In the last year there has been one dominant theme in the news- Women. People are listening and noticing what women have to offer the working world, the family care they provide and to life in general.  They invest in both their future as well as the future of their family. I believe there has always been the perception that they are the backbone of the family and do the lion’s share of the household work, however in the past, women were more silent to the importance of the role they played and the contributions they made to society. Today, we have women leaders as CEO’s, Philanthropists, Doctors, and Lawyers and the list doesn’t stop there.  We have women leaders in the military, high ranking women Politicians and women News Anchors.  We even have women Sports Commentators, coaches and officials. While women are balancing their careers and families, they also need to focus on their financial goals as well. According to a survey that PIMCO conducted, “50% of women say it’s difficult to think about their financial goals due to the day-to-day demands.” Women are often also “sandwiched” between taking care of their aging parents and their own families, which can put stress on what they contribute to their retirement plans. Some have even had to leave the workforce all together for a period of time and lose those few years of savings.

One of the biggest concerns today for women regarding their finances is they are not being heard when trying to express their financial goals to advisors.  While the fundamentals of investing may carry over client to client, many women have specific short-term and long-term financial goals and may need those managed simultaneously.  Perhaps the author Margaret Bonnano said it best when she said, “Being rich is having money; being wealthy is having time.”  The constant balance of “living for today” while also planning ahead can prove challenging if a client-specific plan is not developed.  Many women want to be financially secure but not ultra-wealthy if that comes at the expense of giving up some of their lifestyle to include work-life balance. 

Here are Five tips for women and investing:

  1. Plan with a purpose by mapping out your goals. Make a timeline of what you would like to achieve.  Be sure to think both short and long-term
  2. Start saving for retirement and stay committed to the path you have outlined.
  3. Diversify your investments to spread the risk out in your portfolio.
  4. Meet with your advisor(s) annually if not more to discuss your portfolio and goals. Make changes or reallocations to better position you to meet your goals.
  5. Have confidence in yourself, after all, it is your money and goals!

If you have any questions, one of our advisors at ONST would be happy to help guide you into your future.  We will listen, strategize, and work with other advisors to meet your individual needs. We provide the human touch to all of our clients.

Old North State Trust, LLC (ONST) periodically produces publications as a service to clients and friends.  The information contained in these publications is intended to provide general information about issues related to trust, investment and estate related topics.  Readers should be aware that the facts may vary depending upon individual circumstances.  The information contained in these publications is intended solely for informational purposes, is proprietary to ONST and is not guaranteed to be accurate, complete or timely. 

In our business, we’re accustomed to suggesting trust solutions for clients that have built-in requirements about how assets must be distributed, and when distributed, often stating a distribution a deadline. In other words, most trusts eventually expire, by which time their holdings have been drawn down to zero. But sometimes, complex family situations dictate that a trust be created that doesn’t have a “sell-by”, that is, termination date, and theoretically lasting forever!

This is called a “dynasty” trust, or “perpetual” trust. These are fairly unusual, and because of their complexity they take a good bit of doing to set up. But in some circumstances, they can provide a strong wall of protection for a multi-generational family’s assets.  And this type of trust can be a vehicle that may assist in the passing on family values to future generations.

There are a couple of ways a dynasty trust can be structured to benefit more than one generation. It might, for example, be written so a parent, children, and grandchildren can all draw from it at once. Alternatively, a trust can deal with just one generation at a time. Say the surviving spouse of the trust’s creator draws distributions during their lifetime; only after the spouse’s death would the children be able to start drawing from it; and so on down the line.

That’s possible because the trust never expires. It used to be that North Carolina law wouldn’t permit a trust to last more than 90 years, or 21 years after the last beneficiary’s death. But legislation in 2007 overturned that restriction, legalizing perpetual trusts. By the way, there’s still some controversy about just how legal they are; we’ll get to that a bit later. As of now, perpetual trusts are permitted in North Carolina as long as the trustee has the power to sell trust property.

Another chief quality of a perpetual trust is that it doesn’t require distributions on any particular schedule. Conventional trusts typically require a beneficiary to draw a certain amount every year or take full possession before a certain date. That doesn’t apply to a perpetual trust, which can have some surprising advantages.

Imagine that the beneficiary of a trust loses a lawsuit or otherwise owes a lot of money. While many of that person’s assets might be subject to collection or seizure, what’s in a trust is protected. But a conventional trust that requires distributions would move that money into the beneficiary’s bank account, where it would be fair game for creditors to grab. With a perpetual trust, that person could simply decline to draw on its assets, keeping them where they’ll be safely shielded from courts and collection agencies.

Protection of family values may be another objective of a dynasty trust and sometimes as important as passing on family wealth for the trust creator. This is a tool that can be used by the trust grantor in hopes of passing on their life philosophy and work ethic to the trust beneficiaries. For example, a perpetual trust may contain various incentives to induce the beneficiaries to remain productive members of society and a disincentive to rely solely on the wealth generated by a trust fund.  A trust that will eventually terminate cannot fully provide protection against beneficiary excess, since the trust property will eventually be distributed outright to them.

Until fairly recently, a trust could guarantee that a surviving spouse’s share of an estate would be exempt from the estate tax. However, federal law now provides that protection. New tax legislation has also raised the estate and gift tax exemption from $1 million in 2002 to $11.4 million in 2019. That means estate taxes aren’t an issue for most people. But just in case a future Congress lowers the estate-tax exemption again, a perpetual trust could lock in the current level.

Another scenario: a surviving spouse remarries and wants to disinherit the deceased ex’s children. A perpetual trust would make that impossible. There’s another side to that coin, though. A trust could guarantee that the same surviving spouse wouldn’t lose the inheritance-tax exemption upon remarrying.

Then there’s the matter of young heirs who might find it too tempting to get a big lump-sum distribution when they turn 18, 25, or some other specified age. That’s a common feature of many trusts and has the danger that the inheritance might be squandered in short order. A perpetual trust gives its trustee, not the beneficiary, the power to make distributions, or not. Another way to look at it: that young (and perhaps irresponsible) heir owns the assets but can’t necessarily get to them without the trustee’s OK.

All that being said, a perpetual trust isn’t for everyone. It takes a good bit of planning and legal work to set up. That process requires careful discussion of who the trustees will be – who the owner will rely on to carry out their wishes – and about how the assets will be used, potentially into the very distant future. Keep in mind that while this sort of trust can be very specific (some have called it “a hand controlling from the grave”) it doesn’t have to be. It can just as readily grant a lot of flexibility to the trustee.

That brings us back to the question of legality. Even though North Carolina law explicitly permits perpetual trusts, the state Constitution includes a provision that says, “Perpetuities and monopolies . . . shall not be allowed.” That raises the important question of whether the current state law is constitutional! Some experts caution that a perpetual trust might be challenged on that basis, maybe by disgruntled relatives who want more access to an inheritance than a trust grants them, or maybe by creditors.

We don’t want to get into all the legal questions and complexities here, other than to say this question is controversial among experts, and that the state’s courts haven’t clarified things since the 2007 legislation took effect. On balance, we think it’s a safe approach, but as noted before, not for everybody.

So, if you think a perpetual or dynasty trust might be useful for your family’s situation, your wisest course is to consult with experts on trusts and on inheritance law. The financial-planning experts at Old North State Trust are knowledgeable about this kind of trust, can give you good advice on how it works, and work with your attorney to help you set one up if it’s the best way to accomplish your specific wishes.

Of course, if another estate-planning approach is a better fit, we’ll advise you about the most beneficial alternatives, too.

Old North State Trust, LLC (ONST) periodically produces publications as a service to clients and friends.  The information contained in these publications is intended to provide general information about issues related to trust, investment and estate related topics.  Readers should be aware that the facts may vary depending upon individual circumstances.  The information contained in these publications is intended solely for informational purposes, is proprietary to ONST and is not guaranteed to be accurate, complete or timely. 

In the satirical 1963 musical “Bye Bye Birdie,” the comic actor Paul Lynde lamented everything he thought was wrong with the young people of his era. “Why can’t they be like we were, perfect in every way?” he sang. “What’s the matter with kids today?”

Well, of course, the “kids” he was complaining about were the Baby Boomers, now either retired or preparing for retirement. Since then, several new generations of “kids” have come of age. The newest generation of young adults, the so-called Millennials, face a far different economic landscape than their Boomer grandparents did, one with considerably more employment uncertainty, often crushing levels of student debt, and a far more complex investing universe.

It can be tempting to think like Paul Lynde’s character and look critically at the economic judgment of today’s “kids.” But in fairness, the Millennial generation has the same range of savvy and naiveté, the same mix of good judgment and foolishness, as any other generation. So instead of a “get off my lawn” rant about “kids today,” let’s talk about the genuine challenges facing today’s twenty-somethings.

Uncertain career prospects and soaring student debt are two of the biggest. Even so, the youngest age group has, on average, less debt than most older Americans. That makes sense, considering that many Millennials haven’t yet started families and incurred mortgages, or are just starting to get into the housing market.

Federal Reserve data shows that, as of about a year ago, those under 35 carried an average debt of $67,400. The highest debt loads, averaging about $134,000, belonged to those between 35 and 55, who are in their peak earning years. Those Boomers who have reached retirement age, between 65 and 75, owed $66,000. Lowest of all, not surprisingly, were the 75-and-up bracket, owing just $34,500 on average.

Getting back to those under-35 debtors, only half of the average $67,400 were mortgages. And maybe surprisingly, credit-card debt was a fairly narrow sliver of that total load. More important were car loans and debt incurred getting a college education. Average student loans for that youngest age group was $14,800, 22 percent of their total debt.

While those numbers may not look terribly alarming, it’s interesting that some people don’t borrow at all. If those who owe nothing are taken out of the picture, average debt loads are drastically higher, topping $300,000 for the under-35 crowd. That includes mortgages averaging around $130,000 and, interestingly, debt for second homes in the $100,000 range. Considering that less than 10 percent of all age groups own second homes, the actual amounts those people owe are much, much higher.

Looking at other age groups, still limiting the view just to those who have debts, we see that student-loan, credit-card and car-loan debt levels don’t change much. The big differences between the youngest borrowers and their parents’ generation is in the size of those mortgages, on both primary and second residences. And, increasingly as ages go up, an “other” category of debt starts to balloon. This includes borrowing against life insurance policies, pensions and other retirement accounts, a sign that income worries don’t necessarily diminish with age.

For those who have outstanding student loans, average balances range from just under $33,000 to $37,000, even up to age 65-plus. What changes between age groups is how many are still paying off those loans. It’s around 45% of people under 35, but steadily drops by about 10 percentage points for each 10-year age group. Those two trends imply that those with the biggest student-loan debt load have the hardest time paying it off, and that accrued interest can make that burden linger on even into retirement!

So, what does all this mean for Millennials? There’s no single answer, because individual circumstances vary so widely. One important point is that it doesn’t make good sense to take on large student-loan debt for a degree that isn’t likely to generate significant income. It’s true that big loans for medical school or law school are likely to be offset by significantly improved earning prospects. Graduate degrees in the humanities, by contrast, while often valuable for non-economic reasons, are far less likely to repay big debts.

Many young people are clear-eyed about this, understanding that they can’t expect a single career to support a comfortable lifestyle like their parents or grandparents enjoyed. Today, it’s common for people to change jobs every few years. Also, it’s necessary to continue learning new skills to keep up with rapid changes in technology, markets, and workplace styles.

On the other hand, some Millennials seem willfully blind to those realities. An example would be a person in their late 20s who might become a poster child for the economically heedless. They could have the fortune (or maybe misfortune) to receive a sizeable inheritance from their late father, who let’s say was an attorney. The problem could be this young person expects to live like their father did when he was alive, but without earning the money their father did from the hard work of practicing law.

This young person’s ailment is one that has afflicted self-absorbed young people in previous generations, of course. They’re so dazzled by a big chunk of cash that they’ve lost sight of how it was earned, and the fact that it won’t last forever. They will run through the inheritance by the time they’re 30. This would be a hard reality for one to realize that the free lunch is over, and that just like their late father, they will have to work for a living.

At any age, it’s essential to have some understanding of economic realities, to look ahead and learn from the mistakes and successes of those who came before us, and to be mentally prepared for change and uncertainty.

Fortunately, it’s not necessary to fly solo when it comes to navigating those economic realities or making informed predictions of the future. The financial-planning experts at Old North State Trust are ready to help people of all ages make the decisions now that will help ensure to safe, comfortable future.

Old North State Trust, LLC (ONST) periodically produces publications as a service to clients and friends.  The information contained in these publications is intended to provide general information about issues related to trust, investment and estate related topics.  Readers should be aware that the facts may vary depending upon individual circumstances.  The information contained in these publications is intended solely for informational purposes, is proprietary to ONST and is not guaranteed to be accurate, complete, or timely. 

When the financial markets start to turn volatile – as we have seen so dramatically in the last few months of 2018 – investors become anxious, looking for good, timely advice about what to do. But where does that advice come from? Research shows that many people depend on news media, friends, or relatives rather than full-time experts or professional financial planners. That may not be a bad thing for some people. But for anyone with major investments or complex financial circumstances, choosing the wrong advisor (or taking the wrong advice) can be expensive.

Recently there was a provocative article that made the case that, as with so much else in life, it’s not possible to get financial advice that’s good, fast, and cheap. Not all at the same time, anyway. Any two of those qualities? Sure! But fast and cheap financial advice is not going to be good. It’s equally true that good, fast counsel won’t be cheap.

A couple of recent studies found that significant fractions of consumers rely on newspapers and other media for financial advice. Close behind came friends and family. In short: nearly half the people surveyed were comfortable getting all their financial information from publicly available sources.

That may well be sufficient for some people, whose situations are simple. They may not really need the sort of special expertise we financial professionals can offer. That reality has helped to drive the growth of so-called “robo-advisers,” now offered by online discount brokers. It’s why investment blogs and cable-TV shows are so popular.

But for other people, quick and cheap advice won’t be adequate. Investors whose needs are complex can easily get confused. They need serious expertise from serious advisors who know them and understand not just their needs, but their tolerance for risk. That’s true under any circumstances, but especially so when the markets turn volatile, danger signs appear on the horizon, and the future looks especially uncertain. Like right now.

There’s no disputing it: December 2018 was a very bad month for the financial markets. This volatility is a reminder that what goes up can come down, and that uncertainty is a fact of economic life.

The experts who watch the financial markets say they worry that recent economic growth around the world may slow down in the coming year. Worries about a trade war between the world’s two biggest economies – the United States and China – are contributing to investor unease. It doesn’t’ t help that statistics about manufacturing and retail sales in China are lagging behind projections.

This isn’t just an American problem, either. Stocks in Europe fell sharply in December, too. In addition to global issues, the looming Brexit could badly disrupt trade between Britain and the rest of Europe and threatens the stability of England’s financial markets.

Some analysts are pointing the finger at rising interest rates in this country. The Federal Reserve, always wary of inflation, has been nudging rates up. This has been blamed for hurting investments of all kinds, but especially in emerging markets overseas. The U.S. economy could be starting to follow that global trend.

And while worrisome drops in employee work hours and jumps in layoffs may well induce the Fed to back off on expected rate bumps in 2019, a softening job market is never good for the economy. Finally, an upturn in U.S. bonds is another signal that equity investments are slumping: stocks and bonds almost always move in opposite directions.

After close to a decade of mostly steady growth in stock values, investors are beginning to consider an unfamiliar reality: the first bear market in many years. So, what should a smart investor do when faced with such uncertainty and potential down-side risk?

The purpose here isn’t to offer specific investment advice, but to say a little about how our company, Old North State Trust, does business. We like to think about the meaning of our logo, which includes a pine cone. If you know anything about North Carolina’s native long leaf pines, you know their life cycle has evolved to withstand adverse circumstances over many years: fire, floods, drought, and wind. To us, that pine cone represents longevity, strength, and the ability to withstand uncertainty. Looking at a pine cone’s overlapping scales, it can also represent the many different layers of a client’s needs. Just as no two pine cones are the same, so all our clients’ circumstances are different.

Some of them may thrive on uncertainty and see potential opportunities in every crisis. Others require as much safety and security as we can find for them. For both type of investor, and all the others in between, we work hard to ensure that the advice they get is uniquely tailored to their needs – and that it’s always good.

If you’re in that category where you need good advice about weathering economic storms, the financial-planning experts at Old North State Trust will help you find the sweet spot where your investments are tailored to your unique circumstances.

Old North State Trust, LLC (ONST) periodically produces publications as a service to clients and friends.  The information contained in these publications is intended to provide general information about issues related to trust, investment and estate related topics.  Readers should be aware that the facts may vary depending upon individual circumstances.  The information contained in these publications is intended solely for informational purposes, is proprietary to ONST and is not guaranteed to be accurate, complete or timely.