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He who sees a need and waits to be asked for help is as unkind as if he had refused to give it. Dante Alighieri
Above graphs from CNN Money	Monthly Features Recent Economic News Seven Economic Indicators Major Index Twelve Month Charts Mid Month and Recent Updates FDIC Insures Retirement Deposits TRA 2005 House-Senate Conference Meets Monthly Magazine Frist on Estate Tax President Bush's Budget Supports Charity Update - CRT Spousal Waiver Give More and Live More Be Careful of Trusting 'Trust Mills' News Sources Past Issue Archive

Recent Economic News

Key Interest Rate Raised to 4.75% - 3/30/06 Washington Post
"Economic growth has rebounded strongly" this year from its temporary weakness in late 2005, the Fed's top policymakers said in a statement after their first meeting led by new Chairman Ben S. Bernanke, who succeeded Greenspan last month. The Fed's policymaking body, the Federal Open Market Committee, unanimously agreed to raise its benchmark interest rate to 4.75 percent from 4.5 percent, marking the 15th consecutive increase since June 2004. And with unemployment low and energy prices high, "further policy firming may be needed" to keep inflation in check, the FOMC statement said, signaling that at least one more rate increase might be in store.

US Q4 GDP revised up to 1.7% as expected - 3/30/06 MarketWatch
U.S. real gross domestic product grew at a 1.7% annualized rate in the quarter, compared with the earlier estimate of 1.6%, the Commerce Department reported Thursday. The revision was as expected. Meanwhile, corporate profits increased a record $185.8 billion at a annualized rate. The upward revision to GDP was due largely to higher inventory building by businesses, which offset lower consumer spending on services. Final sales in the economy fell 0.2% in the quarter. Core consumer inflation increased at a 2.4% annual pace in the quarter, higher than the 2% implicit target of the Fed, and up from 2.1% estimated a month ago. In the past year, core inflation has risen 2%.

Consumer confidence at 4-year high - 3/28/06 MarketWatch
U.S. consumer attitudes brightened in March, rising to the most optimistic since May 2002, the Conference Board said Tuesday. The consumer confidence index rose to 107.2 from an upwardly revised 102.7 in February. Economists expected a reading of 101.8.

Assisted living, home care costs climb: study - 3/27/06 Reuters
Older Americans in need of care face sharp spikes in the cost of increasingly popular assisted living quarters and home health aides, according to a study. The average price tag for a private one-bedroom unit in an assisted living facility rose 7 percent in 2006 to about $33,000 per year, compared with a 5 percent rise in 2005, according to a survey by insurer Genworth Financial Inc.. The average hourly rate for most home health aides climbed 19 percent to $22.15 per hour, compared with a 2 percent rise in 2005, the study found. The average cost for a private room in a nursing home, by contrast, rose 2 percent to about $71,000 in 2006, after rising 6 percent in 2005.

New - Now it's an Email Tax Fraud Scam - 3/24/06 MarketWatch
Fraudsters are sending out fake emails informing taxpayers that they're being audited, or that they're eligible for a refund. Of course, you're directed to click to a Web site and provide sensitive personal data, such as your Social Security and bank account numbers. The scary thing is, those who create these types of emails are getting better at their trade. It can be difficult to discern that these messages and Web sites aren't authentic. If you haven't initiated the telephone call or typed in the Web site address yourself, avoid divulging personal account information.

New Home Sales Plummet in February - AP 3/24/06
New home sales fell by the biggest amount in almost nine years in February while home prices declined for a fourth straight month, raising concerns that the once high-flying housing market could be in for a rougher-than-expected landing. The Commerce Department reported Friday that sales of new single-family homes dropped by 10.5 percent last month to a seasonally adjusted annual sales pace of 1.08 million homes. It was the second straight monthly decline, following a 5.3 percent fall in January, and marked the biggest one-month drop since April 1997. Analysts had been forecasting a much more moderate drop of around 2 percent.

US durable-goods orders rebound 2.6% -MarketWatch 3/24/06
Led by demand for civilian aircraft, orders for new U.S.-made durable goods rebounded 2.6% in February after a sharp fall in the previous month, the Commerce Department reported Friday. The increase was above forecasts. Economists were expecting orders to rise 1.5%. Ex-transportation, orders fell 1.3%, the first drop in four months. Durable orders in January were revised to a 8.9% decrease from a 9.9% fall previously estimated. Shipments of durable goods increased 0.2% in February after a 1.8% fall in January. Orders for core capital goods equipment rose 1.6% in February.

PPI falls 1.4% on Sagging Energy Prices - Washington Post 3/21/06
Falling energy and food costs helped push down wholesale prices last month at the fastest rate in nearly three years, the government reported yesterday, indicating that some inflationary pressures had eased. The Labor Department's producer price index fell 1.4 percent, the sharpest drop in nearly three years. The index measures prices paid to producers of finished goods, which are ready for sale to the final user, either an individual consumer or a business. Producer prices are one factor that influences retailers' decisions of how to price consumer goods. Other factors include competition, labor costs and profit margins.

U.S. Feb. Leading Indicators Fall 0.2% - MarketWatch 3/20/06
The U.S. index of leading economic indicators fell 0.2% in February after rising for four months in a row, the Conference Board said Monday. "This could be a signal that the economy will continue to expand this spring before slowing later in the year," said Ken Goldstein, an economist for the research group. Five of the 10 indicators declined in February, starting with vendor performance and consumer expectations. The biggest gainers were core capital equipment orders and money supply. The leading index increased a revised 0.5% in January, compared with 1.1% originally reported. The coincident index rose 0.3% in February and the lagging index rose 0.1%.

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THE ECONOMY: SEVEN INDICATORS - From CNN Money (as of 3/30/06)

The Indicator	What It's Telling Us	Next Update
Consumer Confidence	Confidence near 4-year high	Apr 25
Retail sales	Consumers buying at strong pace.	Apr 13
Leading Economic Indicators	Fell in February	Apr 20
Manufacturing Activity (ISM)	Expansion reaches 33rd month.	Apr 3
Industrial Output	Strong growth	Apr 14
Job Growth	243,000 jobs added in Feb	Apr 7
Inflation (CPI)	Decline in price pressures	Apr 19

TRA 2005 House-Senate Conference Meets
After two weeks of delay, the House-Senate Conference considering the Tax Relief Act of 2005 (TRA 2005) finally met. The Conference elected Senate Finance Chair Charles Grassley (R-IA) as Chairman. Sen. Grassley faces the difficult task of bringing together the House and Senate. Senators would like to include both dividends and capital gains relief plus alternative minimum tax relief in the bill. In order to pay for these items, the bill will need to also include various revenue raisers. House Ways and Means Chair Bill Thomas (R-CA) has consistently opposed revenue raisers. He stated, "What someone might call an appropriate revenue raiser, I might call that policy for the sake of finding money. And I don't think we should ever look at policy for the sake of money if what we put in place to find that money is not meritorious in itself."
GiftLaw 3/17/06

FDIC to insure retirement deposits up to $250,000
The Federal Deposit Insurance Corp.'s Board of Directors on Tuesday approved rules to raise the insurance coverage limit for certain retirement account deposits to $250,000 from $100,000, effective April 1. The rule change conforms to a deposit insurance reform law passed by Congress this year that merges the bank and savings insurance funds and expands coverage for the first time in more than 25 years. The insurance limit for regular bank deposits remains $100,000 but the new rule allows the FDIC and National Credit Union Administration boards to consider future inflation-based increases, the first of which could be available in 2011.
"The increase in deposit insurance coverage on certain retirement accounts is a significant change," said Martin J. Gruenberg, the FDIC's acting chairman. The $250,000 limit applies to combined per-person deposits in traditional and Roth individual retirement accounts and other "self directed" accounts such as 401(k) and Keogh plans at a single institution.
Reuters News 3/14/06

Frist on Estate Tax
Senate Majority Leader Bill Frist (R-TN) told a national gathering of conservatives in Washington, D.C. he would "do everything in [his] power to bury the death tax once and for all," and said he plans to bring estate tax repeal legislation to the floor in May. While full repeal is favored by a number of conservative groups, Frist lacks the 60 votes needed in the Senate to pass such a measure. Should Frist fail to garner the 60 votes needed for full repeal, it is likely we will see a similar attempt to pass a bad "reform" of the estate tax that is just as damaging as full repeal.
2/22/06 EstateTaxOMBwatch

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President Bush's Budget Supports Charity
The White House has released the specifics of President Bush's proposed budget for 2007. Five of the budget provisions are favorable to charities.
1. IRA Rollovers - President Bush proposes allowing individuals age 65 and above to make gifts directly from IRAs to charities.
2. Enhanced Food Gifts - Currently, C corporations may make gifts of food for the ill, needy and infants and receive an enhanced deduction. The White House proposes that all taxpayers would be able to make gifts of food inventory and receive a deduction equal to the lesser of fair market value or twice the basis.
3. Lower Foundation Excise Tax - The excise tax on foundation net investment income would be reduced to a flat 1% rate.
4. Charitable Trust UBI - The unrelated business income tax would be changed for charitable remainder trusts. A charitable trust with unrelated business income tax remains exempt, but there would be a 100% excise tax on the UBI.
5. S Corporation Charitable Gifts - S corporations would be able to make gifts of appreciated property, with a full deduction flowing through to most shareholders.
2/17/06 GiftLaw

Update Regarding Spousal Waivers and Charitable Remainder Trusts
On March 30, 2005, the Treasury and IRS announced guidance (Rev. Proc. 2005-24) "to provide a safe harbor procedure to avoid the disqualification of a charitable remainder trust" because of the existence of a spousal right of election under state law. That guidance grandfathered trusts created prior to June 28, 2005, provided a spousal right of election was not exercised. However, due to numerous problems associated with complying with the new safe harbor rules, IRS has now extended the grandfather date "until further guidance is issued."
Under the augmented estate rules of some states, it was possible (although very unlikely) that a surviving spouse may have the ability to invade the corpus of a charitable remainder trust. As a result, the IRS published Rev. Proc. 2005-24 and required a spouse to waive that right.
It is very possible that after a spouse passes away, the surviving spouse may remarry and that the new spouse would inadvertently not sign a waiver. Under Rev. Proc. 2005-24, many CRTs could be disqualified due to an unintended oversight. Therefore, commentators were extremely critical of the IRS requirement for a spousal waiver.
The IRS and Treasury are reconsidering the approach of Rev. Proc. 2005-24, including the safe harbor rule. The IRS said that until further guidance is issued on the effect of a spousal right of election on a trust's qualification as a CRAT or CRUT, it will disregard the existence of such a right, even without a waiver, but only if the surviving spouse doesn't exercise the right.
PGDC 2/3/2006 and GiftLaw 2/10/06

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Give More and Live More
I know a time-tested and smart way to live longer: make a planned gift to a non-profit organization. A planned gift is a charitable gift that you commit to now and that accrues cash to a non-profit at your death. Your favorite non-profit will credit you with making a gift today and wait patiently for your demise, when they will collect. In the meantime, and for the rest of your life, the organization will invite you to annual recognition luncheons and dinners. Not a bad deal for a non-profit with patience and those of us with a little rope left.
Non-profits need prolonged patience because: people who make planned gifts live longer than those who don't. Appreciation for this highly-regarded axiom runs throughout planned giving circles.
There is company that investigates this seriously and finds that CGA (Charitable Gift Annuity) donors do outlive the national averages. Something about coming from a more affluent background with better access to health care, proper nutrition and the like.
Rubbish. 'Tis the act of giving what keeps you living.
Martignetti Planned Giving Advisors Forest Hills, NY 1/27/06

Be Careful of Trusting 'Trust Mills'
Estate planning is big business these days. It takes a lot of work and a great deal of care to decide how to distribute your assets upon your death. You need to do that with the aid of competent counsel, yet some companies that claim to have that expertise really don't -- some provide limited aid and others perpetrate out-and-out scams.
Emery Gardner of Madeira answered a telemarketing call in 2002, and agreed to have a company draw up an estate plan for his wife and himself. He paid the company $1,695 for its services, including that of an attorney. How about the quality of the work the company performed in preparing Gardner's estate plan? He consulted a local probate attorney and learned there isn't much that's right with it.
The Better Business Bureau reports the company, Family First Estate Planning, has since been sued by both the states of Washington and California. California is seeking more than $110 million from the company and its principals alleging they operated a living trust mill that tricked seniors into using their retirement investments to buy annuities. The state says the annuities often made less financial sense for the elderly victims but earned the con artists substantial commissions and other income.
Neither the company nor the attorney returned calls for comment. Experts say trusts marketed and sold by some agents often lack many essential provisions and sometimes even create substantial ambiguity that can cause problems, and even litigation, after a death. They caution against one-size-fits-all documents generated by these trust mills.
The Community Press Cincinnati 1/25/06

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Be Careful of Trusting 'Trust Mills'
Estate planning is big business these days. It takes a lot of work and a great deal of care to decide how to distribute your assets upon your death. You need to do that with the aid of competent counsel, yet some companies that claim to have that expertise really don't -- some provide limited aid and others perpetrate out-and-out scams.
Emery Gardner of Madeira answered a telemarketing call in 2002, and agreed to have a company draw up an estate plan for his wife and himself. He paid the company $1,695 for its services, including that of an attorney. How about the quality of the work the company performed in preparing Gardner's estate plan? He consulted a local probate attorney and learned there isn't much that's right with it.
The Better Business Bureau reports the company, Family First Estate Planning, has since been sued by both the states of Washington and California. California is seeking more than $110 million from the company and its principals alleging they operated a living trust mill that tricked seniors into using their retirement investments to buy annuities. The state says the annuities often made less financial sense for the elderly victims but earned the con artists substantial commissions and other income.
Neither the company nor the attorney returned calls for comment. Experts say trusts marketed and sold by some agents often lack many essential provisions and sometimes even create substantial ambiguity that can cause problems, and even litigation, after a death. They caution against one-size-fits-all documents generated by these trust mills.
The Community Press Cincinnati 1/25/06

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