The FJY quarterly newsletter for July, 2011 featuring articles on Estate Tax Planning and The Emerging Leaders Institute.

1. Volume 5, Number 3
Quarterly Newsletter July 2011
QUARTER IN REVIEW by returning 2.9% in the second
quarter. High quality fixed income ASSET CLASS PERFORMANCE: Q2 2011
By: Jon P. Yankee, MBA, CFP ® &
also performed well, returning 2.29%,
Clint D. McCalla
despite the significant head winds
faced by both the United States and
It is inevitable that we face a withering
Europe in addressing debt concerns. U.S. Fixed Income 2.29%
volley of screaming headlines from the (Barclay Capital Aggregate Bond Index)
Within traditional equities, international
media after the daily ups and downs
outperformed domestic, although International Fixed Income 1.45%
experienced over the last quarter.
both had relatively flat returns for the (JP Morgan GBI ex-US (Hedged) Index)
With “news” stories meant to draw
quarter. Commodities were the big
readers and sell advertising, individual U.S. Equities, Large 0.10%
underperformer, down 6.73% for the
investors are tempted by much of the (S&P) 500 Index)
quarter.
media to fret over that which should
be soundly planned and considered. U.S. Equities, Small -1.61%
As of this writing, U.S. equity mar- (Russell 2000 Index)
As fiduciaries, we at FJY aim to edu-
kets continue to demonstrate a high
cate our clients to ignore much of this
sensitivity to economic data as they International Equities, Large 0.33%
daily “noise” and rhetoric that is written (MSCI EAFE Index)
are released, continuing much of the
by those who have little concern for
your financial future.
volatility witnessed over the last three International Equities, Small 1.99%
months. As mentioned above, those (S&P/Citigroup EPAC Ext. Mkt. Index)
with a short-term perspective have
The last quarter continued to prove Real Estate Investment Trusts (REITs) 2.90%
dominated the discussion, overshad- (NAREIT Equity Index)
the value in having a well-diversified
owing the more optimistic long-term
portfolio of multiple asset classes. Real Commodities/Natural Resources -6.73%
outlook for the world economy.
estate, as measured by the FTSE NA- (DJ UBS Commodities Index)
Continued Pg. 4
REIT Index, led all of our asset classes
GINNIE AT A GLANCE annually and was so impressed with FJY that I
knew I wanted to do my internship here.
By: Ginnie F. Baker
I was born and raised in Lubbock, TX and
I have the privilege of being one of Fox, Joss
earned my Bachelor of Business Adminis-
& Yankee’s Summer Associates this year. This
tration Degree from the Rawls College of
is a position that I really desired, especially
Business at Texas Tech University. I knew
after talking to one of last year’s summer
after taking a financial planning course, as an
associates, Josh Blair, and meeting with Jon
undergraduate student, that financial planning
Yankee. I am currently a graduate student at
was the career path I wanted to pursue. I feel
Texas Tech University in Lubbock, TX, work-
the profession will give me the opportunity to
ing towards my Master’s Degree in Personal
help people manage their finances while also
Financial Planning and will graduate in May
building relationships with clients. This goal
2012. I had the chance to talk with Jon at
led to me enrolling in the Graduate Financial
the Opportunity Days career fair that the TTU
Planning program.
Financial Planning Department puts on
In my spare time, I enjoy spending time with
my friends and family, as well as baking,
Congratulations Continued Pg. 4
QUICK PLANNING QUESTION:
FJY WILL BE LAUNCHING A NEW RESOURCES SECTION ON OUR WEBSITE SOON, AND WE WOULD
LOVE TO HEAR FROM YOU ABOUT ANY TRAVEL RELATED RESOURCES, TIPS OR EXPERIENCES.
PLEASE EMAIL THEM TO LJC@FJYFINANCIAL.COM BY 9/1/2011.

2. JUST WHEN YOU THOUGHT IT which, among other things, introduced new
estate tax legislation, thereby preventing Gift Taxes: The lifetime gift exemption (the
WAS SAFE TO ENGAGE IN the whiplash effect of reversion back to a amount of taxable gifts individuals can make
$1,000,000 exemption. before gift taxes are due) is $5,000,000.
ESTATE TAX PLANNING
By: Dan Vaughn, Esq The good news? The estate tax, generation- Generation-Skipping Transfer (GST) Taxes:
skipping transfer tax and lifetime gift exemp- The GST exemption (the amount an indi-
tions were unified at $5,000,000, married vidual can gift during lifetime or leave upon
“Round-and-round she goes – where she couples can now more easily utilize both of death to beneficiaries beyond the generation
stops, nobody knows!” Some people their exemptions, and the estate tax rate is immediately below them, thereby eliminat-
feel like the estate tax system is more like a reduced to 35%. ing exposure to taxation in the intermediate
carnival game of chance than a predictable generation(s)) is $5,000,000.
landscape that can be planned around these The bad news? These rules are only in place
days, and with the way the rules have shifted for two years and are scheduled to expire if 2. What Might 2013 Bring?:
recently, it is hard to blame them. a longer-term solution is not implemented
by December 31, 2012. Does that sound Given how politically charged estate tax
As the clock counted down to the end of familiar? In essence, the “solution” imple- legislation has become recently, and that
2010, the nation faced great uncertainty with mented by Congress at the end of 2010 was 2012 is a presidential election year, it is hard
respect to the future of the estate tax system. another band-aid which bought us two more to predict the future of the estate tax system.
In 2001, Congress enacted the Economic years until we will hold our collective breath That said, there are a few options to con-
Growth and Tax Relief Reconciliation Act yet again to see where the rules will end up. sider:
(EGTRRA), which increased the federal Before we stress about what 2013 may bring a. Congress may extend the existing
estate tax exemption from $675,000 in 2001 however, let’s take a look at the rules that ap- rules, along with the $5,000,000 exemptions
to $3,500,000 in 2009, and resulted in total ply in 2011 and 2012. and portability, thereby preserving the status
repeal of estate taxes in 2010. However, quo.
the harsh reality was that EGTRRA would 1. Transfer Tax Rules in 2011-2012: b. Congress may implement replace-
expire and estate taxes would return with a ment rules with a new exemption/rate system
$1,000,000 exemption in 2011, if Congress Like all tax provisions, the details of the 2010 altogether. For example, the Democrats may
did not either affirmatively extend (or make legislation are complicated. The highlights of angle for the $3,500,000 exemption they
permanent) the repeal or replace EGTRRA the system in effect for 2011 and 2012 are as pushed for last year.
before the end of 2010. In the wake of the follows: c. Congress may do nothing, allowing
November, 2010 elections, the bifurcated the 2010 legislation to expire and the estate
power in the Senate and House, the Demo- Estate Taxes: Three of the biggest develop- tax to return with a $1,000,000 exemption
crats seeking a $3,500,000 exemption and ments appear in the estate tax area: and no portability in 2013.
Republicans pushing for $5,000,000, hope a. The estate tax exemption is in-
for resolution seemed dim at best as Decem- creased to $5,000,000. 3. How Does This Picture Affect Existing
ber began last year. As a result, the finan- b. A new rule, called “portability” Planning Arrangements?:
cial and estate planning industries braced of estate tax exemptions, permits a surviv-
themselves and their clients for the seem- ing spouse to utilize any unused estate tax Beyond 2012, the estate tax exemption may
ingly impending expiration of EGTRRA and exemption of his/her decedent spouse. As be as high as $5,000,000 (as adjusted for
the return of estate taxes with a $1,000,000 long as portability is elected on a timely-filed inflation) and as low as $1,000,000. In ad-
exemption in 2011. estate tax return following the first death, dition, married couples may not need to do
a married couple can leverage use of their anything to ensure use of both exemptions (if
Miraculously, a surprising “compromise” of- collective $10,000,000 exemption amount portability is retained), or they may need to
fered by the Senate Democrats and President even if they did not specifically preserve the engage in formal planning to avoid wasting
Obama himself, laid the groundwork for an decedent’s exemption on the first death. an exemption on the first death (if portability
eleventh-hour solution. On December 17, c. The estate tax rate is reduced to is not retained). With that spread of poten-
2010, President Obama signed into law the 35%. This rate is significantly lower than the tial outcomes, now is an opportune time to
“Tax Relief, Unemployment Insurance Reau- 45%-55% levels seen during the past 10 reevaluate planning arrangements to identify
thorization, and Job Creation Act of 2010,” years. Continued Pg. 4

3. THE EMERGING LEADERS tional media (newspapers, magazines, radio
stations, and television stations) and social
WHAT IS THE CFP®?
By: Lisa Crafford
INSTITUTE PROGRAM media. We focused on three main items: 1)
Gearing efforts towards the Hispanic volun-
By: Tess Downing, MBA, CFP® In recent newsletters we have featured
teer base; 2) Integrating existing social media
articles regarding Tom Saunders, our CRA,
I recently graduated from the Emerging tools; 3) Creating and continuing develop-
passing the CFP® exam, and Tess Down-
Leaders Institute (ELI), Class of 2011, at the ment of a media and corporate contacts list
ing, our Associate Financial Advisor, earning
Leadership Fairfax Institute (LFI). LFI is a that will be beneficial to Fairfax CASA in the
her CFP® designation. The CFP® mark is an
nonprofit corporation that strives to develop future.
important identifier in our profession. It helps
leaders in Northern Virginia while emphasiz- consumers identify Financial Advisors who
ing the importance of community awareness are committed to competent and ethical
and involvement. ELI is a unique group of behavior when giving advice.
employees and entrepreneurs who all strive
to become leaders in their respective fields The CFP® designation identifies those indi-
and have a desire to better their communi- viduals who have met the rigorous experi-
ties. I had the wonderful opportunity of ence and ethical requirements of the CFP
being selected to participate with 35 other Board, have successfully completed financial
motivated and enthusiastic young profes- planning coursework and have passed the
sionals. The participants were from a variety CFP® Certification Examination covering
of fields including business, government and the following areas: the financial planning
nonprofit organizations. process, risk management, investments, tax
planning and management, retirement and
The ELI program was an intense and chal- Tess & Jonathan Downing and employee benefits, and estate planning.
lenging experience. I have spent the last Lisa & Ian Crafford at the Future CFP® certificants also agree to meet ongo-
ten months participating in monthly class
days focused on strategic planning, conflict
Fund Gala in May ing continuing education requirements and
to uphold CFP Board’s Code of Ethics and
resolution and negotiation, and communi- Professional Responsibility, Rules of Conduct
Overall, our involvement and commit-
cation and presentation skills. I was also and Financial Planning Practice Standards.
ment to our project did result in increased
paired with a personal mentor who was able
awareness of the Fairfax CASA program; our
to help me focus on real-world leadership CFP Board is a nonprofit certification organi-
team received much more in return. The ELI
techniques and challenges. Not only did I zation with a mission to benefit the public by
program has taught me the value of leader-
learn from several of the top leaders in Fairfax granting the CFP® certification and upholding
ship skills, and the importance of fostering
County, I also gained a true hands-on experi- it as the recognized standard of excellence
relationships. When we are able to combine
ence in community service. for personal financial planning. CFP Board
our time, resources, and energy, great things
are sure to happen! I am grateful to FJY for owns the certification marks CFP®, CERTI-
I was on a six-person team, which worked FIED FINANCIAL PLANNER™ and federally
giving me the chance to participate in this
with a selected nonprofit for ten months. My registered CFP (with flame design) in the U.S.,
program which I would highly recommend
team was given the opportunity to work with which it awards to individuals who success-
to anyone looking to further their knowledge
Fairfax Court Appointed Special Advocates fully complete initial and ongoing certifica-
of Northern Virginia.
(CASA). Fairfax CASA recruits and trains tion requirements. CFP Board currently au-
citizen volunteers to advocate for the best thorizes more than 61,000 individuals to use
In the coming quarterly newsletters, FJY
interests of abused and neglected children these marks in the United States. For more
will begin to feature nonprofit community
who are under the court’s protection in Fair- about CFP Board, visit www.CFP.net.
organizations and groups. We would love
fax County. The juvenile court relies heavily
to hear how our clients are involved in the
on the work of CASA volunteers and requests
community and giving back. Please send
that Fairfax CASA assign a volunteer to every
your feedback or ideas to info@fjyfinancial.
case of abuse and neglect before the Court.
com. If you would like to know more about
Fairfax CASA or other nonprofits in Northern
Virginia, please feel free to contact me.
Our mission was to help increase awareness
of Fairfax CASA through the use of conven-

4. that we improve our services and advice to
QUARTER IN REVIEW, CONT you. We will continue to pursue opportuni-
ties that allow us to better meet our clients’
Despite Greek insolvency, civil unrest in the needs as a measure of our commitment to
Middle East and North Africa, natural disasters your financial future, and our responsibility
1925 Isaac Newton Square in Japan and the U.S., and latent job growth as fiduciaries. Finally we want to recognize
Suite 400 in the US, the world economy continues to Tess Downing for completing the three
Reston, Virginia 20190 recover, albeit slowly. year experience requirement for the CFP®
designation, the final hurdle in a very difficult
1.703.889.1111 phone
Concerns over U.S. default have grown as the process. Congratulations, Tess, we are proud
1.877.395.7795 toll free deadline for raising the debt ceiling draws near, of our newest CFP® professional.
1.866.366.9233 fax though this has become significantly less prob-
able as the details of an agreement have slowly ESTATE TAX PLANNING CONT
taken shape over the last few weeks. A notable
www.fjyfinancial.com number of large domestic companies continue
steps available to take advantage of histori-
cally high exemption levels and minimize
to maintain large cash reserves built over the last future estate tax exposure.
three years. U.S. companies have thus far opted
to push for productivity gains with existing For continued coverage on devel-
employees coupled with efficiencies garnered opments related to the estate tax system,
through investments in technology. This strategy stay tuned to future newsletters. Until then,
is reflected in the high level of persistent unem- enjoy the current estate tax exemption envi-
ployment in the US.
GINNIE AT A GLANCE CONT ronment while it lasts!
The varied performance of the different asset Dan Vaughn, Esq is Principal of Vaughn, Fincher &
watching baseball and college football,
classes during the second quarter reflects an in- Sotelo, PC located in Vienna and Leesburg VA. VFS fo-
and traveling. I attend First United Meth- cuses on Estate Planning, Estate Administration, Fiduciary
crease in volatility in the second quarter. As we
odist Church in Lubbock. Services, and Business Sucession. He can be reached at
mentioned in our previous newsletter, this was
(703) 506-1810.
generally anticipated, as the Federal Reserve
I am currently a member of FPA (Financial
Board discontinued its large scale monetary
FJY ADVISORS
Planning Association), the Texas Tech Per-
stimulus (QE2) with the hope that the economic
sonal Financial Planning Association, Delta
engine may now be able to sustain itself. Vola-
& STAFF
Sigma Pi, a co-ed Business Fraternity, and
tility is the very reason that FJY recommends
this past spring I was a volunteer income
a well diversified portfolio of non-correlating
tax preparer with VITA (Volunteer Income
asset classes. This investment philosophy takes
Tax Assistance).
advantage of the volatility within markets, and
MARJORIE L. FOX
SR. FINANCIAL ADVISOR
enables investors to minimize much of the
When Jon called and offered me the sum-
mer associate position, I was very eager
“noise” that daily movements bring. DANIEL D. JOSS
SR. FINANCIAL ADVISOR
and excited to move to the Washington,
DC Metro area. In the two months that I
In our efforts to continue to be as current as JON P YANKEE
.
possible regarding investment theory and finan- SR. FINANCIAL ADVISOR
have been working for the FJY team, I have
cial planning concepts, FJY advisors partici-
gained a great deal of valuable knowledge
pated in several professional events last quarter. LAURIE A. BELEW
and experience that enhances what I have FINANCIAL ADVISOR
In May, Tess Downing attended the Futures
learned through my coursework at school.
I am very much enjoying my time in the
Portfolio Fund Advisor Conference in Chicago, TESS L. DOWNING
area and am excited for what the rest of
which further reinforced our commitment to this ASSOCIATE FINANCIAL ADVISOR
asset class and the vital role managed futures
the summer holds, along with the oppor-
play as a portfolio component. THOMAS N. SAUNDERS, JR.
tunity to meet many of you along the way! CLIENT RELATIONSHIP ASSOCIATE
In early June, FJY participated in an office LISA J. CRAFFORD
exchange with TGS Financial, a planning firm OFFICE MANAGER
in the Philadelphia area, as a way of evaluating
SALLY M. YANKEE
our processes and services, compared to those ADMINISTRATIVE ASSISTANT
of our peers. It is through such engagements
Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future
performance of any specific investment, investment strategy, or product made reference to directly or indirectly in this newsletter, will be profitable, equal any corresponding indicated
historical performance level(s), or be suitable for your portfolio. Due to various factors, including changing market conditions, the content may no longer be reflective of current opinions
or positions. Moreover, you should not assume that any discussion or information contained in this newsletter serves as the receipt of, or as a substitute for, personalized investment
advice from Fox, Joss & Yankee, LLC. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/
she is encouraged to consult with the professional advisor of his/her choosing. A copy of our current written disclosure statement discussing our advisory services and fees is available for
review upon request.
Historical performance results for investment indices and/or categories have been provided for general comparison purposes only, and generally do not reflect the deduction of transaction
and/or custodial charges, the deduction of an investment management fee, nor the impact of taxes, the incurrence of which would have the effect of decreasing historical performance
results. It should not be assumed that your account holdings correspond directly to any comparative indices.