How to Get Really Rich ( Joan Rivers)

Watch as Joan Rivers probes the lifestyle of the ultra-rich, revealing many cases of excessive consumption but also some fascinating and inspiring Rags-to-Riches stories.

Estate Planning at Every Age (from Bankrate.com)

8 life stages for estate planning
By G.M. Filisko • Bankrate.com


When you're 40, chances are you're not the same person you were at 20, and your estate plan should reflect the changes you've experienced. Here's a rundown of the estate-planning tools you should have if you're just beginning your life's journey, midway through or approaching the final leg.

Ch. 1: Planning for life

"When you're a child, your parents can make financial and medical decisions for you," explains Gabriel Cheong, an estate planning attorney at Infinity Law Group LLC in Quincy, Mass. "But when you turn 18, they no longer have that legal right. If anything were to happen to you, you'd probably want your parents to control your health care and financial decisions. You'd also want them to be able to talk to your medical providers and have those providers respect your parents' right to make health care decisions, including discontinuing treatment if necessary."
So if you're over 18 and unmarried, execute four documents to make sure your loved ones can carry out your wishes:

1. A general durable power of attorney enables you to designate who will control your finances if you become incapacitated, whether it's your parents or another loved one.

2. A health care proxy allows you to designate who will make medical decisions on your behalf in the same situation.

3. A living will lets you lay out your wishes regarding life-sustaining medical treatment.


4. Finally, a Health Insurance Portability and Accountability Act, or HIPPA, release allows your designated agent to discuss your medical condition without violating patient privacy laws. Without those documents, your loved ones may be forced to go to court to seek guardianship over you to assert those controls.

Single, but committed

"If you're in a long-term relationship but unmarried, create a will or trust if you want your life partner to inherit your possessions," recommends Mark Clair, an estate planning attorney at The Clair Estate Planning and Elder Care Law Firm in Maumee, Ohio. "Otherwise, they'll go to your closest relatives according to your state's law."

We're engaged!

"A prenuptial agreement isn't only for people who have a lot of money," says Cheong. "It's essential for everybody. A lot of people divorce because they've never had conversations about money. A prenuptial agreement forces people to engage in this financial conversation."

Just married

Revise your durable power of attorney, health care proxy and HIPPA release if you want there to be no question that your spouse should control your financial and medical decisions if you become incapacitated. "Think of Terri Schiavo," says Leanna Hamill, an estate planning and elder law attorney in Hingham, Mass., referring to the woman whose parents and husband battled publicly for seven years over the right to make health care decisions on her behalf after she became incapacitated. "She didn't have a health care proxy."
Without a revised durable power of attorney, says Hamill, your spouse also can't administer property solely in your name or property you hold jointly with your spouse. Also specify the person you'd like to make financial and medical decisions on your behalf if an accident incapacitates you and your spouse.

If you don't already have one, this is also the time for a will or trust. "In a lot of states, if you die without a will and have a spouse but no children," explains Hamill, "your spouse will inherit some of what you own, but your parents will also inherit." Rather than risk a fight between your spouse and parents over who should inherit, have a will or trust definitively state who should receive your assets. Also, if you own a home, purchase life insurance that will pay off your mortgage if one spouse dies.
Finally, change your beneficiary designations on such things as health insurance and investment plans so they pass to your spouse. "A lot of people think when they get married, those things change on their own, and they don't," explains Hamill. "Go to your human resources department and ask which documents include a beneficiary. Health savings accounts and flexible spending accounts sometimes have a beneficiary, as do bank accounts payable on death."

The joys of parenting

If you have children, update your will to nominate a guardian to step in if you and your spouse pass away. "Also include provisions in your will or a separate revocable trust so that your child doesn't inherit everything at the age of 18," recommends Hamill.
"A revocable trust allows you to appoint a trustee to handle any money your child inherits. The trustee can use it to support your child as the child grows up, and you can specify at what age your child can receive the money, along with any reasons your child should get it before that age, such as starting a business or buying a house. You can also specify that the trustee can withhold money if your child has a gambling problem, is in the midst of a divorce, or there's another situation that makes it inappropriate to inherit."

You'll also need a separate guardianship nomination -- sometimes called an emergency guardianship proxy -- that nominates a guardian to care for your child if both parents are incapacitated, says Hamill. That's helpful in simpler situations as well, such as when both parents take a vacation and a child needs emergency medical treatment.

Each time you have another child, be sure your estate planning documents address all of your children, and don't forget to increase your life insurance. "You need about $1 million to care for a child from birth to college," says Cheong. "Also, if you have a special-needs child, set up a special-needs trust, which allows you to provide for your child without disqualifying the child from government benefits."

Sing it, Tammy Wynette: D-I-V-O-R-C-E

"If you're separating or divorcing, you probably don't want your spouse to still have all the authority to make decisions on your behalf and access your medical and financial information," says Hamill. "Revoke those documents, including beneficiary designations, or sign new ones. A divorce decree doesn't magically change those things."
If you remarry, revise your will and trust documents to reflect the proper beneficiaries. "Most people want to share with their new spouse but also want to provide for their separate children at their death," says Hillary Gagnon, an estate planning attorney with Jennings, Haug and Cunningham in Phoenix. "Determine which assets you want to leave to your spouse and which to leave to your children."

The middle ages
As you reach your 40s and 50s, recommends Hamill, consider purchasing long-term care insurance, which covers the cost of long-term care or a nursing home.
The golden years
Review your life insurance to determine whether you can reduce it if your children are grown. Also review designations on your durable power of attorney, health care proxy, and HIPPA release to be sure the people you've named are still in your life and willing and able to serve in that role. "A lot of people at this stage," says Hamill, "also start planning their funeral to make sure that's in order."

FRS Florida Retirement System : Big Change in DROP (Palm Beach Post)

Lawmakers won't make state employees contribute to pension, but reduce early-out benefits
By Pat Beall
Palm Beach Post Staff Writer

Updated: 7:42 p.m. Monday, April 26, 2010

Posted: 6:02 p.m. Monday, April 26, 2010


State lawmakers jettisoned the idea of making employees start contributing to their pension, a proposal that had drawn united opposition from police, teachers, firefighters and thousands of other government employees.

However, lawmakers agreed to curb a popular early retirement program. The Deferred Retirement Option Program (DROP) allows workers to retire, but keep working for another five years. During that time, their pension is deposited in a tax-deferred retirement trust fund that earns 6.5 percent interest. After an employee gets out of the program, he can receive a lump-sum payment and start collecting retirement checks as well.

Lawmakers slashed the interest earned from 6.5 to 3 percent effective July 1, said Matt Puckett, deputy executive director for the Florida Police Benevolent Association. "What you will have is a rush on retirement and a lot of very angry people who cannot get (into the program) before July 1," predicted Puckett.

For the first time in more than a decade, the Florida Retirement System no longer has 100 percent of what is needed to pay all current and expected retiree benefits. Instead, it has about 88.5 cents for every dollar needed, according to the most recent annual report. But workers, said Puckett, "did not get us in the mess. It's not the fault of the police officer, so why are you punishing them?"

At one quarter of 1 percent of a worker's salary, the amount of money involved in retirement plan contributions was modest - $125 on a salary of $50,000 - but it would have marked the first time in about 30 years employees would have had to contribute.

Tweaking retirement contributions "wasn't about the money" lost by the Florida Retirement System's investments, said Doug Martin, legislative coordinator for the Florida chapter of the American Federation of State County and Municipal Employees AFL-CIO.

"It was setting up a way for them to jack up employee contributions. There's no doubt in anybody's mind that we would be seeing 1, 2, 3, 5 percent contributions within a year or two."

As for public criticism of pensions for government workers, "There are public employees who do make six figures but they are relatively few. Most do not," said Martin. In fact, workers who retired from Palm Beach County's participating employers averaged a pension of $17,732 last year, according to a Palm Beach Post investigation published Sunday. Half received less than $12,438.

An aide to State Sen. Mike Fasano, R-New Port Richey, said that Fasano, who has championed pension reform, was "disappointed" that the retirement contributions didn't get a green light, "given that it was such a small amount."

Find this article at:
http://www.palmbeachpost.com/news/state/lawmakers-wont-make-state-employees-contribute-to-pension-626531.html

The Rules: Roth IRA Conversions (from Kiplinger.com)

Master Limited Partnerships for Income (WSJ, AP)

WEEKEND INVESTOR APRIL 10, 2010

Big Yields, Big Risk in the Oil Patch
Master Limited Partnerships Are Luring Investors for Their Yields and Growth Potential, but Can Plunge When Rates Rise
By TOM LAURICELLA
(See Corrections & Amplifications item below.)


Associated Press

Shares of the master limited partnership have risen more than 11% so far this year.
Yield-starved investors are piling into a small corner of the financial markets sporting big payouts: master limited partnerships. But they should tread carefully. While these energy-related plays are seen as having strong prospects, they also are volatile, and have a history of being tripped up by higher interest rates.

Master limited partnerships, or MLPs, are essentially energy companies that own and operate pipelines and storage facilities for natural gas and oil. They generate revenue by essentially collecting fees from energy exploration and production companies that use their properties.
While the securities issued by MLPs are technically stocks and trade on exchanges, MLPs are unlike most other publicly traded companies. Rather than being structured as corporations, they are partnerships, which means they generally pay out all the cash they generate to shareholders as income.
Those yields are central to MLPs' appeal. On average, MLPs are yielding roughly 7% right now, an unusually high level of income in today's market. In contrast, the stocks in the Standard & Poor's 500-stock index generate dividend yields of only 1.9%, on average. Also central to MLPs' appeal: the increasing development of oil and natural-gas infrastructure in the U.S.

Those two factors have helped fuel the main MLP benchmark, the Alerian MLP Index, to a 19.6% annualized gain over the past decade and a 10.8% rise so far this year. The combination of the high yield and big returns has investors pouring money into the sector. The JPMorgan Alerian MLP index exchange-traded note, launched in March 2009, has attracted $1 billion already.

But in the short-term, external factors can make MLP prices volatile. Because of their big yields, "Many people mischaracterize them as a bond replacement, which they are not," says Shawn Rubin, an adviser at Morgan Stanley Smith Barney who has used MLPs for some clients for a decade. "Although they have a yield component, and hopefully a growing yield … the price fluctuations definitely look more like stocks than bonds."

To a large degree MLPs are creatures of Congress's whims and the tax code. As a result, they have changed over the years. In their early days in the late 1980s, the underlying businesses were all over the map, from hotels to the Boston Celtics. MLP laws were soon tightened. Today they are limited to energy firms, mainly pipelines and storage for natural gas, oil and biofuels.


The universe of MLPs remains relatively small, with 69 publicly traded companies today, up from fewer than 30 a decade ago, according to Alerian. MLPs carry a total market capitalization of $150 billion, and just five companies account for more than 40% of the sector's value, according to Alerian's data. By contrast, Exxon Mobil's market value alone is more than $300 billion.

The long-term bullish case for MLPs centers on expectations for a boom in pipeline and storage in the U.S., especially as new natural-gas fields come into production. That in turn could lead to increases in MLP payouts.

But a look at their history shows the short-term damage that can come from rising interest rates. During MLPs' relatively short history—most didn't exist a decade ago—investors have tended to suffer sharp losses when the Federal Reserve began raising rates, as it is expected to do beginning later this year. For example, in late January 2004 the Fed signaled that an interest rate rise was on the way. The Alerian index fell 4% in a little over a week, recovered and then went into a swoon that took it down 12% from its January high. MLPs also sank after the Fed tightened in 1999 and lost 14% for the year.
One reason for their interest-rate sensitivity is that MLPs increase yields by adding assets, either through acquisition or building from scratch. In either case, MLPs must raise funds for their expansion by tapping the stock or bond markets. As a result, higher interest rates can increase their cost of capital. And if higher rates lead to a slowing economy, that in turn could damp their growth.
But over long periods in which the Fed has raised rates, MLPs have generally recovered well. During the two-year tightening cycle of 2004 through 2006, the Fed raised the federal-funds rate to 5.25% from 1% and MLPs gained 48% between May 2004 and July 2006, data compiled by Kayne Anderson show.

Morgan Stanley's Mr. Rubin says that he is stressing yield-paying investments and, as result, in cases where he might normally recommend 5% of a portfolio be in MLPs, today's he is recommending a 10% stake.

"I'm willing to deal with the variation in price," Mr. Rubin says. Given the potential for long-term increases in MLP yields, "I'd use those interest-rate sensitive pullbacks as moments in time to be a buyer."

Corrections & Amplifications

Master limited partnerships pay out cash they generate to shareholders as ordinary income. A previous version of this article incorrectly described their payouts as dividends.

Write to Tom Lauricella at tom.lauricella@wsj.com

The Back-door Roth IRA ( from Natalie Choate, ataxplan.com)

How to get around the Income Limit for Roth IRAs

Question: If a high-income taxpayer makes a nondeductible IRA contribution, is he free to convert it to a Roth IRA immediately? Or would this be deemed an excess Roth conversion if done in the same year?

Natalie: He is free to convert it immediately. It would not be deemed an excess Roth IRA contribution. There's no legally required waiting period; however, it would make sense to wait until you have received adequate documentation that the original contribution was made to a traditional IRA, just so the record is absolutely clear.

For some reason, Congress left income limits in place for making "regular" (annual-type) contributions to a Roth IRA, even though they removed the income limit for conversion contributions. So this sequence (contribute to a traditional IRA, then immediately convert the account to a Roth) will be very popular with everyone who (1) wants to make a regular contribution to a Roth IRA but is ineligible to do so and (2) is eligible to contribute to a traditional IRA. To be eligible to make a regular contribution to a traditional IRA you must have compensation income at least equal to the contributed amount and be younger than age 70½ as of the end of the contribution year.

As a reminder, the fact that the participant is converting a newly-created IRA (funded with a nondeductible contribution) does not mean that the conversion is automatically "tax-free." The conversion of a newly-created traditional IRA is taxed just like the conversion of any other traditional IRA; you do not look only at the pre- and after-tax money in the particular account he happens to be converting.

The nontaxable portion of any IRA conversion (whether of a brand new account or an IRA you've held for years) is determined the same way. You multiply the converted amount by a fraction. The numerator of the fraction is the total amount of after-tax money the participant has in all of his traditional IRAs. The denominator is the total combined value of all of the participant's IRAs. The amount that results from applying this fraction is the only amount that you can treat as the tax-free conversion of after-tax funds-regardless of which account the conversion actually came from.

Example: Fred and Ed each make nondeductible $5,000 contributions to their respective newly created traditional IRAs on Monday, March 1, 2010. A week later, each of them converts his newly created $5,000 traditional IRA to a Roth IRA. Even though they both followed exactly the same steps, they have very different tax results.

For Fred, the newly created $5,000 traditional IRA is the ONLY traditional IRA that he owns. Fred's conversion is "tax free" because he's converting 100 percent after-tax money.

Ed, on the other hand, in addition to his newly created $5,000 traditional IRA, also owns a $95,000 rollover traditional IRA. The rollover IRA is 100 percent pretax money. To determine how much of Ed's 2010 conversion is tax-free, we multiply the $5,000 conversion amount by the following fraction:

$5,000 (that's the total of Ed's after-tax money in both of his traditional IRAs)
$100,000 ($95,000 + $5,000; the total combined value of all Ed's traditional IRAs)

$5,000/$100,000 times $5,000 = 5%, meaning that only $250 of the $5,000 conversion is deemed to come from the after-tax money in Ed's IRAs. The other $4,750 of his conversion is included in his gross income.

I have simplified the fraction for purposes of illustration; it's actually based on year-end values.

So yes the strategy is legal and safe and it works--but don't fall into the trap of thinking the conversion is automatically tax-free just because you are converting a new account funded only with nondeducted contributions.
Resources: See Chapter 2 of the author's book Life and Death Planning for Retirement Benefits for how to compute the taxable and tax-free portion of any distribution; $89.95 plus shipping at www.ataxplan.com or 800-247-6553. For complete explanation of all aspects of Roth IRAs and other Roth retirement plans, get Natalie's 97-page Special Report Roth-Ready for 2010!, downloadable for $49.95 at www.ataxplan.com.

Puerto Rico Problem Banks

FDIC Faces '3-D Tic-Tac-Toe' In Puerto Rico Banking Crisis