serves on the client service committee.

Bragar counsels advisors and their clients to revisit financial plans to determine the big picture implications on their ability to financially achieve what’s most important.

“For wealthy couples, the estate tax savings alone will be a game changer,” Bragar says. “As part of this exercise, revisit your survivor needs. Maybe you can now self-insure, and don’t need as much life insurance.”

2. Update your estate plan

Trusts, wills, general powers of attorney and healthcare powers likely all need to be re-worked to more efficiently achieve estate transfer objectives, “and to ensure that your spouse can make important financial and healthcare decisions for you if you lose the ability to make them yourself,” Bragar writes.

Married same-sex couples can now execute joint trusts, when appropriate, she adds.

3. Revisit the beneficiary designations for your retirement accounts

“Until DOMA was knocked down, same-sex couples missed out on the ability to enjoy the survivorship rules for IRAs and other qualified retirement plans,” Bragar says.

These rules allow the surviving spouse to roll over the deceased spouse’s retirement account balance to the survivor’s IRA at the deceased spouse’s death without triggering taxes, she writes. “Since this opportunity wasn’t available to same-sex couples, some couples decided to name other beneficiaries (like their trust). Revisit your beneficiary designations to make sure they still make sense.”

4. Take a fresh look at your investment portfolio

Consider these questions: Is the portfolio organized in the manner that you’d like or should you be commingling investment accounts? Do account titles need to be updated? Should you be taking a different overall investment approach now that you can truly invest together without hurdles?

5. Revisit tax planning

“The ability to file joint federal and state income tax returns is a big logistical win,” Bragar reminds advisors to same-sex couples. “All income and expenses can now be captured on one tax return without figuring out how the expenses will be divided between partners’ returns. That said, the marriage tax penalty (i.e., where married couples end up paying more tax than they would if they were two single taxpayers) will now hit high-earning couples in the same-sex community. Make sure you know where you stand, and plan accordingly so you don’t get caught with a big, unexpected tax bill at the end of the year.”

Bragar recommends taking a look at whether amending the 2010-2012 tax returns as a married couple would generate tax savings. Tax returns can be amended up to three years from the tax filing date. “If you filed a gift tax return in the last three years to cover a gift made to your spouse, amend the return(s) to reverse the gift because spouses may make unlimited gifts to each other,” she writes.

“If you/your spouse’s employer doesn’t already provide you with spousal health insurance benefits, and enrolling for those benefits would improve your family’s overall health insurance program, make the change,” Bragar says.

7. Did your spouse die in the last three years, leaving you the net taxable estate?

Amend the estate tax return and have the taxes refunded. A person has three years from the tax filing date to amend the estate tax return. Also, Bragar recommends investigating Social Security survivor benefits.

8. Social Security

Married couples are eligible for spousal Social Security benefits equal to 50% of the spouse’s full retirement age benefit. “If this benefit is bigger than the benefit you earned (or if you didn’t earn a benefit), switch to the spousal benefit,” Bragar says.

9. Consider the whole family

Estate planning for a mixed-gender married couple also extends to parents who have drawn up estate plans that benefit both their child and the child’s same-sex spouse. “People might want to go back to their estate plan and define the word ‘spouse’ in the plan, to make sure that it includes the same-sex spouse,” she advises.

10. Consider a pre-nup if marriage is in the cards

“Marriage equality isn’t all a bowl of cherries,” Bragar writes. “Asset protection pits are involved, so carefully consider entering into a pre-nuptial agreement.”

Read High Court Bolsters Gay Marriage, but Financial Planning Hurdles Remain at ThinkAdvisor.

Wednesday, June 17, 2015

Costco Upbeat over Strong June Comps - Analyst Blog

Costco Wholesale Corporation (COST) delivered comparable-store sales (comps) growth of 6% in June, following an increase of 5% in May, and reflecting comparable sales growth of 6% at both the U.S. and international locations.

Buoyed by strong sales, shares of Costco recorded a new 52-week high of $115.94 yesterday, before closing at $115.89.

Costco's comparable-store sales for the 44-week period ended Jul 7, 2013rose 6%, buoyed by an equivalent increase at both the U.S. and international locations.

Excluding the effect of gasoline prices and foreign currency fluctuations, Costco's comparable-store sales for June rose 6%, reflecting comparable sales growth of 6% at its U.S. locations and 8% at international outlets. For the 44-week period, the company witnessed comparable-store sales growth of 6%, with U.S. and international sales rising by a similar rate.

Total net sales for June rose 8% to $9.92 billion from $9.16 billion in the year-ago period. Costco's sales for the 44-week period increased 8% to $87.05 billion from $80.46 billion in the year-ago period.

We believe that Costco's differentiated product range enables it to provide an upscale shopping experience to its members, resulting in market share gains and higher sales per square foot. Moreover, it continues to maintain a healthy membership renewal rate.

This Zacks Rank #3 (Hold) stock remains committed to opening new clubs in domestic and international markets. The company's diversification strategy is a natural hedge against risks that may arise in specific markets.

Besides Costco, other retail chains also posted healthy sales data for the month of June as improving job market, lower gas prices, warmer weather and clearance discounts boosted consumer sentiment.

Leading the pack is the clothing chain, The Gap, Inc. (GPS), which witnessed a 7% rise in comps, while net sales jumped 8% to $1.53 billion. Off-price retailer of apparels, footwear and accessories, Stein Mart Inc.! (SMRT) was another strong performer of the month. The company registered a 6.5% rise in June comps, while total sales increased 2.6% to $109 million.

Discount store operator, Fred's, Inc. (FRED), marked a significant improvement as the company witnessed a 4.5% rise in comps, substantially up from the 4% decrease witnessed in Jun 2012. Net sales for June increased 3% to $187.7 million.

Sunday, June 14, 2015

Is BMW Building Its Own EV Charging Stations?

Next week, BMW (NASDAQOTH: BAMXF ) is rolling out its new, all-electric i3. This move marks BMW's first launch into the niche market of all-electric cars, but BMW's not going in halfway. In fact, BMW is doubling down on its venture into EVs and teaming up with U.K.-based EV charging station provider Chargemaster, in a venture to build fast charge ChargeNow stations for BMW's new i-Series. Here's what you need to know.

BMW i3 Concept Coupe, November 2012. Photo: BMW USA.

BMW's new EV
We won't know for certain what the i3 looks like until next week, but that hasn't dampened the considerable buzz surrounding the new EV. Built using renewable materials when possible, the i3 has a full carbon-fiber structure that lends to the i3's overall weight of 2,634 pounds -- lighter than General Motors' (NYSE: GM ) Chevy Volt, Nissan Motors' Leaf, and Toyota Motor's Prius plug-in hybrid.

The standard i3 uses a 22kWh lithium-ion battery, delivers 168 horsepower and 184 pound-feet of torque, and can go 0 to 60 mph in 7.2 seconds. More pointedly, reviewers such as Edmunds and BBC's Top Gear test-drove the i3 and raved about the way it performed. According to official European Union test procedures, the i3 can go 118 miles on pure battery in comfort mode. Moreover, BMW says that in the worst conditions the i3 will go 81 miles on pure battery. If that's not far enough, thanks to BMW's e-drive technology, the driver has the option of putting the i3 in an "EcoPro" mode that extends the initial range to 124 miles per charge.

Still not enough range? With the purchase of the optional range extender -- a 650cc two-cylinder gasoline engine that acts as a generator and doesn't provide propulsion -- the range on the i3 is almost doubled. And the best part? The i3 has a base MSRP of $41,350, making this car a serious threat to Chevy's Volt.

More charging stations, please
Even with these impressive specs, the i3, as an EV, faces what all EVs face: range anxiety. No one wants to be stranded in the middle of nowhere, and with charging stations few and far between, that's a real possibility. Luckily, BMW is aware of this problem, and to help offset it, it's buying an estimated 2% equity stake in Chargemaster. The exact details of the deal haven't yet been released, but what is known is that the deal involves having both companies team up for a five-year period, to build fast-charge ChargeNow stations across the U.K., for BMW's i-Series.

Taking into account that the U.K. is BMW's fourth largest sales market in the world, an expanded infrastructure is fantastic news for consumers considering the i3 but worried about range. Also good news? BMW claims the i3 can recharge in as little as 30 minutes when connected to a 50kW fast-charge station.

What about charging stations in the U.S?
Right now, BMW's quick-charge stations are only for the U.K., but that doesn't mean it can't use the same approach in the United States. The U.S. is BMW's largest market by sales -- although China is expected to surpass the U.S. later in 2013 -- and building a quick-charge infrastructure in the U.S. would probably have a positive impact on BMW's EV sales. Furthermore, the i3 isn't BMW's only car to launch into the EV market. The i8 extended-range plug-in hybrid is expected later in 2014, and it's an impressive vehicle, to say the least. Clearly, these moves signal that BMW is throwing its considerable weight into what is still a niche market. How it'll pan out has yet to be seen, but considering BMW's reputation, this is something to watch -- both for how i affects BMW's bottom line, and for how it affects other EV manufactures' sales.

Are you interested in placing your bets on the auto industry? Well, EVs are still a niche market, and they could remain that way for a while. But some automakers have their hand in EVs and are expanding into one of the great auto frontiers -- China. The Middle Kingdom is already the world's largest auto market, and it's set to grow even bigger in coming years. A recent Motley Fool report, "2 Automakers to Buy for a Surging Chinese Market," names two global giants poised to reap big gains that could drive big rewards for investors. You can read this report right now for free -- just click here for instant access.

Tuesday, June 9, 2015

Cruise Investors Smell a Fire Sale

The fire aboard Royal Caribbean's (NYSE: RCL ) Grandeur of the Seas was put out within two hours, but not before disrupting the travel plans of passengers on board and those set to board the ship this Friday. Both sailings have been nixed, and even though Royal Caribbean is doing things right by issuing refunds and discounts on future sailings, this is going to be a big hit for the cruise industry.

Royal Caribbean, NCL (NYSE: NCL ) , and ship spa services provider Steiner Leisure (NASDAQ: STNR ) all hit new 52-week highs earlier this month. Unlike Carnival (NYSE: CCL ) -- which has been sluggish in light of several mishaps at sea since last year -- everyone seemed to view the negative instances as Carnival-specific events. Now Royal Caribbean's fire may lead folks to question booking on any cruise line in the near future.

In this video, longtime Fool contributor Rick Munarriz -- who experienced a kitchen fire aboard the QE2 and whose parents suffered a nixed Hawaiian cruise when the S.S. Independence ceased operations several years ago -- takes a look at the reputation problems that the industry may experience in light of Monday's fire.

Around the world
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Thursday, June 4, 2015

Why the Dow Is Rallying More than 100 Points

Blue-chip stocks are broadly higher today thanks to positive news out of the housing sector and a handful of better-than-expected earnings announcements. With roughly an hour left in the trading session, the Dow Jones Industrial Average (DJINDICES: ^DJI ) is up 123 points, or 0.84%.

The Department of Commerce announced this morning (link opens PDF) that housing starts had risen to a seasonally adjusted annual rate of 1.04 million in March. This was 7% better than the revised February estimate and a staggering 46.7% higher than in the same month last year. It also beat the consensus forecast: Economists surveyed by The Wall Street Journal expected 933,000 housing starts in March.

"Housing continues to be a bright spot," an analyst told Bloomberg News. He went on to note that there's "still a lot of room to go with new construction activity."

On the individual-company front, shares of Coca-Cola (NYSE: KO ) are leading the Dow higher, up by 5.4% at the time of writing. The soft-drink maker reported first-quarter earnings today, and as my colleague Dan Dzombak noted, it beat expectations on both the top and bottom lines with $0.46 in adjusted earnings per share on $11.04 billion in revenue.

Also trading higher today are shares of the Dow's banking components, Bank of America (NYSE: BAC ) and JPMorgan Chase. The companies are up 1.6% and 0.6%, respectively, riding the coattails of Goldman Sachs (NYSE: GS ) and US Bancorp (NYSE: USB ) , both of which reported their results from the first three months of the year.

Analysts have been concerned about the health of the banking sector after Wells Fargo reported at the end of last week that its mortgage-origination volume dropped in the first quarter. Given the industry's run of record profits, however, any worries should be at least partially allayed.

For the three months ended March 31, Goldman grew its top line by 1%, while net income at the investment bank shot up by 7%. And while US Bancorp recorded a slight drop in revenue, the nation's largest regional bank earned 6.3% more this year than last.

Next up for the banking sector is Bank of America, which reports earnings before the market opens tomorrow. The consensus estimate is calling for $0.22 per share, according to the Journal.

Bank of America's stock doubled in 2012. Is there more yet to come? With significant challenges still ahead, it's critical to have a solid understanding of this megabank before adding it to your portfolio. In The Motley Fool's premium research report on B of A, analysts Anand Chokkavelu and Matt Koppenheffer lift the veil on the bank's operations, detailing three reasons to buy and three reasons to sell. Click here now to claim your copy.

Wednesday, June 3, 2015

Baird, SIG Bench Dick’s Sporting

After a report that Dick's Sporting Goods (DKS) is considering going private sent the stock higher Thursday, the sporting goods retailer got nailed today by a pair of downgrades.

The problem? Valuation

Baird cut the stock to neutral from outperform, arguing that its move into the mid $50s “has created a more balanced risk/reward profile.” Susquehanna, meanwhile, cut the stock to neutral from positive. As analyst Christopher Svezia wrote, "We continue to see some upside given manageable near-term (4Q) expectations and potential for healthy earnings recovery in FY15, but ultimately not enough to meet our +15% threshold.”

The stock fell 1.7% to $53.75 in recent trading.

CNBC on Thursday reported unusual options trading in Dick’s stock before a Reuters report surfaced that the retailer is holding early-stage conversations with a handful of buyout firms about going private.

Baird analysts addressed the issue in today's note:

With prospects of a go-private transaction now officially part of the story, downside risk appears somewhat limited in the near term. That said, the stock's current valuation (>9x FY14 EBITDA) is already entering levels consistent with recent takeout activity, and an improvement in fundamentals across early-FY15 appears somewhat discounted. While our model can get an LBO value north of $60, it’s not certain any transaction will occur. As a result, the stock’s risk/reward profile seems more balanced versus what we envisioned last summer.

Not everyone shares those concerns. Jim Chartier, an analyst at Monness Crespi Hardt, maintained a buy rating and raised his price target to $60 from $56. As he explains:

The stock underperformed in 2014 as weakness in the golf and hunting categories resulted in lower than anticipated sales and earnings. In addition, investors have been concerned about the company's difficult same-store sales comparison in 4QFY14. We believe the potential for a private equity sale raises the floor in the stock in the near term. And, we expect easy sales and margin comparisons in 1HFY15 will attract investors if the company reports in line or better 4QFY14 results. Accordingly, we believe a higher valuation multiple is appropriate. The stock is trading at 17.6x our ntm EPS estimate of $3.11, in line with its three year average valuation of 17.7x. We are raising our price target to $60 (from $56) based on 18.5x our FY15 EPS estimate of $3.25.

Tuesday, June 2, 2015

Artists Rejoice! Tax Court Concludes Painter's Activity Isn't A 'Hobby'

I am a Tax Partner in WithumSmith+Brown's National Tax Service Group and the founding father of the firm's Aspen, Colorado office. I am a CPA licensed in Colorado and New Jersey, and hold a Masters in Taxation from the University of Denver. My specialty is corporate and partnership taxation, with an emphasis on complex mergers and acquisitions structuring. In the past year, I co-authored CCH's "CCH Expert Treatise Library: Corporations Filing Consolidated Returns," was awarded the Tax Adviser's "Best Article Award" for a piece titled "S Corporation Shareholder Compensation: How Much is Enough?" and was named to the CPA Practice Advisor's "40 Under 40."

In my free time, I enjoy driving around in a van with my dog Maci, solving mysteries. I have been known to finish the New York Times Sunday crossword puzzle in less than 7 minutes, only to go back and do it again using only synonyms. I invented wool, but am so modest I allow sheep to take the credit. Dabbling in the culinary arts, I have won every Chili Cook-Off I ever entered, and several I haven't. Lastly, and perhaps most notably, I once sang the national anthem at a World Series baseball game, though I was not in the vicinity of the microphone at the time.

Contact Tony Nitti

The author is a Forbes contributor. The opinions expressed are those of the writer.

Monday, June 1, 2015

Hennessy Japan Fund Comments on Ryohin Keikaku Co., Ltd.

Among the strongest performing stocks in the Fund during the period were … and Ryohin Keikaku Co., Ltd. (TSE:7453), the operator of the MUJI brand retail chain store. Finally, shares of Ryohin Keikaku Co., Ltd. surged 18% due to the solid earnings announcement for its fiscal year ended February 28, 2014, and the upbeat guidance for the new fiscal year. The Fund continues to hold all of these positions.

From Hennessy Japan Fund's Semi-Annual Report April 30, 2014.

Also check out: Hennessy Japan Fund Undervalued Stocks Hennessy Japan Fund Top Growth Companies Hennessy Japan Fund High Yield stocks, and Stocks that Hennessy Japan Fund keeps buying

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