Estate Planning For $1 Million +

Published June 9, 2015 for Forbes​BrandVoice/RBC Wealth Management 

By Karen Haywood Queen

Estate planning is essential for everyone, no matter how simple or small the estate. But once your estate edges close to $1 million, the complexities increase. Unless your estate is valued at more than $5.43 million—or $10.86 million for a married couple—you’re exempt from federal estate taxes.

But some states impose estate and/or inheritance taxes at a lower threshold, with most around $1 million to $2 million, although the cutoff is only $675,000 in New Jersey. A comprehensive estate plan can help to maximize what your heirs receive and ensure that your wishes are followed.

Understanding Wills Vs. Trusts

Most people start their estate plan with a will, said Bill Ringham, senior manager of Wealth Strategies at RBC Wealth Management. That’s because wills are relatively easy and inexpensive to create. But for more complicated estates—as those that exceed $1 million often are—a will may not be the only solution to consider.

Wills are a matter of public record, which means anyone can find out the value of your estate and who your beneficiaries are, Ringham said. “A very public figure such as a politician, entertainer or professional athlete might not want people to know what they’re leaving in their estate,” he said. “Or, someone might not want people to know exactly how much is being directed to their children and how much is being directed to charity.“

For a more private resolution after death, many people with larger estates choose to put their assets in revocable trusts, also called living trusts. You transfer assets into the trust and those assets are managed by a trustee—often that trustee is you—for your benefit while you’re still alive.

As the name implies, the trust can be modified during your lifetime. When you pass away, the trust can specify that assets be distributed to your beneficiaries, or a successor trustee can be named to manage and control the trust for your heirs.

A revocable trust can include real estate, cash and non-retirement/non-qualified investments accounts, non-qualified annuities, and tangible personal property such as cars. Retirement accounts such as 401(k)s and -deferred IRAs cannot be placed in a revocable trust. There is no minimum amount for establishing a revocable trust, but such trusts become more attractive as an estate becomes more complex and exceeds $1 million, Ringham said.

“With a trust, no one can see where you’ve left your money,” Ringham said.

Family Estate Planning

Trusts often take less time to settle than wills, since wills must also go through probate. Administering an estate with most assets in a revocable trust could take six to nine months, Ringham said. Probating a will, especially in several states, could add three months to the typical timeline for a trust, he said.

Cost varies by state. “Many of our clients, especially northerners, have homes in more than one state—a primary home in New York, a home in Florida, another home in California,” said Barry Zischang, an RBC Wealth Management consultant. “Going through probate in three states will be expensive and a lot more work. By having individual homes titled in a trust, you can avoid that.”

Setting up the initial trust document isn’t necessarily more difficult than setting up a will, but trusts do require some additional work, Ringham said. After you set up the trust, you have to change the title in all applicable assets from your name to the name of the trust. If you don’t, the title of the accounts takes precedence over your will or the trust and it may take longer for funds to be released to your heirs.

Give While You’re Alive

While planning for the distribution of your assets after you pass, you can also start giving them away during your lifetime. Since the rules vary by state and each family situation is different, it’s important to consult an experienced financial advisor regarding tax implications that may apply You can give $14,000 per year ($28,000 per year for married couples) to a child, grandchild or anyone else you choose without it counting as a gift under the federal gift-tax exclusion. That’s especially appealing if your estate has grown past the level of being exempt from state or federal taxes.

“[For] every dollar that you move out of your estate, your heirs save [approximately] 40 cents in taxes,” Ringham said. If you give more than that $14,000, it counts as a taxable gift and taxes are imposed not on the recipient, but on you as the giver, Zischang said. You don’t have to pay those taxes, but you do have to file a gift tax return and the gift counts against your individual estate exemption of $5.43 million, he added.

However, there are two unique instances where you can exceed that $14,000 individual annual limit with no tax consequences. “You may pay somebody’s tuition at an educational institution in unlimited amounts and that is not considered a gift,” Zischang said. But the payment must be for tuition only—not for books or room and board. And you must pay the money directly to the educational institution—not to the child, grandchild, other recipient or their parents. The other exception is paying medical bills. “If your child or grandchild goes to the hospital and gets a bill for $100,000 they can’t pay, you can pay the hospital or other provider directly and that is not considered a gift either,” Zischang said. You could even help pay for health insurance as long as you write the check directly to the insurance provider, he added.

Irrevocable Trusts

As your assets grow beyond the $5.43 million federal estate tax threshold, you may want to set up an irrevocable trust. Assets placed into an irrevocable trust are removed from your estate, which can make it an especially attractive option for any assets you expect to increase in value, such as stocks and real estate, Ringham said. The assets you put into an irrevocable trust still count against the $5.43 million gift exclusion, but any growth or appreciation occurs outside your estate.

There are some downsides: An irrevocable trust can’t be terminated or modified except under special circumstances. Ringham also pointed out that you will have to draft and file separate tax returns for the irrevocable trust. A well-thought-out estate plan is crucial to ensuring that your wishes will be followed after you’re gone. With the right tools and the help of an experienced estate planner, even a large estate can be handed down to your heirs in exactly the way you intend.

Envision your credit union as an elite athlete

Published in CU Insight for Raoust+Partners on June 10, 2015.

By Karen Haywood Queen

Envision an elite athlete with toned muscles hidden under baggy clothes. Who knew he or she could run a mile in less than five minutes?

Raoust+Partners helped Members Cooperative Credit Union in Minnesota trade that baggy sweat suit for a new set of clothes that fit, flatter and show off that physique.

The credit union, founded in 1936 in Cloquet, was expanding into the much larger college town of Duluth and seeking to reach a younger population. Easy sale, or should have been. Members was leading the pack in offering new services such as mobile banking, mobile bill-paying and photo check deposits. Go to the local app store: Members is there.

But until 2013 Members’ one-size-fits-all advertising disguised its unique approach. The green and black logo was, in management’s words, “old,” “tired,” and “boring.”


“I’d tell my friends ‘We have a mobile app,’” and they’d say ‘Really, I didn’t know,’” says Ryanne Battaglia, vice president of business development and part of the youthful demographic Members is working to reach. “Our brand, our image wasn’t reflective of the products and services we have.”

The tagline, Real Life, Real Benefits, could stand for any credit union, anywhere. Ads were predictable, generic, institutional and thus, usually invisible. One YouTube spot from 2009 touted the Members history in the community and the benefits of credit unions in general –- “lower fees than banks!” (Tell us something new). Change the name and that ad could work, or not work, for any credit union.

Other ads promised that people who took out a car loan could win free tickets to a Vikings game. But beyond that Vikings game, why Members? Ads didn’t answer that question.

Nor did ads connect Members with … its members and prospective members. Looking at those ads, prospective members could not see themselves or their friends.

There was no need for a new culture or even new products. All that was needed was to upgrade Members’ advertising to reflect the forward-thinking reality.

“We had no intention of changing our culture or our employees,” Battaglia says. “We felt our culture was a successful culture. We wanted our brand to be reflective of who we are.”

Raoust + Partners interviewed the credit union team and members to understand the credit union and community culture, Battaglia says.

Based on an understanding of the community, Raoust+Partners created branding that accurately reflected the strength in each member and showcased that the credit union could be a resource to meet individual financial needs, says Tammy Heikkinen, president and CEO.

The resulting branding, tagline and other advertising reflect that understanding. The colors, burnt orange, turquoise, red and gold, are energizing. The new tagline, The Strength of Me, plays on the first two letters of Members to emphasize that members are important.





The Strength of Me also celebrates the region’s rugged individualistic culture where surfing on a freezing Lake Superior in a 20-knot wind is just what you do. Raoust+Partners’ new ads for Members show young people paddling in white water, carrying surfboards over snowy rocks, kite boarding and camping in the snow. These ads, which induce shivering in less hardy souls, wouldn’t work for a credit union in Raoust+Partners’ home base of Coastal Virginia. But for Members, the ads celebrate a culture where winter is a force to enjoy and conquer.

The new ads also build on the idea of individual strength made stronger by working with others. That would be with Members Cooperative Credit Union.

These days, people in the community recognize the name and they’ve seen the ads, Battaglia says. Membership is growing. As for working with others, applications for positions are much higher, she says.

“People recognize we offer a progressive culture and that we’re changing with the times,” Battaglia says.

Changing with the times, running well ahead of the pack and showing off those toned muscles thanks to Raoust+Partners.

Credit union social media done right with personality and purpose

For Raoust+Partners for CU Insight. Published April 3, 2015.

By Karen Haywood Queen

‘Credit Unions need to get on social media, especially YouTube, because that’s where the action is.’ Great advice as far as it goes. But without a purpose, social media presence doesn’t expand a brand.

Some argue that the Facebook ship has sailed—younger people certainly have moved on to other channels. If a credit union is on Facebook, the page should reflect the credit union’s unique personality not serve as a dump for generic copy that could be about any business.

Found on Facebook: “Keep your face towards the sunshine and shadows will fall behind you.” Thank you Walt Whitman, but how does that promote a brand or attract new credit union members?

Raoust+Partners helps credit unions determine if their culture is a good fit for social media. If so, Raoust+Partners helps create content specifically for those channels aimed at getting results. Credit unions use social media channels effectively and smartly not by pushing product but by creating content that’s an extension of their brand story.

YouTube, which has replaced television for many younger people, can be an ideal medium for telling a credit union’s story. At least until the next big thing comes along.

Just being on YouTube isn’t enough. What works? Copy developed specifically for YouTube – not rebroadcasts of TV commercials. YouTube gives a credit union time to expand its message beyond a 10-, 15- or 30-second TV spot. Take advantage of it.

Keep in mind, though, that people tune in to YouTube to be entertained.

No one wants to watch a credit union’s annual meeting on YouTube. Correction: a spot check of three credit union annual meetings showed 14 views, 84 views and 177 views.

Not many people really want to watch Blizzard the Penguin visit a credit union either—102 views.

Sadly, not many people even want to hear how a credit union helped a college student with her overwhelming debt. In 10 months, 15 views.

If the message isn’t entertaining, they’ll tune out. They certainly won’t share it with their friends.

True to its name, Innovations Federal Credit Union in Panama City, Fla., a Raoust+Partners client, has mastered the art of telling its story on YouTube in a way that engages viewers and clearly communicates the credit union’s offbeat brand. The well-produced videos give viewers insight into Innovations’ culture.

Innovations’ videos are produced solely for YouTube—not TV commercials rebroadcast. CEO David Southall sketched out the credit union’s first YouTube video, Jingle Bells Lip Dub, on a napkin in 2009. He still has the napkin.

The video stars not actors, but rather employees who are clearly engaged and having fun. The mimosas may have helped.

“Around here, for local Christmas commercials all the employees get together, wave at the camera and say ‘Merry Christmas,’” Southall says. “It’s kind of boring and overdone. We decided we didn’t want to do that.”

Raoust+Partners helped take the concept from a napkin to a professional production.

“They have some creative minds at Raoust,” Southall says “They made it look professional—rather than something we did homemade. If something is interesting and eye-catching, you want to share it with your friends and family.”

So far, 17,383 people have enjoyed the catchy beat and fun vibe of that first video. That engagement, that culture can’t be faked. If that unique exuberance isn’t in a credit union’s DNA, best to avoid the attempt. For Innovations, it worked because the video showcased the credit union’s personality.

“That first video said to our community ‘Hey we’re different,’” says Southall, who appears in the videos. “We don’t want to be traditional in anything. Our lobby design is different. The way we hire employees is different. The way we train employees is different.”

The Financial Brand ranked Innovations 21 out of the top 100 credit unions on YouTube. More important, as Innovations continued to make more videos, friends and family of employees, credit union members and then others in the community asked to participate. You can’t put a price on that kind of engagement and awareness.

A flash mob to open a new branch generated more than 5,000 views. A video entitled Bad Bank Romance has captured 4,219 views.

YouTube isn’t the best place to constantly push products but those who know what they’re doing—read Innovations–can bend the rule. Innovations’ 30-second video about an Obstacle-Free Auto Loans collected 53,151 views.

The goal of these videos is to reach younger members and potential members. While the average age of credit union members nationwide is about 48, Innovations’ average age is 40 or 41.

“Those are the members we want to attract—the kind of members who like the social media piece,” Southall says. “Our older board members—they probably haven’t seen them. Maybe their children or grandchildren saw them.”

Saw them and decided Granddad’s credit union wasn’t so fuddy duddy after all.

The (off) beat goes on.

Branding is about DNA, not smiles and dogs

For Raoust+Partners and CU Insight Published March 18, 2015 By Karen Haywood Queen.

Dogs. Smiles. Fun. That’s the theme of too many credit union brands.

A brand is not a logo. A brand is not a color palette.  A brand is not a dog.

Yet, an online search for credit unions with dogs or credit unions with smiles yields plenty of promotions based on smiles and/or canine friends.

Don’t blame the credit unions. Blame the ad agencies that confuse a promotion for a brand, agencies that talk instead of listen. These agencies trot out the same dog and pony show and then tweak that show slightly for each credit union. But dogs and smiles won’t separate your credit union from the pack.

Raoust+Partners knows that each credit union has a unique DNA. That DNA has nothing to do with dogs and everything to do with each credit union’s history, culture, community, employees and members. To create an authentic brand, Raoust+Partners doesn’t field test a dozen ideas to see what sticks. What it does is plenty of research–the kind that traditional focus groups and boring surveys don’t reveal. What it does is listen… No dogs either—unless the credit union is in an area with a strong canine heritage.

Instead, Raoust+Partners uncovers the credit union’s unique DNA and then builds on the core values of the past to move to a successful future. At Jeanne D’Arc Credit Union in Lowell, Mass., that DNA included a long history of reaching out to immigrants and the unbanked.

In 2009 when Raoust+Partners began working with Jeanne D’Arc, the nearly 100-year-old credit union was losing both members and market share. The listening approach yielded key intelligence.

Members and even former members felt a strong loyalty. But they thought of the credit union as they might a beloved former kindergarten teacher — a teacher you reluctantly leave behind after mastering the basics.

“The depth of their passion for the credit union was refreshing,” president and CEO Mark Cochran says. “But they thought they should grow up and go somewhere else later. They didn’t understand that there was more.”

Cochran, who had started at the credit union in 2007, knew he didn’t want to approach branding as a popularity contest.

“We didn’t want the coolest thing or even ‘This is who we want to be,’” he says. “With Raoust+Partners, our approach was ‘What are we? Who are we?’ We didn’t want to project ourselves as anything different from who we are. We didn’t go about trying to invent something new. We wanted to use our members’ words and perceptions as a launching point for where we want to go in the future.”

As Cochran listened to members, former members and employees, he heard stories of how the credit union had made a difference and how strongly the community and the credit union were intertwined.

“So many of these stories had a common theme: ‘I was new to this country,’” Cochran says. “The credit union was the first place that I had an account. It was the first place I got a car loan.’ But they viewed us like a hometown savings and loan — offering only checking, savings and mortgages.”

Jeanne D’Arc was already offering the products members wanted—credit cards, small business loans, automated banking –members just didn’t know. But getting the word out about those products was a minor part of the Raoust+Partners strategy. Emphasizing connections was the major focus.

At Jeanne D’Arc employees are part of the community and many know the members personally or at least at the level of  ‘I know your cousin who dated my sister.’ That shared history, knowledge and understanding make up the edge the competition doesn’t have. With that in mind, most of the marketing and advertising Raoust+Partners developed was based not on products but on the connection. With an authentic brand, employees don’t have to put on fake smiles and read from a phony script—they live the brand.

To reflect that shared history and values, Raoust+Partners created “We share a common thread.”

The resulting brand is a big mirror that accurately reflects members, employees, the community and the credit union’s personality. When members or perspective members look in that mirror, they recognize something that makes them feel comfortable and at home. They feel the connection.

That connection can happen only with a brand that is true to the credit union. An authentic brand reflects a credit union so closely that it would fail anywhere else. Raoust+Partners knows what works in Lowell, Mass., won’t work in Panama City, Fla.  At Innovations Credit Union in Panama City the resulting brand position was “Spark Change” based on the young credit union’s modern, progressive outlook.

Meantime since 2009, Jeanne D’Arc’s assets have nearly doubled, from $600 million to $1.1 billion—all organic growth, no mergers. The average age of members has dropped from 46 to 41. Average age of new members is 34

“It was the natural outcome of doing things that are right for our members,” Cochran says. “It goes back to that common thread.”

And an uncommon approach.


Wellinghoff Urges Creation of Distribution ISOs

Published March 17, 2015 in Smart Grid Today. By Karen Haywood Queen
IOUs would own grid, maintain it but not run it


In retail markets, grid ownership and operation should be separated to allow competitive energy sales, Jon Wellinghoff, former chairman of FERC, told us recently in an exclusive interview. “Retail energy sales are a competitive product and as a competitive product, should be provided by multiple entities,” he added.

In the current model in most states, there is no incentive for utilities to encourage DG and DR because successful deployment may cut the need to boost the utility’s asset base, Wellinghoff, who stepped down as FERC chairman in 2013, said. He argued for unbundling utility services and increasing competition while at FERC.

Such a separation between operation and ownership of the power transmission system already works well in the power wholesale markets at ISO/RTOs, he added, noting competition has lowered prices.

QUOTABLE: Most of the RTOs are doing a very good job of creating robust markets at the wholesale level and incorporating as many products as possible – both supply and demand-side products. In those markets, you create systems that improve efficiency and provide benefits to individual entities that are providing products to the market and providing benefits to all members of the market. The result is, overall prices go down. – Jon Wellinghoff, former FERC chairman, in an exclusive interview

He imagines a system on the retail side where state-regulated distribution utilities would continue to own the distribution grid but would transfer operations to independent distribution-system operators akin to the ISO/RTOs on the transmission side. If these distribution system owners wanted to be involved in another energy business, they could create a separate division, Wellinghoff said.

“The only monopoly service would be the owner and maintainer of the distribution system,” he added. “The Duke Energies and other owners of the distribution system would be like the transmission owners on the bulk grid. They would own the assets, maintain the assets and earn a regulated cost-of-service return on those assets.”

The resulting independent distribution operators would operate a market platform for the sale of energy and other energy service products to retail end users, Wellinghoff said. Competitive firms would facilitate and aggregate these energy services, including DR and energy efficiency.

Such a separation could yield results in the utility sector similar to what happened when the Bell system was broken up in 1984, we noted and Wellinghoff agreed.

QUOTABLE: To the extent that consumers will have new and additional sources for the generation of energy through solar PV and other local generation opportunities, as well as storage opportunities, [the utility sector] will start to look like this diverse world we now have in the communications sector. – Wellinghoff

Seventeen states and the District of Columbia currently have retail energy choice, but none yet provides an ideal array of distinct options, he added.

In an ideal competitive retail market, consumers might choose among different billing and pricing structures with and without demand or time-of-use pricing, from their retail provider, Wellinghoff said. Such pricing would provide customers incentives to cut energy use during peak times.

In turn, that would lessen the need to build peak generation plants and reverse the trend of higher peak-to-average demand ratios, he added.

“We really need a market-based system that provides consumers with multiple market choices that allow them to control their energy costs overall. We would have more opportunities for that if we had a retail choice structure.

“I would advocate for allowing retail third-party providers to provide services for consumers because it is competitive.”

To create such a system, nothing would have to change at the federal level but the states would have to change how their PUCs oversee the distribution utilities, Wellinghoff said. States already looking at such a change include California, Hawaii, Minnesota and New York, he added.

There has been much discussion surrounding the fairness of net energy metering (NEM) policies for rooftop solar, we reported this month (SGT, March-6) but a market-based, retail energy pricing system would transcend that discussion, Wellinghoff noted.

“Efficiency is a better word than fairness,” he said. “Any pricing system that does not provide for a market-based system that looks at costs and benefits that are being provided by consumers participating in these systems is not efficient. You improve efficiency and everybody wins.”

Wellinghoff stepped down as FERC chairman in 2013 and joined the law firm Stoel Rives based in Portland, Ore. The firm listed San Francisco and Washington, DC, as the offices he works in.

Since leaving FERC, he has written frequently about NEM and fixed charges. Wellinghoff represents clients in an array of emerging energy technology fields including energy storage, DR, data analytics, distributed solar PV, advanced transmission control technology and waste heat recovery systems, the Stoel Rives website said.

BOTTOM LINE: We included the topic tag “transactive energy” on this story because we think the idea of distribution ISOs is a good match to the idea of a future in which computers buy and sell electrons from a variety of systems and devices based on finding the lowest cost, creating market efficiencies and price signals throughout the energy internet of things. That is one way of describing the transactive energy future we would love to see evolve from some of the old models used now. Taking the ISO/RTO concept and using it on the distribution side begs one to imagine transactive energy systems having access to those market efficiencies. That seems like a very smart grid, maybe Smart Grid 3.0.

The Fix: Critical Insights on US Grid Cybersecurity

Published as a series January through May 2015 and then as a special report for sale by Smart Grid Today.

By Karen Haywood Queen

Security risks, including and maybe especially cybersecurity vulnerabilities, abound inside utilities in the US. Digital SCADA systems are thought to be air-gapped but are not. Internet service provider systems used for SCADA systems are thought to be private but are not. Utility staff members have been wrongly presuming using a SCADA protocol across the internet was obscure enough to avoid hacking.

And risks are posed by software bugs, SCADA-system programming errors, substation maintenance mishaps, payment kiosks in shopping malls, utility employees checking email and surfing the internet at work and online systems that let consumers track energy use and savings.

The vulnerabilities expose the nation to risks that might not be obvious. Experts we interviewed noted that countries like Iran and North Korea can cause damage to critical infrastructures – and a hostile country could first cripple the US power grid and then launch nuclear weapons.

All kinds of malicious cyber-attacks on the grid are growing, including attacks that exploit what the industry calls “zero-day” vulnerabilities – ones without a patch or fix. At the same time, increased smart grid automation and internet connectivity create vulnerabilities linked to mistakes, negligence, misguided intentions and other mundane actions.

Renewables are also a major cybersecurity vulnerability for utilities and their smart grid tech providers.There is a bit of hope for those concerned about cybersecurity – but in the form of tough love, we were told.

Many utilities in the last 18 months have moved to insure themselves against problems caused by cyber attacks, but one out of 10 initially are turned down because their systems are not sufficiently protected, an expert told us.

In this 41-page report, (which I wrote) you will get critical insight on the state of US grid cybersecurity from the experts listed below, plus a list of 14 actions that utilities and other stakeholders should take now to minimize risk.

14-point Action Plan Recommended by Top Cybersecurity Experts in Smart Grid Today’s “The 2015 Fix”

No single fix will eliminate cybersecurity vulnerabilities in the grid, cybersecurity experts told us. No single set of stakeholders can solve the problem, and all the parties involved can take steps to lessen the risk. Those parties include utilities, insurance firms, IT and security experts, RTOs, control system experts, control system vendors, proponents of renewables and federal regulators. This report offers a 14-point action plan that cybersecurity experts believe will yield big results.

A peek at the action plan for 2015:

  1. Consider one-way OT (operational technology) connectivity to the outside world;
  2. Take an active, preventive approach to security and reliability;
  3. Set rules for access, and
  4. Inventory devices and software

(Please note: this piece is copyrighted by the owner of Smart Grid Today and is posted here only for purposes of showing what I can do. It is not intended for distribution beyond this site. To purchase a copy, please contact Smart Grid Today).


Smart Grid Enigma SGT_The2015Fix_Final