Finance & Law

By Nancy Burner Esq.

Nancy Burner, Esq.

Being a Trustee of a trust carries serious responsibilities and trustees are compensated for their time. 

Section 2309 of New York’s Surrogate’s Court Procedure Act sets forth how to calculate the amount of commission. Under the statute, Trustees receive  commissions on the amount of property paid out and annually. However, keep in mind that the trust agreement can override the statute. The creator of the trust (Grantor) and Trustee may agree to a different amount, or the Trustee can waive the right to commissions altogether.

The statute lays out that the Trustee is entitled to a commission of 1% of any trust principal paid out. In addition to the 1% commission on distributions of principal, the following fee schedule sets out the Trustee’s annual commissions: 

(a) $10.50 per $1,000 on the first $400,000 of principal 

(b) $4.50 per $1,000 on the next $600,000 of principal 

(c) $3.00 per $1,000 on all additional principal.

Take the simple example of a trust with $1 million dollars in assets that directs $200,000 be paid out to the beneficiaries upon the Grantor’s death. The Trustee is entitled to a $2,000 commission for the distribution and then $5,200 annually. The statute also provides for reimbursement for reasonable and necessary expenses.

The trustee can choose to collect the commission at the beginning of the year or at the end of the year. But once the Trustee chooses a time they must collect the commission at that time of year every year going forward. Any successor or substitute Trustee must follow the same schedule.

Pursuant to SCPA §2309(3), annual commissions must come one-third from the income of the trust and two-thirds from the principal of the trust. Unless the trust says otherwise, commissions are payable one-third from trust income and two-thirds from trust principal. The only exception is for charitable remainder unitrusts or annuity trusts. In such cases, the commissions are paid out of principal, not out of the annuity or unitrust payments.

When deciding what the Trustee’s commission should be, it is important to keep SCPA 2309(3) in mind. This is especially true when the only asset in the trust is the Grantor’s home. Until the home is sold and the proceeds paid out, the Trustee is not entitled to the 1% commission.  Likewise, if the home is not generating rental income, then the one-third of the trustee’s commission is not payable under 2309. This may not be important if the Trustee is a beneficiary, but there is no incentive for a non-beneficiary Trustee in this situation.

Determining how to calculate the correct commission owed a Trustee can be complicated. Consulting an experienced estate planning attorney can make the process much easier to navigate. These discussions should be had upon creation of the trust as well as when the Trustee starts managing the trust.

Nancy Burner, Esq. is the founder and managing partner at Burner Law Group, P.C with offices located in East Setauket, Westhampton Beach, New York City and East Hampton.

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By Michael E. Russell

Michael E. Russell

What a week!  Monday the Dow rose 765 points.  Tuesday the Dow rose 826 points.  Wednesday the Dow lost 40 points, a well-deserved rest. Back to the new reality.  Thursday the Dow dropped 347 points followed by a loss of 630 points on Friday. Still, a gain of 1.5% for the week. 

Is the market building a base at these levels? Were the gains of the past week what we used to call a “dead cat bounce” in a Bear market?  Really hard to say.

Earnings are starting to weaken while consumer debt increases. An example of the cost of debt this year is as follows: Let us say that a family wishes to purchase a home while secured a $480,000 mortgage. Last year the cost would have been $2023 per month with an interest rate of 3%. That same mortgage presently would cost $3097 per month with a rate of 6.7%. Over a 30-year period you would pay an additional $385,000 in interest. These increases are taking a substantial portion of the middle class out of the real estate market. This is only one segment of a problematic economy.

Expectations of how many more rate increases the Federal Reserve will make is a big part of what is driving the price action in the stock market. The present administration is having a problem with conditions overseas.  President Biden just met with the Crown Prince of Saudi Arabia. It was hoped that this meeting would lead to a production increase of 2 million barrels of oil per day.  

Guess what? Upon Biden’s return, the Saudi’s announced a decrease of the same 2 million barrels per day. Productive meeting! On top of this, the President stated that we are facing a “potential nuclear Armageddon” the likes of which have not been seen since the Cuban Missile Crisis that President Kennedy faced in 1962. Nice thought to go to sleep with!!

Time to ease up a bit. The Federal Reserve cannot start cutting rates until the Consumer Price Index drops in half from its current level of 8.3%. In the meantime, investors should be taking advantage of U.S. Treasury yields. The 30-year bond is yielding 3.6% while the one- and two-year notes are yielding in excess of 4.1%. This is called an inverse yield curve.  4.1% for one year sure beats the 0.001% the banks are paying. Not very neighborly!  

We may be getting close to a market bottom plus or minus 10%. Many financial “gurus” are suggesting a large cash position in investor portfolios. Brilliant! This after a decline of over 30% in the market. Where were these people in January and February?  

Is crypto currency a viable investment now?  Bitcoin was supposed to be an inflation fighter. However, the worst inflation since the early 1970s has coincided with a 60% drop in Bitcoin’s price over the past year. It was also stated that Bitcoin is “digital gold.” Not proven true. Gold itself has outperformed Bitcoin, losing just 6% of its value. 

Ethereum, which is the second largest blockchain, has had a major upgrade which may fuel money going into crypto. Readers need to do their own research pertaining to crypto. My last thought on this topic: crypto strategist Alkesh Shah of Bank of America still feels that bitcoin and other cryptos are still viable long-term investments. As an aside, I really don’t have a long-term horizon. 

On a pleasant note, my wife and I just returned from Scotland where we visited our granddaughter at the University of St. Andrew, an incredible experience.

The economy there is booming. We did not see vacant store fronts. Much pride was shown in their communities; cleanliness and politeness were everywhere. I was very interested in the opinion of the Scots vis a vis the vote to break from the UK. 

I will breakdown opinions in three groups. The youth have little interest in the monarchy, the senior citizens still admire the monarchy due to their memories of WWII. The 40–60-year age group I found most interesting, although my questions were asked at a single malt scotch distillery. The point was made that Scotland is a land of 5.5 million, like Norway and Sweden. The British Pound is in free fall, which is threatening government and corporate pensions. The Scots are upset over Brexit. They wished to stay within the European Union. 

As we get closer to Thanksgiving, let us hope that the Russian people put pressure on Putin to leave office or better yet, the planet. Best regards to all and enjoy this beautiful Fall season. 

Michael E. Russell retired after 40 years working for various Wall Street firms. All recommendations being made here are not guaranteed and may incur a loss of principal. The opinions and investment recommendations expressed in the column are the author’s own. TBR News Media does not endorse any specific investment advice and urges investors to consult with their financial advisor. 

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By Michael Christodoulou

Michael Christodoulou
Michael Christodoulou

You may have heard that you can simplify your investment strategy just by owning index-based or passive investments. But is this a good idea? 

You’ll want to consider the different aspects of this type of investment style. To begin with, an index-based investment is a vehicle such as a mutual fund or an exchange-traded fund (ETF) that mimics the performance of a market benchmark, or index — the Dow Jones Industrial Average, the S&P 500, and so on. (An ETF is similar to a mutual fund in that it holds a variety of investments but differs in that it is traded like a common stock.) You can also invest in index funds that track the bond market.

Index investing does offer some benefits. Most notably, it’s a buy-and-hold strategy, which is typically more effective than a market-timing approach, in which individuals try to buy investments when their prices are down and sell them when the prices rise. Attempts to time the market this way are usually futile because nobody can really predict when high and low points will be reached. 

Plus, the very act of constantly buying and selling investments can generate commissions and fees, which can lower your overall rate of return. Thus, index investing generally involves lower fees and is considered more tax efficient than a more active investing style. Also, when the financial markets are soaring, which happened for several years until this year’s downturn, index-based investments can certainly look pretty good — after all, when the major indexes go up, index funds will do the same.

Conversely, during a correction, when the market drops at least 10% from recent highs, or during a bear market, when prices fall 20% or more, index-based investments will likely follow the same downward path.

And there are also other issues to consider with index-based investments. For one thing, if you’re investing with the objective of matching an index, you may be overlooking the key factors that should be driving your investment decisions — your goals and your risk tolerance. An index is a completely impersonal benchmark measuring the performance of a specific set of investments — but it can’t be a measuring stick of your own progress.

Furthermore, a single index, by definition, can’t be as diversified as the type of portfolio you might need to achieve your objectives. For example, the S&P 500 may track a lot of companies, but they’re predominantly large ones. And to achieve your objectives, you may need a portfolio consisting of large- and small-company stocks, bonds, government securities and other investments. (Keep in mind, though, that while diversification can give you more opportunities for success and can reduce the effects of volatility on your portfolio, it can’t guarantee profits or prevent all losses.)

Ultimately, diversifying across different types of investments that align with your risk tolerance and goals — regardless of whether they track an index — is the most important consideration for your investment portfolio. Use this idea as your guiding principle as you journey through the investment world.

Michael Christodoulou, ChFC®, AAMS®, CRPC®, CRPS® is a Financial Advisor for Edward Jones in Stony Brook. Member SIPC.

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By Nancy Burner, Esq.

Nancy Burner, Esq.

What is portability? The word is defined as the ability to be easily moved, but in the context of trusts and estates, it means so much more. In this regard, portability is one of the strongest tools in the planner’s toolbox to reduce or eliminate federal estate taxes after the deaths of a married couple. 

According to federal law, each person has a lifetime estate and gift tax exemption ($12.06 million per person in 2022). As long as the taxable gifts they have paid out during life and at death is under this exemption, no taxes will be owed on the estate at the time of death. While the current exemption is over $24 million, this will sunset for deaths after Dec. 31, 2025.  For any individual death after that date, the exemption will be $5 million, indexed for inflation. Unfortunately, New York State does not allow for portability so other estate tax planning remains necessary.

As an example, take a couple with $14 million total in assets, all held jointly or with the spouse named as beneficiary. The first spouse dies in 2022, the assets all pass over to the survivor and when the survivor dies, all assets will be taxable in that person’s estate. Estate taxes would be owed because the estate is larger than the survivor’s exemption, and if the second spouse dies after Jan. 1, 2026, the tax will be largely based on the reduced exemption amount.

Enter portability to save the day! The IRS allows the surviving spouse to have their own exemption plus any leftover amount of the first to die spouse’s exemption. The first to die spouse’s exemption is portable.  However, this is only available if an estate tax return was filed at the time of the first death and election was made for portability. In our example, since the first spouse passed all assets to the survivor, none of the exemption was utilized. 

If a tax return was filed for the estate and portability was elected, the estate of the survivor will have the applicable exemption amount from the year of death and the $12.06 million exemption from the first death in 2022. That will amount to over $17 million in exemption, thus eliminating all federal estate taxes.

The election to transfer the first deceased spouse’s unused applicable credit amount must be made on a timely filed estate tax return, usually within 9 months of the date of death or the last day of the period covered by an extension. If the tax return is not filed timely, the estate could utilize a simple procedure to obtain an extension to file a late tax return solely for the purpose of electing portability. The caveat is that the estate was not otherwise required to file an estate tax return. If more than 2 years had expired, the estate could ask the IRS for a Private Letter Ruling to obtain permission to file a late estate tax return.  

The good news is that, in July 2022, the IRS amended its regulations to elect “portability” of a deceased spousal unused exclusion amount up to five years after the decedent’s date of death. This is especially relevant with the prospect of the federal applicable credit amount being reduced to $5.0 million (indexed for inflation) after Dec. 31, 2025.  

As an example, the first spouse dies in 2018 and leaves everything to the surviving spouse — which would be tax free and no part of the deceased spouse’s credit was used. Now the surviving spouse has assets of $8.0 million. Since the federal credit is $12.06 million, no tax would be due if the surviving spouse died before December 31, 2025. However, if the surviving spouse dies after that date, there would be a federal tax for any estate assets in excess of $5.0 million (indexed for inflation). 

Under this new amendment, the estate of the first deceased spouse could file for an extension to file a late estate tax return to capture the unused exemption of the first spouse to die. The survivor would have his or her own exemption plus the unused exemption, escaping all federal estate taxes.  

Executors, trustees, or surviving spouses of an individual that died within the past five years should seek advice from a trusts and estates attorney regarding this important change in the regulation. It may be prudent, even in a more modest estate, to file the return and preserve the unused exemption amount as a planning tool for the surviving spouse.

Nancy Burner, Esq. is the founder and managing partner at Burner Law Group, P.C with offices located in East Setauket, Westhampton Beach, New York City and East Hampton.

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By Michael E. Russell

Michael E. Russell

Sometimes it makes my head hurt trying to understand how Washington works. The Federal Reserve raises interest rates in order to curb inflation.  Immediately following these actions, Senate Democrats passes the Inflation Reduction Act with the blessing of the White House.

This bill goes counter to what Jerome Powell and the Federal Reserve are trying to accomplish. Jim Kramer on CNBC calls this bill the “Spend Our Way To Oblivion Act or SOWOA.”

If you own stocks, this could be a problem.  For many U.S. companies the bill includes a tax on stock buybacks. This will impact the way companies address their capital. A 15% book tax which hurts companies with net operating losses will force them to issue debt in order to raise capital.

Senator Chuck Schumer proudly states that this bill will allow Medicare to negotiate prices with drug companies. Really? This is not quite correct. Beginning 4 years from now, Medicare will only be negotiating on lowering prices on 10 drugs. Schumer also states that the bill will create higher paying Environmental Engineering jobs. This potentially will lead to hyper wage inflation.  Just look at last Friday’s employment figures. 

Environmental groups are euphoric over the bill, providing the potential for an additional 500,000 high paying jobs. That’s awesome, but where are the applicants to fill these positions? This is the type of wage inflation that the Federal Reserve is trying to rein in.

It appears that commodity inflation has peaked, but now we will have to contend with labor inflation by creating jobs we have no ability to fill, other than to take from the private sector. I don’t want to beat a dead horse, but every time Fed Chairman Jerome Powell tries to get a handle on inflation, the Federal government throws him a curveball.

The people of this country for the most part are hard-working and good-hearted.  The stock market has politics, of course. We all want to slow global warming or better yet, STOP IT. However, what is occurring in Washington has the potential to destroy our free enterprise system. The government is printing money and spending it like sailors on shore leave. A final thought on this, TERM LIMITS.

On a positive note: We have had a nice bounce during the month of July. The jobs number this past Friday appears to show that we may not be on the verge of a recession, but it sure puts pressure on the Fed to increase rates. 

Stock news. GE is splitting into 3 different companies. Those individual stocks could perform very well.  Think back to the split up of AT&T into 7 different entities. I am still a big fan of ExxonMobil, even though it is already up 50% this year. JPMorgan has come down from $165 in January to $114. The potential for a higher price is very possible, while being paid with a nice dividend. Last, but not least, Proctor and Gamble. Most of us use their products on a daily basis, like toothpaste and laundry detergent, don’t we?

Until next month, try to stay cool.

Michael E. Russell retired after 40 years working for various Wall Street firms. All recommendations being made here are not guaranteed and may incur a loss of principal. The opinions and investment recommendations expressed in the column are the author’s own. TBR News Media does not endorse any specific investment advice and urges investors to consult with their financial advisor. 

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By Michael Christodoulou

Michael Christodoulou
Michael Christodoulou

As you know, the stock market has attracted a lot of attention — and for good reason, as we’ve seen considerable volatility almost from the beginning of the year. But if you own bonds, or bond-based mutual funds, you might also have some concerns. However, it’s important to understand why bonds should continue to be an important part of your portfolio.

To begin with, let’s look at what’s happened with bond prices recently. Inflation has heated up, leading the Federal Reserve to raise interest rates to help “cool off” the economy. And rising interest rates typically raise bond yields — the total annual income that investors get from their “coupon” (interest) payments. Rising yields can cause a drop in the value of your existing bonds, because investors will want to buy the newly issued bonds that offer higher yields than yours.

And yet, despite this possible drop in their value, the bonds you own can still help you make progress toward your financial goals. Consider these benefits of bond ownership:

Income — No matter what happens to the value of your bonds, they will continue to provide you with income, in the form of interest payments, until they mature, provided the issuer doesn’t default — and defaults are generally unlikely with investment-grade bonds (those rated BBB or higher). Your interest payments will remain the same throughout the life of your bond, which can help you plan for your cash flow and spending.

Diversification — As you’ve probably heard, diversification is a key to successful investing. If you only owned one type of asset, such as growth stocks, and the stock market went into a decline, as has happened this year, your portfolio likely would have taken a big hit — even bigger than the one you may have experienced. But bond prices don’t always move in the same direction as stocks, so the presence of bonds in your portfolio — along with other investments, such as government securities and certificates of deposit — can help reduce the impact of volatility on your holdings. (Keep in mind, though, that by itself, diversification can’t guarantee profits or protect against all losses in a declining market.)

Reinvestment opportunities — As mentioned above, rising interest rates and higher yields may reduce the value of your current bonds, but this same development may also offer you some favorable reinvestment opportunities. If you own bonds of varying durations — short-, intermediate- and long-term — you should regularly have some bonds maturing. And in an environment such as the current one, you can reinvest the proceeds of your expiring short-term bonds into new ones issued at potentially higher interest rates. By doing so, you can potentially provide yourself with more income. Also, by owning a mix of bonds, you’ll still have the longer-term ones working for you, and these bonds typically (but not always) pay a higher interest rate than the shorter-term ones.

It might not feel pleasant to see the current value of your bonds drop. But if you’re not selling them before they mature, and you take advantage of the opportunities afforded by higher yields, you’ll find that owning bonds can still be a valuable part of your investment strategy.

Michael Christodoulou, ChFC®, AAMS®, CRPC®, CRPS® is a Financial Advisor for Edward Jones in Stony Brook. Member SIPC

Pixabay photo/Alex Shute

By Nancy Burner, Esq.

Nancy Burner, Esq.

When creating estate planning documents for clients, a common concern is how to protect the beneficiaries of the estate.

When it comes to providing creditor protection for oneself, there are not many estate planning options available, aside from giving assets away. This could result in undesired consequences, such as the loss of ownership of the assets or creating a taxable event. Fortunately, this is not the case for beneficiaries — there are certain planning techniques to provide beneficiaries with creditor protection, and other protections, that one would otherwise not be able to provide for themselves.

The Internal Revenue Code states that if a trust limits the distribution of principal to an ascertainable standard, the trust qualifies as a creditor protected trust. Limiting distributions to the beneficiary for their health, education, maintenance, or support (HEMS) falls within the IRS guidelines of an ascertainable standard that creates creditor protection for the beneficiary. 

While this type of trust may sound restrictive, the trust can essentially be used to maintain the beneficiary’s lifestyle. The principal of the trust can be used to pay for the beneficiary’s schooling, rent, taxes, medical expenses and more. 

Additionally, assets, such as a real property, can be bought directly in the name of the trust, thus protecting the assets immediately upon purchase. Lastly, the beneficiary can be their own trustee of the trust and have the right to withdraw the income generated from the trust, all while still maintaining creditor protected status.

If there is a concern that the beneficiary may want or need access to the trust beyond HEMS distributions, or that the trust may become too burdensome or impractical to manage, the estate planning document creating the trust can provide various ways to either completely undo the trust or to authorize a distribution of principal beyond the beneficiary’s health, education, maintenance, or support.

Aside from creditor protection, there are additional benefits that come with beneficiary trusts. If, for example, there is a concern that a beneficiary may end up with a taxable estate, any assets transferred to them in trust will not be includable in the beneficiary’s estate.

This could help reduce, if not eliminate, a large estate tax on the beneficiary’s death. Another benefit is the ability for the creator to maintain control of the distribution of trust assets should the beneficiary die before the complete distribution of their trust. 

If the beneficiary is unable to manage their personal finances for any reason, the document can name someone other than the beneficiary to be the Trustee of the trust. The document can include specific instructions on how to administer the trust, thus ensuring that the beneficiary is properly cared for and that assets of the trust will last for an extended period of time.

Beneficiary trusts can exist both within a last will and testament, also known as a testamentary trust, as well as a free-standing living trust. Either document can take advantage of this powerful tool.

Because it is not always immediately clear whether a beneficiary trust or outright inheritance is the right distribution method, it is important to meet with your estate planning attorney and provide them with as much information as possible in order for them to properly advise on the creation of your documents.

Nancy Burner, Esq. is the founder and managing partner at Burner Law Group, P.C with offices located in East Setauket, Westhampton Beach, New York City and East Hampton.

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By Jennifer B. Cona, Esq.

Jennifer B. Cona, Esq.

All trusts are not created equally; there are many different types of trusts used for a variety of purposes, such as asset protection planning, financial management, probate avoidance and tax planning. Two common types of trusts in estate and asset protection planning are revocable and irrevocable trusts.

A revocable trust is a trust where you, the trust creator, reserve the right to revoke or change the trust at any time. If properly structured and funded, a revocable trust can be helpful in avoiding probate and allowing for easier management of assets in the event of incapacity. If you own homes in more than one state, it may make sense to place your out-of-state property in a revocable trust to avoid the need for probate in two states. Beware, however, that a revocable trust offers no asset protection. For Medicaid purposes, all of the assets in a revocable trust are considered available and may have to be spent down on the costs of care.

The better option for most older adults is an irrevocable trust. This type of trust cannot be revoked or changed by you alone, but can be with the consent of the trust beneficiaries. The benefit of making a trust irrevocable is that it can be structured as a Medicaid asset protection trust.

An irrevocable trust set up for asset protection purposes can hold almost any type of asset, including your home, bank accounts, and investments. You cannot have access to the principal of the trust, but you can retain the right to receive the income (dividends and interest). After five years have passed, the assets held in the trust are protected with respect to Medicaid. You would not have to spend down those assets on the cost of care; they are protected and will be inherited by your beneficiaries.

By properly planning ahead, your assets can be maintained for quality-of-life items and ultimately left to your heirs. But creating the trust is only the first step. The trust also must be funded, meaning assets must be transferred or re-titled into the name of the trust. For example, bank and brokerage accounts need to be retitled in the name of the trust. When transferring real property to a trust, you will need to sign a new deed naming the trust as the owner of the property.

For many families in the metro NY area, their most valuable asset is their home. As such, we often transfer title to the home to the irrevocable asset protection trust in order to protect its value. You can still sell your home, purchase a new property, keep your real estate tax exemptions, and no one can sell your house without your consent. Other assets can be placed in a trust for asset protection purposes as well, such as investment accounts, bank accounts, mutual funds, and life insurance. 

With the escalating cost of healthcare, it is more important than ever for older adults to protect the assets they worked their whole lives to save from a sudden healthcare crisis. An irrevocable trust is an important tool in that asset protection plan. 

Be sure your Elder Law and Estate Planning attorney understands the extent of your assets and listens carefully to your concerns and goals so that together you can create a customized trust, estate and elder law plan.

Jennifer B. Cona, Esq. is the Founder and Managing Partner of Cona Elder Law located in Melville and Port Jefferson. The law firm concentrates in asset protection, estate planning, Medicaid benefits, probate and special needs planning. For information, visit

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By Michael E. Russell

Michael E. Russell

My wife Barbara and I were lucky enough to spend the past week in Vermont. A respite like this gives one the chance to see what is occurring in the economy from a different perspective.

Sitting on the front porch in the morning I watched truckers hauling lumber and building supplies up and down the road. I decided to check out the nearby diner to hear what the local populace had to say. It sure sounded familiar: prices on the rise, shortage of employees and a real concern as to the direction the country was headed.

However, restaurants were full, many of whom were New Yorkers! Other tourists were taking in the beauty of southern Vermont.  So where are we?

The Federal Reserve is expected to raise short-term interest rates by three quarters of a percentage point later this month. This will lift the benchmark rate to approximately 2.5%. The probability of another one percentage point rate by the year’s end will hopefully cool down inflation which is approaching 9%.

The market has looked favorably on the current moves by the Federal Reserve that were done over the past two weeks. In the short-term there have been some widespread commodity-price declines and other signs of inflation slowing.

The bond market has responded in a positive way. The yield on the ten-year treasury has decreased by one quarter of a percentage point. It currently is at 3.1%, down from 3.1 in early June. This includes a 2% increase in the past week alone!

The S&P is currently projecting earnings for 2023 at under 16x earnings. The 2022 earnings is close to the same number. What this says is that the current 2022 projection on the earnings yield which equates to profits divided by the current index level is close to 6%, twice the ten-year treasury yield!

Looking at other indices is showing that that there may be opportunities in area other than the S&P 500, which most investors follow.

The S&P small cap 600 is currently priced at less than 12x estimated 2022 operating earnings. This a number that hasn’t been seen in a long time. This index and corresponding exchange traded funds may provide for portfolio growth.

As I have mentioned in past articles, the money center banks have provided dividend yields ins excess of 3%. These dividend yields have given support to their stock prices.  Bank of America, Goldman Sachs trade at near book value. Citigroup, which has improved its balance sheet by controlling expenses and increasing its net interest income, is trading at half its book value.

Even though short-term earnings are not looking robust due to a drop in mortgage origination fees and weaker investment banking opportunities, all dividends appear secure.

What is Warren Buffett up to? This week he added to holdings in Occidental Petroleum through Berkshire Hathaway. He now owns close to 20% of the company in a stake worth more than $20 billion.

By the way, Berkshire Hathaway is holding close to $100 billion in cash and cash derivates I expect Buffett to put several billion into picking up value stocks.  As an aside, the $100 billion in cash will give Buffett a profit in excess of $5 billion annually. NICE!!!

In summary, where are we? Not exactly sure. West Texas Crude Oil has dropped to $98 a barrel, some “experts” are projecting a drop to $65. We can only hope! Mortgage rates have dropped to 5.3% and the June jobs number beat expectations.

Boris Johnson is gone, Elon Musk says no to Twitter, Janet Yellen threatens China with sanctions, China threatens Taiwan, etc, etc. Now Monkey Pox!!! Can we just catch a break and enjoy the rest of the summer? Sure hope so. Until next time.

Michael E. Russell retired after 40 years working for various Wall Street firms. All recommendations being made here are not guaranteed and may incur a loss of principal. The opinions and investment recommendations expressed in the column are the author’s own. TBR News Media does not endorse any specific investment advice and urges investors to consult with their financial advisor. 

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By Michael Christodoulou

Michael Christodoulou
Michael Christodoulou

In just a few weeks, students will be heading off to college — and parents will be getting out their checkbooks.

Without a college-bound student in your home right now, you might not be thinking much about tuition and other higher education expenses, but if you have young children, these costs may eventually be of concern. So how should you prepare for them?

It’s never too soon to start saving and investing. Unfortunately, many people think that they have a lot of “catching up” to do. In fact, nearly half of Americans say they don’t feel like they’re saving enough to cover future education expenses, according to a 2022 survey conducted by the financial services firm Edward Jones with Morning Consult, a global research company.

Of course, it’s not always easy to set aside money for college when you’re already dealing with the high cost of living, and, at the same time, trying to save and invest for retirement. Still, even if you can only devote relatively modest amounts for your children’s education, these contributions can add up over time. But where should you put your money?

Personal savings accounts are the top vehicle Americans are using for their education funding strategies, according to the Edward Jones/Morning Consult survey. But there are other options, one of which is a 529 plan which may offer more attractive features, including the following:

Possible tax benefits

If you invest in a 529 education savings plan, your earnings can grow federally income tax-free, provided the money is used for qualified education expenses. (Withdrawals not used for these expenses will generally incur taxes and penalties on investment earnings.) If you invest in your own state’s 529 plan, you may receive state tax benefits, too, depending on the state.

Flexibility in naming the beneficiary 

As the owner of the 529 plan, you can name anyone you want as the beneficiary. You can also change the beneficiary. If your eldest child foregoes college, you can name a younger sibling or another eligible relative. 

Support for non-college programs 

Even if your children don’t want to go to college, it doesn’t mean they’re uninterested in any type of postsecondary education or training. And a 529 plan can pay for qualified expenses at trade or vocational schools, including apprenticeship programs registered with the U.S. Department of Labor.

Payment of student loans 

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A 529 plan can help pay off federal or private student loans, within limits.

Keep in mind that state-by-state tax treatment varies for different uses of 529 plans, so you’ll want to consult with your tax professional before putting a plan in place.

Despite these and other benefits, 529 plans are greatly under-utilized. Only about 40% of Americans even recognize the 529 plan as an education savings tool, and only 13% are actually using it, again according to the survey.

But as the cost of college and other postsecondary programs continues to rise, it will become even more important for parents to find effective ways to save for their children’s future education expenses. So, consider how a 529 plan can help you and your family. And the sooner you get started, the better.

*Investors should understand the risks involved of owning investments. The value of investments fluctuates and investors can lose some or all of their principal.

Michael Christodoulou, ChFC®, AAMS®, CRPC®, CRPS® is a Financial Advisor for Edward Jones in Stony Brook. Member SIPC.