When your children are special

Success is the sum of small efforts, repeated day in and day out.

-Robert Collier

First off, I thought I’d point you to a recent USA Today article which does a good job of explaining the current estate tax mess–as well as the dangers for families with even just $1million in assets:

http://www.usatoday.com/money/perfi/taxes/2010-07-21-estatetax21_CV_N.htm

The article has already received an unusually high number of comments online, so it’s certainly focusing the firestorm.

But today I want to talk about special children.

Every child is special, in their own unique way. That said, certain children are even more precious–and their needs are great. I’m referring to what many call “special needs children” (though, it’s perhaps better to call them children with special needs–after all, they really are “children” FIRST, and not to be defined first by their “needs”!)

Because this is something which adds certain complications to any family, I thought I’d take a moment this week to address 3 key wealth strategies for families with these beautiful, special children.

Feel free to forward this along to families who come to mind, and let them know that we will certainly assist them with their unique situation.

Let me know what you think!

Planning Your Family’s Wealth Around a Child With Special Needs

Here is the standard thinking, in regards to setting up your affairs with children who have special needs:

Families realize that they have to support these children for the rest of their lives. So, they typically write wills and take out significant term life insurance policies. They are careful to name a trust as the beneficiary, because if their child has more than $1,000 in assets upon reaching age 18, he/she will no longer be eligible for some government benefits.

However, while these families are indeed on the right track, parents with special needs children also need to:

1. Set up a second trust. The purpose of this additional trust would be so that friends and family members can contribute to the child’s care while the family is still alive–without causing the child to lose eligibility for federal disability benefits.

2. Increase savings. These families need a much larger emergency fund than most, and they also need to create a “reserve fund”. They should concentrate on savings–rather than paying off debt–especially if interest rates on loans are low.

3. Plan for three retirements. These families not only have to plan for their retirements, but also for the child’s long-term care. They should maximize their savings and take an aggressive approach with their portfolio to maximize returns over the long run.

While I’m not a financial planner, per se, I thought that these tips were so important that if you find yourself in this situation, you should raise them with your professional advisor.

I’m personally dedicated to the success of your family — and your finances! Can other lawyers say that?

You’re unique. Your plan should be too.

“Stay committed to your decisions, but stay flexible in your approach. It’s the end you’re after.”

–Anthony Robbins

One of the perils of our internet age is the breaking down of personalized service.

The web has made it so much easier for families to fall prey to “one size fits all” solutions–when they really should be consulting with someone who can talk through the particulars of their unique situation.

Now look–I LOVE the internet, and I’m not trying to knock those sites which really do provide a great service by offering a bunch of legal forms for a cheap price.

It’s just that your family’s estate plan should NOT be one of those items left to templates.

So, I’ve put together more of what I’m referring to in my Weekly Note.

Let me know what you think!

The Unique Plan

Here’s what I’ve discovered, after years of working with families, preparing plans:  Personal dynamics are more important than avoiding probate and estate taxes. Part of what I’m often discussing with my clients is beneficiary, guardian and trustee decisions–and each of these require a conversation.

But here are a few additional thoughts for you, as to why you need a personalized plan, as well as a few other quick tips:

There are very few “simple estate plans.”

For example, another attorney related to me the story of a man who wanted a so-called “simple” estate plan drawn up for him and his wife. In the first 15 minutes, the estate planner learned the client was a citizen of the UK, his 25-year-old son had bipolar disorder and the son was actually not his biological or adoptive child, although he and the young man’s mother have been married for 23 years.

In another case, a very wealthy man was seeking “a simple estate plan” for him, his wife, and his family. But he was in a second marriage, had three children from his first marriage, his new wife had four children from her first marriage and one of his daughters was in prison for kidnapping.

Now, obviously these are NOT your circumstances. But you are unique. So, here are some of the questions you may answer in a unique way:

* Do you donate regularly to charity? Or make substantial gifts to family members? Do you want those gifts to continue if you lose capacity?

* Do you own a business?

* Do you own property that should not be sold?

* Do you have a beneficiary who is likely to cause trouble or owes you money?

* Do you want to provide for the continuing care of a pet?

* Do you have a working farm or farm animals?

* Do you want to be cared for at home regardless of the cost?

Your estate plan should be carefully crafted to address your specific needs and circumstances. The more tailored your plan, the less room there is for family disagreements.

Next, you must have an up-to-date plan. Too many people either fail to prepare an estate plan or let their plan become outdated. Changes in the law occur frequently. As Will Rogers said, “The only difference between death and taxes is that death doesn’t get worse every time Congress meets.”

Plus, your circumstances can change. Toward the end of your life they seem to change faster. Between ages 40 and 65, have a new estate plan drawn up every decade. In your 70s and 80s, consider revisions every 12 months.

Third, be careful not to change your plan inadvertently. Suppose, for example, you have a will that provides for your estate to be distributed equally among your three children, and you have named your daughter Pamela as your executor.

To make it easy for Pamela to access your bank accounts in the event of a medical emergency, you have added Pamela’s name to all of them. What you have done without realizing it is to change your plan. Under the law in many states, those bank accounts will belong to your daughter at your death and will not be shared by your other two children. As a result, your estate might be distributed differently than you intended. It can also result in family feuds or adverse tax consequences.

Before doing any self-help planning–even something as simple as adding a child’s name to a bank account–check with a professional to see how it impacts your plan.

Finally, use your discretion, but consider telling your family in advance what arrangements you have made. Explaining your plan to your family upfront gives you the opportunity to address any concerns, answer questions and clear up misunderstandings. Once you lose capacity or die, it is too late. Many family fights could have been avoided with an open and frank discussion, so everyone is best prepared to handle a loved one’s loss of health or life. Eliminating surprises helps eliminate family fights.

In summary, most people who plan do pay enough attention to concerns such as probate and estate tax avoidance.

But the best estate plans are uniquely drafted with YOUR family harmony as a priority.

I’m personally dedicated to the success of your family– and your finances! Can other lawyers say that?

Summer depression? No way!

“Create a definite plan for carrying out your desire, and begin at once, whether you’re ready or not, to put it into action.”

- Napoleon Hill

I hope your weekend was as good as mine! I’m not sure if it’s that I have Seasonal Affective Disorder, or that I just love warm weather–but there’s just something about summer sunlight…

Anyway, speaking of summertime, it’s a fantastic time to get savings on a variety of family items. As you know, I’m here to be your resource and guide for much more than just your legal needs…it’s my pleasure to point you in the right direction for creating (and *preserving*) wealth, however I can!

So, while many folks are simmering in the doldrums of economy-induced depression, I say, when the going gets tough–the tough go out and score some sweltering deals!

So, check out this list of stuff that you should put on your list for the next two months…

“Straight Talk” Personal Strategy

The “When To Buy” Guide

The lazy days of summer may be in full swing, but if you know where to look, there are quite a few deals to be had for those willing to plan ahead on major purchases.  Knowing the best time to buy that new car, house or lawn mower could be the difference between saving hundreds (if not thousands) of dollars every year.

Read on for your best bets in July and August–use them wisely, and then kick back with the knowledge that while temperatures may rise, your bills don’t have to.

Broadway Tickets

New Yorkers flock to new shows in the fall and consider summer performances “tres gauche.” That means theaters are more likely to fill empty seats in July with cut-rate tickets. On the other hand, some truly good theater closes quickly, so availability depends on a show’s popularity.

Best time to buy Broadway tickets: July

Furniture

New furniture is typically released bi-annually. Retailers like Crate and Barrel slash prices in January with anticipation of new furniture arriving in February. Prices are lowered again in July for the arrival of new furniture in August.

Best time to buy furniture: January and July

Computers

Computers have become essential items for students–which is why most retailers have big back to school sales in August. You can also get a good deal on a computer during the run up to Christmas.

Best time to buy a computer: August and December

Garden Plants and Flowers

Prices on plants and flowers fall drastically after midsummer when nurseries and garden supply stores are trying to clear inventory.

Best time to buy garden plants and flowers: August

Lawn Mowers

Once summer is over stores begin preparing for Fall products, which means big sales on lawn mowers. Stores need to make room for new inventory and lawn mowers take up plenty of space.

Best time to buy a lawn mower: August

Swing Sets

Swing sets go on sale at summer’s end, when children have abandoned outdoor play for indoor pursuits. Swing sets also take up a lot of floor space merchants are just itching to fill with holiday merchandise.

Best time to buy a swing set: August

I’m personally dedicated to the success of your family- and your finances! Can other lawyers say that?

*True*independence

The optimist sees opportunity in every danger; the pessimist sees danger in every opportunity.

- Winston Churchill

The fireworks are over (mostly–my neighbors seem to not have gotten the memo that July 4th is passed!), the BBQ leftovers are sitting in the fridge. Another national holiday come and gone.

But, in my opinion, this year’s celebration of our nation’s independence touches some deep issues for my clients and friends. I’ll get to that in a moment.

Before I do, here’s some info I bet you didn’t know:

The Declaration of Independence was actually approved on July 2nd, and most of the delegates didn’t sign it until August 2nd. While John Adams expected Americans would celebrate July 2, the date on the publicized copies of the document was July 4th … so that’s why we celebrate it then!

Some other facts you may not know about our just-passed holiday…

* Three presidents died on July 4th: Thomas Jefferson and John Adams in 1826, and James Monroe, in 1831. Calvin Coolidge was the only president born on July 4th, in 1872.

* The Massachusetts General Court was the first state legislature to recognize July 4th as a state celebration, in 1781.

* The first recorded use of the name “Independence Day” occurred in 1791.

* The U.S. Congress established Independence Day as an unpaid holiday for federal employees in 1870. They changed it to a federal paid holiday in 1931. So for those of you who enjoyed a paid holiday on Monday–thank the Great Depression-era Congress!

Anyway, as I mentioned, “independence” is a scarce commodity these days for too many families. Which is why I’ve written some thoughts about what it really takes to achieve *financial* independence–not just political.

So, see below, and let me know what you think!

How To Achieve Financial Independence

Because this economy has thrown so many family financial plans into chaos, we can focus so much of our energies on surviving this storm–and forget that what we’re really seeking to accomplish in wealth-building requires us to keep our head on straight, and to avoid all of the negativity which surrounds us.

After all, what is it we’re trying to accomplish by earning wealth? For me – and for many others – the answer is Financial Independence.

Here’s what I mean by that: “having an income sufficient for your basic needs and comforts from sources other than paid employment”. Financial independence implies freedom. It’s the condition of having saved enough money that you can do whatever you choose. Whether you elect to keep working doesn’t matter – you have enough saved and invested to follow your dreams.

But is financial independence just a pipe dream? Is it something only for the lucky and the strong?

No, it’s a goal that anyone can fulfill as long as they’re armed with some basic knowledge; as long as you make the smart choices.

As I see it, there are four keys to accumulating wealth:

1. Start investing as early as possible. It takes significantly less money to accomplish what you want, and you have more time working for you.

2. Be determined to save on a regular basis. It is an easy way to accumulate wealth.

3. Begin investing with the largest possible sum you can. You will have more money working for you over a longer period of time.

4. Reach for the highest rate of return you believe you can safely receive on your money over time. Each additional percent is important. The higher the rate, the less money it takes to accomplish what you want.

Financial independence is built upon these four guidelines. Now, of course this is all more easily said than done! So, let’s examine what keeps us from doing this!

Confronting your financial challenges

In order to save money, you must obviously fight to keep from spending it too much! I encourage you to set goals, to actively prioritize wants–and not just make willy-nilly decisions about what you’re spending.

To do this, it may be helpful to place a value on each of your wants. So…here’s an exercise for the week: Pull out a piece of paper and list your wants.

Depending on your income and net worth, these can range from a new house to a hot tub to a trip to London to a new blender for the kitchen. Next to each item, write why you want it. (You might want a hot tub, for example, because it would allow you to relax with family and friends.)

When you’ve finished, take another piece of paper and re-order the list based on how important each want is to you. If a trip to London tops the list, are you still willing to delay it by spending $100/month for that gym membership you rarely use? That’s how you can use this list of prioritized desires.

Confront this issue first (keeping in mind those four keys mentioned above), and I’ll be back with more thoughts for you next week.

I’m personally dedicated to the success of your family and your finances! Can other lawyers say that?