What Role Does Your 401(k) Play in Your Retirement and Your Estate Planning?

Approximately 60 million workers across the United States rely on the benefits of tax advantage savings accounts, such as a 401(k) when it comes to saving for their future. Many people are eligible to contribute as much as $19,500 to their 401(k) in 2021 but that limit can be updated from year to year for the purposes of keeping pace with inflation.

When you are able to invest $20,000 per year, this can have significant implications for your retirement as well as giving assets to your loved ones in the future. There are three primary reasons why most people choose to try to max out their 401(k) in a given year. These include:

  • Growing their wealth on a tax advantage basis.
  • Reducing their taxable income for the purpose of saving on taxes.
  • Saving enough money to truly retire one day.

Many people vastly underestimate how much they’ll need to retire and this is even more problematic given recent data on increasing longevity. Retirement, for example, could last up to 30 years or even longer. Setting aside over $19,000 a year in your 401(k) account is not necessarily easy. This makes it extremely important to have a consultation with an experienced financial planner and to discuss with an estate planning lawyer how all of this fits into your bigger estate plan.


Could Potential Beneficiaries Appeal a Will Contest or Trust Litigation Decision?

Overturning a trial court’s decision on a will or trust matter is not simple. This is largely due to the fact that in probate court judges are given wide discretions for their decisions.

It can be frustrating for a beneficiary who assumed they were in the right to realize that they were not successful in their initial form of estate litigation, but it does not always mean that it is in their best interests to proceed with filing an appeal.

The appellate court does not have the power to rehear the case. Instead the appellate court must adhere to one of three standards when reviewing a case on appeal and the two most commonly used standards in these cases are very difficult to meet by the appealing party.

The general appellate review standards are de novo, substantial evidence, and abuse of discretion. Overturning a trial court decision with the de novo review standard is very rare even though it is the best standard to use. De novo review applies to strictly legal questions.

Under the substantial evidence standard, the appellate court evaluates the facts as decided by the trial court and determines whether there was enough evidence to support those factual conclusions. This appellate court is not able to rehear or relitigate the case. Finally the abuse of discretion standard applies only when a trial court has the power to exercise discretion, which is the case in many probate court matters. But a trial court’s decision will only be turned over on appeal if the trial court’s action was a clear case of abusing their discretion.

For What Reasons Should I Revoke My Trust?

A revocable living trust enables the creator to make changes to that trust at any point in time prior to their death. This includes revoking the trust entirely, meaning that it becomes obsolete.

There are any different number of reasons why a person may wish to revoke a trust but the most common reasons for making this change include updates in their life. For example, a divorce might prompt someone to dissolve a trust that was previously created as a joint document with a soon-to-be former spouse.

If the changes to be made to a revocable living trust are so extensive in nature that it might simply be easier to dissolve the trust entirely and to start fresh, the creator of the trust has the ability to do this. The first step in dissolving your revocable trust is to remove all of the assets that have been put inside it. This includes changing deeds, titles, and any other legal documents to reflect ownership of the asset from the trust back to the grantor of the trust or the original owner.

It is strongly recommended that when making any changes to a revocable living trust, including the dissolution of the trust completely, that you schedule a consultation with an experienced and knowledgeable estate planning lawyer.


What Documents Should Be Kept in a Place Easy for My Loved Ones to Find?

Planning ahead is a critical aspect of your comprehensive estate planning and it doesn’t stop just at the creation and signing of your documents. While creating and signing these documents is certainly a key component of ensuring that your wishes are respected and that you have answered many of the most important questions around the topics of estate planning, it’s imperative that your loved ones be able to access the information necessary to carry out these wishes.

These documents need to be stored and quickly located if something happens to you. Either your spouse or other family members should have access to the following materials in case of an emergency:

  • Email account information.
  • Pins or passwords to access your phone or your computers.
  • A list of insurance policies and financial accounts, including passwords, login details and websites to access that login information.
  • List of your intangible and tangible property.
  • Your health care and financial power of attorney documents.
  • Any estate planning documents that outline your wishes, including a will or a trust.

In the immediate aftermath of an accident impacting your ability to take care of yourself, or in the sudden event of your passing away, you need the support of your family members to be able to take action quickly. If they don’t know where to find these important documents, their ability to take action for your estate plan could be extremely limited.


How to Tell if a Will Was Revoked or Replaced

While you’ll create your will while you’re still alive, it will be one of your loved ones sorting through your paperwork to find it once you pass away. If you have multiple documents or it’s not easy for them to find, it’s easy to make mistakes about what the will includes or if it’s the most recent version.

Storing only the most recent version of your will makes it simpler for your personal representative to be completely clear that they have the right version. Previous wills should ideally be destroyed.

If you’re keeping copies of old wills as possible evidence that your executor might need if a family member comes forward with those older wills, sort them by date with the newest at the front. You might even leave behind a letter for your executor stating that there are previous but invalid versions of your will if you are concerned about the possibility of a will contest. If you’re the executor right now, check the dates on all the wills. If they all include a statement about revoking prior wills, the most recent one is the accurate one.

If you find a will that has handwriting on it, such as notes in the margins, this might be notes for editing. See if you can contact the estate planning lawyer who helped your family member draft the will. If you can only find a copy of the will, keep searching. You’ll want an original to submit to probate court.

If no valid version of the will can be found intestate succession rules might apply.


What Is the Role of a Fiduciary in My Estate?What Is the Role of a Fiduciary in My Estate?

There are many different terms associated with the administration of a trust, a will or an estate. One common example is the term fiduciary. This refers to an individual who has the legal obligation and power to act on behalf of someone else in situations that require honesty, trust and loyalty.

Fiduciaries have a legal responsibility to act in the best interests of the person who is delegated this responsibility or the beneficiaries associated with the strategies in question.

Fiduciaries can serve in a variety of roles in your estate, both during your life and after you pass away. Fiduciaries can include professionals like bankers, accountants, real estate agents, mortgage brokers, business advisors and financial advisors. One of the most common ways that you will come into contact with a fiduciary is by determining who will serve in the role of executor of your estate.

The executor of your estate should be someone that you trust to handle the important aspects of closing out your formal estate. This requires careful consideration of the beneficiaries and assets in play and the complexities associated with administering your estate.




Estate Planners See Increase in Requests from Clients

If the pandemic taught us anything, it’s to be prepared for the unexpected. More people than ever used this opportunity to get on top of their planning. If you went though difficult issues related to your health or experienced this with a loved one in 2020 or 2021, it’s a good time to speak with a dedicated estate planning lawyer to ensure your plans cover all your needs.

Your estate planning should cover not only what happens to any of your children or your property once you pass away, but provisions for what will happen to you and your affairs if you were to become sick or disabled during your life.

Most people view estate planning as the process of documenting your property transfer plans when they pass away. While that’s important and can make things much easier for your beneficiaries when you pass away, some of the most complex legal questions emerge when you’re hurt or ill and not able to communicate what care you’d like on your own. In the heat of the moment, medical decisions must be made, but if you haven’t taken the time to document these or appoint someone who knows them to make those calls on your behalf, your family members can get stuck in red tape during a period where timely decision-making is key.

If you have specific feelings about what medical care you’d like and when, make sure this is written down with the help of your local estate planning attorney. If you’re appointing someone else in a power of attorney role for you, be sure they are clear about how the process works and are comfortable serving in this role.

Don’t let unexpected events catch you off guard. Schedule a time to speak with an experienced estate planning attorney today.

If I Create a Trust in New Jersey Do I Still Need a Power of Attorney, A Will and A Living Will?

Many different estate planning tools can be used to help you accomplish your goals and it is recommended that you sit down with a knowledgeable New Jersey estate planning lawyer so that you have clarity over the goals you intend to accomplish and the strategies and tools that may be aligned with them.

You might need a will to be drafted in conjunction with the trust and this is known as a pour over will. For those assets that are not transferred into the trust, the will picks up those assets at the time of death and formally transfers them into the trust for central distribution.

You will also need a document known as a power of attorney which is required for those legal matters that cannot be handled by the trust, such as those assets that will not transfer to the trust or items that cannot be transferred like rights under health insurance policies or pension benefits or rights. In addition, a living will might be recommended by your New Jersey estate planning attorney more broadly or a health care power of attorney, which is used to handle substitute medical decision-making processes during lifetime and death.

Once a living trust is established, it can be changed. You may choose to use a living trust, a will and other estate planning strategies based on your initial consultation with an attorney who will help you clarify what you intend to accomplish and help you create a plan that not only serves you today but is capable of adapting with you in the future.

Can an Executor Resign After Court Appointment?

An executor can be appointed in someone’s will, but this does not obligate them to serve in this role. An executor has the opportunity to decline this chance, and when you are choosing someone as your own executor you should be clear that they want to serve in the role in the first place. You can avoid unnecessary delays for your beneficiaries by naming an executor who is aware of this appointment and is also willing to serve.

Once a will is filed with the court, an executor must be named to handle out the closing of the estate. If the will has named this person, then the court will formalize their role. At this time, if the executor does not want to serve, the proposed person can state this. Once that individual has been formally appointed as the personal representative, it becomes more difficult, although not impossible, for them to step down.

If the estate is still unsettled at the time the already-appointed executor wants to step down, a petition needs to be filed in the same probate court in which the estate was opened. A probate judge does have the discretion to reject this decision, so it’s good for the person filing this petition to have a solid reason as to why they don’t want to serve.

If probate was already opened and the executor had done some work to close out the estate, then this individual needs to provide full records of everything done up until that point, such as receipts, current balances, and notes related to any transactions made on behalf of the estate. In the vast majority of cases, you cannot be formally released until you are able to provide all of this so that the new person stepping in has everything they need.

As you can see, things can get complex when a NJ executor decides not to proceed. Although naming a family member to this role might be the easiest thing for your estate planning, it’s not always the best choice. Once you meet with your NJ estate planning lawyer, discuss how to proceed with a conversation involving your intended personal rep so that they are clear on what’s required.

What Not to Include When Writing a Will

Your will is the most basic component of your estate plan, but it doesn’t cover all your primary needs. In this official legal document, you can state a lot of things about your intentions, such as who you intend to take over as the executor of your estate and who you’d like to have the responsibility of caring for your minor children if something happens to you.

But it’s a mistake to assume that your will encompasses every aspect of your planning. Leaving your will as the only document might not accomplish all the goals you intended, leaving your loved ones to handle the rest.

Many things pass to loved ones or intended organizations outside of your will. Some do this by default based on the ownership of those assets at the time, but others will require you to fill out additional paperwork. This includes your IRA or your life insurance policy, where you’ll need to direct the managers of those accounts how to handle the transfer of your assets or funds.

In addition to those accounts, there are other things your will cannot accomplish, such as:

  • Adding privacy to your estate plan. A will is public record in your state, so other people can legally request access to that documentation and see what’s in your estate.
  • Pass on property designated as joint with right of survivorship. This will automatically go to the joint owner when you pass away.
  • Pass on property that technically belongs to a living trust. The trust and the trustee are responsible for adhering to the terms of the created trust in these circumstances.

If you have more questions about what a will can do and cannot do, run these questions by an experienced estate planner today.

How Has the Pandemic Impacted Retirement?

Major changes in the world and current events always have the potential to impact retirement plans and schedules. Research has started to emerge indicating how some workers were forced into early retirement as a result of the pandemic. At the same time, those already in retirement were not able to enjoy their normal life since travel and time with family were really limited. Concerns over getting COVID 19 impacted people all over the world, but prompted plenty of people to think about how their savings and retirement plans might have to shift as a result.

Others turned to estate planning during these difficult times in order to ensure that their wishes were properly documented for their loved ones. Economic experts have also chimed in that the far-reaching implications of the pandemic will influence different sectors of the workforce in unique ways. That’s called a K-shaped recovery in which some people and industries are able to thrive during difficult times and others will stall out or fold completely.

Prior to the pandemic, the number of Baby Boomers entering retirement was around 2 million per year. However, in the third quarter of 2020, the number of new retirees had already hit 3.2 million. Whether it was the reminder of mortality provided by the pandemic or a forced retirement as a result of changes in the industry, Boomers entering retirement have to think not just about their day to day costs but also the potential impact of healthcare concerns.

Long term care is one of the biggest financial challenges facing those entering retirement. Most people intend to rely on government services like Medicare or Medicaid but might not have a clear understanding of what these programs do and don’t do. Having a clear plan and an existing relationship with an estate planning lawyer can be critical first steps in ensuring that you’ve either created a plan or evolved it due to changing circumstances and goals.

What Is the Difference Between Estate Planning and Elder Law?

As you look towards your future, you might want to schedule meetings with both an elder lawyer and estate planner, or to find an attorney who practices in both of these spaces. While there is some crossover, certain lawyers focus only on one or another.

As you think about end of life issues and the proper administration and transfer of your assets to your loved ones, you may have questions about the difference between estate planning and elder law.

Both estate planners and elder lawyers cover many similar issues but these are actually different concerns. The primary difference is that elder law planning seeks to preserve your assets and income for use while you are still alive to enable you to maintain your lifestyle or to enable you to have the funds available to you to be as comfortable as possible if you need to go into a nursing home.

Estate planning often considers elder law issues at least at a basic level but is more often concerned with implementing your wishes and then distributing your assets after you pass away in the most tax advantaged and efficient way. These two processes go hand in hand.

Without estate planning documents you make it difficult for your loved ones to receive your assets. Without an elder law plan to protect and preserve your income and assets, you may find that you don’t have an estate to pass onto your loved ones to begin with.


What Happens to a Joint Bank Account When One Person Dies?

Ownership of certain accounts is an important thing to know in the back of your mind if you jointly share one with another person. While both of you are alive, this means you jointly own that entire account.

For most joint accounts, these will be created by the bank as a “joint account with right of survivorship.” This means that when one account owner passes away, the other remaining party on that account will automatically be the full owner of any assets inside.

While some accounts carry automatic rights of survivorship, others do not. That’s why you should always check with your bank directly; many family members have discovered after the fact that what seems like minor paperwork issues can stall the transfer of an account.

Most things associated with the transfer of a joint account are simple, but there are aspects to consider for the person who will inherit the account. For example, any income earned by that account has tax consequences. The tax situation can get even more complex if other assets owned by the decedent are subject to probate or estate taxes, too.

The bottom line is that in cases where you’re properly assigned as the joint owner of the account, you should automatically assume ownership of the account in full.

If you have an account with joint owners but also other assets inside your probate estate, it’s up to you to make sure you’ve properly planned for those assets in terms of a transfer to beneficiaries. An estate planning lawyer in New Jersey can help you figure out what your comprehensive estate plan looks like and how to proceed to accomplish your individual goals.

The Next Normal

A year ago, at the end of March 2020, the S&P 500 was down nearly 20%1 and the world was scrambling into lockdown. Many experts wrote articles telling us where we would be in a year. I don’t remember reading any that said the S&P 500 Index would be up 56% over the next 12 months. But that’s what happened.

I didn’t predict any of that. I never do. Last June, I spoke about the Old Normal and how we should be prepared for market downturns once or twice a decade, while accepting we just can’t know when they’ll happen. We can’t predict financial crises, but we should plan for them. That’s why I always recommend having a trusted financial advisor, a fiduciary who puts your interests first, who can help you understand the range of possible outcomes and create a plan tailored to your goals and acceptable levels of risk.

If you stayed in the market, it might be time for a victory lap. Dimensional’s US Core Equity 2 Portfolio, which holds a diversified mix of broad US equities and is Dimensional’s largest core portfolio, returned nearly 72%, as Exhibit 1 shows. Within the US market, small cap value stocks2 were among the hardest hit. Dimensional’s US Small Cap Value Portfolio was down 39% in the first three months of 2020 and subsequently returned a showstopping 112% over the next 12 months.

Sticking to long-term investment plans in the face of such extreme uncertainty wasn’t easy. I have so much appreciation for what the financial advisors we work with went through to keep their clients in the market, and nothing but admiration for what they achieved.

We were all stressed out last March. There was pressure to “do” something, to make changes just for the sake of reacting. People might get out of the market in an effort to reduce uncertainty. But getting out of the market can actually increase uncertainty because it can force investors to make a difficult decision: choosing the best time to get back in.

This highlights something I’ve long believed to be true: while all investments have risk, many people who think they’re investing are actually gambling. It is a really simple distinction for me; if you’re trying to time short-term market movements, you’re gambling.

Staying focused on a long-term strategy during times like the past year is hard work. Short periods like the first quarter of 2020 and the past year are not signals of future performance, but reminders of just how hard being a long-term investor can be. We didn’t know returns like that would come this year, but we knew we needed to be in the market to capture them when they do show up.

As I’ve said before, every crisis is different, but I think the best way to deal with them is always the same. We can’t control crises, but we can control our response to them. You want to be prepared to deal with the unexpected before it happens. Not when you’re stuck in the middle of it.

What is the Next Normal? It’s expecting uncertainty and committing to a plan that addresses it. It’s rising above the temptation to make changes when things get tough. It’s understanding the difference between investing and gambling. And it’s remembering how good it feels when things work out according to plan.

If you don’t already have a plan that includes crises among the range of possible outcomes, it’s never too late to create one. This is not the last crisis any of us are likely to experience. If we make thoughtful planning the New Normal, we’ll all be ready for the Next Normal.

By: David Booth
Executive Chairman and Founder


Dimensional Fund Advisors LP is an investment advisor registered with the Securities and Exchange Commission. Consider the investment
objectives, risks, and charges and expenses of the Dimensional funds carefully before investing. For this and other information about the
Dimensional funds, please read the prospectus carefully before investing. Prospectuses are available by calling Dimensional Fund Advisors
collect at (512) 306-7400 or at us.dimensional.com. Dimensional funds are distributed by DFA Securities LLC.

Investing risks include loss of principal and fluctuating value. Small cap securities are subject to greater volatility than those in other asset
categories. These risks are described in the Principal Risks section of the prospectus.

Defining Testamentary Capacity

One of the most common reasons for a will contest are claims about testamentary capacity. These are usually brought by heirs who allege that the person who created the will did not have testamentary capacity to create that document. If this challenge is successful in court, the will is deemed invalid.

Capacity is a general term and one that is not subject to a precise definition, but generally refers to someone not being in a sound mind to understand their estate planning documents or decisions. In these cases, documents executed by a person in this state are not valid. 

Multiple factors might be explored to determine whether or not a person is of sound mind at the time they executed their will. This can include information from the doctor regarding the testator’s mental state at that point in time, whether or not the testator understands the nature and extent of the property they own and whether or not the testator understands the ordinary affairs of life. It falls to the person who is alleging that the creator did not have testamentary capacity to illustrate this in court. 

This makes it all the more important to ensure that when crafting your own estate planning documents, you have the support of an experienced estate planning attorney. An estate planning lawyer can help you consider the many different elements that go into crafting your estate plan and special steps that you can take to help minimize the chances that your loved ones will file a will contest after you pass away.       


Four Steps to Review Your Beneficiaries

 Although your will and other estate planning documents can spell out your wishes, they might not cover everything. Beneficiary forms are used to designate who you wish to receive certain pieces of property when you pass away. Many of these pass outside of your will and can therefore, only be updated when you make changes to these forms.

The following four steps can help you accomplish these goals:

  1. Check your insurance and retirement accounts since these are the once that most frequently have beneficiary designations, which will outweigh what’s inside a will.
  2. Don’t leave any beneficiary sections on forms blank since this could mean that when the account goes through probate it will be distributed based on the state’s rules for who gets that property.
  3. If you forget the beneficiaries that you’ve named on accounts or policies created many years ago, you’ll want to make sure that you update these on an annual basis.
  4. Name contingent beneficiaries. These are people who will receive the assets inside the account if your primary beneficiary passes away before you do and you are not able to update the primary beneficiary designation.      

Do you need help with this or other aspects of your estate plan? Contact a New Jersey estate planning lawyer to get a personalized walkthrough of your current plan and to start the process of defining your new goals and intentions. 

The Three Key Groups Involved in Creating a Trust

Trusts are a popular estate planning tool because they can help you accomplish numerous goals at once. At a very simple level, a trust is a legal entity that holds your assets that are intended to benefit others. They help you control how your assets are distributed after your death and help you plan for incapacity.

It usually falls to a knowledgeable estate planning attorney to create a trust document to achieve a specific purpose but the basic concept should be understood by anyone who is thinking about leveraging a trust. The three key groups involved in the implementation of a trust include the grantor, the beneficiary and the trustee. The grantor is the person who funds the trust with assets and creates it.

The beneficiary is the person or individuals who benefit from the trust. The trustee is the person who holds legal title to the trust’s assets and administers the provisions of the trust as outlined in the document. The trustee must meet a fiduciary responsibility to act in the best interests of the beneficiary. When used properly, trusts can be used to avoid the expense and delay of probate court, shield assets from potential creditors, minimize estate taxes, assist with issues of incapacity and move income tax burdens to beneficiaries in lower tax brackets.

To discover how a trust can be used to help you accomplish your goals, schedule a consultation with an experienced estate planning lawyer.

What to Bring to Your First Estate Planning Lawyer Meeting

So you just set up a time to meet with an estate planning lawyer- now what? What do you need to think about in advance or prepare to bring with you to that first meeting?

The important thing is that you’ve already taken the step to meet with a professional about how to align your estate planning goals with available strategies.

In your first meeting, prepare to bring a rough list of your assets and accounts that you have. This means that you can then discuss what should be part of your overall estate plan.

If you have other documents, such as beneficiary forms, wills, trusts, or other planning tools you created in the past, bring these as well. Whether you decide to revoke those previous creations and instead create new documents in line with your current plans.

If you have information on other items in your taxable estate that do not include account statements, such as vehicles or jewelry, you might want to list these out and also bring with you any papers on appraisals already accomplished by you. This is especially important if you believe that your estate might be close to the federal taxable limit and you want to be clear about whether or not you need advanced planning tools.

When you meet with your estate planning lawyer, you want to know that you have considered all the broad issues together and have a plan that meets your needs now and can also evolve over time to adjust to your life changes.

Another thing to bring with you to your first meeting is a list of questions you have for your lawyer. During your initial consultation, you can make the decision about whether or not this is the right fit for you to work with this lawyer. Bring a notebook to keep track of your answers to these important questions.

Shorting Stocks and the Open Market

In 1984, 33-year-old Gary Kusin started an educational software retailer named Babbage’s. Started in Dallas, Texas, Babbage’s quickly expanded from educational software to focusing on Atari and Nintendo video games. Little did Gary know at the time, but his company would one day become a symbol of a market movement and capture the attention of households, Congress and regulators across the United States. But before we get into what Gary Kusin’s small company became, we need to understand a few key terms and mechanics of a stock market.

Stock markets are exchanges, and in their simplest form are simply open-market auctions. Think Sotheby’s or a local estate auction, where potential buyers raise their paddle until only one buyer remains – but at a much larger scale. Thousands of buyers meet thousands of sellers every day through brokers on stock exchanges,(2) and the items of interest are shares of a company’s stock. Generally, none of the money in these transactions goes to the company; rather the two parties barter for existing shares of the stock. Most of this activity has moved digitally, but the fundamentals are the same: every transaction has a buyer and a seller, and presumably both sides think they are getting a good deal.

Occasionally an investor may see a stock that they believe is overvalued. In other words, they believe that buyers are willing to pay more for that stock than what it is actually worth. For those brave investors who are so convicted that a stock price is trading higher than its true value, a process exists for them to bet against the company. Through a broker, the investor connects with another investor who owns shares of the stock, borrows the shares and then sells them. This is called shorting the stock. Assuming the price of the stock declines, the investor can buy back the shares at a lower price and return them to the lender, pocketing the difference in price. However, just as a bank may monitor a borrower’s creditworthiness, the lender of the shares needs protection to ensure that the borrower will eventually be able to repay the loan. The broker of the deal monitors how much it would cost for the borrower to purchase the shares compared to how much money the investor has available in their account. If the price of the stock rises too much, the broker can demand the investor either put more cash into their account or return the shares. If the investor is forced to return the shares, they must go back out to the market, find a buyer willing to sell, and repurchase them. This, known as a margin call in financial jargon, essentially just protects the lender against someone taking on a loan they can’t repay.

So, what does all this have to do with a software retailer from the 80s? In 1999, fifteen years after being founded, Barnes & Noble purchased Babbage’s for nearly $200 million.(4) Three years later, Babbage’s was combined with other similar retailers, and the company went public under a new name, GameStop.(5) Now, nearly 20 years after going public, GameStop has become a stock market phenomenon with the stock price jumping from $18.84 on December 31, 2020 to $325 at the end of January, a 1,625% jump in a single month.

For those watching the financial media (or social media for the matter), the obvious question is how can this happen? Well, a lot of investors were betting against GameStop at the end of last year – a lot. In fact, every share of GameStop had been borrowed and sold, at least once. In January, more investors started to take interest in buying shares of GameStop, partially spurred by speculative investors in an online forum, and that demand pushed the price of GameStop higher. As the price continued to climb, the investors who had borrowed shares were forced to either put more money into their account or buy shares at a higher price to close their loan. As the price of GameStop’s stock climbed, more investors bought shares to cover their loans, which created more demand for shares of GameStop’s stock, which continued to push the price higher. This phenomenon is called a short squeeze, and the cycle continued throughout January, with the stock hitting a high of $483 on January 28.

What does this all mean for your portfolio? Honestly, not a lot if you are our Investment Management client. You own thousands of stocks to mitigate the risk of any short-term dysfunction of any single name in the markets. Investors who bet against GameStop were wrong, at least for now, and they had to buy a lot of GameStop stock to make up for their error. If margin calls didn’t exist, January may have looked very different for the price of GameStop’s stock. But, margin calls exist to protect lenders and they functioned as expected. Thousands of buyers met thousands of sellers, and they agreed to exchange shares of a stock for an agreed-upon price. And if you are not our client & need to know what it does mean, feel free to contact us.

We know that on any given day, the stock market can look like a casino with random outcomes. But, when viewed over longer horizons, the outcomes are logical. That is why we continue to encourage our clients to look past the daily noise – no matter how entertaining – and keep a long-term focus. And in case you’re wondering, I don’t think that it’s a good time to buy GameStop’s stock.


Neel Shah



This information is for educational purposes only and should not be construed as specific investment, accounting, legal or tax advice. Investing involves risk including loss of principal. Information from sources deemed to be reliable but its accuracy and completeness cannot be guaranteed. IRN-21-1776

Can I Leave Behind an Unequal Inheritance?

Do you have questions about leaving behind unequal amounts or assets for your loved ones?

It might be simpler for the vast majority of older parents to leave the exact same inheritance or asset value to each adult child. However, equal is not always the best fit. Many more people are confronting this question in light of the pandemic. You may be concerned about protecting a child who needs it more or paying back a child who helped with caregiving in your older years. 

Although leaving equal inheritances might be the default method and still the most popular, many people are thinking about the benefits of using different amounts. A recent study by Merrill Lynch Wealth Management found that two thirds of Americans age 55 and above said that a child who gave them care should receive a bigger inheritance than those children who did not contribute. 

The study also found that one out of four parents said that an adult daughter or son who had children should get more than a child who did not. Equity will be different for different families but having a conversation with an estate planning lawyer can help you figure out the right solution for you. 

Unequal inheritances can sometimes trigger sibling infighting after a parent passes away. This is particularly true of cases in which family members believe that undue influence by a party who received more could trigger a contest of the will. For more support, make sure that you work directly with an experienced estate planning lawyer.