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| In The News
Advisers mull bevy of election issues
Investment News
Sara Hansard, Washington Bureau Chief, reports comments from investment professionals on the varied issues of the presidential campaign.
Read responses from Capital Financial Advisor's Charles Stanly in the Environmental Regs Section.
4 Minutes
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Uncertainty in the markets is likely to cause any of us to question our decisions. To help you evaluate current conditions, we've attached two slides for your perusal.
Recently at a study group presentation, a very interesting theory was discussed. As clients of Capital Financial Advisors, we all believe that small and value companies have higher expected returns. The question posed to the group was, "Do these same shares have higher expected returns if purchased at the bottom of the business cycle?"
Many people believe we are near such a bottom now. It makes intuitive sense that investors would require extra return to be willing to invest in equities during recessionary times.
The data in these slides provides facts that support the theory that future returns, on average, are quite high after declines of more than 7%. Please take a minute to review this information. It may help you steel your resolve during these turbulent times.
Slide 1
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Over the last 5 years or so many of our clients have asked us about using Tenants in Common (TIC) 1031 exchange products to continue to defer capital gains taxes on real estate investments they no longer wish to own.
My answer was always, "Focus on the underlying investment, not the tax benefits." My suspicion was that most people were putting too much faith in these vehicles and the commissioned sales people promoting them.
This article tells the story of one nightmare scenario for owners of TIC's.
Commentary by Christopher Van Slyke, CFP, Captial Financial Advisors, L.L.C.
How 1 Property Sank the Savings of 35 Investors
The Wall Street Journal
By Jennifer S. Forsyth, Staff Writer
The bottling company went bankrupt, leaving 35 real-estate investors in a bind. To come up with a solution, all 35 of them had to agree -- no dissenters. None of them could be in charge while they discussed what to do. And, for most of them,their life savings were at stake.
The 35 investors were part of a tenant-in-common real-estate venture, a structure in which multiple investors buy fractional ownership in a commercial property, in this case a Phoenix bottling plant. But the bottler -- the building's lone tenant -- was forced into bankruptcy in November 2006 amid allegations of accounting fraud. Then, the investors found themselves in largely uncharted waters.
9 Minutes
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"Cain and Abel," "The Evil Step-Mother" and "The Trustee You Can't Trust"
 "There are three kinds of trial cases that make it to the Probate Court: 'The Cain and Abel', 'The Evil Step-Mother' and 'The Trustee You Can't Trust'", so said Tom Mitchell, a retired Probate Judge when he was mentoring a young Howard Kipnis, now a trust litigation attorney with Hickson, Kipnis & Barnes in San Diego. The "Cain and Abel" refers to the sibling rivalry that has lasted since childhood and is now being carried out with high stakes in Probate Court. "The Evil Step-Mother" refers to the sad family dynamic that takes place when a parent remarries after either the death of the other parent or a divorce. The new spouse is viewed by the spouse's children as an interloper stealing the inheritance of the deceased spouse's children. "The Trustee You Can't Trust" is untrustworthy for various reasons. The trustee may be simply naïve, maybe negligent and may be malicious. In any case, they can't be trusted.
Commentary by Charles L. Stanley CFP® ChFC AIF®, Capital Financial Advisors, L.L.C
7 Minutes
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Decision: Unitrust
Financial Planning
Estate Planning
By Martin M Shenkman, CPA, PFS, JD, an estate planner in Teaneck, N.J., and author of 35 books, including Funding the Cure.
Unitrusts are invested for neither growth nor income, but for whatever maximizes the total value of the trust over a set time. Before unitrusts, a trustee who had to pay income to the beneficiary could invest only in bonds to maximize income and preserve principal. As a result, the remainder beneficiaries, such as the children, would have seen much of the economic value of their inheritance eroded by inflation.
With a unitrust, the trustee invests for total return, and the trust pays the current beneficiary a mandatory fixed payout-a percentage of the fair value of the trust's principal, set when the trust is started. Suppose that the trust is worth $1 million and requires a 4% annual payout to the current beneficiary. The trustee can legally invest in a diversified portfolio for growth without concern for how much income the trust earns annually. In this example, the trust would pay out $40,000 the first year, or 4% of $1 million. If it grew to $1.2 million the next year, $44,000-4% of $1.2 million-would go to the income beneficiary. The remaining assets should grow reasonably for remainder beneficiaries.
10 Minutes
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We consistently emphasize to our clients the importance of expert, up-to-date estate planning. dailybreeze.com staff writer Andrea Woodhouse details an example of the consequences, particularly taxes, when owners' wishes are not properly detailed.
Heirs put Hermosa Beach's Mermaid on sale again dailybreeze.com
Plan to build a seaside hotel on Pier Plaza site derails By Andrea Woodhouse, Staff Writer  The Strand-front property housing a landmark Hermosa Beach tavern, as well as an adjacent chunk of Pier Plaza property, will go back up for sale this week - and at a discount, insiders said. After recently falling out of escrow with a local developer envisioning a hotel for the site of the Mermaid and several other businesses, the properties will hit the market again by Friday with about $1.5 million knocked off their combined asking prices, said the land's broker, Jack Gillespie of South Bay Brokers.
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