Canada Australia and commodities

EWC - MSCI Canada Index Fund - has lots of big canadian stocks in it.  According to yahoo financial, the major categories are:
26% - Industrial materials (I assume this is commodities like oil, gas, metals)
7% - energy

10% - consumer services (???)
44% - financial services (banks)

VGENX - vanguard energy mutual fund with a bunch of oil companies in it

KROO - smaller cap australian companines (not nearly as much emphasis on financial companies).  This fund was started in March 2010 by Index IQ.
CNDA - smaller cap canadian companies (not nearly as much emphasis on financial companies)  This was also started by Index IQ in March 2010.  According to Benzinga.com This fund has 50% of its money in materials and about 19% in energy.

Estate tax notes

from Jim Dilley

Say a man dies with a $10 million estate. At time of death, he has $2 million left of his lifetime exemption (unified credit as it is known) and $900,000 left of his generation skipping tax exemption. He could leave all to wife, but then he's wasting the $2 million lifetime exemption. He could put $2 million in trust for kids and and then leave the other $8 million to wife. Then later when wife dies, she can structure her will to take advantage of her lifetime exemption and GST exemption as she wants.

But maybe he wants to leave money to grandkids too. He could leave $8 million to wife and $1.1 million to kids and $900,000 to grandkids. This would get at least some money ($900,000) to third generation without paying any estate tax because $900,000 was the amount of his GST exemption.. And it uses all of his lifetime exemption.
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Met with Lytle Nichol 24-sep-10

GTN will.

Assume that estate is $10 million at death and that GTN gave $1 million in gifts during his life.  So his lifetime exemption (unified credit) which started at $3.5 million is now (at death) down to $2.5 million.  2009 GST exemption was $3.5 million so we'll use that in this example. He has not used any of GST exemption at time of death.

First, add $1 million in lifetime gifts back to estate so estate is $10m + $1m = $11m.  Subtract lifetime exemption from total estate $11m - $3.5m = $7.5m.  So $7.5m goes into marital trust for Sarah.  The other $3.5m (really $2.5m because the $1m added back to estate is really not there) goes into residuary trust for children. 

Marital trust:         $7.5m
Residuary trust:    $2.5m

But to use GST exemption, make all of the $2.5m in residuary trust GST exempt.  That leaves an additional $1m of GST exemption leftover.  So use that to exempt $1m of the Marital trust.  To do that, split the marital trust into two trusts, M1 exempt, and M2 non-exempt.

So now it looks like this:

M1            $1m (GST exempt)
M2            $6.5m (nont GST exempt)

Residuary trust    $2.5m (GST exempt)

Land on Stinson just east of Knox in Fayette County

Talked to agent Jimmy Morrison (cell 489-9806) today.  He is an agent with Banyan Tree.  He has 13.78 acres for sale for $329,700.  That's about $23,925 per acre.  It is on south side of Stinson about 600 feet east of Knox.  He said that Buck Clark (Nick Clark's dad) has the land across Stinson (on the north side) and that he used to own this land and that he put restrictions on this land.  It cannot be divided and you cannot put a trailer on it.  The current owner paid abut $60,000 more for this land than the asking price.  The owner doesn't want to build big house on it like he was going to because of the intermodal rail yard going in about 1.5 miles to West.  Jimmy lives right behind (to south of) this land.  His driveway is on Knox.

Looked at this land with Margie 19-sep-2010.

Also talked to agent Andrea Folda (cell 849-0405) with Prudential Collins-Maury about lots on North side of Stinson near Frazier.  The 2 lots are about 5.4 acres each and are priced at $140,000 and $150,000.  She will email me covenants.

Fidelity annuity info

Dave Dettmer (800-343-2431 ext 62038) at Fidelity called me today about annuities.  He is in Cincinatti. 
He said there were two basic types:  Deferred and Immediate.  Deferred were more of an IRA product and you could not draw money out until you were at retirement age and seemed to have other restrictions too.  An immediate annuity allows monthly payments after you pay Fidelity a lump sum.  If I am 53 years old and I pay Fidelity $646,313 up front, they will send me $3000 per month ($36,000 per year) until I die.  If I want to have them guarantee that the payment will be made for at least 10 years, even if I die before that, then the up front payment goes up to $652,796.  On the "plain" (no guarantee) annuity, the rate of return is 36,000 / 646,313 = approx 5.57%

If GTN at age 79 were to give them $321,000 then he could get a monthly payment of $3000 ($36,000 per year) until he died.  His up front fee is much less because he will die sooner.  If he wants the guaranteed 10 year payout, his up front payment goes up to approx $396,000.  The increase to his up front fee for 10 year payout guarantee is much greater than Tayloe's because he will die sooner than a 53 year old.  Girls will get a somewhat worse deal because they statistically live longer.  On plain (no 10 year guarantee) annuity the rate of return is 36,000 / 321,000 = 11.2%.