Latest News

January 13, 2022 by Cava Faulkner

Unlike most of your assets, individual retirement accounts (IRAs) do not pass to your family through a will. Instead, upon your death, your IRA will pass directly to the people you named via your IRA beneficiary designation form.

Unless you take extra steps, the named beneficiary can do whatever he or she wants with the account’s funds once you’re gone. The beneficiary could cash out some or all of the IRA and spend it, invest the funds in other securities, or leave the money in the IRA for as long as possible.

For a number of reasons that we’ll address more below, you might not want your heirs to receive your retirement savings all at once. One way to prevent this is to designate your IRA into a trust.

But you can’t just use any trust to hold an IRA; you’ll need to set up a special type of revocable trust specifically designed to act as the beneficiary of your IRA upon your death. Such a trust is referred to by different names—IRA Living Trust, IRA Inheritor’s Trust, IRA Stretch Trust—but for this article, we’re simply going to call it an IRA Trust.

IRA Trusts offer a number of valuable benefits to both you and your beneficiaries. If you have significant assets invested through one or more IRA accounts, you might want to consider the following advantages of adding an IRA Trust to your estate plan.

1. protection from creditors, lawsuits & divorce

While IRAs are typically protected from creditors while you’re alive, once you die and the funds pass to your beneficiaries, the IRA can lose its protected status when your beneficiary distributes the funds to him or herself. One way to counteract this is to leave your retirement assets through an IRA Trust, in which case your IRA funds will be shielded from creditors as long as they remain in the trust.

IRA Trusts are also useful if you’re in a second (or more) marriage and want your IRA assets to be used for the benefit of your surviving spouse while he or she is living, and then to distributed or be held for the benefit of your children from a prior marriage after your surviving spouse passes. This would ensure that your surviving spouse cannot divert retirement assets to a new spouse, to his or her children from a prior marriage, or lose them to a creditor before the funds ultimately get to your children.

2. Protection from the beneficiary’s own bad decisions

In addition to outside creditors, an IRA Trust can also help protect the beneficiary from his or her own poor money-management skills and spending habits. If the IRA passes to your beneficiary directly, there’s nothing stopping him or her from quickly blowing through the wealth you’ve worked your whole life to build.

When you create an IRA Trust, however, you can add restrictions to the trust’s terms that control when the money is distributed as well as how it is to be spent. For example, you might stipulate that the beneficiary can only access the funds at a certain age or upon the completion of college. Or you might stipulate that the assets can only be used for healthcare needs or a home purchase. With our support, you can get as creative as you want with the trust’s terms.

3. Tax savings

One of the primary benefits of traditional IRAs is that they offer a period of tax-deferred growth, or tax-free growth in the case of a Roth IRA. Yet if the IRA passes directly to your beneficiary at your death and is immediately cashed out, the beneficiary can lose out on potentially massive tax savings.

Not only will the beneficiary have to pay taxes on the total amount of the IRA in the year it was withdrawn, but he or she will also lose the ability to “stretch out” the required minimum distributions (RMDs) over their life expectancy.

A properly drafted IRA Trust can ensure the IRA funds are not all withdrawn at once and the RMDs are stretched out over the beneficiary’s lifetime. Depending on the age of the beneficiary, this gives the IRA years—potentially even decades—of additional tax-deferred or tax-free growth.

4. Minors

If you want to name a minor child as the beneficiary of your IRA, they can’t inherit the account until they reach the age of majority. So without a trust, you’ll have to name a guardian or conservator to manage the IRA until the child comes of age.

When the beneficiary reaches the age of majority, he or she can withdraw all of the IRA funds at once—and as we’ve seen, this can have serious disadvantages. With an IRA Trust, however, you name a trustee to handle the IRA management until the child comes of age. At that point, the IRA Trust’s terms can stipulate how and when the funds are distributed. Or the terms can even ensure the funds are held for the lifetime of your beneficiary, to be invested by your beneficiary through the trust.

Find out if an IRA trust is right for you

While IRA Trusts can have major benefits, they’re not the best option for everyone. Laws regarding IRA Trusts vary widely from state to state, so in some places, they’ll be more effective than others. Plus, the value of IRA Trusts also varies greatly depending on your specific family situation, so not everyone will want to put these trusts in place.

If you have more than $150,000 in retirement accounts, consult with us to find out if an IRA Trust is the most suitable option for passing on your retirement savings to benefit your family.

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.

January 11, 2022 by Cava Faulkner

In the sea of financial planning wisdom, there are too few messages about the importance of mindset. Think your salary can bring you safely to retirement? Think again. Gone are the days when simply saving money was enough to get you to retirement. With pensions practically a thing of the past, it takes more than just a big piggy bank to afford retirement. Do you need a second income to afford retirement?

Saving strategies aside, changing your mindset from that of a consumer to thinking like an investor, or even an entrepreneur through a side hustle, can give you the security you’ll need to ensure a comfortable retirement.

Many people believe that investing wisely is the key to taking your retirement planning into the 21^st century, but is it really enough? Smart financial advisors recommend multiple income streams to ensure you can retire comfortably. Even with a healthy retirement savings, it is wise to look for ways to diversify your income sources.

Enter: the side hustle. Your side hustle (i.e. a second job, side business, or income-generating investment) boosts your income while minimizing risk that you’ll run out of money down the road. Your salary isn’t guaranteed, but with a side hustle (or a few), you won’t put your retirement in jeopardy if you lose your job or change jobs.

If an advisor focuses just on the certain amount you need to save by age 55 to retire, they might not have your best interests in mind. In reality, there is no magic number. No one can predict how much you’ll need or even tell you where you need to keep your money. That’s why it’s so important not to limit your retirement planning to simple money saving techniques.

If you are ready to take the next step toward planning wisely for your retirement on the road to reaching financial independence, start by sitting down with us. As your Personal Family Lawyer®, we will walk you step by step through creating a plan that will help you achieve your financial goals. Ask about your Money Map Planning Process or start with a Family Wealth Planning Session, which will give you absolute clarity on what you own, and what will happen to all of it when something happens to you, so you can make informed, empowered decisions for the one’s you love. Before the session, we’ll send you a Family Wealth Inventory and Assessment to complete that will get you thinking about what you own, what matters most to you, and about your wishes in case you become incapacitated or when you die. Schedule online.

January 11, 2022 by Cava Faulkner

Your partnership agreement is a legal document that outlines each partner’s rights and responsibilities as well as the operating procedures for the business. When a group of people come together to invest in a business venture, the partnership agreement can provide valuable protections. But drafting an agreement that provides you with the protections you need can be tricky. Including ironclad clauses that offer comprehensive protection is a good place to start.

Five Clauses Every Partnership Agreement Needs

1. Decision-Making

Decide now how you will make decisions down the road when there is no consensus. Having a protocol in place for managing disagreement will help you move forward even when consensus is not possible.

2. Capital Contribution

Make sure each capital contribution is documented clearly. Be sure everyone knows who put in what and when. Also, decide what will happen if that capital runs out. Will you contribute more capital, turn to other sources of funding, or close your doors? Don’t wait until you’ve run out of capital or are facing a financial downturn to consider this piece.

3. Salaries and Distributions

Address when and how the partners will be able to take money out of the business. Will you each be repaid for your initial investment? What happens if one partner wants to expand their investment and keep money in the business longer?

4. Death and Disability

This isn’t easy to talk about, but it is important to go over what will happen to a partner’s shares if he or she dies or becomes disabled and can no longer contribute to the business. Having this information in a legal agreement will help you create individual estate plans that address your business holdings. Unfortunately, we see many partnership agreements that overlook this altogether. Make sure yours doesn’t, and call us for support, if it does.

5. Dissolution

Again, this can be a sensitive topic to broach, but it is very important to decide what will happen when a partner wants to leave the business. Better to determine the protocol at the beginning of the business relationship than at the end. Agree on your exit strategy now.

Partnerships can present unique problems, but with sound planning, you can overcome them. If you want to avoid the costly legal mistakes partnerships often make, begin by sitting down with us. We can establish a sound legal, insurance, financial, and tax system for your business so you can focus on growth.

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.

January 9, 2022 by Cava Faulkner

October 19th-25th, 2020 is National Estate Planning Awareness Week, so if you’ve been thinking about creating an estate plan, but still haven’t checked it off your to-do list, now is the perfect time to get it done. If you or anyone you love has yet to create a plan, contact us, as your Personal Family Lawyer®, to get your plan started today.

When it comes to putting off or refusing to create an estate plan, your mind can concoct all sorts of rationalizations: “I won’t care because I’ll be dead,” “I’m too young,” “That won’t happen to me,” or “My family will know what to do.”

But these thoughts all come from a mix of pride, denial, and above all, a lack of real education about estate planning and the consequences to your family of not planning. Once you understand exactly how planning is designed to work and what it protects against, you’ll realize there is no acceptable excuse for not having a plan.

Indeed, the first step in creating a proper plan is to thoroughly understand the potential consequences of going without one. In the event of your death or incapacity, not having a plan could be incredibly traumatic and costly for both you and your family, who will be forced to deal with the mess you’ve left behind.

While each estate and family are unique, here are some of the things most likely to happen to you and your loved ones if you fail to create a plan.

1. Your family will have to go to court

If you don’t have a plan, or if you only have a will (yes, even with a will), you’re forcing your family to go through upon your death.The legal process for settling your estate, and even if you have a will, it’s notoriously slow, costly, and public. But with no plan at all, can be a true nightmare for your loved ones.

Depending on the complexity of your estate,can take months, or even years, to complete. And like most court proceedings,can be expensive. In fact, once all of your debts, taxes, and court fees have been paid, there might be nothing left for anyone to inherit. And if there are any assets left, your family will likely have to pay hefty attorney’s fees and court costs in order to claim them.

Yet, the most burdensome part of is the frustration and anxiety it can cause your loved ones. In addition to grieving your death, planning your funeral, and contacting everyone you’re close with, your family will be stuck dealing with a crowded court system that can be challenging to navigate even in the best of circumstances. Plus, the entire affair is open to the public, which can make things all the more arduous for those you leave behind, especially if the wrong people take an interest in your family’s affairs.

That said, the expense and drama of the court system can be almost totally avoided with proper planning. Using a trust, for example, we can ensure that your assets pass directly to your family upon your death, without the need for any court intervention. As long as you have planned properly, just about everything can happen in the privacy of our office and on your family’s time.

2. You have no control over who inherits your assets

If you die without a plan, the court will decide who inherits your assets, and this can lead to all sorts of problems. Who is entitled to your property is determined by our state’s intestate succession laws, which hinge largely upon whether you are married and if you have children.

Spouses and children are given top priority, followed by your other closest living family members. If you’re single with no children, your assets typically go to your parents and siblings, and then more distant relatives if you have no living parents or siblings. If no living relatives can be located, your assets go to the state.

But you can change all of this with a plan and ensure your assets pass the way you want.

It’s important to note that state intestacy laws only apply to blood relatives, so unmarried partners and/or close friends would get nothing. If you want someone outside of your family to inherit your property, having a plan is an absolute must.

If you’re married with children and die with no plan, it might seem like things would go fairly smoothly, but that’s not always the case. If you’re married but have children from a previous relationship, for example, the court could give everything to your spouse and leave your children out. In another instance, you might be estranged from your kids or not trust them with money, but without a plan, state law controls who gets your assets, not you.

Moreover, dying without a plan could also cause your surviving family members to get into an ugly court battle over who has the most right to your property. Or if you become incapacitated, your loved ones could even get into conflict over your medical care. You may think this would never happen to your loved ones, but we see families torn apart by it all the time, even when there’s little financial wealth involved.

We can help you create a plan that handles your assets and your care in the exact manner you wish, taking into account all of your family dynamics, so your death or incapacity won’t be any more painful or expensive for your family than it needs to be.

3. You have no control over your medical, financial, or legal decisions in the event of your incapacity

Most people assume estate planning only comes into play when they die, but that’s dead wrong—pun fully intended. Although planning for your eventual death is a big part of the process, it’s just as important—if not more so—to plan for your potential incapacity due to accident or illness.

If you become incapacitated and have no plan in place, your family would have to petition the court to appoint a guardian or conservator to manage your affairs. This process can be extremely costly, time consuming, and traumatic for everyone involved. In fact, incapacity can be a much greater burden for your loved ones than your death.

We, as your Personal Family Lawyer®, can help you put planning vehicles in place that grant the person(s) of your choice the immediate authority to make your medical, financial, and legal decisions for you in the event of your incapacity. We can also implement planning strategies that provide specific guidelines detailing how you want your medical care to be managed, including critical end-of-life decisions.

4. You have no control over who will raise your children

If you’re the parent of minor children, the most devastating consequence of having no estate plan is what could happen to your kids in the event of your death or incapacity. Without a plan in place naming legal guardians for your kids, it will be left for a judge to decide who cares for your children. And this could cause major heartbreak not only for your children, but for your entire family.

You’d like to think that a judge would select the best person to care for your kids, but it doesn’t always work out that way. Indeed, the judge could pick someone from your family you’d never want to raise them to adulthood. And if you don’t have any family, or the family you do have is deemed unfit, your children could be raised by total strangers.

What’s more, if you have several relatives who want to care for your kids, they could end up fighting one another in court over who gets custody. This can get extremely ugly, as otherwise well-meaning family members fight one another for years, making their lawyers wealthy, while your kids are stuck in the middle.

With this in mind, if you have minor children, your number-one planning priority should be naming legal guardians to care for your children if anything should happen to you. This is so critical, we’ve developed a comprehensive system called the Kids Protection Plan® that guides you step-by-step through the process of creating the legal documents naming these guardians.

Naming legal guardians won’t keep your family out of court, as a judge is always required to finalize the legal naming of guardians in the event of death or incapacity of parents. But if it’s important to you who raises your kids if you can’t, you need to givethe judge clear direction.

On top of that, you need to take action to keep your kids out of the care of strangers over the immediate term, while the authorities figure out what to do if you’re incapacitated or dead. We handle that in a Kids Protection Plan®, too.

You can get this process started right now for free by visiting our user-friendly website: https://christine.kidsprotectionplan.com/

No more excuses

Given the potentially dire consequences for both you and your family, you can’t afford to put off creating your estate plan any longer. As your Personal Family Lawyer®, we will guide you step-by-step through the planning process to ensure you’ve taken all the proper precautions to spare your loved ones from needless frustration, conflict, and expense.

That said, the biggest benefit you stand to gain from putting a plan in place is the peace of mind that comes from knowing your loved ones will be provided and cared for no matter what happens to you. Don’t wait another day—contact us, as your Personal Family Lawyer®, to schedule an appointment, so you can finally check this urgent task off your to-do list.

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.

January 8, 2022 by Cava Faulkner

While starting and building a successful business is immensely challenging, selling one can be almost as difficult. Many business owners are surprised by just how time consuming and laborious the sales process is. Fortunately, tons of time and effort can be saved simply by avoiding these four common pitfalls:

1. Insufficient Preparation

You certainly wouldn’t plant a “For Sale” sign in your yard without preparing your home for the market, yet many people basically do just this by not taking the proper steps to prep their business before attempting to sell. On average, it takes two to four years to sell a company, so this isn’t something you should do on the fly.

Just gathering all of the necessary documentation—financials, business history, profit forecasts—is a massive undertaking and must be done before you can even set your price. Preparation is also key to closing a sale. If buyers see you’ve done a thorough job preparing your sales portfolio, this should convince them the business has been run in an equally efficient manner.

We can be an invaluable asset in helping prepare your business for sale. We’ll guide you through the documentation process, ensuring you have all of the necessary records needed to wow potential buyers.

2. Improper Valuation & Pricing

Pricing a business can be sensitive. The business is your baby, and you want to see a healthy return on the time, energy, and money you’ve put into building it. However, emotion has no bearing on a business’s value. Only quantifiable criteria like cash flow, current market prices, and growth forecasts should influence pricing. For optimal valuation, get the objective opinion of a third-party appraiser.

And don’t forget to take into account the total cost of the sale. If you set the price without considering the amount of taxes and fees that will be deducted, you could end up with much less money than expected.

We’ll help you accurately assess financials and tax obligations for the sale, while also providing trusted advice on any legal ramifications that might affect the process.

3. Selling to the wrong person

It might be tempting to sell to someone you know—a friend, relative, or colleague—but camaraderie has no part in a sale either. To choose the right person, pre-qualify all potential buyers and agree to share business records with them only if they sign a confidentiality agreement. This will ensure anyone you deal with is actually serious about buying.

Evaluate several qualified buyers; don’t just sell to the first person who comes knocking. Having a pool of buyers not only provides backup if a sale falls through, it also offers leverage when negotiating terms.

We can help you evaluate qualified buyers as well as draft legal documents like confidentiality agreements and other contracts.

4. Trying to do everything yourself

You’re an expert at running a business, but that doesn’t mean you’re competent at selling one. Besides, selling can be lengthy and labor-intensive, so it’s doubtful you’ll have time to manage the sale and run the company at the same time. Given this, it’s best to hire a business broker to facilitate the process.

A veteran broker can handle vital tasks like overseeing preparation, taking care of buyer pre-qualification, showing the business, and negotiating terms. While brokers cost more, they often sell more quickly and boost the asking price, making them well worth the investment. It’s also advisable to seek the counsel of other professionals like accountants, financiers, and bankers. In fact, putting together a seasoned team of advisors is one of the first things to do once you’ve decided to sell.

We can also assist with numerous financial and tax-related matters, putting you well ahead of the curve before you even get started. Allow us to help you get the money you deserve for your most valuable asset and ensure the sales process goes as smoothly as possible.

January 7, 2022 by Cava Faulkner

Question: Does self care help you be a better parent? All parents have undoubtedly felt guilty at some point for not spending enough time with their children. A large part of this guilt comes from our culture. American parents are pressured to dedicate superhuman levels of time and energy to caring for their children to ensure optimal development.

This notion is so prevalent, it’s even garnered names like “helicopter parenting” and “intensive mothering.” Trouble is, this style of child rearing is extraordinarily taxing on one’s mental and physical health. Not to mention, many believe such obsessive control not only doesn’t work, but may actually harm a child’s development.

If you’re nagged by such guilt, there’s good news. Recent research suggests that worrying about the amount of time you spend with your kids is totally unwarranted. A 2015 study published in the Journal of Marriage and Family found that for children aged 3 to 11, there was no statistically significant association between the amount of time they spent with their mothers and their outcomes in terms of behavioral health, emotional health, or academic performance.

The study did find that teens experienced less delinquency when they spent more time with their mothers. However, this outcome occurred with teens who spent an average of six hours a week with the family—not exactly a massive commitment. What’s more, the study found when parents are stressed, anxious, and guilty, spending time with kids can even be harmful. Perhaps becoming aware of this now can let you off the hook and free up your time for self care first.

“Mothers’ stress, especially when mothers are stressed because of juggling work and trying to find time with kids, may actually be affecting their kids poorly,” study co-author Kei Nomaguchi said in an interview with the Washington Post.

As with everything in life, successful parenting involves finding a healthy balance between caring for your kids and caring for yourself. It’s vital—for you and your children—to develop a self-care routine that allows you to devote regular periods of time each day to relaxing and recharging your mental, physical, and spiritual resources.

There are countless self-care methods, but one of the easiest, least expensive, and most effective practices is mindfulness meditation. Although the word often conjures up images of monks, monasteries, and mountaintops, meditation is no longer the sole domain of celibate yogis and wandering ascetics.

Today, meditation is practiced by millions of Americans, regardless of religious affiliation or lack thereof. And it’s not just childless hipsters who meditate. Even the busiest parents are sitting quietly each day to reduce stress and cultivate mindfulness—the ability to maintain non-judgemental awareness of one’s moment-to-moment experience.

The reason meditation has grown so popular? It works. Dozens of clinical studies have shown that meditation offers myriad benefits: stress reduction, decreased emotional reactivity, increased relationship satisfaction, enhanced memory, sharper focus, and expanded cognitive flexibility.

Some of you are probably thinking you can’t possibly add another item to your daily to-do list; however, meditating for just 10 to 15 minutes a day is enough to generate results. And once you experience meditation’s benefits, you’ll likely wonder how you ever got by without it.

Just ask Shana Smith, mother of two and author of Meditation for Moms and Dads: 108 Tips for Mindful Parents and Caregivers. Her book intimately details how meditation made her a better mother and kept her healthy and sane during parenthood’s most trying stages. Indeed, she believes meditation is not only possible for busy parents, it should be mandatory.

“If I forget to meditate, I’m much more likely to be overwhelmed by parenting’s physical, mental, and emotional demands,” she said. “With meditation, these demands are more easily kept in perspective within life’s bigger picture.”

Maintaining perspective on life’s big picture is a critical part of estate planning as well. During a Family Wealth Planning Session, we’ll help you assess what’s most important for your family’s well-being and security and protect those assets in a comprehensive estate plan. To this end, estate planning—like meditation—can reduce anxiety and stress over your children’s future, allowing you to take better care of both your kids and yourself. Schedule online.

Could an IRA Trust Benefit Your Family?