schenley second quarter review 2017

August 9, 2017     

As the second Quarter of 2017 has ended and companies are now releasing earnings, we have a quick review of how things shaped up for the quarter.

 

The biggest winners for the quarter:

The FANG – Facebook, Amazon, Netflix and Google and Apple – are the real leaders in the US markets

These high profitability stocks outperformed among large and small stocks

US Large Cap:

US large Companies have returned 3.02% for the 2nd Quarter and 10.34% YTD

Emerging Markets:

Emerging Markets is the growth story for 2017 – returning 6.27% in the 2nd and 25.69% Year to Date (YTD)

Large Cap International:

Large International markets have returned 5.63% in the 2nd  Quarter and 17.83% YTD

Real Estate:

The global real estate markets returned 1.67% in the 2nd Quarter and 3.82% YTD

Fixed Income-Bonds:

The fixed income markets were buoyed up by the global bonds- the longer bonds performed better than the shorter bonds

So what were the strongest and the weakest sectors for the second quarter?

Globally the strongest sectors were healthcare and financials, while the weakest were energy and telecom

 

As the market rises we are optimistically cautious, we are taking some profits off the table and reallocating to sectors that will potentially perform well. 

 

 

Below you can find some great graphics and charts showing a few top highlights for the 2nd Quarter of 2017

p@sswords

August 8, 2017     

     Password security is a very important aspect of cyber security. Data breaches can occur when a password’s security level is low and the same password is used for multiple sites. By taking proactive measures towards password security, you are protecting yourself, your personal credentials, and your finances online!

     One great way to protect yourself online is to make sure you change your passwords for all your accounts including e-mails, your investments and bank accounts regularly. Many institutions require their employees change their passwords on a regular schedule of every six to eight weeks. This helps eliminate stale passwords and keeps company and personal data safe. In the instance that your password has become compromised and a data breach or hack has occurred, always change the passwords for not only that specific account right away, but all your other passwords as well. When you do change your passwords, make sure you use a different password combination for every site.

     Using separate passwords for each account you have online will make it harder for your other accounts to be hacked in the case that one of your passwords is compromised.  One simple way multiple accounts are compromised is when someone uses the same password for all their accounts. Once hackers obtain a password, they will enter that password and username combination for multiple sites, trying to gain access to as much as possible before they have been discovered. Choosing different passwords and log in usernames for each account adds a security layer for all your accounts, helping to prevent password theft.

When choosing a password, make sure it is lengthy, uses letters,

numbers, characters, and even using capital and lower-case letters

will make your password more secure.

 

One of the biggest mistakes in creating a secure password is using your name, address, a hobby, or a general commonly used password. Using a longer phrase or even a randomly generated combination of characters, numbers and letters will help keep your online accounts secure.

 

 

  The use of a password generator will help you to create a password that is secure. If you use a password authenticator app you will ensure your bank, credit card, and accounts are more secure. The authenticator generates numbers to type in after your secure password. These numbers will regenerate every 30 seconds and are tied only to your account, making it a very secure layer to add to your accounts. You can find some great password authenticators on the app store, on your Apple or Android phone.

     Schenley is very proactive concerning password security! We like to use best practices, such as changing passwords regularly. We use different password combinations, including characters, numbers and letters; in addition, we also use password authenticators to make sure our credentials and company files remain secure!

     Therefore, we advise you to create different passwords for each financial institution, make your passwords complicated and change your passwords regularly.

 

 

Written by: ||cassandra hartman, office manager||

Cyber Security… Are You Protecting Yourself and Your Investments?

August 3, 2017     
     Cyber security is one of the biggest problems in the United States. Individuals are experiencing data breaches, as they are having their accounts compromised. Everyone is scrambling to make sure  that they’re accounts and information are secure. What is the best way to be more cyber secure? Many might not even know the small things they do daily may be placing their personal information at risk. What steps can you take to become more secure and where are you most at risk for an attack?
 
This week we’re going to do a series of blog posts to help our clients, potential clients and fellow blog readers stay secure and put up the best fight against these internet hackers!
 
     One great method for a cyber- attack is phishing. Phishing is the fraudulent practice of sending emails purporting to be from reputable companies to induce individuals to reveal personal information such as passwords, credit card numbers or bank account information. 
 
To help protect yourself from phishing do not succumb to the pressure of emails requesting personal confidential information.
 
      Banks and other companies such as credit card companies will never ask for account information via email. Utilities will also never ask for banking or account information via an email. Don’t get pressured into scare tactics and submit information that is confidential as well. Phishers will look to frighten you into submitting your account info.
 
 

-Never use links in an email to submit your personal bank or financial account information.

-You are safer to call the institution directly to submit your credentials.

-Phishing emails usually don’t look authentic and the hacker will try to mask themselves as a company. (For example- Docu-Sign or Drop Box)

-Never give out personal credentials thru an email.

-Always change your password for your email to a long combination of numbers, letters and characters as this will help prevent your email from becoming hacked.
 
     Many anti-virus companies have computer security programs that will help protect you against phishing. Remember, if the email doesn’t seem authentic or a request for personal information, your best choice is to delete the email. If a request is coming from a bank or financial institution, your best choice is to call and confirm with your financial advisor or bank representative about any account changes, money movement, personal information or account requests!
 
     Schenley is very sensitive to data requests! We make sure to check URL links before clicking them, check that all requests from any client are correct by speaking directly to them. We make sure to delete all phishing emails as soon as they are received. We take extra precautions to make sure our info and clients information is always safe from phishing attacks. 
 
 
 
Written by: ||cassandra hartman, office manager||

QPRT’s and your home

May 31, 2017     

What is a QPRT?

A QPRT is a Qualified Personal Residence Trust. This is a specific type of trust in which its creator can remove a residence from his or her estate. Once the set term is over, the remaining interest in the property is transferred out of your estate to the set beneficiaries, as a remainder interest.

Why Initiate a QPRT?

A QPRT is a lifetime transfer of a personal residence to your children in exchange for continued rent-free use of the residence for the trust term. A QPRT is done for lowering the amount of estate tax that will be paid when a person passes away. The owner lives in the residence for a specific period with only a retained interest in the property. If you are planning on leaving your home to your children, this is a smart way to reduce the value of your estate. This will in turn reduce the amount of Federal estate tax your estate will pay and states such as, Pennsylvania with a high inheritance tax. This is also a smart way to ensure a direct transfer of your estate to your beneficiaries by outlining the specifics in the newly created trust.

How is a QPRT set up and how does the trust work?

The residence owner would create the QPRT for a certain number of years and would name the beneficiaries. The beneficiaries are usually family members. The owner (grantor) would then contribute the residence to the trust, removing his or her name from the property after a length of time, creating a taxable gift. The residence is usually a second home, or vacation home. The fair market value of the residence would be discounted for estate and inheritance tax purposes, at the time of the transfer. The trust will be set up as an irrevocable trust.

Once an Irrevocable Trust has been created, the written terms of the trust agreement generally cannot be changed. The trust is drawn up by an estate attorney and will state the grantor, property, term for the trust and the beneficiaries. A term could be 7, 10 or 15 years. The QPRT works effectively, if the grantor out lives the trust term set for the QPRT. If the grantor should pass away before the end of the term, a date of death value will be included in the grantor’s estate. The grantor’s estate will receive a tax credit for the initial gift of residence to the QPRT. At the end of the term, the grantor may wish to lease or “rent” the residence from his/her beneficiaries. A positive relationship is essential. Leasing the property after the QPRT term has expired is an excellent way to further reduce the grantor’s estate by providing current cash to the heirs as rent each month. It should be noted that this income is taxable income to the heirs. Any gain on the sale of the residence may qualify for the $250,000/$500,000 gain exclusion from the sale of a principal residence, provided the other requirements for the exclusion have been met.

Example:

An example: Susan, created a QPRT with a 10-year time frame. Susan, is healthy and aged 53, has a beach house worth $1.2 million market value. She transfers her residence into the QPRT. She retains the right to utilize the home as her residence for 10 years. The value of the initial taxable gift into the QPRT would be about $750,000 and, if Susan survives the 10-year trust term, the residence will pass to her two children with no additional gift or estate tax. Assuming the beach house appreciates at 3% per year, at the end or the 10-year time frame, the house would be worth $1.6 Million. Susan would have been successful in transferring a $1.2 M residence and saved her children $255,000 in estate tax! (based on a 45% estate tax rate and 15% capital gains rate)

“Take Away’s” for a QPRT

  • You can gift property with a value of up to $5.34 million (set by IRS in 2014)
  • Your heirs receive the double gift of the valuable property, as the asset grows within the Trust and they may also receive cash on an annual basis in the form of “rent” – a positive – both actions remove assets from your estate!
  • Most importantly, your heirs will not pay hefty federal estate or state inheritance taxes on an increased value of the residence.

 

 

Written by: ||cassandra hartman, office manager & elizabeth genter, president ||

 

 

Why Create an Irrevocable Life Insurance Trust or an ILIT….?

May 31, 2017     

Why Create an Irrevocable Life Insurance Trust or an ILIT….?

Tax Savings…. People buy life insurance for many reasons, life insurance has unique features not found in other financial solutions. Why not reduce your family’s estate taxes by placing your life insurance policy you already own into a trust? Why would one make this choice?

The main purpose of this technique is to remove an asset from your estate, assign the funds to loved ones, and not to pay estate tax on the amount of money in the insurance policy.

 

Three reasons to create a Life Insurance Trust or ILIT:

 

  • Reduce Federal and Pennsylvania estate taxes
    When life insurance is transferred to, or owned by, the ILIT, all the money/proceeds derived from the policy at an individuals’ death are NOT part of the insured’s gross estate. The policy has been transferred to a trust. Therefore, the asset is not subject to Pennsylvania or Federal estate tax.
  • You control where the money goes…. most likely to family members
    You can control how the life insurance proceeds in the ILIT are distributed. The money can be distributed immediately to one or many beneficiaries. Secondly, you can specify how and when the beneficiaries would receive distributions. Thirdly, the trustee could have discretion to the timing of the distributions, such as upon graduation, buying a new house or attaining a certain age.
  • Leverage
    The ILIT is created control a life insurance policy, while the insured is alive, as well as manage the proceeds which are paid out upon the insureds death. The insured can borrow against the proceeds in the life insurance policy to purchase other assets, such as real estate. Leverage is a very powerful tool.

 

What’s the catch….?

The trust is Irrevocable, meaning once the trust instrument has been signed, the terms are not subject to change. Secondly, if you die within three years of signing the trust document, the amount will revert to your estate. Lastly you are required to choose a trustee, a close relative, friend or a trusted bank relationship.

 

The Bottom Line….

ILIT’s are a powerful tool that removes an asset from your estate, is a tremendous tax savings, allows you to leverage your assets and transfers assets to your family….The Ultimate Goal!

 

 

Written by: ||elizabeth genter, schenley president & giovanna brown, intern ||

1st Time Homebuyer Withdrawl Article

May 31, 2017     

Did you know that you can use your ROTH or Traditional IRA to purchase your 1st home?

Saving enough for the down payment on a home purchase is daunting…there are caveats you need to consider

Are you a first-time home buyer?

Here are the criteria for an IRA distribution:

    • Purchase must be a principal residence.
    • Person whom resides must be the owner of the IRA or a family member
    • A grandparent could make the purchase for a child or grandchild
    • Purchaser must be a “first-timehomebuyer”
    • A max of $10,000 as qualified first-time homebuyer distributions (a lifetime limitation)
    • You must use the funds within 120 days for qualified acquisition costs

Using your IRA would allow you to take a distribution for your home down payment without paying prepayment penalties or interest on the funds.

 

What is considered a Principal Residence?

This is the primary location where a person resides. It could be a house or a condo, as long as it is where you live most of the year. Vacation homes do not qualify.

 

Who can the Principle Residence be for?

The IRA distribution can only qualify if the purchase is for yourself, a spouse, your child, grandchild or ancestor, or your spouse’s child, grandchild or ancestor.

 

What is the Date of Acquisition and what makes you a 1st time home buyer?

The IRS states that if you have not had financial interest in a home in the past two years prior to the closing date on your new home, you’re technically a first-time home buyer. For instance, you sold your previous residence on November 1, 2015. If you have not owned a home since that date, you can use the funds in your IRA to put a down payment on a home, if the contract is signed after November 1, 2017.

The IRS checks your date of acquisition, when purchasing a home. The “date of acquisition” for your new home is not the actual closing date. This is the date that you sign a binding contract to purchase the home, or the date that the building or rebuilding of your new home started.

How much can I withdraw?

The maximum penalty free withdrawal from an IRA is $10,000.

There is an exception for a ROTH- after holding a ROTH for over 5 years; you may withdraw contributions made to a ROTH account without limit.

 

What penalties can you occur?

With the ROTH, withdrawal contributions are tax free, because you have already paid income tax on your invested money when you made the contribution into your ROTH IRA. With the Traditional or ROTH, you can withdraw up to $10,000, if you are married $20,000. The catch is after withdrawing over $10,000 from your ROTH earnings, you will be subject to ordinary income taxes and a 10% penalty.

 

Should you remove money from your IRA early?

    1. Retirement decisions can have a long-term effect on your future! If you withdraw funds from your IRA now, you lose the ability to grow your money tax-free. Meaning that all money inside the IRA grows tax-free and compounds over the next 10, 20 or 30 years, until retirement.
    2. The money you withdraw from your IRA now will be counted as taxable income in the year that you take the funds out. Depending on your current income, this could move you into a higher tax bracket, making your taxes higher for that fiscal year’s return.
    3. The big question… should I withdraw? You should look for alternatives because you are losing the tax-free growth over time and depleting something you’ve worked hard to save. Look at the big picture…talk to your financial advisor. Make sure you are making right decision in terms of taxes, penalties and your financial security.

 

 

Written by: ||cassandra hartman, office manager||