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If you or your parents have a retirement account, (or any investment accounts for that matter) now is the time to get connected to how those accounts are invested. While you may have outsourced all of this to a broker in the past, you can no longer afford to allow your investments to be made without your clear understanding of exactly what you are investing in, how and whether your investments align with your plans for the future.

My colleague shared a story that hit home with me, and it may for you as well.

After my colleague’s grandmother died, her grandmother’s retirement and investment accounts went directly to her mom, due to the estate planning they had set up. No court process. No intervention. No conflict. Great!

But my colleague’s mom then never looked at the investments in those accounts. She just let them stay as they were for four years, until finally, her daughters convinced her to look.

When they did look, they were mortified to find that, even though the investments should have been gaining with the bull market we’ve been in for the last many years, the accounts had actually decreased over the years from $100,000 to $60,000. If my colleague and her mom had looked at these accounts and re-allocated them when grandma died, this would not  have been the case.

Fast forward to now, and the daughters think to look at mom’s retirement accounts with her, only to discover that mom has a 401k with $180,000 in it and it’s lost $17,000 over the last two weeks. Mom had picked her investments with the help of a friend many, many years before, and hadn’t looked at those investments since.

My colleague’s mom is mostly invested in high-growth ETFs, which may have been the right choice when she was building her retirement fund, but definitely is not the right choice given that she retires next year and will need to start making withdrawals to replace her income.

If mom doesn’t get her money into safer investments now, her daughters could end up needing to support her for the rest of her life.

So, why am I sharing this story with you?

Because now is the time for you to get connected to your investments, even if they are in a retirement account and invested through a broker or advisor. This is simply not the time to set it and forget it. It’s time to know what you have, and make intentional, aware choices about how your resources (and your parent’s resources) are being used.

Now is the time to truly understand what you have, and use it wisely.

If you or your parents have a retirement account, and you are not intimately connected to how your assets are being invested, it’s time to get more involved.

Log in to your retirement account or pull your last statement and look. Many brokerages select investment funds for their clients’ portfolios based on rates of growth. They’ll offer investment options based on a few tiers of growth and risk, and very often you have no idea what your assets are actually invested in.

Labels like “slow-growth” or “conservative” or “high-growth” or “income” aren’t enough to tell you exactly where your money is invested. So what you want to do now is look at your statement, which  should contain the names of the funds chosen for you, and you can go from there to do your research. Look up each of the funds on sites like Yahoo Finance to see what you are investing in, and whether you understand these companies, believe in their future growth, and want to stay invested there.

If your investments are tied to an index, like the S&P, are you willing to keep betting on its growth? If not, now may be the time to make a shift. It’s possible that you have some losses right now, so you’ll have to decide if you want to lock in and limit those losses (and potentially trade some future gains even) to get more connected to what you are investing in now

Go through this process with your parents, too. The money they have invested in the stock market is part of your overall family wealth. If it’s not there to support them through their senior years, that financial responsibility will eventually fall to you. Having these conversations with them now can be difficult, but it’s important. And if you need help with this, please let us know, and we can support you as you raise these issues with them.

If you have a broker you work with, call them now, and ask to get on a video conference. Then, have them help you review each investment, why it’s been chosen, and whether there may be better or other options for you or your parents.

Here’s the key: make sure you understand it, and don’t hang up the phone until you do. If your broker is using words you don’t understand, or jargon, keep asking questions until you do understand.

If you need a referral to an advisor, or want us to sit down with you to help you look at what you have, give us a call.

With everything that is happening in the world—and with the volatility of the stock market and our current reality —knowing your options is vital to preserving the life and legacy your parents have worked to build. If you need help figuring out how to best preserve these assets, we are here and ready to support you.

Proper estate planning can keep your family out of conflict, out of court, and out of the public eye. If you’re ready to create a comprehensive estate plan, contact us to schedule your Family Wealth Planning Session. Even if you already have a plan in place, we will review it and help you bring it up to date to avoid heartache for your family. Schedule online today.

If you’re struggling with debt, but don’t want to shut down your business, bankruptcy might be one way to save your company. While this may sound paradoxical, many big corporations – American Airlines, General Motors, and Kodak – have successfully used bankruptcy to restructure debt and get a fresh start.

The main difference between you and a big corporation filing bankruptcy is that if you use personal bankruptcy (either Chapter 7 or Chapter 13) to discharge or restructure your debt, it will impact your personal credit. In contrast, a Chapter 11 bankruptcy used by big corporations doesn’t hurt the credit of corporate officers or shareholders.

However, a few years of negative credit may be a valid option to give you another chance to rebuild your business. But deciding between Chapter 7 and Chapter 13, or whether to use bankruptcy at all (as opposed to negotiating directly with creditors), are big decisions—but ones we can help you evaluate.

Chapter 7 is a liquidation bankruptcy, which means all of your non-exempt assets (including your business assets) will be sold off by a court-appointed trustee to repay your creditors. This can let you wipe your personal debts clean and start over, albeit without credit available to you for some time.

And though your personal assets will be included in the bankruptcy estate, you can use exemptions to protect this property. In fact, if you don’t have a high income or significant assets, you might be able to use exemptions to protect all of what you do have using what’s known as a “no-assets case.” This is designed to ensure business owners have enough assets to sustain themselves while they get back on their feet.

Chapter 13 lets you keep your assets and repay some or all of your debts through a court-approved payment plan lasting three or five years. By filing Chapter 13, the court grants an “automatic stay” stopping ALL creditors from pursuing you. This temporarily halts repossession of your business and personal property, allowing you to potentially lower your payments—or at least give you time to catch up on those you’re behind on.

When it comes to secured debts, you can give up the collateral and convert the debt to an unsecured claim, or keep the property and continue to make payments through your repayment plan. What’s more, you typically pay only a portion of your unsecured debts, and the remainder is discharged (forgiven) at the end of the bankruptcy, provided you kept up with payments.

However, Chapter 13 requires that you pay off certain “priority” debts—back taxes, child support, and alimony—in full, regardless of your income.

Both types of bankruptcy can improve your financial situation and let you re-focus on your business, without closing your doors. However, bankruptcy is not a panacea, and if you fail to meet your court-ordered obligations, you can face serious consequences. Given this, consult with us as your Family Business Lawyer® to see if either of these bankruptcy options (or negotiating directly with creditors) are right for you.

We offer a complete spectrum of legal services for businesses and can help you make the wisest choices on how to deal with your business throughout life and in the event of your death. We also offer a LIFT Start-Up Session™ or a LIFT Audit for an ongoing business, which includes a review of all the legal, financial, and tax systems you need for your business. Call us today to schedule. Or, schedule online.

Taxes are a thorn in just about every entrepreneur’s side. Indeed, taxes are your single biggest business expense. Fortunately, it’s fairly easy to reduce the level of sting taxes cause—all it takes is a little planning and creativity.

And we’re not talking about doing anything illegal. We’re not suggesting you evade paying taxes; that’s a recipe for disaster. Instead, we’re suggesting you do what practically every highly successful business owner does and implement creative strategies to reduce your company’s tax liability to the lowest levels possible.

Last week, we discussed how you can lay the groundwork for your yearly tax strategy by having the right relationship with a qualified financial manager and a tax advisor. Here, we’ll discuss how you can use this foundation to develop and implement creative tax strategies that can save your company big bucks.

The next step in saving big on your taxes is to meet monthly with your financial manager and develop a clear system for categorizing your expenses. In order to accomplish this, your financial manager should have a clear grasp of how your business operates and its overall financial status.

To this end, your financial manager should understand all of the ways you earn revenue and the expenses required to fulfill on your product and/or service, and be able to categorize income and expenses properly. Your financial manager should produce weekly and monthly reports, so you can stay regularly apprised of your company’s financial health.

Each month, when you review your profit-and-loss statement (P&L), you’re looking for variances from the prior month as well as expenses that are improperly categorized or not categorized at all. It’s vital to categorize all expenses properly, so you can measure trends and write off as many deductions as possible against your taxable income.

In late October, your financial manager should send a year-to-date P&L to your tax advisor. Your tax advisor will use that data to create tax projections based on your current earnings versus expenses and how much you expect to bring in over the remainder of the year.

Using these projections, you can put strategies in place to minimize your tax liability. Most of these strategies need to be in place BEFORE year’s end, so make sure you’ve started this process by late November at the latest.

If your tax projections indicate that you’re going to owe money, contact us and ask for our list of year-end tax strategies. And if you haven’t run your tax projections yet because you don’t have a qualified financial manager or tax advisor, we can refer you to the professionals we trust most.

Once you have your tax projections ready, you then want to look at whether you’re likely to be in a higher tax bracket this year compared with future years. Determining this will allow you to save on your taxes by managing when you receive your income and pay your expenses.

If you’re likely to be in a higher tax bracket this year than in the future, it makes sense to push taxes off into the year(s) when your tax rate will be lower. Even if your tax bracket will be higher in future years, it still might be worthwhile to push your taxes off to the future. This way, you’ll be able to use those funds, which would otherwise be in the hands of the government.

The question you should ask is: Can I make more money with those funds now than I’d pay in higher taxes by pushing those tax payments off until later?

If you can make more money now, you can decrease this year’s taxes by pushing income into the future and accelerating expenses that you’d otherwise pay next year into this year. You can do that by enrolling clients or selling products now, but giving your customers until next year to pay for those products or services. Or you could ask your vendors if you can prepay for next year’s services this year.

If you’d prefer to pay taxes this year because you’re currently in a significantly lower tax bracket than likely in future years—or have losses that will be expiring to offset your income—you should increase this year’s income. You can generate more revenue now by offering year-end discounts on products and services that may not need to be delivered until next year.

Managing when you receive your income and pay your expenses in this manner can save you big money on your taxes this year. If you’d like more information or guidance about additional ways to save money on your taxes, contact us today.

We offer a complete spectrum of legal services for business owners and can help you make the wisest choices on how to deal with your business throughout life and in the event of your death. We also offer you a LIFT Your Life And Business Planning Session, which includes a review of all the legal, insurance, financial, and tax systems you need for your business. Schedule online today.

Our nation’s population is aging at a faster rate than ever before, and collectively we are living much longer than in the past. In fact, by 2034, seniors (age 65 and older) will outnumber children under age 18 for the first time in U.S. history, according to Census Bureau projections.

With the booming aging population, more and more seniors will require long-term healthcare services, whether at home, in an assisted living facility, or in a nursing home. However, such long-term care can be extremely expensive, especially when it’s needed for extended periods.

Moreover, many people mistakenly believe that their health insurance or the government will pay for their long-term care needs. But the fact is, traditional health insurance doesn’t cover long-term care. And though Medicare does pay for some long-term care, it’s typically limited (covering a maximum of 100 days), difficult to qualify for, and requires you to deplete nearly all of your assets before being eligible (unless you use proactive planning to shield your assets, which we can support you with if that’s important to you and your family).

To address this gap in healthcare coverage, long-term care insurance was created. Since such insurance is fairly new, here we’ll answer some of the most frequently asked questions about these policies to help you determine whether you (or your loved ones) could benefit from investing in long-term care insurance coverage as part of your estate plan.

A: Long-term care is a general term that describes the type of care or support you need when you are no longer able to handle activities of daily living (ADLs) on your own. ADLs include things, such as getting dressed, bathing, eating, and using the bathroom.

In some cases, long-term care might simply mean that you have someone assist you in your own home with getting ready in the morning and before bed at night. In other cases, long-term care might mean you move into a nursing home to recover from surgery or manage a chronic medical condition.

Some common activities of daily living (ADLs) include:

• Ambulating (walking or getting around)
• Feeding
• Bathing
• Dressing and grooming
• Using the restroom
• Continence management
• Getting in and out of bed or a chair

A: Long-term care services typically fall into two categories: personal care and skilled care. Personal care, also known as custodial care, is for people who require assistance with non-medical activities, including the following:

• ADLs such as dressing, grooming, bathing, and eating.
• Instrumental activities of daily living (IADLs), such as grocery shopping, meal prep, and laundry
• Companionship
• Supervision
• Transportation

Skilled care, or skilled nursing care, is for people who require skilled medical care or rehabilitation services, including:

• Medication management
• Vital sign monitoring
• IV treatments or feedings
• Occupational, physical, and speech therapy
• Wound care
• Mobility assistance

A: First introduced as “nursing home insurance” in the 1980s, long-term care insurance is designed to cover the expenses related to your long-term care in the event you are no longer able to handle your own ADLs.

These policies cover the cost of both personal care and skilled care services whenever and wherever you plan to receive care, whether in your own home, an assisted living facility, a nursing home, or a community care facility. Some policies even cover modifications to make your home more accessible, such as adding wheelchair ramps or grab bars to your bathroom.

A: Before your coverage kicks in, most policies require that you demonstrate you have lost the ability to engage in at least two or three ADLs. Most policies also have a deductible, or “elimination period,” which is a set number of days that must elapse between the time you become disabled (eligible for benefits) and the time your coverage kicks in.

Many policies offer a 90-day elimination period, but others can be longer, shorter, or even have no elimination period at all. Of course, the shorter the elimination period, the more expensive the premium. Additionally, long-term care policies typically come with a predetermined benefit period, which is the number of years of care it will pay for.

For example, a benefit period of three to five years is a quite common duration for such policies. Most policies also come with a cap on the dollar amount of coverage that will be paid for care on a daily basis, known as a Daily Benefit Amount.

A: Obviously, the younger and healthier you are when you buy the policy, the cheaper the premiums will be, so the sooner you invest in coverage, the better. In fact, most policies exclude certain pre-existing conditions, so if you wait until you become ill, it can be impossible to find coverage.

For example, if you have any of the following conditions, it generally disqualifies you from obtaining coverage:

• You already need help with ADLs
• You have AIDS or AIDS-Related Complex (ARC)
• You have Alzheimer’s Disease or any form of dementia or cognitive dysfunction
• You have a neurological disease, such as multiple sclerosis or Parkinson’s Disease
• You had a stroke within the past year to two years or have a history of strokes
• You have metastatic cancer
• You have kidney failure

According to the American Association for Long-Term Care Insurance (AALTCI), the best age to apply for coverage is before you reach your mid-50s. Beyond that age, your health is unlikely to improve significantly, so waiting longer will typically increase your premiums, or you may even become ineligible before acquiring a policy.

A: If you are looking to purchase long-term care insurance, you should speak with multiple insurance providers and compare their benefits, care options, and premiums. Different companies may offer the same coverage and benefits, but they can vary dramatically in price. Always ask about the insurance company’s history of rate increases, including the amount of the most recent increase.

For the best chances of success when shopping for a policy, get help from a fee-only planner, who is not compensated based on your choice of coverage. Or, if you are working with a commissioned agent, consult with your Personal Family Lawyer®, who has experience in elder law, and we can review the policy terms to ensure it’s a good fit for you before you sign on the dotted line.

A: When meeting with an insurance provider, you must get answers to the following three questions about your policy:

1. How long is the elimination period before the policy begins paying benefits?
2. What capacities, or ADLs, must you lose before coverage kicks in?
3. How many years of care are covered?

These are the most important elements in a long-term care policy, and as such, they will make the biggest difference in the quality of coverage and the amount of your premiums.

A: Yes, you can buy long-term care insurance for your parents. You will pay for the policy, and then have your parent(s) listed as the beneficiary. If you know you are going to be the primary caregiver for your aging parents, investing in a policy for them can help offset the expenses related to their long-term care.

Furthermore, buying long-term care insurance should always be a family affair, because you are going to need your family members to advocate for you and file a claim for the policy when you need to use it. Given this, make sure your family knows what kind of policy you have, who your agent is, and how to make a claim.

What’s more, you should pre-authorize the right person to speak to the insurance company on your behalf, and not just rely on a medical power of attorney. That said, you should definitely have a well-drafted, updated, and regularly reviewed medical power of attorney on file as well.

A: Once you are in your 50s, your long-term care policy should be reviewed annually to evaluate new insurance products on the market and update your policy based on your changing needs. Whatever you do, once you have a policy in place, make sure you don’t miss a premium payment. If you fail to pay, even for a short period of time, you’ll lose all of the money you invested and will have no access to the benefits when you need them.

Meet with your Personal Family Lawyer® for guidance and support in finding the right long-term care insurance policy for your particular situation. In addition to life insurance, a long-term care insurance policy is a key component in your estate plan. When combined with the right estate planning strategies, you can rest assured that your loved ones will be protected and provided for no matter what happens to you.

As your Personal Family Lawyer®, we view estate planning as much more than just planning for death, which is why we call it Life & Legacy Planning. Ultimately, it’s all about your life and the legacy you are creating by the choices you make today. Contact us today to learn more.

Proper estate planning can keep your family out of conflict, out of court, and out of the public eye. If you’re ready to create a comprehensive estate plan, contact us to schedule your Family Wealth Planning Session. Even if you already have a plan in place, we will review it and help you bring it up to date to avoid heartache for your family. Schedule online today.

With the arrival of summer, young people across the country are about to reach a key milestone: high school graduation. If you have a child claiming their diploma, now is the time to prepare them for life after leaving the nest.

Graduating high school is a significant accomplishment. However, it comes with serious responsibilities that your child probably isn’t thinking much about right now. Once your child turns 18, they become a legal adult, and specific areas of their lives that were once under your control will be solely their responsibility.

While your child will now be a legal adult, you still have essential parental duties. Yet, if you don’t support your child to step into adulthood with legal documents to help both of you, it can be challenging and costly for you to help them in the event of an emergency.

For instance, should your child get into a severe car accident and require hospitalization, you would no longer have the automatic authority to make decisions about his or her medical treatment or handle their financial matters. In fact, without legal documentation, you wouldn’t even be able to access his or her medical records or bank accounts without a court order.

To address this vulnerability and ensure your family never gets stuck in an unnecessary court process, before your kids move out or head off to college, have a conversation about estate planning and have them sign the following three documents.

1. Medical Power of Attorney

The first document your child needs is a medical power of attorney. A medical power of attorney is an advance healthcare directive that allows your child to grant you (or someone else) the immediate legal authority to make healthcare decisions on their behalf if they become incapacitated and are unable to make decisions for themselves.

For example, the medical power of attorney would allow you to decide about your child’s medical treatment if he or she is knocked unconscious in a car accident or falls into a coma due to a debilitating illness.

Without a medical power of attorney in place, if your child suffers a severe accident or illness that requires hospitalization and you need access to their medical records to make decisions about their treatment, you’d have to petition the court to become their legal guardian. While a parent is typically the court’s first choice for a guardian, the guardianship process can be slow and expensive.

And due to HIPAA laws, once your child becomes 18, no one—not even parents—is legally authorized to access his or her medical records without prior written permission. But an adequately drafted medical power of attorney will include a signed HIPAA authorization, so you can immediately access their medical records to make informed decisions about their treatment.

2. Living Will

While the medical power of attorney allows you to make healthcare decisions on your child’s behalf during their incapacity, a living will is an advance directive that provides specific guidance. These are specifications on how your child’s medical decisions should be made, particularly at the end of life.

For example, a living will allows your child to advise if and when they want life support removed should they ever require it. In addition to documenting how your child requests their medical care managed, a living will also include instructions about who should visit them in the hospital and even what kind of food they would want to have provided. For example, if your child is a vegan, vegetarian, gluten-free, or takes specific supplements. These are all things that should be considered and recorded in their living will.

Finally, speak with your child about the unique medical decisions related to the coronavirus, particularly in intubation, ventilators, and experimental medications. Your child’s quality of life decisions should also be outlined in their living will. You can find in our previous article, COVID-19 Highlights Critical Need for Advance Healthcare Directives.

3. Durable Financial Power of Attorney

Should your child become incapacitated, you may also need the ability to access and manage their finances, and this requires your child to grant you durable financial power of attorney.

Durable financial power of attorney gives you the authority to manage their financial and legal matters, such as paying their tuition, applying for student loans, paying their rent, negotiating (or re-negotiating) a lease, managing their bank accounts, and collecting government benefits if necessary. Without this document, you’ll have to petition the court for such authority.

Start Adulthood The Right Way

Before your kids head out into the world, make sure they’ve got the proper planning in place. By doing so, you are modeling good financial stewardship and setting them up right from the start. Financial and legal illiteracy is an epidemic that you can quickly address, starting with yourself and your own family.

As your Personal Family Lawyer®, we can not only help you create these vital documents, but we can also facilitate a family meeting to discuss the importance of planning. We will begin what we hope will be a life-long relationship with your children as they take this crucial first step into adulthood. Contact us today to ensure that if your child ever does need your help, you’ll have the legal authority to provide it.

Proper estate planning can keep your family out of conflict, out of court, and out of the public eye. If you’re ready to create a comprehensive estate plan, contact us to schedule your Family Wealth Planning Session. Even if you already have a plan in place, we will review it and help you bring it up to date to avoid heartache for your family. Schedule online today.

We can all learn a lot from celebrity estate planning mistakes. Discussing death can be awkward, and many people would prefer just to ignore estate planning all together. However, ignoring—or even putting off—such planning can be a huge mistake, as these celebrity stories will highlight.

The next time one of your relatives tells you they don’t want to talk about estate planning, share these famous celebrities’ stories to get the conversation started. Such cautionary tales offer first-hand evidence of just how critical it is to engage in estate planning, even if it’s uncomfortable.