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.   

What Do I Need to Do to Amend a Revocable Living Trust?

The very definition of a revocable trust means that you are able to make changes to it in a few different ways. You can, for example, prepare and sign a trust amendment that is valid under your applicable state law.

This makes an amendment or an update to the existing trust so if further substantial changes are needed you might wish to revoke the original trust agreement and create a new trust. The second option available to you is to sign a complete trust restatement valid under your state law. 

Your third option is the most expensive, time-consuming, and radical. This involves revoking the original trust agreement and any amendments, then transferring the assets that were stored in the revoked trust back into your own name. You could then create a brand new revocable living trust if you wanted. This third option might only be required if you are making significant changes to the initial trust agreement.

In most cases, restatements or amendments are appropriate if you just wish to add or change beneficiaries, if you divorce or if you marry or have a child. Make sure that you have a relationship with a trusted estate planning lawyer to protect your best interests.   

Tales from the Crypto: How to Think About Bitcoin

“Everything you don’t understand about money combined with everything you don’t understand about computers.”—HBO’s Last Week Tonight with John Oliver, March 11, 2018

Bitcoin and related cryptocurrencies (now numbering in the thousands) are the subject of much debate and fascination. Given bitcoin’s dramatic price changes, it is not surprising that many are speculating about its possible role in a portfolio.

In its relatively short existence, bitcoin has proved extraordinarily volatile, sometimes gaining or losing more than 40% in price in a month or two. Any asset subject to such sharp swings may be catnip for traders but of limited value either as a reliable medium of exchange (to replace cash) or as a risk-reducing or inflation-hedging asset in a diversified portfolio (to replace bonds).

Assessing the merits of bitcoin as an investment can be problematic. Adding it to a portfolio could mean paring back the allocation to investments such as stocks, property, or fixed income. The owner of stocks or real estate generally expects to receive future income from dividends or rent, even though the size and timing of the payoff may be uncertain. A bondholder generally expects to receive interest payments as well as the return of principal. In contrast, holding bitcoin is similar to holding gold as an investment. Even if bitcoin or gold are held for decades, the owner may never receive more bitcoin or gold, and unlike stocks and bonds, it is not clear that bitcoin offers investors positive expected returns.

Putting aside squabbles over the future value of bitcoin or other cryptocurrencies, there are other issues investors should consider:

  • Bitcoin is not backed by an issuing authority and exists only as computer code,
    generally kept in a so-called “digital wallet,” accessible through a password chosen by the user. Many of us have forgotten or misplaced computer passwords from time to time and have had to contact the sponsor to restore access. No such avenue is available to holders of bitcoin. After a limited number of password attempts, a user can permanently lose access. Since there is no central authority responsible for bitcoin, there is no recourse for the forgetful owner: a recent New York Times article profiled the holder of more than $200 million worth of bitcoin that he can’t retrieve. His anguish
    is apparently not unusual—a prominent cryptocurrency consulting firm estimates that 20% of all outstanding bitcoin represents stranded assets unavailable to their rightful owners.
  • Mt. Gox, a Tokyo-based bitcoin exchange launched in 2010, was at one time the world’s largest bitcoin intermediary, handling over one million accounts in 239 countries and more than 90% of global bitcoin transactions in 2013. It suspended trading and filed for bankruptcy in February 2014, announcing that hundreds of thousands of bitcoins had been lost and likely stolen.
  • The UK Financial Conduct Authority cited a number of concerns as it prohibited the sale of “cryptoasset” investment products to retail investors last year. Among them were the inherent nature of the underlying assets, which have no reliable basis for valuation; the presence of market abuse and financial crimes in cryptoasset trading; extreme price volatility; an inadequate understanding by retail consumers of crypto assets; and the lack of a clear investment need for investment products referencing them

The financial services industry has a long tradition of innovation, and cryptocurrency and the technology surrounding it may someday prove to be a historic breakthrough. For those who enjoy the thrill of speculation, trading bitcoin may hold appeal. But those in search of a sound investment should consider the concerns of the Financial Conduct Authority above before joining the excitement.

By: Weston Wellington
Vice President


Resources: The opinions expressed are those of the author and are subject to change. The commentary above pertains to bitcoin cryptocurrency. Certain
bitcoin offerings may be considered a security and may have different attributes than those described in this paper. Dimensional does not offer bitcoin.

This material is not to be construed as investment advice or a recommendation to buy or sell any security or currency. Investing involves risks including possible loss of principal. Stocks are subject to market fluctuation and other risks. Bonds are subject to increased risk of loss of principal during periods of rising interest rates and other risks. There is no assurance that any investment strategy will be successful. Diversification does not assure a profit or protect against loss.

The information in this document is provided in good faith without any warranty and is intended for the recipient’s background information
only. It does not constitute investment advice, recommendation, or an offer of any services or products for sale and is not intended to provide
a sufficient basis on which to make an investment decision. It is the responsibility of any persons wishing to make a purchase to inform
themselves of and observe all applicable laws and regulations. Unauthorized copying, reproducing, duplicating, or transmitting of this
document are strictly prohibited. Dimensional accepts no responsibility for loss arising from the use of the information contained herein.

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UNITED STATES: Dimensional Fund Advisors LP is an investment advisor registered with the Securities and Exchange Commission.

What Should I Ask My Elderly Family Member About End of Life Wishes?

Having a conversation around the topic of estate planning is often difficult for adult children. This is because it means coming to terms with your parents’ own mortality and discussing issues on which you might not agree.

Even though the subject might be uncomfortable to broach, it is good to have this conversation with your parents well before you need to take action on any of these specific wishes, otherwise your parents’ estate plan is incomplete without these clear directives. Although the form those directives will take depend on the state in which they live, they might include things like;

  • Physician orders for life sustaining treatment, which regards your loved one’s wishes about what kind of treatment they do or do not want to receive.
  • A living will with details about termination of life support under specific conditions.
  • The appointment of a health care proxy who can make medical decisions on behalf of your parent if they become incapable of making them on their own.
  • An advanced or medical directive that explains what kind of care they would like.

All of these circumstances can be very unwelcome to deal with in the moment but it is important to have a plan in advance so that you can be able to take the necessary next steps should something happened to your elderly parent.

What is NJ Asset Protection Planning?

What would happen if someone sues you? Do you have a plan? Or are you simply hoping this never happens to you?

While this situation can happen to anyone, certain people are perceived as bigger threats for lawsuits or creditors than others. Those in this situation take proactive steps to create an asset protection plan to decrease their overall risks.

The process of asset protection planning involves making critical decisions today that will protect your business, yourself, and your hard-earned assets from loss due to lawsuits, bankruptcies, or creditors period. This form of legal planning is especially important for business owners and professionals whose personal assets could be threatened in the event of a claim of someone else.

Federal as well as state laws exempt certain assets from the claims of creditors. You can discuss with which of your assets might be exempted from creditor claims. New Jersey means that you must use the state exemptions.

Because federal bankruptcy exemptions are not available, it can make sense to enhance your protection by converting those non exempt assets into exempted assets. Finally, if you’re an entrepreneur with a business as a sole proprietorship, you may need to schedule the support of an experienced New Jersey asset protection planning lawyer.



What You Need to Know About Revoking a Power of Attorney


If you’re no longer happy with the person you’ve named as a power of attorney or the powers you gave them in that document, it’s not enough to renounce that verbally. You need to take the extra step to clarify what this will look like by destroying the former document and creating a new one while also updating anyone who knew about the previous arrangement.

You have the right to revoke an existing power of attorney at any time, but it’s recommended that you work with an estate planning lawyer to do so. Your local estate planning lawyer can give you clarity around the action steps you took and give you peace of mind that you’ve done the necessary steps to revoke this document properly.

Make a statement in writing about your intention to formally revoke the old document so there is no confusion. When you right this, make sure to state that you are of sound mind and understand the implications of revoking this old document. You should mention the name of the original agent and the date this other document was executed.

Send a copy to the old agent and any institutions that had this on file so that you can fully protect the revocation, especially if you are executing a new POA document. More questions about crafting or revoking a POA document, sit down with your lawyer and discuss your next steps.

When Should I Use a Corporate Trustee as My Successor Trustee?

A successor trustee is the individual or entity appointed to handle trust affairs should you become incapacitated or pass away. If you are not sure that a family member or friend you intended to appoint in the role of successor trustee could handle this responsibility well or you fear that it could only spark further family conflict, you may be able to avoid some of these problems by using a trust company or the trust division of a bank.

No matter who you choose, your trustee should be professional and competent and have good skills when it comes to record keeping and decision making for distributing money to beneficiaries. A professional trustee might make the most sense in your case if you have a trust that is intended to last for a long time such as one that would provide for grandchildren.

Another example when it makes sense to choose a corporate trustee is if you have very valuable assets. In most simple revocable living trusts, however, that are designed for avoiding probate, it might not make sense to pay a professional because professional management in a successor trustee role is expensive.

Many trust companies won’t accept accounts that are below a certain minimum and will charge a percentage of the assets as the fee. Some of the potential downsides of going with professional management might include;

  • Not accepting other kinds of assets beside cash.
  • The management might not be as personal as that from a friend or family member.
  • Beneficiaries might have to deal with new people frequently as bank or trust company employees come and go.
  • Beneficiaries may not get a quick decision when they ask for trust funds since this will need to go through the other entity.

What Are the Requirements for Signing a Will in New Jersey?

Many people have different conceptions about what is required to create a will. Mistakes made in the will creation or signing process can prove problematic for your loved ones so it’s important to educate yourself first and to schedule a consultation with a trusted estate planning lawyer.

Although you do not need an attorney to create a New Jersey will, you might want to speak with an attorney if you are concerned about taking specific steps like disinheriting someone or you are worried about family members contesting your will. The basic requirements for signing a will in New Jersey include:

  • This document must be signed in front of two witnesses and,
  • Per New Jersey statutes 3(b):3-2, the witnesses must sign the will within a reasonable time after the testator has created or acknowledged it.

You are not required to notarize your will to make it legal. New Jersey does, however, allow you to make your will self-proving and you will need to obtain a notary in the event that you wish to do that.

If you want your will to be a self-proving will, since it might speed up probate and the court is eligible to accept the will without contacting the signature witnesses, you and your witnesses will need to go to a notary and sign an affidavit that states who each of you are and that you all knew that you were signing a will.


How Can I Change My New Jersey Will?

Have you had significant changes in your life circumstances that are making you rethink your existing estate planning documents? You are not alone. There are many different reasons why you might contemplate updating your New Jersey will.

In any of these cases, make sure you set aside time to speak to an experienced estate planning lawyer in New Jersey about your options. You may want to make changes to your will if:

  • You’ve adopted a child or had a child since you first created your documents.
  • You’ve gotten divorced or married since initially creating this will.
  • A personal representative or trustee passes away before you.
  • You have acquired a property that you wish to pass in a very particular manner rather than inside the terms of your will.

The process matters when you make updates to your will. Unfortunately, many people believe they can informally change their document by doing things like marking up an existing will or including an additional note, but these attempts are often unsuccessful. You have two options to update your will in New Jersey. The first of these is writing a new document and the second is adding an amendment to the will. If you are changing numerous terms inside the will, it is recommended that you create a new one to replace that older document. An amendment is used when you want to make a relatively straightforward change to a will. Your estate planning attorney can be the first one to help you update or revoke your will.

A knowledgeable New Jersey estate planning attorney can talk to you about whether an amendment or a freshly drafted will is the most appropriate way to view this situation. Schedule a consultation today with a New Jersey estate planning lawyer.


How Will a House Deed Get Transferred Upon the Death of a Parent In NJ?

When a parent passes away, the children of the deceased as well as the executor of the estate may have certain challenges when attempting to liquidate the estate’s assets. An estate planning attorney in New Jersey can be helpful for guiding executors through this process.

In plenty of estates, the home belonging to the parent may be the biggest asset inside the estate. It requires special involvement and is relatively illiquid. The transfer of real estate is not always easy. How the deed is titled at the time the person passes away will have a specific impact on how the property can be transferred. If you don’t currently have a copy of the deed, contact the county recorder’s office. There are several different types of deed issues that can impact transfer. These include:

  • Joint tenancy. If the home was owned in joint tenancy or tenancy by the entirety, this joint owner or surviving spouse automatically becomes the new property owner and a new deed is not required.
  • Sole ownership. The property has to go through probate before passing to the heir or heirs designated in the will.
  • In trust. Property can eb left to a variety of trusts and in this case a new deed would have to be prepared by the estate executor and recorded in the county clerk’s office.
  • Without joint tenancy. If the will specifies another person or people to whom legal ownership of the property should pass, a new deed will be required.
  • Fiduciary authority. The executor has the right to dispose of the property at a private or public sale unless the will specifies another disposition.

The support of an experienced estate planning attorney can be very helpful in navigating this complex process.


Biden Contemplating Significant Federal Tax Increase

Any change in presidential administration or big shifts in Congress could change current estate plan impacts, and that’s certainly true now. For business owners in particular, now is a good year to keep your eye on the news or your finger on the speed dial for your business, tax, and estate planning lawyer.

If you haven’t yet scheduled a consultation with your estate planning lawyer for 2021, you need to be aware of potential sweeping changes that could come to federal taxes.

For the first time in nearly 30 years, Biden is contemplating a massive federal tax increase that would raise the corporate tax rate from 21% to 28% and the proposal on the table also considers increasing income taxes for those people who earn over $400,000 a year.

The next spending package will include further details about this anticipated tax increase. This would be the first significant federal tax increase in nearly three decades since the last significant raises to the taxes occurred in 1993.

Another aspect for business owners to be aware of with these possible tax changes on the table has to do with cutting back the preferences that certain businesses get. As of now, for example, LLCs are not subject to corporate taxes as pass-through entities.

If these sweeping changes do come to pass, you will want to have the support of an experienced estate lawyer to help you create a comprehensive strategy for your next steps with regard to your business. Do not hesitate to contact an estate planning lawyer in New Jersey to learn more.


Three New Jersey Medicaid Mistakes Worth Avoiding

What seems like a minor mistake in the application process can turn out to be a big issue down the road. Partnering with a New Jersey Medicaid planning attorney early on gives you the best possible opportunity to protect your interests. NJ-medicaid-qualification

Mistake #1: Assuming that Medicare Will Pay for Your Bills

Medicare does not cover the vast majority of long term care expenses, meaning that your personal savings can be decimated quickly or your spouse is forced to sell assets to pay for the necessary health care. Without the proper planning you could be exposed to risks.

Mistake #2: Thinking that It’s Too Late to Do Any Planning

It is always beneficial to do planning well in advance but you should still consult with an experienced Medicaid lawyer if a loved one has recently entered a facility or is on the cusp of doing so. There may still be legal planning opportunities available to you.

Mistake #3: Gifting Assets Too Early or Too Late

Don’t risk your financial security by transferring everything else to your children. This can also cause difficult health care, tax and Medicaid eligibility issues. Make sure that you have an awareness of the five year lookback and penalty period before obtaining public benefits eligibility. Proper planning can help you avoid the vast majority of these problems and put you in a good position to be able to leverage New Jersey Medicaid benefits as soon as possible.


Why You Need a New Jersey Medicaid Plan

Plenty of NJ residents do not anticipate needing Medicaid or understanding its required aspects until it is too late. As long term care costs have been on the rise and life expectancies have also increased, the challenge for many people is about how to pay for these services. It can cost upwards of $8000 a month to live in an assisted living facility or a nursing home or to pay someone for home based care.

Many people will not have enough money inside their retirement accounts to support them even for a few months, much less years. The New Jersey Medicaid program can help pay for your long term care needs but it is only eligible to those people who pass certain tests on the number of assets and amount of income that they have. Multiple services can be provided to you by an experienced New Jersey Medicaid planning lawyer, including:

  • Comprehensive analysis of your current eligibility for long term care benefits through Medicaid.
  • A detailed review of your financial and asset records as well as plans for what to do with these assets if you intend to apply for Medicaid in the future.
  • Updating your current estate planning documents, such as powers of attorney, trusts and wills.
  • Assisting you with implementing and asset protection plan until you become eligible for New Jersey Medicaid benefits.
  • Crafting a plan to protect the assets of the community or healthy spouse.

In all of these circumstances, having the insight of an experienced New Jersey estate planning lawyer can go a long way towards easing your fears about the cost of health care in older ages.  Contact our office today when you need a short term or long term plan to help you family prepare for the costs of health issues in older age.


How to Avoid a Trust

Asset protection, tax planning, or legacy control are just some of the numerous reasons why trusts can be used. However, the most common use for a trust is to avoid probate, therefore allowing for an easier transition of assets. This is most likely accomplished using a revocable living trust.

For some, it may be important or even desirous to avoid or sidestep the use of a trust. This may be because individual circumstances do not allow for planning using the trust due to factors such as cost considerations.

The benefit of a trust is that it allows the creator to establish their own set of rules, rather than rely on those of a beneficiary designation or probate courts. The biggest detriment of trust planning typically is the creation and fermentation of it. If it is not done properly, it could have disastrous impacts, or at a very minimum, be a waste of time and money to create.

Often, folks will resort to using legal strategies or titling strategies to avoid a trust. This might be done by adding beneficiary designations, transferring on death/payable on death titling, or just including family members or other beneficiaries on title during lifetime. But taking a shortcut is not without its unintended consequences. For example, naming someone as a beneficiary means they will get the asset outright. There is no guarantee that the asset will be protected against creditors, lawsuits, divorcing spouses, etc. Additionally, if the beneficiary were to pass away, you can then see the assets making their way to individuals or organizations who may not have been intended contingent beneficiaries. A trust can prevent that. You may also want to avoid having certain classes of beneficiaries receive assets outright, such as feeling members, receiving government benefits, or have special needs or substance abuse issues. In such cases, one should strongly consider using trust planning.

When asset protection is a concern, one should consider trust planning, but they may also consider using certain legal planning strategies. In many states, life insurance proceeds are protected from creditors and lawsuits. In other states, one’s home may be protected from creditors. Individual retirement accounts are treated differently from state to state, while ERISA governed plans such as most 401(k)s and defined-benefit plans have federal asset protection rules built in already.

If you are not sure if a trust is right for you & would like guidance, please feel free to call us at 732-521-9455. 

Two Things Every Qualified Retirement Plan and IRA Owner Should Do

In late 2019 Congress passed the Secure Act which represents some of the most significant changes to IRAs and qualified retirement plans since 2006. One of the most important and far reaching of these is the elimination of the opportunity to receive distributions from these accounts over the course of the beneficiary’s life. 

Many people might not have realized the updates this called for in their estate plan but there are critical steps that IRA owners and QRP participants should take when considering the potential impact of these changes on their estate plan. Primarily, IRA owners and QRP participants should first review all contingent and primary beneficiary designations for IRAs and QRPs. 

The second step of this is to review any trust that is named as a contingent or primary beneficiary, including trusts for a spouse, trusts for non-disabled adult children, trusts for minor children and any special needs trust for a mentally or physically impaired beneficiary. 

The review should be completed by an experienced estate planning attorney who is familiar with the impacts of the Secure Act and can help guide you through this process of figuring out what to do next. The support of an attorney is instrumental in adapting your estate plan to necessary changes.        

An IRA account manager can also help you when you need to update your beneficiary designations. Any time that you make changes to your overall estate strategy, that information should be shared with your IRA account manager, too, so that these forms can be update.  

Is It Time to Clean Out the Family Filing Cabinet?


Keeping all of your key documents in one place makes it easier to grab these in the case of an emergency or find them in any other event in which you might need them. But if it’s been some time since you cleaned up the family filing cabinet, this might be a great opportunity to schedule a consultation with your financial planner, your accountant or even your estate planning lawyer to discuss changes in your strategy. 

This is a great time to do spring cleaning as it relates to your estate and your finances. If you’ve kept unnecessary old tax returns, utility bills or even medical records, now is a good opportunity to clean that out and leave the most important documents stored. You only need to keep your tax returns and related documents for a maximum of three years from the date the original return was filed.

However, if you are a business owner or individual filer, the IRS has the right to audit you for several years beyond that period. A general rule of thumb is that you can let these go after 7 years. You also don’t need to keep paper versions of these since digital records can be used in the event of an IRS audit. 

Self-filers and clients may choose to work with tax preparation companies that allow you to store your tax documents uploaded from a computer or mobile device. Whether it’s a power of attorney, a trust or your will, estate planning documents should always be stored safely. One document that must be stored in a physical location from an estate planning perspective is your will. 

There will be many hoops and jumps through the court in the event that you have to prove the will copy is valid. For more questions about the estate planning process, schedule a consultation with a lawyer in your area. 

Is it safe to Create Online Will

An online will makes it simple to be under the impression that you can complete all of your estate planning in a matter of just a few hours and be completely protected if something happens to you. However, as any estate planning lawyer can tell you, review of hundreds of estate planning documents that have been created in a variety of ways can show some of the gaps in creating an online will. 

You don’t want your loved ones to find out that you made estate planning mistakes, which is why it is recommended that you think carefully about whether or not an online will service is right for you. 

What seems like a minor mistake, omission or wrong term used in an online will created document could become very problematic for your loved ones who will be on the receiving end of all of these problems when you pass away. While attorneys might be on staff for online will creation services, you might need specific help to create your personal documents. 

This includes thinking about your individual goals, your beneficiaries, your assets and the tax implications of all the choices that you make. The support of an experienced estate planning lawyer can guide you through this process and ensure that you have considered all of the most important aspects of drafting your own will. 

While some people might be able to use an online will service to get started or cover their basic estates, the risks of making a mistake could be costly for your loved ones. 

The support of an attorney is instrumental in answering these key questions and giving you peace of mind that when something happens to you, your loved ones will be able to have a clear path towards resolving your estate. Think about both incapacity planning and planning for your assets after you pass away by leveraging the services of an estate planning lawyer.       

YOLO, Meme, and EMH: What’s Your Investment Style?

You only live once! Social media investors have banded together on unconventional platforms to drive up the prices of a handful of “meme stocks,” seemingly without traditional evaluation of investing risks and rewards. They made headlines with their “short squeeze” of GameStop (GME), and, as they garner media attention, their tactics continue. While it’s not the intended victim of the YOLO traders, will the efficient market hypothesis be a casualty of these events? The answer depends a lot on your definition of efficient markets. Perhaps long-term investors would be better served questioning the potential impact on their investment philosophy.

Fama (1970) defines the efficient market hypothesis (EMH) to be the simple statement that prices reflect all available information. The rub is that it doesn’t say how investors should use this information. EMH is silent on the “correct” ways investors should use information and prices should be set. To be testable, EMH needs a companion model: a hypothesis for how markets and investors should behave. This leaves a lot of room for interpretation. Should asset prices be set by rational investors whose only concerns are systematic risk1 and expected returns? It seems implausible to link recent meme-stock
price movements to economic risks. Rather, they seem fueled by investor demand to b part of a social movement, hopes to strike it rich with a lucky stock pick, or plain old schadenfreude.

There is a vast ecosystem of investors, from individuals investing in their own accounts to governments and corporations who invest on behalf of thousands. Ask investors why they invest the way they do, and you’ll likely get a range of goals and approaches just as diverse. It’s this complex system that generates the demand for stocks. Another complex system fuels the supply of stocks. Supply and demand meet at the market price. People may contend that the market is not always efficient, or rational, but the stock market is always in equilibrium. Every trade has two sides, with a seller for every buyer and a profit
for every loss.

There are plenty of well-studied examples that show supply and demand at work. The huge increase in demand for stocks added to a well-tracked index often creates a run-up in the stock price. Some of this price increase can be temporary and reversed once the tremendous liquidity demands at index reconstitution2 are met. Index reconstitution is just one example; instances of liquidity-driven price movements happen all the time. It is well documented that liquidity demands can produce temporary price movements.
Investors may wonder if temporary price dislocations motivated by users of r/
WallStreetBets differ from those caused by changes to an index. Lots of buying puts temporary upward pressure on prices, which later fall back to “fundamental value”–it sounds familiar. The more relevant observation may be that markets are complex systems well adapted to facilitate the supply and demand of numerous market participants.

There are numerous reasons people may be willing to hold different stocks at different expected returns. Can all those differences be explained by risks? Doubtful. To quote Professor Fama, “The point is not that markets are efficient. They’re not. It’s just a model.” EMH can be a very useful model to inform how investors should behave. We believe investing as if markets are efficient is a good philosophy for building long-term wealth. Trying to outguess markets might be a quick way to destroy wealth.

It’s true, you only live once. The good news is that investors can look to market prices, not internet fads, to pursue higher expected returns. Theoretical and empirical research indicate higher expected returns come from lower relative prices and higher future cash flows to investors. Long-run investors can be better served by using markets, rather than chatrooms, for information on expected returns.

– Marlena Lee, PhD
Global Head of Investment Solutions

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Please see the end of this document for important disclosures.

Kong Limited is licensed by the Securities and Futures Commission to conduct Type 1 (dealing in securities) regulated activities only and does not provide asset management services.

Named securities may be held in accounts managed by Dimensional. This information should not be considered a recommendation to buy or sell a particular security. Diversification does not protect against loss in declining markets. There is no guarantee strategies will be successful.

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Entrepreneurs Cannot Afford to Neglect Succession Planning

Starting a business is an exciting and sometimes overwhelming proposition. Founders of companies often spend years putting most of their focus, planning and attention in building the business, scaling it and making it sustainable. One big way that too many entrepreneurs fall short is planning ahead for what will happen after they exit the company.

One study recently published by Wilmington Trust found that nearly 60% of privately held businesses in the United States had never even considered succession planning. An exit strategy should be discussed with key members of your team and this involves considering a few different priorities. 

These priorities are continuing to meet customers’ needs, ensuring that employees still have jobs and a future within the company if they wanted and making sure that the company remains viable over the long term future. Given that more than 8 out of 10 business owners have not engaged in succession planning, you need to carefully consider what key talent in the company would be eligible to step up and take on these important leadership roles. You might assume that a child or other member of your family will be the natural successor to taking over the company but it is often the case that some businesses do not survive into the second or third generation. You need to have careful succession planning strategies in place to avoid these potential pitfalls and ensure a smooth transition when you decide to leave.