Monthly Archives: October 2014




When should you talk to your child about…Crowdfunding?

Friday, October 24, 2014

You may have heard the term “Crowdfunding” and thought it described a creative way of paying for a party.  Or maybe you’ve heard about it from one of your children telling you about an “investment” that went bust.  So what is it and why should you care?

Estate Planning, Wealth Management, Tim Scannell, Valparaiso Wealth Management

After the Great Depression of the 1930’s and the widespread fraud in the unregulated sale of investment securities, Federal and State governments enacted laws requiring agencies to protect investors from sham investments.  Recently those controls have been relaxed.  Internet-driven charity fundraising and volunteer funding for creative music and movie projects via KickStarter have inspired the change. Congress has now also loosened rules governing the solicitation and sale of investment securities online. Crowdfunding is the massive online selling of these investments.

Congress passed The JOBS (Jumpstart Our Business Startup) Act of 2012 to relax investment regulations for smaller online equity investments and required the SEC to issue enabling guidelines. While the SEC has delayed implementation to date, Georgia, Kansas, Michigan, Alabama, Maine, Washington, Wisconsin, Indiana and Texas (pending November) have approved statutes permitting Intrastate Crowdfunding of equity investments. 

As a result, businesses wanting to raise $1,000,000 to $2,000,000 online in increments of $5,000 or less have powerful new options to consider.  Meanwhile, online investors (who need not be accredited investors as was required for prior closely held offerings) need to be aware of the unregulated nature of these investments, and investors must consider their risk of loss.

If you have not had a discussion about Crowdfunding with your children, be informed as this is a very popular topic among the social media-connected generation.  Investments come in many forms, and they will succeed or fail for many reasons.  Getting your children involved with your team of professional advisors – Attorney, CPA, Finance and Investment Advisor – will increase their chance of making a successful investment by giving them the due diligence tools needed to evaluate the proposed investment.  The process of reviewing the potential Crowdfunding offering will also be a valuable learning experience that will prepare your children for when they eventually inherit the family wealth.  Just as you wouldn’t stand by and watch your son or daughter build a custom home without help from an architect and other construction professionals, don’t sit on the sidelines while they invest hard-earned wealth in unregulated investments without reaching out for help. 

Your goals and dreams change. Financial products do not.  Clients work with us because we don’t sell products – we create customized plans based on each client’s unique goals, and we continuously reevaluate client plans to ensure they are aligned with changing needs.  Our clients rely on us to protect their futures, and we take their trust to heart. 

Tim Scannell, CPA, CFP TM provides Personal and Business Tax Planning, Estate Planning, Investment Management, and Generational Wealth management to his clients. “We deliver proactive, objective advice, plans and solutions enabling our clients to reach their unique family goals “.

Keith Wolak, CPA is a partner at Hoeppner Wagner & Evans. Keith is a Board Certified Indiana Trust and Estate Lawyer, as certified by Trust and Estate Specialty Board who assisted in the technical drafting of this article but does not necessarily adopt any views expressed herein. Hoeppner Wagner & Evans LLP is a law firm with offices in Merrillville and Valparaiso. DISCLAIMER: This publication is not intended to be legal advice but is presented for informational and educational purposes only. The facts and circumstances of a specific legal issue are unique and you should seek legal advice for your specific questions or concerns. No attorney-client relationship is created

Beware of your Good Deeds

Thursday, October 2, 2014

We encourage our clients to involve their children and grandchildren in charitable giving because it creates stronger family connections and teaches the next generation valuable lessons about money and responsibility.  Charitable activities create tremendous good for families and charities; however, contributors need to be aware of the risks to families and their wealth if giving is not carefully planned.  To protect the families we work with, we offer proven processes that ensure that philanthropic work is done in compliance with the IRS and other regulators.

 

A few years ago, a client considered joining a local charity board that addresses a very important need in our community.   Unfortunately, we discovered through due diligence that the non-profit organization had poor financial management and lax board oversight, so my client declined the invitation.  Later that year, the non-profit failed, and because government funds were involved, board members were scrutinized by the regulators and the community.  Good intentions inadvertently created risk to those involved financially, and generous givers found that their reputations were impacted.

 

Please also be aware that you may be at risk if you or your family members are volunteer board members for a Non-Profit Entity with employees. The good news is that Congress recognizes your generous deeds, and does not want to punish you if the Non-Profit has unremitted payroll taxes.  IRC §6672(e) states that a “volunteer” should not be held personally liable for unpaid employment taxes where he or she is serving in an honorary capacity, does not participate in the day-to-day or financial operations, and does not have actual knowledge that the taxes are not paid.   The IRS does not hold volunteers to the “should have known” standard it applies to employees. The bad news is that the Justice Department and the Courts have taken a very restrictive reading of this statute.   If you are a check signer, even infrequently, or approve financial reports, expect to be treated harshly outside the protection of this statute.  If you discover that your organization has not paid its withholding taxes you should (1) resign your office immediately in writing (2) refuse to sign any check or approve any action (3) report the entity to the IRS in writing.

 

You and your family members need to research your chosen charities before you take on a leadership role. Investigative processes will help ensure that you are better stewards of your family wealth.

Wealth Management, Estate Planning, HighTower Advisors, Tim Scannell

Tim Scannell, CPA, CFP TM provides Personal and Business Tax Planning, Estate Planning, Investment Management, and Generational Wealth management to his clients. “We deliver proactive, objective advice, plans and solutions enabling our clients to reach their unique family goals “.

 

Keith Wolak, CPA is a partner at Hoeppner Wagner & Evans.  Keith is a Board Certified Indiana Trust and Estate Lawyer, as certified by Trust and Estate Specialty Board. Hoeppner Wagner & Evans LLP is a law firm with offices in Merrillville and Valparaiso.  Visit our website www.hwelaw.com for more information.  DISCLAIMER:  This publication is not intended to be legal advice but is presented for informational and educational purposes only.  The facts and circumstances of a specific legal issue are unique and you should seek legal advice for your specific questions or concerns.  No attorney-client relationship is created.




Scannell Wealth Management Group is registered with HighTower Securities, LLC, member FINRA, MSRB and SIPC, and with HighTower Advisors, LLC, a registered investment advisor with the SEC. Securities are offered through HighTower Securities, LLC; advisory services are offered through HighTower Advisors, LLC.

This is not an offer to buy or sell securities. No investment process is free of risk, and there is no guarantee that the investment process or the investment opportunities referenced herein will be profitable. Past performance is not indicative of current or future performance and is not a guarantee. The investment opportunities referenced herein may not be suitable for all investors.

All data and information reference herein are from sources believed to be reliable. Any opinions, news, research, analyses, prices, or other information contained in this research is provided as general market commentary, it does not constitute investment advice. Scannell Wealth Management Group and HighTower shall not in any way be liable for claims, and make no expressed or implied representations or warranties as to the accuracy or completeness of the data and other information, or for statements or errors contained in or omissions from the obtained data and information referenced herein. The data and information are provided as of the date referenced. Such data and information are subject to change without notice.

This document was created for informational purposes only; the opinions expressed are solely those of Scannell Wealth Management Group, and do not represent those of HighTower Advisors, LLC, or any of its affiliates.