In Perspectives

With the recent decline in the equity market, the time is ripe to discuss how to take this opportunity to turn a “lemon into lemonade”.

Nobody likes seeing a decrease in their portfolio value, even if it is just temporary.  However, at times this can indeed be an opportunity in disguise.  Here are four ideas to perhaps consider in this time of market decline.

1.  Increase your 401k/403b contributions
This goes for all pre-tax retirement plans.  When you purchase a mutual fund or a stock, you are purchasing shares of the investment.  When stock prices are lower, you can purchase more shares similar to deals at the grocery store when you can buy 5 apples for the price of 4.  This also follows the mantra of “buy low, sell high.”

2.  Gifts of Stock
Many of our clients have utilized this strategy recently.  When you have a taxable estate (for estate tax purposes), any sort of marginal difference adds up. Using your annual gift exclusion can remove assets from your estate, which can result in immediate tax savings for your estate.  An heir will always be willing to receive cash, but the gift of a stock could potentially provide greater benefits to the donor as well as the donee, especially if the donee is in a lower tax bracket.  Another concept to consider is gifting appreciated securities to an heir in a lower tax bracket.  The markets have essentially given you a gift because (for example), a stock that was worth $100,000 four months ago might now be valued at $80,000.  Why not gift this to an heir so they can pay the taxable gain or so they can realize the eventual growth of the stock?

3.  Roth Conversions
When you convert traditional, pre-tax IRA assets to Roth IRA assets, you have to recognize the amount you convert as current taxable income.  Following the same context as before, why not transfer assets at lower prices for the time being to realize the eventual long-term gains in a more favorable tax environment (most distributions from Roth IRA’s are tax-free versus distributions from IRA assets that are fully taxable)?  This can be very powerful if utilized over a long period of time because you could accumulate money in this tax-friendly account by way of contributions, growth and without tax consequences upon distribution.

4.  Purchase Stocks
Not everything “on-sale” is worthy of purchase.  Many values are lower for good reason.  However, there are also some high-quality, positive cash flow generating companies available at very attractive prices.  Unlike at Jos A. Bank, which is always running a sale, you do not get opportunities to purchase stocks at great values every day.

By no means are we calling a bottom on stock prices and we do not believe in market timing.  However, we are suggesting a proactive approach to try and create an opportunity out of the uncertainty that currently exists in the market.  Many things in life are out of our control, but the choice to make “lemonade out of lemons” is within our grasp.

Legacy Trust and Your Right to Financial Privacy

At Legacy Trust we have established policies and practices that respect the financial privacy of all individuals who use our trust company. We believe it is critical to comply with the laws and regulations designed to secure your financial privacy. Your relationship with us as our client is very important to us, and we want you to understand our policies and practices about handling your information.

This Policy applies to you – This Policy applies to our relationships with individual clients who inquire about or obtain products or services from us for personal, family and household purposes.

Strict security measures – We take the security of information very seriously. We have established security standards and procedures to prevent access to client information. We maintain physical, electronic and procedural safeguards to guard client information.

Limited employee access – We have established procedures to limit employee access to information to only those employees with a business reason for accessing such information. We educate our employees about the importance of confidentiality and client privacy. We take appropriate disciplinary measures to enforce employee responsibilities regarding client information.

Why we collect information – We collect information about you to:

  • accurately identify you;
  • protect and administer your records, accounts and funds;
  • help us design or improve our products and services;
  • understand your financial needs;
  • save you time when you apply for new products and services; offer you quality products and services; and comply with certain laws and regulations;

We collect information – We collect and maintain your personal information so that we can provide investment management and other services to you. The types and categories of information that we collect and maintain about you include:

  • Information we receive from you to open an account or provide investment advice or other services to you (such as your home address, social security number, telephone, financial information and investment objectives).
  • Information that we generate to service your account or from our transactions with you (such as account statements and other financial information).
  • Information on your transactions with nonaffiliated third parties.

We have established procedures so that the financial information we collect is accurate, current and complete. We are committed to work with you to promptly correct any inaccurate information.

Our selective sharing of information – In order for us to provide investment management and other services to you, we do disclose your personal information in very limited instances, which include:

  • Disclosures to nonaffiliated companies as permitted by law, including those who help us service your account (such as providing account information to brokers and custodians).
  • Other limited disclosures as permitted by law, for example, required reports to government entities.

We do not share your information with third parties for marketing purposes. We do not sell your information.

Former clients – If you end your relationship with us, we will continue to adhere to the privacy policies and practices described in this notice.

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USA PATRIOT Act

Important Information About Procedures For Opening A New Account

To help the government fight the funding of terrorism and money laundering activities, Federal law requires all financial institutions to obtain, verify and record information that identifies each person who opens an account.

What this means for you: When you open an account, we will ask for your name, address, date of birth and other information that will allow us to identify you. We may also ask to see your driver’s license or other identifying documents.

We apologize for any inconvenience this may cause; however, federal law prohibits us from waiving these requirements.

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