Managed Portfolios Through LPL Financial Wrap Account Platform

Stocks

When you buy stock in a company, you are buying partial ownership of that company. you can earn a return on your investment both through dividends ( a portion of the company's profits) and through an increase in the price of the shares you own.

Bonds

When you buy bonds what you are really doing is lending money at a certain rate of interest. You may be lending to a business or a government entity.

REITs

Our philosophy is to use REITs (Real Estate Investment Trusts) as a vehicle to include Real Estate in our portfolio allocations so as to broadly diversify client’s asset holdings.

A Real Estate Investment Trust or REIT is a tax designation for a corporation investing in real estate that reduces or eliminates corporate income taxes. In return, REITs are required to distribute 90% of their income, which may be taxable, into the hands of the investors. The REIT structure was designed to provide a similar structure for investment in real estate as mutual funds provide for investment in stocks. Like other corporations, REITs can be publicly or privately held. Public REITs may be listed on public stock exchanges like shares of common stock in other firms.

Investing in REITs involves special risks such as potential illiquidity and may not be suitable for all investors. There is no assurance that the investment objectives of the program will be attained.

Trust Services

As the nation’s leading independent broker/dealer*, LPL Financial serves the independent financial advisor with the highest quality support services available. Through The Private Trust Company, N.A., a wholly owned subsidiary of LPL Holdings, LPL Financial has the ability to deliver fully integrated administrative trust services to you in a seamless manner, while maintaining your relationship with your trusted financial advisor.

What is a Trust?

A trust is simply your instructions for the management of all or part of your property. An attorney who represents you and has expertise in the area of estate planning should create your trust. The trust document describes:

• How you want your assets managed, and eventually distributed
• Who you want to benefit from your assets now and in the future
• Who you want to be responsible for carrying out these instructions

What Can a Trust Do for You?

A trust can provide a measure of comfort knowing that you have a plan in place to help provide for the safe and accountable management of family assets and to direct their use in accordance with your wishes, goals and objectives. A trust is used to help ensure the proper management of your assets throughout the different stages of your life:

1. During your active lifetime, placing assets in a trust allows you freedom to continue managing your assets or to devote time to other priorities. A trust created and funded during your life is generally called a “living” or “revocable” trust.
2. In the event you are incapacitated, a trust can help ensure that your needs are met and that your finances are kept in good order for your benefit.
3. Upon your death, a trust becomes “irrevocable”, and your assets are managed and distributed by your trustee, in accordance with your instructions throughout the trust’s existence.
4. An estate planning attorney may recommend creating an irrevocable trust during your lifetime, in addition to a revocable trust. This may provide creditor protection, controlled giving to family members or estate tax minimization.

Private Foundations & Endowments

Private Foundations:

A private foundation is a charitable organization created and funded by a donor as a trust or a non-profit organization, which is designed to help achieve one or more specific charitable functions.

Family Foundation:

"Family foundation" is not a legal term, and therefore, it has no precise definition. Yet, approximately two-thirds of the estimated 44,000 private foundations in this country are believed to be family managed. The Council on Foundations defines a family foundation as a foundation whose funds are derived from members of a single family. At least one family member must continue to serve as an officer or board member of the foundation; they or their relatives play a significant role in governing and/or managing the foundation throughout its life. Most family foundations are run by family members who serve as trustees or directors on a voluntary basis, receiving no compensation; in many cases, second- and third-generation descendants of the original donors manage the foundation. Most family foundations concentrate their giving locally, in their communities.

Independent Foundation:

An individual usually founds these private foundations, often by bequest. They are occasionally termed "non-operating" because they do not run their own programs. Sometimes individuals or groups of people, such as family members, form a foundation while the donors are still living. Many large independent foundations, such as the Ford Foundation, are no longer governed by members of the original donor’s family but are run by boards made up of community, business and academic leaders. Private foundations make grants to other tax-exempt organizations to carry out their charitable purposes. Private foundations must make charitable expenditures of approximately 5% of the market value of their assets each year. Although exempt from federal income tax, private foundations must pay a yearly excise tax of 1%-2% of their net investment income. The Ford Foundation and the John D. and Catherine T. MacArthur Foundation are two examples of well-known "independent" private foundations

Operating Foundation:

Also called private operating foundations, operating foundations are private foundations that use the bulk of their income to provide charitable services or to run charitable programs of their own. They make few, if any, grants to outside organizations. To qualify as an operating foundation, specific rules, in addition to the applicable rules for private foundations, must be followed. The Carnegie Endowment for International Peace and the Getty Trust are examples of operating foundations.

Private Foundation:

A nongovernmental, nonprofit organization with funds (usually from a single source, such as an individual, family or corporation) and program managed by its own trustees or directors, established to maintain or aid social, educational, religious or other charitable activities serving the common welfare, primarily through grant making. U.S. private foundations are tax-exempt under Section 501(c)(3) of the Internal Revenue Code and are classified by the IRS as a private foundation as defined in the code.

Public Charity:

A nonprofit organization that is exempt from federal income tax under Section 501(c)(3) of the Internal Revenue Code and that receives its financial support from a broad segment of the general public. Religious, educational and medical institutions are deemed to be public charities. Other organizations exempt under Section 501(c)(3) must pass a public support test (See Public Support Test) to be considered public charities, or must be formed to benefit an organization that is a public charity (see Supporting Organizations). Charitable organizations that are not public charities are private foundations and are subject to more stringent regulatory and reporting requirements (See Private Foundations).

Public Foundation:

Public foundations are nonprofit organizations that receive at least one-third of their income from the general public. Public foundations may make grants or engage in charitable activities. The IRS recognizes public foundations, along with community foundations, as public charities. Religious, educational and medical institutions are deemed to be public charities.

Supporting Organization:

A supporting organization is a charity that is not required to meet the public support test because it supports a public charity. To be a supporting organization, a charity must meet one of three complex legal tests that assure, at a minimum, that the organization being supported has some influence over the actions of the supporting organization. Although a supporting organization may be formed to benefit any type of public charity, the use of this form is particularly common in connection with community foundations. Supporting organizations are distinguishable from donor-advised funds because they are distinct legal entities.

Tax-Exempt Organizations:

Organizations that do not have to pay state and/or federal income taxes. Organizations other than churches seeking recognition of their status as exempt under Section 501(c)(3) of the Internal Revenue Code must apply to the Internal Revenue Service. Charities may also be exempt from state income, sales and local property tax.

Endowments:

An endowment is a fund that is restricted. Only the interest from the fund can be spent, not the principal that anchors the endowment. Usually, only a portion of the interest or earnings from the endowment (typically 5%) are spent on an annual basis in order to assure that the original funds will grow over time. Professional money managers often oversee endowment funds, investing the money in stocks, bonds, and other instruments.

The principal amount of gifts and bequests that are accepted subject to a requirement that the principal be maintained intact and invested to create a source of income for a foundation. Donors may require that the principal remain intact in perpetuity, or for a defined period of time or until sufficient assets have been accumulated to achieve a designated purpose.