I hope you are starting spring break like I am….getting some much needed R&R. I am spending a couple of glorious days with my kids and my mom in a very cute cabin in Lake Tahoe. We missed the snow by a day but even so, it’s great to be here. Tune in next week for a picture of our snowman.

I am signing off. Enjoy your loved ones this week. Have a wonderful Easter and Passover.

Wishing you Health, Happiness and a life filled with Passion!

Christine

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Planning for the “Let’s Hope It Never Happens”

by Christine Faulkner, Esq.

Some things are unavoidable. Death and taxes are two items that fit nicely into that category. It’s almost ironic that estate planners deal largely with precisely those two issues (was Benjamin Franklin secretly an estate planning attorney?)  Unfortunately, the job of an estate planning attorney is not so cut and dried. We often have to deal with the uglier side of life and address things like disability, incapacity, and even long-term elder care in less than ideal situations.

Medicaid and Planning Your Estate

One issue that seems to be recurring is that of using Medicaid to pay for long-term care in an assisted living facility. In many cases, people are simply advised that they must first use whatever assets they have saved to pay for care, and only after such assets are exhausted will Medicaid begin to “pick up the tab.”

The thought of exhausting the nest egg—the thought of spending a lifetime of accumulated wealth on nursing home care rather than leaving it to loved ones—is simply too much for most people to bear. It makes the decision to accept assisted living as a necessity much more difficult, and it’s very heartbreaking.

The truth is that there are smart ways to arrange an estate so that many assets can be passed on to loved ones or held in trust while still allowing for an elderly person to maintain Medicaid eligibility. The rules differ drastically depending on whether one or both spouses need assistance, and there are completely different rules for unmarried people.

Generally speaking, a husband and wife can have a pretty substantial asset value and still qualify one person for Medicaid. Specifically, a husband and wife can jointly have about $115,000 in “permitted assets” and still have Medicaid pay for the nursing home costs for one spouse. Besides that, some assets are excluded entirely from the calculation of permitted assets.

For example, necessities such as clothing, furniture, vehicles, burial plots, and more than $750,000 in home equity are exempt from the calculation of permitted assets. That’s great news for elderly people who don’t have extensive real estate investments or many liquid assets, but it is a very real psychological burden on people who are above the permitted asset threshold or have very illiquid investments. What should you do if you fall into that category?

Giving It Away

It is possible to give assets to your loved ones prior to requiring Medicaid assistance for nursing home care, but there is five-year “look back.” That means that if you’ve gifted assets within five years of needing Medicaid assistance, you might not qualify. There are, however, ways to reduce or eliminate the penalty period through the use of very specific types of trusts designed just for Medicaid planning.

That’s Where We Might Be Able to Lend a Hand

Nobody wants to think about putting their loved ones into a nursing home or about possibly ending up in one personally, but it’s a possibility that can’t be ignored, especially given the cost of care in assisted living facilities.

We are here to help you make the best decisions regarding your health and your assets. We’ve seen lots of scenarios where people are convinced that they have to spend their hard earned assets on long-term care rather than leave or gift those assets to loved ones. The truth is that some careful planning can help achieve quality care and a generous estate. Call our office today to schedule your Family Wealth Planning Session™. If you mention this article by name and you’re one of the first two people to call, we’ll waive our customary $750 consultation fee and meet with you for free.

Looking forward to a great weekend full of more lacrosse and some travel (Cameron has a game in Santa Rosa). Cocktail party Saturday celebrating the “empty nest”…I think this is a first for me. What a great idea though huh? I have to admit that I periodically daydream about the time when my life becomes my own again. Mostly though, I wish for more time with my kids, who are growing into amazing people.

The time clock, the bane of our existence in so many ways right? For an employer, keeping accurate time records for wages is so important but how to gain compliance with punching in and out? We struggled with this ourselves, and it can be a tough problem to deal with employees who will not cooperate with your policy regarding clocking in/out. Some quick dos & don’t’s on this subject may keep you out of trouble with the labor board.

Have a great weekend!

Wishing you Health, Happiness and a life filled with Passion!

Christine

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Employee Time Clock Policies

Time clock policy is an extremely tricky area for most employers. No matter what you do as an employer, it can be very difficult to get employees to follow the rules with respect to clocking in, clocking out, and clocking in and out at permissible times. What can you do to enforce your policies and avoid paying huge sums of money in overtime wages?

Rules Vary By State

In most states, it’s a blatant violation of wage and hour laws to deduct pay from an employee’s compensation as a penalty for improperly clocking in and out. Some employers try to impose a fine on employees in the form of charging for time required to fix errors on paychecks when the employee is at fault for the error. But how would you enforce it? Withhold a paycheck? That’s a big “no-no.”

While financial incentives might seem like a good way to make sure that employees are recording time accurately, it’s not a very cost effective strategy if you want to avoid getting hit with a wage and hour claim lawsuit.

Put very simply, withholding employee pay is typically a violation of both state and federal laws, so don’t use money as an incentive. Moreover, just firing an employee without thinking through the issues fully can open you up to a potential lawsuit.

What You’re Required to Do

First, almost every state has a list of time periods for which employees must be paid if they are clocked in.

What You Can Do

You can set in place a policy prohibiting work at times beyond the scope of what is mandated by state law. While you may adopt a policy of revising or correcting subsequent paychecks to make up for compensation included for unauthorized work, you may not ever withhold or delay a complete paycheck as a form of punishment.

Issue written warnings to employees that work during unauthorized hours. A write-up with the employee’s acknowledgment of receipt is very important. If a second violation occurs, you should give the employee a written termination warning.

Finally, you can adopt a policy that makes employees ineligible for future bonuses if they have not complied with time clock policies. This will only work, however, if everyone is held to the same standard.

What You Should Do

What you should do is adopt a very strong overtime policy in your employee handbook (which we discussed several weeks ago). The other thing you should do is contact our office ASAP. We can help you avoid the many pitfalls and traps involved in crafting policies that govern employees. Mistakes in this area can be particularly costly. So if you have an existing business or, even better, if you’re thinking of starting a business, do it right from the start. Call our offices today to schedule a LIFT™ Business Audit. LIFT™ stands for Legal, Insurance, Finance, and Tax . . . all things that we can help you plan to tackle. If you mention this article when you schedule your LIFT™ audit, we’ll completely waive the $1,250 fee that we customarily charge.



Almost spring break and we are so ready. Daniel played 3 lacrosse games this weekend, yesterday winning 19-0 (wow). Cam had two games and took some major hits from an overzealous defender on Saturday. Given the sheer volume of play, both boys are achy and sore. Thus, Monday mornings are always tough to get the boys going.

Did you see the Lord of the Rings trilogy? Most people did and I am a fan so today’s article incorporates a little fun from the story. The point, though, is that slick maneuvering sometimes backfires when it comes to the IRS. Yes, finding solutions is important when it comes to tax planning but you don’t want to find out after the fact that your estate planning solution won’t hold water when it comes to tax avoidance.

At Cava & Faulkner, we will find the best solution that works to meet your individual needs. We’ve got you covered.

Wishing you Health, Happiness and a life filled with Passion!

Christine

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The Reciprocal Trust Doctrine

by Christine Faulkner, Esq.

Some people are just naturally ingenious. The attorneys who came up with the idea for creating reciprocal trusts belong in that category. First things first: What is a reciprocal trust?

Let’s look at an example. Assume that Bilbo Baggins and Frodo Baggins are cousins (I know . . . it’s a stretch). Also assume that they are both relatively wealthy. Let’s say they each have $5 million in the bank (again, a long shot for hobbits, but pretend they found a very valuable ring that they were able to sell for $10 million and that they split the proceeds).

Here’s what they could do. Bilbo could set up and fund a trust and name Frodo as the sole beneficiary entitled to income, with the principal passing to Frodo’s children after Frodo dies.

Frodo would set up an identical trust, only with Bilbo as the income beneficiary and Bilbo’s children’s as the ultimate beneficiaries of the principal.

The Benefits of the Arrangement

The main benefit to setting up trusts like this is that the money contributed to the respective trusts by Bilbo and Frodo would be excluded from their taxable estates at their respective deaths. If, however, they had each set up identical trusts for their own benefit (i.e. if they had named themselves income beneficiaries of their own trusts), then the money in the trust would be included in their estates.

You can see that this is a rather ingenious way to avoid estate taxes by creating reciprocal trusts in times when the permissible unified tax credit is high (like it is through at least the rest of this year).

 A Little Too Ingenious for the Courts to Stomach

When smart people innovate to circumvent the “spirit of the law,” the courts often intervene to close loopholes. In the case of reciprocal trusts, that’s exactly what happened. Here’s the reasoning they used: Money is obviously fungible. A dollar in my hands could be swapped for a dollar in your hands with neither of us feeling any impact whatsoever. So why should two people who have that obvious realization be permitted to exempt themselves from estate taxes by taking advantage of an “I’ll scratch your back, you scratch mine” relationship?

They shouldn’t . . . or so the courts decided.

The general rule today is that if two trusts exist, the trusts will be “uncrossed” if they meet these three criteria:

• They have substantially identical terms,

• Were created at the same time, and

• Are part of the same transaction.

When trusts are uncrossed, it means that the money in the reciprocal trusts is treated as if it benefits the person from whom it came. In other words, the reciprocal nature of the trusts is undone. Now, if this happens after one of the two reciprocal trust creators dies (which is when it always happens), the results can be devastating, since there is then no opportunity to pursue effective estate tax strategies.

The bottom line is that you don’t want to pursue a strategy that has even a remote chance of not working, since the repercussions are irreversible once you’re deceased. That’s why you need an experienced, professional estate planning attorney in your corner. Call us today and mention this article, and we will waive our customary fee of $750 and give you a free Family Wealth Planning Session™.

I am out of the office today for training so I really am going to be brief.

Choices choices. Today’s article touches upon an important decision in choice of business entity. In reading this article you will immediately identify the fact that choosing the best entity will likely involve compromise. You may benefit in your tax election but also necessarily be somewhat dissatisfied with the costs of maintaining the entity or find the management structure less than ideal. We will help you identify whether management structure or taxation are your priority and then put in place the best business entity to protect what you care about the most.

Wishing you Health, Happiness and a life filled with Passion!

Christine

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LLC vs. S-Corporation and Tax Myths

by Christine Faulkner, Esq.

A lot of people have opinions about the best type of business entity to use when starting a new enterprise. The two types of entities most often discussed are probably S-corporations and limited liability companies. Today we want to give you some insight into these two very different types of entities.

Subchapter S

An S-corporation is nothing more than a regular corporation that has elected to be taxed under Subchapter S of the Internal Revenue Code. An “S election” allows corporations to avoid the problem of double taxation. Typically, corporations are taxed on their income, just like individuals. The problem is that when shareholders receive dividends, those payments are also taxed. So in effect, profits are taxed twice (once at the corporate level as income and then again at the individual level as dividends).

Subchapter S eliminates this problem and allows for what is called pass-through taxation. In other words, all the corporate income hits the shareholder’s bottom line directly and is not double taxed (i.e. there is no corporate income tax on S-corporations).

S-Corporations do have some drawbacks. First, only U.S. citizens or residents can own S-corporations. Second, individuals must own them. That means S-corporations cannot typically be part of a larger corporate structure involving holding companies or limited partnerships. One exception is that S-corporation can be owned by certain types of trusts.

Limited Liability Companies

A limited liability company (“LLC”) is a type of entity that is generally taxed as a partnership, but with an LLC you’re actually free to choose how you’ll be taxed. That means you can elect to be taxed as an S-corporation (which also means you have to comply with all the rules stated above).

The benefit to an LLC typically is that the management structure is very flexible, which simply gives you more options. LLCs avoid the rigid formalities of corporate law and allow you to structure your business in the way that best suits you.

The drawbacks

One argument for the use of S-corporation taxation over the default limited liability company taxation (i.e. partnership) is that shareholders receive income in a pass-through manner without having to pay self-employment tax. Before you get too excited, it’s important for you to understand that S-corporation regulations require any officer or owner who performs actual work on behalf of the corporation to be an employee.

That means red tape in the form of setting up a payroll system and paying FICA. While it is still true that part of your income can avoid all this because it is taxed as dividends, the IRS requires that income be treated as wages “to the extent the amounts are reasonable compensation for services rendered to the corporation.”

In short, if you expect to make a lot of money with your business venture and if a reasonable wage for your services isn’t too extreme, then making the S-election just might make sense.

Have you decided yet?

Didn’t think so! Let us help you. It’s what we do all day long. Making decisions like what type of business entity to use isn’t something you should do alone. We can help you flush out the pros and cons of the many options you’re going to have in almost every area of your business. Give us a call today to schedule a free LIFT™ (Legal, Insurance, Finance, and Tax) Business Audit. We normally charge $1,250 for LIFT consultations, but if you mention this article when you call, we’ll meet with you for free. You have nothing lose and lots to gain in the way of tax savings just by using the best business entity for your situation!

Happy Tuesday:

Jean Marie took some much deserved R & R yesterday. As Jean Marie is the only person in the office with the expertise of sending my newsletter, it comes to you today instead! As for our family, we have been busy with lacrosse on the weekends and practice almost every night. The boys are both spread pretty thin, but hanging in. We look forward to spring break in a week so that we can all slow it down just a bit!

Being married carries some tax specific benefits both in terms of income and estate tax. I won’t throw around any other words of art to confuse you here. Today’s article touches upon the ability of spouses to provide unlimited gifts to one another and how this ability affects estate planning decisions in your trust. You will gain a better understanding of how it works by reading below. I hope you come away with the idea that your trust can be quite flexible. Timing is crucial when making important elections in sub-trust planning & you will get a glimpse of the complexities involved.

Wishing you Health, Happiness and a life filled with Passion!

Christine

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QTIP Trusts

by Christine Faulkner, Esq.

A QTIP trust, or Qualified Terminable Interest Property trust, is a special type of A/B trust. Have I lost you yet?

Not to worry… keep reading!

Let’s start at the beginning. An A/B trust is a marital trust system comprised of two trusts, an A trust and a B trust. The A trust is typically referred to as the marital trust, though sometimes it is a QTIP trust (just keep that in mind for now). The B trust is the trust that benefits the broader family.

Here’s how it works

1. A married couple puts the appropriate language to create A/B trusts in their last wills or revocable living trusts.
2. Assets are divided so that they are owned in relatively even proportions between the spouses. The entire A/B plan falls apart if assets are owned jointly, since then the assets pass directly to surviving spouses without the tax benefits of the A/B system.
3. When one spouse dies, the entire tax-free portion of his or her estate is transferred to the B trust. This trust can be for the benefit of the surviving spouse, children, grandchildren, and just about anyone else. It is very flexible.
4. The taxable portion of the deceased spouse’s estate is transferred into the A trust. This is a very strict trust that must benefit only the surviving spouse and no one else. By doing this, the law provides that taxes are deferred on the taxable portion until the surviving spouse passes away. When the surviving spouse dies, if his or estate is taxable—if it is greater than the available exemption—then the excess will be taxed at the applicable rate.



Where the QTIP Comes Into Play

The QTIP comes into play at step 4 above. One can elect to make the A trust a QTIP trust.

Why?

Spouses can give unlimited gifts to one another tax-free, but the law is very strictly construed. It MUST be a gift only between spouses. The QTIP election is an exception to that rule. It allows for the creation of a trust that benefits only the surviving spouse during his or her life but then passes on to other beneficiaries like children or grandchildren.

So when might a QTIP election be wise? Well, how about in a blended family situation where both spouses have children from previous marriages? You want to make sure that your spouse is cared for after you die, but then you want the remaining interest in the trust to go to your children (or to whomever else you want) rather than just to your stepchildren.

QTIP elections are the primary reason for using A/B trusts at all, at least until 2013 when the estate tax laws are likely to change and the portability of the estate tax exemption could very well go away.

Let us guide you

This is all very complicated stuff. There’s no way to explain it all in the course of one short article, but then again . . . we don’t need to, because we are here to meet with you in person, and we would very much like an opportunity to do that. Please call our offices and mention this article when scheduling an appointment, and we’ll waive the customary $750 that we charge for Family Wealth Planning Sessions™. Don’t wait. Our calendar fills up very quickly these days!

A day late and a dollar short…..missed sending this out yesterday. I wish I had some excellent excuse but in truth, just got behind. Today has been busy with leadership training for my rockin’ BNI chapter, the Elk Grove Rainmakers and I now finalize this newsletter while in court. Gotta love those smartphones!

Life insurance is a crucial…

…piece of your financial planning. If you don’t have insurance, come talk to me and I can connect you with some amazing professionals who will guide you and educate you as to your options. Many people fail to appreciate the impact of life insurance on estate planning and taxes. The great news is that with additional planning, specifically an ILIT (irrevocable life insurance trust), we can avoid all or a good portion of estate taxes on your insurance benefits! You may not have heard of this type of planning but really, this planning is more common than you think.

At Cava & Faulkner, we make sure you know your choices for optimal protection. We’ve got you covered!

Wishing you Health, Happiness and a life filled with Passion!

Christine

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Creating Liabilities Out of Love

by Christine Faulkner, Esq.

There are some pretty basic reasons to carry life insurance. One of the top reasons we hear is that clients simply want to make sure that their loved ones will be cared for if the client dies other than “as planned.”

That’s certainly fair enough. We all want to make sure that our spouses and children have their financial needs met. With respect to children, they will have financial needs until they are out of college and on their own career paths. Spouses have a range of varying needs, depending on whether or not they work and whether or not they are the primary breadwinners in the family.

It Should Change At Retirement

In theory, the need for life insurance diminishes and should, in theory, disappear at retirement. The reason is that by the time you retire, your children should have their own careers, and you and your spouse should have enough money to live the rest of your lives in relative comfort. So the need for life insurance certainly diminishes over time (even though premiums often increase later in life).

The fact that the need for insurance diminishes over time does absolutely nothing to negate the fact that you likely need life insurance right now. So what is the point that we’re trying to make?

Ownership of your policy matters . . . tremendously

What we’ve been talking about is insurance on your life. The question, however, is who should own the insurance policy on your life?

Well, who do you trust not to kill you for . . . wait, that’s not where we’re going with this.

Ownership of your life insurance policy matters because if you own the policy yourself, proceeds from the insurance will be included in your estate when you die. Yes, this is true even if you’ve designated a beneficiary other than your estate.

So in reality, something bought out of love (life insurance) can create a huge potential liability for your heirs, since tax rates on estates are some of the highest around.

And That Could Make Your Estate Taxable

On occasion, life insurance policies are large enough to move an estate from non-taxable status to taxable status. That’s simply a waste of your family’s dollars, because some very simple planning can solve the tax problem completely.

There are two simple ways to remove life insurance proceeds from your estate:

1. Totally relinquish control and ownership of the policy, or

2. Create a life insurance trust to hold the policy.

In reality, these two solutions are really the same thing. They involve you giving up the rights associated with ownership of insurance policies on your life, but the result is that the proceeds from insurance will not be included in your estate, and as a result, they will not be taxable in any manner whatsoever.

Setting Up a Life Insurance Trust

It’s not difficult for you to set up life insurance trusts – simply call us. If you have questions regarding whether or not your existing policies will move your estate into the taxable bracket and you’d like to do something about it, contact our offices. We normally charge $750 for Family Wealth Planning Sessions™, but if you mention this article when you call (and if we still have space on our calendar), then we will meet with you for free.

What a lovely day. This bodes well for a nice weekend. I hope to get out walking sometime today and experience the warmth. Whenever I see trees blossoming, I feel myself becoming happy….or happier as the case may be. There must be some study out there showing how looking at and smelling beautiful things directly impacts our happiness quotient! Speaking of happy, we get the pleasure of watching our oldest play lacrosse tonight. Go Elk Grove Gladiators!!

Ladies night events always mean that spring is on the way. I attended a fun “Ladies Night” last night hosted by Phyllis Enos, my pal from the Elk Grove Rainmakers, my BNI chapter. Phyllis not only keeps me stocked up on important beauty supplies (Mary Kay) but always inspires me with her generosity and giving spirit by tirelessly working to raise funds for the Elk Grove Food Bank. If you want to donate, let me know and I will put you in contact with Phyllis.

Do you have a well written handbook for your business? If so, great but you still might want to take a look at today’s article which clarifies a few common misconceptions about handbooks. If not, then creating a handbook is a must-do as to avoid litigation or at least protect yourself in the event of a lawsuit. Your handbook should be precisely crafted as anything less allows an unscrupulous, or depending on your point of view, shrewd employee, to take clear advantage of you and your business.

At Cava & Faulkner, no detail is overlooked so that you and your business are protected. We’ve got you covered.

Wishing you Health, Happiness and a life filled with Passion!

Christine

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Employee Handbooks

Christine Faulkner, Esq.

Does your business have a good, and I mean a really good, employee handbook in place? If you’re like most business owners, the answer is likely “no.” That is not a judgment of you as a business owner. It’s simply a reflection of the fact that you’re probably very busy running your business profitably rather than worrying about the ridiculous number of regulations that we all need to be worried about.

But You Do Need a Handbook

If you don’t have an employee handbook at all, run (do not walk) to us. If you have an employee handbook but haven’t updated it in the last five years, you need to do so.

Why? The reason is that laws are constantly changing. Every year state legislatures pass new statutes that affect employer-employee relationships, not to mention the fact that courts are constantly interpreting those statutes and actually creating some employment law through case law.

The bottom line is that if you haven’t updated your employee handbook in the last five years, it’s likely out of date.

What Does An Employee Handbook Do?

First, there is a common misconception that an employee handbook is a contract between you and your employees. This is evidenced by the fact that many handbooks have a page where employees sign an acknowledgement that they have read and agree to the terms of the handbook.

The reality is that you need to get nothing more from your employees than an acknowledgment that have received your handbook. The handbook itself is policy. It is not a contract, and it requires no agreement. It is binding whether your employees agree to it or not. You simply need them to acknowledge that they’ve received it so they can’t later claim “I didn’t know” as an excuse for non-compliance.

General Rule of Employment Law

The most employee-friendly law prevails. That’s the general rule. If a state law is more lenient toward employees than federal law, then it will prevail and vice versa. It’s important to understand this concept when you’re creating a handbook so that you can be clear on which law applies to situations you’d like to address.

You must know which laws apply to you. Not knowing can mean that you’ll eventually have to settle, or even lose, a lawsuit simply because you aren’t protected by properly drafted policies.

Things You Need To Address

Office policies need your attention. Well-written policies and procedures can, and if you’re in business long enough will, help you avoid lawsuits and potential liability. Whether you are considering a start-up venture or you have an existing practice, it makes sense for you to take the time to develop an employee handbook and keep it up to date.

If you’re totally lost and don’t know where to start, call our office. We are here to help you create a successful business in all respects. Mention this article when you schedule your LIFT™ (Legal, Insurance, Finance, and Tax) Business Audit, and we will meet with you for free (we normally charge $1,250, so this is much better than a free lunch!).

Well, I officially feel old (na…just kidding). Daniel turned 15 yesterday and was forced to remind me of this fact when I mistakenly referred to him as “only 14”! Time is taking me by surprise these days when I look at my boys, both of whom have the physicality of men. Daniel is coming on 6’3” and Cam is moving onto 5”9” at just 12 years old. All of that broccoli and salmon must have worked.

I managed to catch a few photos of Daniel blowing out the candle (yep, we dispensed with the pyrotechnics in favor of one perfectly placed and colored- orange Daniel’s favorite- candle). I lamented the bygone days when we spent hours videotaping the kids’ every move and facial expression at the birthday party. Instead, the ritual was replaced with a few snapshots on the iphone. Technology to the rescue.

Speaking of technology, I bet when you think of estate planning, you don’t think about your Facebook or Google account. You should. As we transition away from tangible stuff into a world of all things digital, your online alter ego, and data need to be protected in much the same way as your assets. Check out the comments below on the subject.

At Cava & Faulkner, we are on the cutting edge so that you and your family are always protected. We’ve got you covered.

Wishing you Health, Happiness and a life filled with Passion!

Christine 

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We All Have IP These Days

by Christine Faulkner, Esq.

Remember the days when IP—Intellectual Property—was the exclusive domain of patent attorneys, computer science majors, successful authors, and professional photographers and artists? Well, times have changed, because whether you know it or not, you’re very likely a player in the IP space…today’s world of ones and zeros (i.e. binary code, if you’re not up on the lingo).

This IS Relevant to Planning Your Estate

Before you conclude that we’re about to embark on some platitude about how technology is leaving us all in the dust (we’re not going to do that), take a moment to think about your current digital footprint. In what ways are you out there on the internet?

• Facebook?

• YouTube?

• Email accounts? Cloud storage (Flickr, iCloud, Amazon Cloud, Google Docs)?

• PayPal? Online bank accounts? Online recurring subscriptions?

• Websites, domain names, blogs?

Unless your head’s been buried in the sand for the last ten years, it’s likely that you have at least some of the above-named assets.

Increased Online Storage

One of the most important functions of any estate plan is an instructional letter that advises your loved ones on where they can find critically important documents—Last Wills, Trust Agreements, Power of Attorney, Health Care Proxies, and financial instruments.

Increasingly, these sorts of documents are being stored online. Make things easy on your loved ones. Even if your critically important estate planning documents aren’t stored online, your loved ones will still need to access your digital life once you’ve exited the real world.

The first step in making life easy on your loved ones is to list your digital assets. Be careful . . . some assets might belong to your business (if you have one), so take care in discriminating who owns what (e.g. internet domain names). It can be a lot to sort through, but you’re the best person for the job. Nobody knows what you have better than you.

Understand the Fine Print

The terms of service for online providers differ markedly. Take the time to understand what you’re getting into when you sign up for a service. For example, when a person dies, his or her Facebook page is “memorialized.” That means it can’t be accessed or altered by anyone. Make sure you’re okay with that, and remember that whatever you write will be on the web . . . potentially forever.

Be Clear on Your Wishes

Clearly communicate to your attorney or to someone that you intimately trust (i) what you have, and (ii) what you want to have done with it. If you’ve stored passwords to email accounts that you want someone to be able to access, make sure you leave a clear record. Otherwise, your loved ones might be locked out of your accounts (e.g. Facebook, as described above).

You just don’t want to leave your digital footprint to chance. Take the time to decide how you want your digital legacy handled, and then put a system in place to make sure it happens according to plan.

It’s A New Ballgame

Dealing with the issue of digital assets, not to mention hard assets like real estate, stocks, bonds, bank accounts, precious metals, business interests, etc., can be really stressful if you don’t know what you’re doing. Luckily, we’re here to support you, and we’re old pros at dealing with these issues. Digital legacies might be a new ballgame, but they adhere to the tried and true rules of estate planning, so we can help you handle these issues without a hiccup.

Give us a call today to schedule a free Family Wealth Planning Session™. We normally charge $750 for these sessions, but until our calendar fills up for the month, we’re going to give them away!

I hope you are having a great week so far. I know it is only Monday but always good to start on a positive note. Daniel and I were in Redding over the weekend for his lacrosse Jamboree. The Team lost the first game and won their second. Boy, I had no idea that High school games were so long. As we were chatting and watching the first game, it seemed to be really long and my intuition was correct!. The regulation game was almost 2 hours! WOW. Daniel was in the penalty box 3 times, which is an absolute record for Daniel. In his 5 years of playing, he has not had more than 1 or 2 penalties total, so we were both surprised. The ref checked his stick and found it illegal, which is a non releasable 3 minute penalty. I just learned this weekend that if an individual player racks up 5 minutes in penalties in any game, they are done for the game. Whew….Daniel missed getting kicked out by just a small margin. I need to get out my book “Lacrosse for Dummies” and read up. Always learning……

I bet you worry about your kids’ money sense, or lack thereof. Our boys have learned to save and are pretty good about it…..for a while. Then, there is the must-have album on I-tunes or Xbox game that will make life so much better. You know what I am talking about, and these impulse purchases don’t just apply to kids, but all of us. I bet you agree that it takes resolve to save, and keep saving for a long term goal, or not spend beyond our means. Being role models, in other words, walking the walk, not just talking the talk, for our kids is the best way to teach them good financial sense. The article below outlines a few thoughts and suggestions on this oh-so- important subject.

Here’s is to your Family’s success!

Wishing you Health, Happiness and a life filled with Passion!

Christine

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Teach Your Kids the Fundamentals of Money

by Christine Faulkner, Esq.

Kids generally don’t understand money innately, and until they learn that money must be earned and is in finite supply at any given time, kids are apt to develop a one-way relationship with money and become very good spenders. Those are tough habits to break. They can last into well into adulthood, and the consequences can be dire in the most serious cases.

The moral of the story is that it’s never too early to start teaching your children about money. If they develop good habits and beliefs around money early on, life will make much more sense to your children later on, since so much of life requires an understanding and healthy relationship to money.

Slow Comprehension

Children are often cognizant of money long before they can add or subtract. They understand that parents trade money for goods and services, and many times children even connect the dots and conclude that money comes from the bank. If you have young children, don’t assume they have no understanding of money. It’s more important, actually, for you to find out what your children do assume about money and work to slowly correct misconceptions and instill appropriate beliefs. It will take time, but the rewards will be well worth the effort.

Naturally Good Savers And Big Spenders

It’s pretty natural for kids to begin looking for and “collecting” money as soon as they realize that money can be traded for the things they love—candy and toys. How you manage that urge to find, save, and splurge will largely determine what type of money managers your children turn out to be.

Make The Most of Opportunities

It’s when your children gain comprehension of the fact that money buys many of the things they want that you have the best opportunity to make an impact. For example, you can encourage your children to develop a mindset of abundance and the belief that in order to have money they must be a responsible steward and conduit of money.

One way to do that is to give your children an allowance, and require them to save part of it, give part of it away, and spend another part of it. When their savings reaches a particular figure, you can increase the allowance and the related giving and expenditures until it becomes second nature. And rather than sitting idly by while your children spend the entirety of their “free” money, encourage them to reach a little bit—to budget for bigger items and save in designated envelopes until they have enough for more significant purchases.

The point of all these exercises is to teach your children to respect and use money so it serves them. You want to help them avoid developing an unhealthy “need” to have money just for the sake of having it or spending it.

Our Concern For Your Family

We are concerned for you and your family. That’s why we think about issues like the one addressed in this article. We are here to help you make sure that your family is protected, no matter what happens to you. If you have questions about how you can plan to protect your family, you should contact our office and schedule an appointment. We normally charge $750 for Family Wealth Planning Sessions™, but if you mention this article by name when you call, we’ll waive that fee andmeet with you for free.

Another week come and gone. We are about to begin the lacrosse season and will be traveling to Redding this weekend for Daniel’s first games on the varsity team. He is playing in a Jamboree to kick off the season. Cameron’s season begins next week, so he gets to relax over the weekend.  Daniel will play various positions and Cameron will play defense for the first time. He is one of his team’s captains this year, which is a huge honor for him. I am looking forward to seeing our boys gain more experience and of course, enjoy the game!

Don’t know if you caught the HBO movie “Too Big to Fail”. It lays out how these huge companies including AIG and Goldman Sachs crumbled and how everything fell apart shortly thereafter. These events hugely impacted the financial picture for at least the forseeable future. However, this economic climate provides hidden advantages for small business that you might not have considered. If you are willing to spend time really cultivating relationships with your clients or customers, and creating your special niche, you will have a huge advantage over big business!

As they say, “No time like the present”. When you are ready to really dig in, we are here to not only cheer you on but guide you to build a business that you love.

Wishing you Health, Happiness and a life filled with Passion!

Christine

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Overcoming Macro-Environmental Factors

by Christine Faulkner, Esq.

There’s always talk of the macro-environment. Whether it’s a Greek default, frigates entering the Straits of Hormuz for military posturing, or a Chinese economic slowdown, the hits just seem to keep coming. Economic news (or news that can affect the economy) is everywhere. If you’re one to turn on the television or open the newspaper, it’s impossible to miss news of potential impending doom, and when the news questions whether big business can survive the environment, it obviously becomes concerning for the world of small business.

When There Are No Backstops

There are no backstops in the world of small business. Entrepreneurs can’t count on multi-hundred billion dollar bailouts or favors from highly connected bankers turned policymakers. The last line of defense for the small business owner is the same as the first line of defense: Self-reliance.

It’s not all bad news, however. Small businesses have a few advantages over the Too-Big-To-Fails of the world. For example, small business owners can establish and cultivate meaningful relationships with their customers. By knowing your customers and what they want and need, you can actually provide a superior level of service and products.

The idea is to “niche down” whenever possible. That means creating a specialized product or level of service that just can’t be matched by the companies vying for large market share. In that way, you can actually succeed in creating your own market. You can effectively invent your own successful category within an industry.

Don’t Think Its Possible?

If you have doubts as to whether it’s really possible to “niche down,” just take the time to look around. Examples are everywhere. For instance, think about the rolling razor (have you even heard of this yet?)—a razor on wheels designed specifically for bald men who want clean shaven heads.

A guy who simply wanted to shave his own head without cutting himself created this product. Despite the fact that big razor companies sink millions of dollars into research and development, it seems that all they come up with is the idea to add more blades to existing razors. That result is a consequence of trying to please everyone who uses razors, rather than asking if there is a particular market that is underserved (or not served at all), which needs an entirely redesigned razor.

This ability to serve where there is no value being created by companies that occupy huge market share is where opportunity exists for you, regardless of the macro-environment.

The Reality Is That People Pay For Value

What happens in the aggregate has a much greater impact on big companies than it will on you. That’s because you can provide better service and products, and it’s also a function of the fact that you can know and have personal relationships with your customers. After all, you live and work in a community, and people enjoy being part of something—even if that something is your business.

Besides that, no matter how much the media reports that it’s “bad out there,” the world is not going to stop turning. People are still going to spend money, and if you can connect with them, they’ll spend that money with you.

Never A Perfect Time

There will never be a perfect time to start your business. When the economy is bad, there’s fear in the streets. When the economy is booming, it’ll appear that there’s too much competition. The reality is that the time to start is RIGHT NOW. No matter when you do it, there will be lots to learn, so the only thing you’re wasting is time!

Call our office today, and we’ll help you get started, or we’ll consult with you on streamlining your existing business. We normally charge $1,250 for a LIFT™ (Legal, Insurance, Finance, and Tax) Business Audit, but if you mention this article when you schedule your appointment, we’ll waive that fee.