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A disappointment for NFT collectors?

What do you get when you cross art with the technology behind digital currencies such as bitcoin? The answer is a “Non-Fungible Token,” or NFT. The token is a digital representation of a digital thing, and it is made unique with a blockchain signature. Their value comes from their uniqueness. CNBC reports that NFT trading in NFTs reaching an estimated $17.6 billion in 2021. However, the craze may have peaked.

In March 2021, Jack Dorsey, the founder of Twitter, sold an NFT of his first tweet in 2006 for $2.9 million. The tweet was “just setting up my twttr.” This particular NFT was considered by some to be the Mona Lisa of NFTs, because of its potential historical significance in the social media phenomenon.

The owner of Dorsey’s tweet NFT put it up for auction earlier this year, pledging to give half of the proceeds to charity. Evidently he was expecting bids in the range of tens of millions of dollars. Unfortunately, the market did not share the owner’s enthusiasm, with bids of only tens of thousands of dollars. When the offer failed to exceed some $14,000, the owner withdrew the NFT from the auction.

It’s too soon to know whether this failed auction is an outlier or it signals a cooling of the NFT craze. When it comes to art or collectibles, a good rule to follow is to buy for the joy of ownership, not for the prospect of profit. Collecting should not be confused with investing.

 

Article ©2021 M.A. Co. All rights reserved. Used with permission. 

What happens to property acquired after death?

William Keough was among the hostages held captive in Iran between 1979 and 1981. He survived the ordeal, but died in 1985. William’s wife, Katherine, died in 2004. Her will left her residuary estate to her stepson, Steven, who was William’s son from an earlier marriage.

In 2015, Congress enacted the Justice for United States Victims of State Sponsored Terrorism Act. Under the Act Katherine was entitled to $600,000 as the spouse of a hostage. If a person entitled to compensation had died when the Act took effect, the money was paid to the estate’s personal representative.

When Katherine died, her sole heir under the intestacy laws was her brother, Fred Schwarz. He died intestate in 2018. In 2019 Fred’s cousin, Eleanor, filed a lawsuit claiming the $600,000 should pass to Fred’s estate. She was the administrator of his estate. The executrix of Katherine’s estate argued that it should pass under the residuary clause of her will.

The Appellate Division of the Supreme Court of New York held for Fred’s estate. Will provisions can only control the disposition of property that the decedent owns at death. “We are particularly persuaded by the decision in Shaw Family Archives Ltd., which involved a dispute over ownership interest in Marilyn Monroe’s right of publicity after her death. The court determined that New York law did not permit a testator to dispose by will of property that she did not own at the time of her death,” the Court wrote. As Katherine could not have known of the possibility of the future payment, her will is ineffective as to it, and the $600,000 must pass by intestacy to Fred’s estate.

 

Article ©2021 M.A. Co. All rights reserved. Used with permission. 

How long must you plan for?

According to the latest data from the National Vital Statistics Reports (March 2022, reporting on 2019 experience, so before the pandemic), a male age 65 should expect to live 18.2 more years (to age 83.2) and a female 20.8 years (to age 85.8). Half of 65-year-olds will die sooner, half later than suggested by those averages.

That tells us nothing about you, of course. How’s your health? Your family history? You’ll want to take these into account, and you probably should plan for longer than you expect to live.

Here’s another way to look at the numbers from that report. For every 100,000 men, how many reach age 85? 36,252 men do. For every 100,000 women, 50,324 reach age 85. Mortality increases precipitously after that, as shown in the table below.

Number of survivors of 100,000 people

At age

Men

Women

75

63,844

75,903

80

51,653

65,404

85

36,252

50,324

90

19,371

31,124

95

6,480

13,035

100

1,092

2,976

         

Source: National Vital Statistics Report, Volume 70 Number 19, March 22, 2022

The table quantifies the fact of life than everyone knows, women live longer than men. Half of the men reach age 80, but half of the women reach age 85.

Race is a measurable factor in longevity as well, according to the report. Some 63% of Asians will live to 85, and 53% of Hispanics. For whites the figure is 42%, for Blacks 33%, and for American Indian and Alaskan natives, just 30%. Asian women have a nearly 8% chance of reaching age 100.

To answer the question in the headline, probably longer than your first guess.

 

Article ©2021 M.A. Co. All rights reserved. Used with permission. 

Ask a trust officer:
Warren Buffett on inflation response


DEAR TRUST OFFICER:

The recent record inflation is frightening. What stocks should I be buying to protect my portfolio? —WORRIED INVESTOR

DEAR WORRIED:

As it happens, a Berkshire Hathaway shareholder posed that exact question to Warren Buffett and Charlie Munger at this year’s shareholder meeting, held in Omaha on April 30. She observed that Berkshire Hathaway prospered during the high-inflation years of the 1970s, a period with similarities to today’s economy.

Mr. Buffett responded that the best investment one can ever make is in one’s own talents. Sometimes that involves additional education, sometimes not. Someone who is the best at anything, whose skills are in demand in good times and bad, will not have to worry about inflation. Mr. Munger concurred.

That’s a very good answer, although it sidesteps the question, of course. Buffett offered no prediction on the future of inflation, saying that no one can know with confidence the course of inflation or the economy in the coming year. In truth, there can be no simple answer response to your question, because your current holdings, time horizon and risk tolerance all come into play in developing a portfolio strategy.

 

Would you care to make an appointment for a portfolio review?

 

Article ©2021 M.A. Co. All rights reserved. Used with permission. 

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