Issue: #  47   NOVEMBER 2012
Bautis Financial
Dear ,

Welcome to the November 2012 issue of The Wealth Chronicle!




Now that the election is over the media has turned their full attention to the economy and "The Fiscal Cliff." The notion of anything having to deal with a cliff and the economy is probably not a good thing, but the media doesn't go into too much detail on what that actually means. This article is a primer on the fiscal cliff: what it means to nation, the markets, and to us individually.

On December 31st, 2012, a large swath of the federal income tax code is scheduled to expire. Among the expiring provisions are the 2001 and 2003 tax cuts enacted under President George W. Bush, a compromise on the estate tax, a "patch" in the Alternative Minimum Tax (AMT) to reduce its impact, the temporary 2% payroll tax holiday, increased business expensing and a package of miscellaneous tax deductions.

On January 1st, 2013, five taxes enacted as part of the Patient Protection and Affordable Care Act (PPACA), more commonly known as Obamacare- also takes effect.

To top it off, there is also scheduled to be $109 billion in reduced spending due to the failure of the "supercommitte" to reach consensus on budget reductions. And in late February, the US government will hit the debt ceiling, exhausting its ability to borrow to finance ongoing spending without an increase by Congress.

All together this "Taxmageddon" event could potentially reduce economic output by hundreds of billions of dollars and throw the fragile economy back into a recession.


Washington has already started working on dealing with the fiscal cliff before it happens, however their record on dealing with these types of events is less than stellar, so I'm not sure how much progress we can expect prior to January 1st.

Absent action prior to January 1st, many tax provisions would revert to pre-2001 law:

-          The lowest income tax bracket of 10% would expire, reverting to 15%.

-          The top four income tax brackets would see rate increases. The 25% bracket would rise to 28%, the 28% bracket would rise to 31%, the 33% bracket would rise to 36%, and the top bracket would rise from 35% to 39.6%.

-          The tax on long-term capital gains would rise from a maximum of 15% to a maximum of 20%. Additional, a 3.8% capital gains tax on high-income individuals, enacted as part of PPACA, takes effect in 2013. The top capital gains tax rate would thus be 23.8%

The following is a great article by the National Association of Realtors that explains how real estate transactions will be impacted by the new tax.

2013 3.8% Tax Scenarios & Examples

-          The tax on qualifed dividends would rise from 15% to ordinary wage tax rates. The top dividend tax rate would thus be 43.4% (39.6% plus 3.8%)

Estate tax increase

-          The estate of an individual who dies on December 31, 2012, will pay a federal estate tax of 35% on anything above $5.12 million. If the individual dies the next day on January 1st, the estate will instead owe a 55% tax on anything above $1 million.

The sheer size of the fiscal cliff in scope, importance, and dollars signifies the uncertainty faced by American taxpayers. History suggests that Washington will once again duct-tape together another short-term extension and put off the hard choices, anything can happen.


GUEST POST: Employment Law   


The following is a guest post by Andrew Bosin, a New Jersey employment lawyer. If you have any questions about employment law, he is a great person to talk to.


If you are presently bound by an employment agreement and speaking to a prospective new employer, you should stop and have an experienced employment attorney look at your agreement to make sure that your contact with the new company doesn't violate any provisions in it. It is perfectly legal to go and look for another job. You just want to make sure you don't wind up on the other end of lawsuit for doing so.

More, now than ever, employers are going to great lengths to protect their confidential proprietary information and
competitive advantages in the marketplace.If your employer enjoys such an advantage because of a great product or by its market share, you can bet the farm it will not be happy tolearn thatyou have beenspeaking to a competitor while at the same time obligated under your agreement with them. Employers think nothing of throwing out the "breach of contract" or "breach of duty" language at you when and if they find out what you have been doing.

Here are some of the things you want to avoid:

Violating Your Restrictive Covenant:
Assume for purposes of this article that the covenant is legal and enforceable. If you take a job with a competitor you will get sued by your employer seeking to enforce the restrictive covenant. You bargained for and signed the agreement with the covenant going forward put in place to prevent you fromworking for a competitor.

Leaving Options or Deferred Comp on the Table:
You need to make sure that your decision to leave your employer voluntarily doesn't surrender your right to receive deferred compensation or stock options.
Likewise, if you quit, you need to know under the agreement whether you will receive the bonus you earned for working over a certain time period.


Taking Your Clients With You:There is a strong possibility that if you are leaving to go to a competitor that a court of law could prevent you from using contacts and connections you met at your present employer that it paid to get. Simply put, courts don't like it if you obtained clients on your employer's dime and then leave and take the clients to a competitor with you. With this said, you need to be very careful about the representations you make to a prospective new employer about the amount of business or clients you will be taking with you.

                                    Andrew S. Bosin, LLC, Esq.
10 Wilsey Square, Suite 136
Ridgewood, NJ 07450 (201-446-9643)

Stuck on a Number 

One of my favorite financial books is The Behavior Gap by Dan Richards. Dan takes complex financial topics and tries to simplify them by drawing sketches on napkins. One sketch I particularly like is called Getting Stuck on a Number. One of the more common behavioral mistake we make when it comes to investment decisions is the tendency to get stuck on a certain value or price, which can lead to costly blunders.

Let's say you paid $800,000 for your home a few years ago, and now you need to sell it. You want to get back at least as much as you paid. So you insist upon listing it for $800,000 even though you know the real estate market has come down. Three months later, you pass on an offer around $750,000. Another six months go by and your now hoping to get $700,000. The housing market doesn't care what you paid for your house. It doesn't care how much you put into it, or even what it cost you to landscape. All that matters is what it is worth today.


The same holds true for investing in stocks. You bought a stock for fifty dollars a share and six months later it trades at forty dollars. You know that it really doesn't belong in your portfolio anyway. But you don't want to sell it until you "get back to even"

The fact that you paid fifty dollars has no bearing whatsoever on what you should do now. The past is the past. What matters now is making the correct decision today.

Birth Announcement:   


We recently sent out Charlotte's birth announcement.


We have Charlotte on a strict push up program. She is able to pump out 50 at a time. Next we are going to work on her 40 yd dash time.



Please contact me if you have any questions about the articles above or about your personal or business finances.



Marc Bautis
Wealth Manager


office: 201-842-7655
cell:    201-221-6895
fax:     201-754-9760
Disclaimer:The information contained in this newsletter is for information purposes only and may not be suitable for your specific financial situation.  You should consult a financial advisor before making any investment decisions relating to the information contained in this newsletter

What's Inside?
The Fiscal Cliff
Employment Law
Stuck on a Number
Birth Announcement
Marc Headshow w Skyline, 9-2011

Marc Bautis is a Wealth Manager specializing in working with young families as well as retirees and those nearing retirement. He understands that everyone wants to not only protect their principal, but also be sure that their money lasts.  He is committed and proud to deliver independent advice, always in the interest of his clients.

Marc is the creator of the Retirement Fitness Challenge™,  a program designed to be sure his clients enjoy the retirement years as they have always envisioned them.  Marc's program is designed to prevent outliving your money but also to minimize expenses during retirement and find the best time to start taking Social Security benefits.   Marc is also the author of a recent book The Retirement Fitness Challenge: Shape Up Your Finances and Make Your Money Last a Lifetime, which is available on

Marc is a graduate of Seton Hall University.  He is a Bergen County native, from Lyndhurst, where much of his extended family still resides. He currently lives in Hasbrouck Heights with his wife Katie, new daughter Charlotte and Old English Bulldog, Winnie.


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