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Inheriting Wealth: How to Preserve and Grow Your Family’s Legacy

March 29, 2023

Inheriting wealth can be a life-changing event, but it also comes with a great responsibility to preserve and grow your family’s legacy. Whether you receive an inheritance from a parent, grandparent, or another family member, it’s important to have a plan in place to use the wealth wisely and continue to benefit future generations. In this article, we will provide guidance on how you might preserve and grow your family’s legacy after inheriting wealth.

Educate Yourself on Financial Management

To effectively manage an inheritance, it’s important to have a basic understanding of financial management. This includes knowledge of financial concepts such as budgeting, saving, investing, and debt management. If you don’t have this knowledge, consider taking a personal finance course or working with a financial advisor to develop a financial plan that aligns with your goals and values.

Assess Your Current Financial Situation

When inheriting wealth, it can be tempting to make big moves right away, such as paying off your mortgage. However, before making any decisions with your inherited wealth, take the time to assess your current financial situation. This includes reviewing your income, expenses, debts, and any existing investments or savings. By having a clear understanding of your financial position, you can make informed decisions about how to best use your inheritance to benefit your family now and into the future.

Consider Tax Implications

Inheriting wealth can also come with tax implications. Depending on the type and size of the inheritance, you may be subject to estate or inheritance taxes. It’s important to understand these tax implications and work with a financial advisor or tax professional to develop a tax strategy that minimizes your tax liability and preserves your family’s wealth.

Related Article: Passing an Inheritance To Your Children: 8 Important Considerations

Develop a Long-Term Plan

When inheriting wealth, you may want to develop a long-term plan that considers the needs of future generations. This includes setting financial goals, developing an investment strategy, and creating an estate plan. Research shows that up to 70% of families lose their wealth by the second generation, so having a long-term plan can help your family avoid that common fate.

Communicate with Your Family

Inheriting wealth can be a sensitive topic, and it’s important to communicate with your family about your plans and intentions. This includes discussing your long-term plan, setting expectations, and ensuring that everyone is on the same page. Open and honest communication can help prevent misunderstandings and ensure that your family’s legacy is preserved.

Consider Philanthropic Opportunities

Inheriting wealth can also provide opportunities to make a positive impact on your community and the world. Consider philanthropic opportunities that align with your family’s values and interests. This can include donating to charitable organizations, establishing a family foundation, or funding scholarships for deserving students.

Final Thoughts on Inheriting Wealth

Inheriting wealth can be a life-changing event, but it also tends to come with feelings of responsibility to preserve and grow your family’s legacy. To effectively manage an inheritance, it’s important to educate yourself on financial management, assess your current financial situation, consider tax implications, develop a long-term plan, communicate with your family, and consider philanthropic opportunities. By taking a thoughtful and strategic approach, you can preserve and grow your family’s wealth and leave a lasting legacy for future generations.

If you think you would benefit from a conversation about inheriting wealth, contact Lane Hipple Wealth Management Group at our Moorestown, NJ office by calling 856-638-1855, emailing info@lanehipple.com, or to schedule a complimentary discovery call, use this link to find a convenient time.

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Modest Growth in Texas Manufacturing But Outlook Worsens

March 28, 2023

The Federal Reserve Bank of Dallas conducts the Texas Manufacturing Outlook Survey monthly to obtain a timely assessment of the state’s factory activity. Firms are asked whether output, employment, orders, prices and other indicators increased, decreased or remained unchanged over the previous month. Responses are aggregated into balance indexes where positive values generally indicate growth while negative values generally indicate contraction.

On Monday, the Dallas Fed ran this headline:

Modest growth resumes in Texas manufacturing, but outlooks continue to worsen

From the release: “Texas factory activity expanded slightly in March after contracting in February. The production index, a key measure of state manufacturing conditions, moved up from -2.8 to 2.5, a reading suggestive of a modest increase in output.

Further, other measures of manufacturing activity showed mixed signals this month, including:

• The new orders index was negative for a 10th month in a row and came in at -14.3, little changed from February.
• The growth rate of orders index was also negative and largely unchanged, at -15.2.
• The capacity utilization index returned to positive territory, moving up six points to 2.3.
• The shipments index pushed down from -5.0 to -10.5.

Perceptions of broader business conditions continued to worsen in March. The general business activity index slipped two points to -15.7. The company outlook index remained negative but rose four points to -13.3. The outlook uncertainty index came in at 22.0, down slightly from February but still elevated.

Labor market measures suggest a resumption of employment growth and continued lengthening of workweeks. The employment index shot up 11 points to 10.4 after dipping below zero last month. Twenty-four percent of firms noted net hiring, while 14 percent noted net layoffs. The hours worked index edged down to 2.6, a reading slightly below average.

Price and wage pressures receded in March, though wage growth remained elevated relative to average. The raw materials prices index retreated five points to 20.3, falling further below its series average of 27.9. The finished goods prices index dropped from 15.8 to 7.0, falling below its series average of 9.0 for the first time since 2020. The wages and benefits index inched down two points to 30.5.

Expectations regarding future manufacturing activity were mixed in March. The future production index remained positive but fell eight points to 13.5, signaling well-below-average output growth is expected over the next six months. The future general business activity index pushed further negative, from -2.9 to -11.2. Most other measures of future manufacturing activity remained positive but moved lower this month.

Sources: dallasfed.org

Existing Home Sales Jump in February as Median Home Prices Slide for the First Time in Almost 11 Years

March 22, 2023

On Tuesday, the National Association of Realtors reported that “existing-home sales reversed a 12-month slide in February, registering the largest monthly percentage increase since July 2020. Month-over-month sales rose in all four major U.S. regions. All regions posted year-over-year declines.

Existing Home Sales

Median Prices Slide After 131 Months of Gains

• “The median existing-home price for all housing types in January was $363,000, a decline of 0.2% from February 2022 ($363,700), as prices climbed in the Midwest and South yet waned in the Northeast and West.
  
  
• This ends a streak of 131 consecutive months of year-over-year increases, the longest on record.
  
  
• Properties typically remained on the market for 34 days in February, up from 33 days in January and 18 days in February 2022.
  
  
• Fifty-seven percent of homes sold in February were on the market for less than a month.
  
  
• First-time buyers were responsible for 27% of sales in February, down from 31% in January and 29% in February 2022.
  
  
• All-cash sales accounted for 28% of transactions in February, down from 29% in January but up from 25% in February 2022.
  
  
• Distressed sales – foreclosures and short sales – represented 2% of sales in February, nearly identical to last month and one year ago.
  

Regional Breakdown

• Existing-home sales in the Northeast improved 4.0%, down 25.7% from February 2022. The median price in the Northeast was $366,100, down 4.5% from the previous year.
  
  
• In the Midwest, existing-home sales grew 13.5%, declining 18.7% from one year ago. The median price in the Midwest was $261,200, up 5.0% from February 2022.
  
  
• Existing-home sales in the South rebounded 15.9% in February, a 21.3% decrease from the prior year. The median price in the South was $342,000, an increase of 2.7% from one year ago.
  
  
• In the West, existing-home sales rocketed 19.4% in February, down 28.3% from the previous year. The median price in the West was $541,100, down 5.6% from February 2022.”
  

Sources: nar.realtor

Markets Mixed as Growth and Tech Names Jump on Hopes That the Fed Might Have Reached an Inflection Point on Hiking Rates

March 17, 2023

• This week was dominated by banking worries that started with the collapse of Silicon Valley Bank last week and spread to Signature Bank of New York and a few others this week
  
  
• But before markets opened on Monday, Wall Street learned through a joint statement from the Federal Reserve, Treasury, and the FDIC that all depositors at SVB and Signature Bank would be able to access deposits on Monday, despite being taken over by regulators
  
  
• When Friday’s final Wall Street bell rung, equity returns were mixed, as the small-cap Russell 2000 lost 2.6%, pushing it into the red for the year (YTD: -2.0%) and the mega-cap DJIA lost 0.1%, pushing it further into the red for the year (YTD: -3.9%)
  
  
• The tech-heavy NASDAQ, on the other hand, leapt an astonishing 4.4%, as investors hoped that the Fed’s rate hiking might slow down or be over for the year
  
  
• The large-cap S&P 500 inched up 1.4% and is positive for the year (YTD: +2.0%)
  
  
• Of the 11 S&P 500 sectors, 6 were positive, with the growth sectors, especially Communication Services (+6.9%) and Information Technology (+5.7%), outpacing the defensive sectors like Utilities (+3.9%) and Consumer staples (+1.3%)
  
  
• The 2-year Treasury yield sank 77 basis points to 3.82% and the 10-year Treasury note yield fell 29 basis points to 3.40%
  
  
• Oil prices dropped 13.5% this week to $66.33/barrel, the lowest level since December 2021
  

Weekly Market Update – March 17, 2023

*Source: Bonds represented by the Bloomberg Barclays US Aggregate Bond TR USD.
This chart is for illustrative purposes only and does not represent the performance of any specific security. Past performance cannot guarantee future results

Markets Mixed as Bank-Failure-Worries Ease

It was another volatile week for equity markets around the world, as pressures mounted on the banking sector as concerns grew after the failures of Silicon Valley Bank and Signature Bank and worries at First Republic Bank and Credit Suisse.

And while pundits were quick to call attention to the big bank failures of 2008/2009, this week was different as governments (including the Fed, the Federal Deposit Insurance Corporation, and the Treasury Department) and other well-capitalized banks stepped in quickly to put worries at ease.

Then as bond yields dropped swiftly, equities rebounded, giving investors a good case of whiplash. When the week ended, the major U.S. equity indices finished mixed, as the current banking worries might ultimately end up as an inflection point where the Fed slows down or even pauses future rate hikes this year.

Not surprisingly, the 11 S&P 500 sectors varied markedly, with 5 of the 11 ending the week in the red. Specifically, Communication Services (+6.9%) and Information Technology (+5.7%) made big weekly jumps and Financials (-4.9%) and Energy (-6.9%) struggled with big losses. The range in sector returns was further underscored as Large Growth outperformed Large Value by almost 6%.

While the bank failures were unpleasant, glass-half-full investors were hopeful that the Fed might adjust its monetary policy and not raise rates by as much. By the end of the week, the fed fund futures markets were pricing in zero likelihood of a 50-basis-point hike versus a 40% chance just one week ago and an almost 40% chance of no rate hike at the Fed’s upcoming meeting on March 21^st.

While it seemed everyone was focused on the latest banking news, there was a lot of economic data this week too, including:

• The Consumer Price Index was was up 0.4% month-over-month in February, and up 6.0% year-over-year, which was the smallest 12-month increase since September 2021
  
  
• Core CPI, which excludes food and energy, was up 0.5% month-over-month and up 5.5% year-over-year, which was the smallest 12-month increase since December 2021
  
  
• The February NFIB Small Business Optimism Index came in at 90.9
  
  
• Weekly MBA Mortgage Applications Index were up 6.5%
  
  
• February Retail Sales were down 0.4%
  
  
• February Retail Sales ex-autos were down 0.1%
  
  
• February PPI was down 0.1%
  
  
• February Core PPI was flat at 0.0%
  
  
• January Business Inventories were down 0.1%
  
  
• Weekly Initial Claims came in at 192,000
  
  
• February Import Prices were down 0.1%
  
  
• February Export Prices were up 0.2%
  
  
• Leading Indicators fell 0.3% in February
  
  
• The preliminary University of Michigan Consumer Sentiment Index for March dropped to 63.4
  

Consumer Price Index Records Smaller Increase, But Food Index is Up 9.5% Over the Last Year

On Tuesday, the U.S. Bureau of Labor Statistics reported that the Consumer Price Index for All Urban Consumers rose 0.4% in February, after increasing 0.5% in January. Over the last 12 months, the all items index increased 6.0% before seasonal adjustment.

Specifically:

• The index for shelter was the largest contributor to the monthly all items increase, accounting for over 70% of the increase, with the indexes for food, recreation, and household furnishings and operations also contributing.
  
  
• The food index increased 0.4% over the month with the food at home index rising 0.3%.
  
  
• The energy index decreased 0.6% over the month as the natural gas and fuel oil indexes both declined.
  
  

• Categories which increased in February include shelter, recreation, household furnishings and operations, and airline
  fares.
  
  
• The index for used cars and trucks and the index for medical care were among those that decreased over the month.
  

Inflation Over the Past 12-Month

The all items index increased 6.0% for the 12 months ending February; this was the smallest 12-month increase since the period ending September 2021.

• The all items less food and energy index rose 5.5% over the last 12 months, its smallest 12-month increase since December 2021.
  
  
• The energy index increased 5.2% for the 12 months ending February.
  
  
• The food index increased 9.5% over the last year.
  

Food Index

• The food index increased 0.4% in February, and the food at home index rose 0.3% over the month. Five of the six major grocery store food group indexes increased over the month. The index for nonalcoholic beverages increased 1.0% in February, after a 0.4% increase the previous month. The indexes for other food at home and for cereals and bakery products each rose 0.3% over the month. The index for fruits and vegetables increased 0.2% in February, and the index for dairy and related products rose 0.1%.
  
  
• In contrast, the meats, poultry, fish, and eggs index fell 0.1 percent over the month, the first decrease in that index since December 2021. The index for eggs fell 6.7% in February following sharp increases in recent months.
  

Nearly Half of Small Businesses Have Job Openings They Can’t Fill

Early in the week, the National Federation of Independent Businesses reported that 47% of small business owners reported job openings they could not fill in the current period.

Specifically, “[t]he percent of small business owners reporting labor quality as their top small business operating problem remains elevated at 21%, down three points from January. Labor cost reported as the single most important problem to business owners increased two points to 12%, down one point below the highest reading of 13% reached in December 2021.

A seasonally adjusted net 17% of owners are planning to create new jobs in the next three months, down two points from January and 15 points below its record high reading of 32 reached in August 2021, showing that the trend in planned hiring is on the decline.

Sixty percent of owners reported hiring or trying to hire in January, up three points from January. Of those hiring or trying to hire, 90% of owners reported few or no qualified applicants for the positions they were trying to fill. Thirty percent of owners reported few qualified applicants for their open positions.

Further:

• 46% of owners reported raising compensation, unchanged from last month.
  
  
• 23% plan to raise compensation in the next three months, up one point from January.
  
  
• 38% of owners have job openings for skilled workers.
  
  
• 19% have openings for unskilled labor.
  

Sources:  bls.gov;  nfib.com;  msci.com; fidelity.com; nasdaq.com;  wsj.com;  morningstar.com

U.S. Wholesale Inventories Fell in January for the First Time Since July 2020

March 8, 2023

Still Up 15.8% Since January 2022

On Tuesday, the U.S. Census Bureau announced the following new wholesale trade statistics for January 2023:

Sales

• January 2023 sales of merchant wholesalers, except manufacturers’ sales branches and offices, were $693.8 billion, up 1.0% from the December level and up 3.6% from the January 2022 level.
• The November 2022 to December 2022 % change was revised from the preliminary estimate of virtually unchanged to down 0.2%.

Inventories

• Total inventories of merchant wholesalers, except manufacturers’ sales branches and offices were $929.0 billion at the end of January, down 0.4% from the December level.
• Total inventories were up 15.8% from the January 2022 level.
• The December 2022 to January 2023 % change was unrevised from the advance estimate of down 0.4%.

Inventories/Sales Ratio

• The January inventories/sales ratio for merchant wholesalers, except manufacturers’ sales branches and offices was 1.34.
• The January 2022 ratio was 1.20.

Wholesale Inventories – Last 20 Years

Sources: census.gov