Wednesday, March 25, 2020

Free Financial Planning: My Response to COVID-19

I am waiving all my hourly financial planning fees, effective immediately, to help anyone, anywhere in the country.  In these times when so many Americans are feeling both emotional and financial stress, everyone should have access to someone with a financial planning and financial therapy background without fretting over the fee. I am here to help on a voluntary basis.

Based on my research, expertise, and experience, I have been predicting a major market disruption for some time (although I did not expect it to be a pandemic). As a result, we have been allocated primarily to strategies that provide steady cash flow while simultaneously insulating from even severe market losses. Consequently, I am not at all frantic at this time. The only calls I have received are from folks whose accounts I do not manage seeking what my research is showing and a game plan moving forward.

Many people are distraught over what has happened to their investments, what risks lie ahead, and what they should do at this moment. I have spoken with people who had planned to retire within the next year or two, and now realize that they have to come up with a Plan B. I have spoken with folks who are sick and tired of the roller coaster ride associated with traditional investments. They’ve seen their nest eggs cut dramatically when commercial real estate dried up in the 1980s, and again in the 1990’s on account of the dot com debacle, and again after 9/11, and again after the subprime mortgage crisis, and now again as a result of COVID-19 with fears of more to follow. They do really well when the market soars, but they give it back when the market goes south. They desperately seek someone with reliable research and strategies to make sure they stop the cycle from re-occurring another time.

Commonly and naively, many people lump all financial planners together, believing that one is as good or harmful as another. This is akin to believing all surgeons perform the same. Most people have an offense but not a defense when it comes to investment management. All of the market’s gains over the last four years have evaporated as we are now trading at levels equivalent to 2016. Meanwhile, our national debt has skyrocketed, and it is exploding even further. We are in a bear market, and times will be tough for many people for a long time, notwithstanding the fact that they are in denial and don’t want to face it.

Our country’s standing and our citizens’ financial security are at risk. We need much better and profound financial literacy, knowledge and empowerment. We need real knowledge and information beyond what the talking heads dish out nightly. We need someone who can educate us and direct us in an objective and unbiased way.

 What can I do to educate, empower people to get them on the right path? What can I do to provide independent and prudent guidance as it relates to your specifics at a time when you might be feeling financially insecure and are consequently reigning in spending? As a perpetual student of finance and investments who shares what I have learned from the masters, I can make a lasting contribution through providing virtual online personal conference calls gratis, waiving my retainer and all fees. This could easily equate to thousands of dollars.

Limiting exposure to re-occurring market crashes has to become a primary objective.  Insanity is doing the same thing over and over again and expecting different results. Someone’s physical and mental wellbeing are paramount, but financial stability is not far behind.

I am here to help. I have navigated through a variety of market cycles. Unlike restaurant owners and personnel, lawyers, dentists, retailers, hair and nail salons, and numerous non-essential service providers, because of positioning, I personally am very mildly impacted by the implosion of the market or the economy. The least I can do is donate my time and knowledge to others. Regardless of your net worth, age, prior experience, etc., or that of anyone to whom you forward this, please let me know whether you would like me to email you to coordinate your session(s). If you have a phone, you have a financial planner.

In solidarity,
Greg Gann


Securities and advisory services offered through LPL Financial, a registered investment advisor.
This information is not intended to be a substitute for individualized legal advice. Please consult
your legal advisor regarding your specific situation. Gann Partnership and LPL Financial do not
provide legal advice or services. Please consult your legal advisor regarding your specific

Wednesday, January 29, 2020

Major 2020 Estate Planning Law Change Affecting Maryland Marriages

There is a sweeping and complex change beginning October 1, 2020 in how married Marylanders will be able to distribute assets to their heirs that will especially impact inter-spousal estate conveyances.

The Issue

Under Maryland's current law, which affects anyone domiciled in the state who dies prior to October 1, 2020, in terms of determining the surviving spouse's legal share of her decedent spouse's estate assets, there is a distinction between "probate" and "non-probate" assets. Non-probate assets are assets that have a named beneficiary and pass directly to the named beneficiary upon the death of the decedent. Because they pass onto the named beneficiary and not in accordance with provisions in the decedent's will, they are deemed to transfer upon death "outside the will." Examples of non-probate assets include life insurance, revocable trusts, retirement accounts, and investment accounts which are designated as TOD (transfer on death) or POD (payable on death). Under current law but only through September 30,2020, a spouse has a statutory legal right to one third of the decedent's PROBATE estate if there are surviving children or grandchildren or one half of the PROBATE estate if there are no children. Therefore, under current law, if say a husband dies with only non-probate accounts and names someone other than his spouse as the named beneficiary, then in theory, he could completely disinherit his wife and remain in compliance with the legal stature. I say in theory because the wife could always sue the estate and rely on the court to determine that such a result was unconscionable. However, outcomes with respect to litigation are anything but certain, and the associated costs preclude the average family from practically pursuing this potential remedy. One of the intentions of the new statute is to rectify this possibility and potential conflict.

In addition to enhanced opportunities to disinherit a spouse, the current law to be rectified also has the potential of creating a windfall to a spouse who wishes to act greedily, especially in second and subsequent marriages. What I mean by this is that say it is a second marriage for the couple, and Husband, wanting his business which he owned prior to the marriage to pass onto his children, executes a will that specifically authorizes this conveyance. Furthermore, let's assume that the business represents the most significant asset in Husband's estate, valued at say $1million. Thinking that the full value of the business will transfer to his children in accordance with his will, let's say that he names Wife the sole beneficiary of his $1 million life insurance to financially protect her. Well, because the life insurance is a non-probate asset, under existing law, she will receive the entire life insurance proceeds outright. However, she will also have a statutory right to one-third of the value of the business because it is a probate asset and passes through Husband's will. This one-third interest is deemed her elective share, and by law her interest is protected and supersedes the terms otherwise stipulated under Husband's will. She could contest the will, and claim that she is entitled to one-third of the business value.

To rectify both scenarios, the new law was adopted. However, due to its complexity, its effective date was delayed until October so that the public would have time to get their affairs ordered properly.

Remedy Under The New Law

For Marylanders who die on or after October1, 2020, there will no longer be a distinction between probate and non-probate assets in terms of determining the spouse's elective share. In other words, regardless whether assets pass outright to a named beneficiary "outside" the will or through the will and therefore probate, the entirety of all the assets have to be aggregated, and the spouse can claim interest to a third or half of the aggregate value depending on whether there were surviving children or not. Consequently, if one spouse leaves his entire IRA to someone other than his spouse, or names the beneficiary of his life insurance as someone other than his spouse, and/or transfers all or a remainder of his assets to a revocable living trust naming someone other than his spouse as beneficiary, his spouse can override his beneficiary designations and claim her respective 1/3 or 1/2 share. If she exercises her right within nine months of Husband's death, her spousal statutory share supersedes his beneficiary designations. As long as she is named the beneficiary of Husband's assets worth at least the value of her statutory elective share, then his estate is in compliance. However, she can sue to claw back assets transferred to others if she does not inherit at least her spousal share. Because the spouse's share under the new law aggregates all of the decedent's assets irrespective whether they were part of his probate or non-probate estate, the new law refers to the decedent's estate from which the spousal share is calculated as the "augmented" estate.

Marriage Implications

Unless the spouse waives her right to the spousal share, the surviving spouse can contest the disposition of the estate, and supersede the decedent spouse's wishes. For a happily married couple who has only been married once, this probably is no big deal. I say this because for first time married couples, most intend for the vast majority of their assets to pass to the surviving spouse. Where things get tricky is in second or subsequent marriages where the one spouse may have designated that his assets pass to his children, and might now come to realize that his present wife can claim an interest to a third of his augmented estate, thereby limiting his children's inheritances and creating a conflict and costly legal battle between his children and his second wife. Under the pre-October law, he could have "protected" his children by arranging that none of his assets would pass through probate or his will. He could have financially planned in a way to prevent the second wife from inheriting what he wished to pass onto his children. This ability to financially plan in this way minimized the need for a pre-nuptial agreement. However, because the spouse will be entitled to her share of the augmented estate later this year, the need for a prenuptial agreement in subsequent marriages has become even more profound. Without a prenuptial agreement, a couple could be married for an insignificant amount of time before the death of one spouse, and the surviving spouse could demand a windfall from the deceased spouse's estate as her statutory right, irrespective of his estate plan.
Because of the pending change of law, in the absence of a valid pre-nuptial agreement, it would also make sense for spouses to protect their interests and their estate plans by negotiating and executing a post-nuptial agreement whereby the new spouse waives her spousal share. Because of the awkwardness and emotional attachments associated with pre-nuptial and post-nuptial agreements, reaching an understanding and sensitivity as to their terms and therefore an agreement is best achieved through mediation rather than through the perceived contentious nature and one-sided vantage of lawyers.
The new law can be used as the opening and justification for mediating pre-nuptial agreements for couples who are about to tie the knot, but, and perhaps even more importantly, through post-nuptial agreements for couples who have already walked down the aisle.
As a member of the Maryland Bar (although not currently practicing) and a divorce financial analyst Gann is credentialed and skilled to help clients understand, negotiate and reach resolution in the most timely and cost-efficient manner.

Securities and advisory services offered through LPL Financial, a registered investment advisor.

This information is not intended to be a substitute for individualized legal advice. Please consult
your legal advisor regarding your specific situation. Gann Partnership and LPL Financial do not
provide legal advice or services. Please consult your legal advisor regarding your specific