Previous Columns
8:30 AM EST Thursday, April 27, 2006: If my wife and I die on December 31, 2010, my children won't pay any estate taxes. Not one nickel. If I die a day later it will cost my kids 55% of my assets. The IRS wants its money -- in cash -- 9 months and a day later. If my assets are tied up in a business, a private equity fund, real estate, or sundry other illiquid "investments," the IRS will still insist on its cash. Which means my assets will be put up for a fire sale and the penalty of dying could be much higher -- perhaps over 100%. In which case the only "inheritance" my kids will get will be a whopping tax bill.

The name of the game is get one's assets away from the IRS now. That will save the taxes now on the principal and the appreciation between now and when you die. Figure you have a $10 million net worth now. Die today, you could get zapped with taxes of $4.4 million -- that's after the $2 million deduction. But die in ten years, when even with our miserable stock picking we've doubled our estate, our heirs are now looking at a $9.9 million tax bill.

The easiest way to reduce the value of your estate is to spend all your money or give it all to charities or do both.

The second "easiest" way is to put your money into various "trusts." They have quaint names:
+ Revocable trust
+ Credit maximizing trust
+ Life insurance trust
+ Charitable remainder trust.
+ Profit sharing sub-trust
+ Living trusts
+ Dynasty trust
+ Personal resident trust

The third "easiest" way is is to buy sufficient life insurance. In effect, your insurance company will pay your estate tax bills.

If you screw up in your planning and paperwork , there are huge penalties:
+ Your life insurance payment might itself be taxable.
+ You'll die "asset rich, cash poor."
+ Some of the trusts are irrevocable. That means you can't change the beneficiaries, even though you have a falling out with your idiot daughter-in-law.
+ Your estate might end up in Probate Court, with everybody and their uncle arguing endlessly about who gets your money. Think divorce: The arguments will only stop when the legal fees equal the value estate. This becomes really expensive if you happen to have assets in several states. You'll need lawyers there. And their fees are outrageous.

There are plenty of "gotchas," along the way, too. If you die, and your wife, age 90, remarries without a pre-nuptial agreement (even at 90), your kids could get handsomely screwed. Congress might also change the law -- like kill estate (aka death) taxes altogether, though I doubt it.

A nice man called Ira Kessler placed an ad in The New York Times, offering a free seminar on Estate Planning. I went to yesterday's. That's where I learned the above. The seminar accomplished its purpose. It scared the pants off me. I've met with other estate planners. I'm trying to get a handle on all this. Check out my column of March 1. Click here.

There are several problems:
1. No one seems to have a simple step-by-step plan to take you from today to tomorrow painlessly. Everybody is different.
2. You need an estate planner (like Ira) to do your planning. You need to find one who's not a life insurance salesman in disguise.
3. You need a talented lawyer who can draw up all the necessary IRS-bullet-proof paperwork. Finding one who's got time for you is probably impossible today.
4. The IRS code is clear on some things. For example, your trust's goals have to be "health, maintenance, education and support." Any other words and you're screwed.
5. The IRS is not clear on most things. You can understand that. Its job is to collect money. It's not going to tell you how to plan your death so you can screw the IRS.

But I'm floundering down this path. I have a will, but it's old. I have too many assets in joint Susan-Harry names, so I'm changing that. And I'm even looking at insurance. And maybe I'll find a lawyer who isn't busy. And I'm meeting with IRA for a one-hour "planning" meeting next week.

There is another alternative. Namely, spend all the money now. Die poor. Susan's latest mantra is "fly first class or our children will." 98% of us never pay estate taxes. That's because the 98% of us die with estates under $2 million.

I love reading annual reports: You have to beg your broker to send you paper annual reports through snail mail. Most investors don't get them. But there's nothing -- absolutely nothing -- as worthwhile as reading the words, seeing the layout, seeing the pictures, all in your hot little hand. My favorite quote from this year's annual reports came in Radio Shack's. Remember, I don't make this stuff up. It This quote took up a whole page:

Radioshack Corpopration remains a healthy business despite the fact that our 2005 financial performance was not consistent with our goals or the expectations of our shareholders.

And, pray tell, what is the $35.07 for? Why, it's for the cost of collecting $35.07 from you. Check this excerpt from the dunning letter which I scanned last night.

That's the best part. There's also the five months and many phone calls that it takes to actually close your Bank of America account down (even though there's no money any longer in your account). Meantime, because there is no money in the account, they charge you banking fees. And you have to argue against those.

Why wouldn't anyone sane have an account with the Bank of America? Of course, I never had one. I'm not that stupid. My charming little Fleet Bank got taken over by BofA.

I knew things were bad from Day One when all the banking charges went through the roof -- like sending and receiving wires, etc. Things got even worse Day Two when Bank of America fired 90% of the branch's employees. Day Three, one of them asked me for a job.

I'm sure these tactics make the bank money -- short-term.

Oh, by the way, if I recommend Bank of America's checking to one of my friends, I get $25. So please get a check account and let me know. I love Bank of America's slogan -- "Higher Standards." I think they really mean "higher fees." I don't make this stuff up.

dtSearch is a great search engine for your PC: Want to find something on your PC? Windows has a terrible search engine. I was hoping the new Windows -- called Vista -- would be out soon. But it's delayed. So, I'm spending $199 today to buy the world's best searching tool -- dtSearch. Don't believe me? Go here www.dtsearch.com/download.html. Download a free 30-evaluation copy. You'll marvel at suddenly how fast you can find things on your hard disk. dtSearch searches inside your work. I put in the words "estate planner" and it instantly (less than a second) found my March 1 column. Think of dtSearch as Google for your desktop.

The concrete truck's short fuse: Zillions of these things arrive every day for the humungous building going up two blocks away.

The concrete truck	The concrete building, when complete.

Inquiring minds want to know:
Q: How long does the driver have for the delivery?
A: 1 1/2 hours. Any longer and the load is rejected by the building.

Q. How does the building know the driver isn't fibbing?
A: The building has inspectors at the concrete plant. Each truck carries a slip certifying when it left the plant.

Q: What happens when the concrete is late?
A: It gets radically weaker. The building could fall down.

Q: How do you get concrete into Manhattan and emptied in under 90 minutes?
A: Beats me.

Simpler and Cheaper Clean Coal Technology: As the price of oil stays high, so it encourages the search for the perfect alternative energy. I found this piece in the lastest issue of MIT's Technology Review:

Gasification, in which coal is converted to a gaseous fuel, is the front-runner as next-generation technology for cleaner coal-fired power plants. Already, a number of utilities, including American Electric Power in the United States and RWE in Germany, are engineering large-scale gasification plants that would capture their carbon dioxide. But one major utility, Stockholm-based Vattenfall AB, is bucking the gasification trend. Last month, it finalized plans for a 40 million euro ($50 million) test of a simpler and potentially cheaper technology called oxyfuels.

Vattenfall's technology modifies a conventional coal plant, by burning the fuel in pure oxygen instead of air (which is mostly nitrogen). Conventional coal plants generate a flu-gas mixture of mostly nitrogen with some carbon dioxide and water; capturing the carbon dioxide is expensive because it takes a lot of energy to separate the carbon dioxide gas from the nitrogen gas. In oxyfuels technology, the flu gas is mostly carbon dioxide and water, the latter being easily condensed and removed -- yielding pure carbon dioxide, which can be collected.

This month, Vattenfall revealed that it has ordered the first components for a 30-megawatt oxyfuel pilot plant -- by far the largest test of oxyfuels technology to date. Lars Strömberg, the company's strategic director and oxyfuels project manager, says gasification is not ready to be a source of clean coal power. He cites mechanical difficulties that have plagued the gasification demo power plants built to date. "There are only four gasification power plants and none has performed well," says Strömberg. He thinks gasification's capacity to produce both power and hydrogen is similarly oversold, given the slow development of fuel cells. "Frankly, we don't believe at all in the hydrogen society," he says.

Vattenfall participated in the large-scale effort to rebuild eastern Germany's power industry after reunification; in the 1990s, the effort produced some of the world's most advanced coal-fired power plants. These plants operate at up to 600 degrees Centigrade, and in doing so extract as much as 45 percent of coal's energy, compared with efficiencies below 40 percent for earlier-generation plants. The oxyfuels approach is an extension of those developments. "We don't need to create a new power-producing process," Strömberg says.

Vattenfall's pilot plant will test that prediction. The plant will operate next to the company's 2000 megawatt power-and-heat plant at Schwarze Pumpe (a two-hour drive south of Berlin along the Polish border). Steam produced in the plant will be piped to the larger plant's turbines to produce power.

A key component in the pilot plant will be its furnace and steam generator, where pulverized coal will be combusted with oxygen from an integrated cryogenic oxygen plant. In conventional coal furnaces, nitrogen in the combustion air dilutes the oxygen, limiting the intensity of the flame and the resulting combustion temperatures. In the oxyfuels technology, flu gases will be recirculated into the furnace to limit the oxygen concentration, thereby simulating the same effect.

Frank Kluger, head of research and technology in Stuttgart, Germany, for Alstom Power Boiler, the engineering firm building the pilot plant's furnace, says it will be more than 30 times larger than previous oxyfuel furnace tests, providing a more realistic view of how the components respond to the new conditions. Kluger also says that, unlike some earlier tests, the pilot will be designed to run on either air or oxygen, enabling side-by-side tests that will provide critical data to tune the design software used to engineer commercial plants. "By seeing what [factors] change in the pilot plant, you can imagine how it will look at full scale," says Kluger.

Vattenfall's plan is to crank up the pilot program in spring 2008, and begin planning for a 600-megawatt oxyfuels plant before the end of that year. Strömberg says the hold-up in moving to full scale is more likely to be political than technical. Specifically, the biggest hurdle, he suggests, will be getting permission to store the carbon dioxide -- including the pilot plant's.

The most likely destination for Vattenfall's carbon dioxide is underground storage in deep aquifers and spent oil wells, which are currently under investigation in Europe, including a saline aquifer just west of Berlin. The problem is that, while carbon dioxide released up a stack is exempt from waste rules, putting it into the ground requires a permit. And with some environmentalists bitterly opposed to the idea of extending the use of coal through gasification -- not to mention the risk of the carbon dioxide escaping -- those permits may be hard to get. Greenpeace Germany, for one, is opposed to the concept.

You can read more. Click here.

Poor Reverend Ike: I messed up his philosophy yesterday. It should read, "The best thing you can for the poor is not to be one of them."

Bad Moishe Joke - 1
A story is told of a Jewish man who was riding on the subway reading an Arab newspaper. A friend of his, who happened to be riding in the same subway car, noticed this strange phenomenon. Very upset, he approached the newspaper reader.

"Moshe, have you lost your mind? Why are you reading an Arab newspaper?"

Moshe replied, "I used to read the Jewish newspaper, but what did I find? Jews being persecuted; Israel being attacked; Jews disappearing through intermarriage; Jews living in abject poverty. So I switched to the Arab newspaper. Now what do I find? Jews own all the banks; Jews control the media; Jews are all rich and powerful; Jews rule the world. The news is so much better!"

Bad Moishe Joke - 2
Moishe is on his death bed.
"Is my wife here?" he asks.
"Yes, I'm here," she answers.
"Are my children here?" he asks.
"Yes, all your children are here."
"And my grandchildren?"
"Everyone is here. Rest."
Moishe lifts himself a little from his bed and asks, "So why is the kitchen light on?"

Harry Newton

This column is about my personal search for the perfect investment. I don't give investment advice. For that you have to be registered with regulatory authorities, which I am not. I am a reporter and an investor. I make my daily column -- Monday through Friday -- freely available for three reasons: Writing is good for sorting things out in my brain. Second, the column is research for a book I'm writing called "In Search of the Perfect Investment." Third, I encourage my readers to send me their ideas, concerns and experiences. That way we can all learn together. My email address is . You can't click on my email address. You have to re-type it . This protects me from software scanning the Internet for email addresses to spam. I have no role in choosing the Google ads. Thus I cannot endorse any, though some look mighty interesting. If you click on a link, Google may send me money. Please note I'm not suggesting you do. That money, if there is any, may help pay Claire's law school tuition. Read more about Google AdSense, click here and here.
Go back.