Getting Divorced? Vital Info Re Your Estate Plan
If you’ve already got an estate plan in place and you are going through a divorce, you’ve got some steps to take because no matter how you cut it, divorce has a major impact on your estate plan. I hate to tell you that because I know that the last thing you want to think about in the middle of your divorce is your estate planning and yet, it’s critically important unless you want your ex to end up with control over all of your assets if anything happens to you.
Yep, that’s what could happen if you don’t address your estate planning as part of your divorce … your ex could end up with everything or at the very least in control of everything.
For most people going through a divorce, this is the last thing they want. It certainly was for me!
To make sure this doesn’t happen, you need to revamp your estate plan and create a new Will, Trust, Powers of Attorney and Health Care Directives during your divorce and not wait until afterwards.
Revamp Your Estate Plan During Your Divorce Or Your Ex Could Get Everything (including control of your medical decisions!)
Here’s the truth: if you are in an accident during your divorce, it’s your soon to be ex who will be making your health care decisions, who will be in control of your money, and will inherit everything if you die unless you have new documents drafted.
Your estate planning lawyer should be one of the first calls you make when you file for divorce.
While your divorce is pending, your estate planning lawyer can prepare a divorce Will (a temporary Will that ensures your soon to be ex won’t inherit from you if you die), create a new Trust to receive the assets that you will receive after the divorce is final and update your health care directives and powers of attorney. One thing to be careful of though is not to move any of your assets into your new Trust until after your divorce is final or until your divorce lawyer gives you the go-ahead.
Once the divorce is final and you know which assets you are receiving, you should then revisit your estate planning lawyer and get a new plan in place that will be established to cover what you have been given as part of the divorce and help you plan for your financial future.
Change Your Beneficiary Designations
You also want to make sure to review all of your beneficiary designations after your divorce. This is absolutely critical and often overlooked. And, you need to do it even if your divorce agreement says your ex won’t receive any benefits. If you don’t change your beneficiary designations, your agreement may be superseded!
There’s actually a case pending in the United States Supreme Court right now about this very thing. Husband and wife got divorced and husband never changed his beneficiary designation on his pension account. Then, Husband died. The pension administrator paid the benefits to his ex-wife, as indicated by the beneficiary designation. Husband’s daughter from a prior marriage sued for the benefits claiming that the ex-wife had given up her rights to the pension in the divorce agreement. The first Court heard the case and agreed. The appeals Court heard the case and disagreed, saying that the beneficiary designation trumped the divorce agreement. Now, the final answer will come from the Supreme Court.
You don’t want to put your family through this. So update your beneficiary designations.
Review Your Life Insurance Provisions.
If you have any kind of a requirement in your marital settlement agreement that life insurance should be maintained on the life of either spouse for the benefit of the children, you should have this provision reviewed by your estate planning lawyer.
We’ve seen so many provisions like this that are just not well thought out. For example, a provision that says “Husband shall maintain life insurance having an aggregate death benefit of $250,000 for the benefit of the minor children” sounds great, right? But, this is just the kind of provision that provides no protection for the minor children at all.
How long does the insurance have to be maintained? What type of insurance has to be used?
Can Husband just get a cheap 1 year term policy that needs to be renewed each year?
What if he gets ill and becomes uninsurable? Who should be the beneficiary of the policy?
An effective provision should provide the type of insurance and the minimum length of time it must be in force, specific ratings requirements for the insurance company and whether the policy should be in trust or payable to a trust. Your estate planning lawyer can help to identify these issues where even a very good divorce lawyer may overlook them.
Bottom line … your divorce has real, meaningful implications for your estate plan. I know it’s not something you want to think about and yet if you don’t, you and your family could end up very, very sorry you didn’t.
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Happy Halloween
I’m looking forward to spending the entire day tomorrow up at the kids’ school for Halloween.
They have a cute Halloween parade and then we’ll bring the kids over to Little Sisters of the Poor in San Pedro to bring some Halloween cheer to the men and women there who love to see the kids all dressed up.
Kaia’s going as Little Bo Peep this year and unfortunately we couldn’t get Noah to go as a sheep - of course, he wants to be a swamp reaper - so perhaps, I’ll be the sheep.
I’ll send pictures, if so.
Check out my personal blog for a scary update re toxic Halloween Candy and make sure to check out the music video Kaia appeared in, which has landed her and her fellow choir members on the Ellen show! That’ll air on election day, Nov 4.
Getting Divorced? Critical Estate Planning Info.
If you are going through a divorce, you’ve got to call your lawyer (or at least read this week’s article). You don’t want your ex getting everything, do you?
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Back From NYC
I’m back from my whirlwind Cape Cod/NYC trip and fighting off the sniffles congestion thing from all that traveling.
The CNBC meeting was off the charts. If I could have scripted the words that came out of the mouths of the development executives I met with, I would not have had them say anything different.
It was that good.
Next steps? I don’t know! That’s how the “business” is apparently.
We love you, we want you … now let’s see how you deal with radio silence.
Fortunately, I was well prepared for this by my high school boyfriends so I’m in a place of anticipatory patience.
And manifesting the opportunity of my lifetime.
More about that on my personal blog.
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You’ll Kick Yourself If You Miss This: Financial Freedom Opportunity #1 in a Down Market.
Yes, the market is down. You’ve probably lost a little money. Maybe a lot. You’ve heard me talking about opportunities. Perhaps you’ve wondered what I meant by opportunities.
Today, the first of two opportunities you cannot afford to miss in this market downturn.
This one is for business owners.
Planning Opportunity #1: Proactive personal asset protection
If you own your own business, this is the time to think about asset protection.
A few years ago, when I heard about asset protection, I poopoo’d it as something that didn’t apply to me.
First, I figured I didn’t have anything to protect and didn’t need to waste money protecting assets for the future when I needed to focus on growing those assets now.
Second, I thought it was something fear-mongering lawyers put out there to generate more business, but wasn’t really necessary.
Last, I thought it was only for the uber-rich, who were setting up shell companies in places like the Cayman Islands.
Lo and behold, was I wrong on all fronts. And, if you think asset protection doesn’t apply to you, you’re probably wrong too.
Asset protection means taking control of what you can control - your own behavior and decisions – so you don’t end up in a place of reaction and fear due to events outside of your control. It means proactively safe-guarding what you have acquired and what you are building for the future. It means working with a trusted advisor to guide you during times of uncertainty. It means making smart choices, not from a place of fear, but from a place of empowerment.
Let’s start there.
Is asset protection important even if you don’t have much?
Of course, loss hurts no matter what. Some might say it’s even more important when you don’t have much because the impact of a loss of the little you do have is so much greater when you only have a little.
Check out this case. This couple used an advanced asset protection strategy to protect their kids’ 529 college accounts and less than $200,000 of other assets. And, thank goodness they did or they could have lost everything after a business deal went bad. At least, at the end of the day, they still had what they safe-guarded.
Safe-guarded from what you might ask?
This is the part that was most surprising to me. I used to think the threat of lawsuits was mostly hyperbole pushed by over-active lawyer imaginations. Over the past two years I’ve learned through my own personal experience that’s not the case. As my success has grown, I’ve been threatened with more than one lawsuit.
Having an asset protection plan in place to protect my most valuable assets has allowed me to approach each of the situations calmly and without concern.
Here are a few examples:
* When I moved into my new house, we hired a cleaning crew to prepare the house for us. One of the housekeepers was cleaning a window and fell through plastic covering a vent left behind when our floors were refinished. Of course, her employer threatened a lawsuit.
* A former employee who was fired for theft has brought a retaliatory labor board claim against me. Lawsuit filed.
* When I moved out of my former house, my landlord and I disagreed about who was responsible for the remaining time on the lease despite my having found a suitable replacement tenant they didn’t want.
Each of the circumstances that led to these unfortunate situations was and is outside of my control. What is within my control and has contributed to my ability to calmly respond without stress instead of being forced into a place of reaction and fear is knowing my personal assets are protected.
So, how does all of this apply to you?
As a business owner, there are many things outside of your control.
What if one of your businesses is forced into bankruptcy due to the business failure of one of your key clients? What if a disgruntled employee decides to bring a lawsuit? What if someone gets hurt on one of your properties? What if there is a disagreement between you and one of your partners, clients or vendors? What if you can’t make the payments on your equipment or property lease?
Without asset protection in place, all of your personal assets could be at risk.
With proactive asset protection planning, not from a place of fear, but from a place of empowerment, you would have the peace of mind of knowing that your children’s future is safe-guarded.
During this time of uncertainty, that kind of peace of mind can be priceless. It will allow you to make business decisions more aggressively and ultimately achieve more of the success you want.
The key is to be proactive because otherwise, the asset protection planning may not work, no matter how good it is.
If you wait until something has happened, you cannot put in place asset protection plans without violating laws against fraudulent conveyance, which prohibit you from moving assets once you are facing the threat of a lawsuit.
Here’s an asset protection action plan for you to take right now:
1. Make sure your business is properly incorporated as either an LLC or a Corporation.
2. If you are incorporated, be sure you are in compliance with all State filings, records of meetings, separate sets of books and bank accounts, and other record keeping requirements.
3. Consider advanced asset protection strategies, such as a Nevada LLC, which provides “charging order” protection, or an irrevocable trust to shield your personal assets.
Asset protection is necessary even if you are doing everything right. In fact, I’d say it’s necessary especially if you are doing everything right because that means you’re successful. And the more successful you are, the more important this is.
Remember, it’s not about reacting from fear, it’s about empowerment.
If you are a business owner and you are serious about doing some proactive asset protection planning, go to the Personal Family Lawyer website and request a Family Wealth Planning Session. Use the certificate code “Asset Protection” and I’ll get you a private phone consultation with one of the top asset protection lawyers in the United States. Please only take me up on this if you are serious about asset protection, have at least $100,000 of assets outside of your business to protect and you are willing to make the investment in proactive protection.
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Disability Insurance Claim?
Before you make a claim for coverage under your disability insurance policy, you must read this book. It reveals the mistakes claimants and their doctors make and shows you how to fill out the forms correctly. It contains horror story after horror story of folks who made mistakes in their claims and were denied as a result. Don’t file a claim for coverage without checking Robbert Without a Gun by Ben Glass out first.
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Big News from New York
I’m writing this week from New York City where I’ve had the week of my life.
I met with CNBC earlier in the week, and I tell you, I could not have scripted the meeting any better than what happened.
I’m not ready to reveal details yet as there’s nothing in writing and I feel a little nervous even getting excited about it, but if everything goes forward as suggested, this is going to be huge.
It’s all happening, my friends. It’s all happening.
While I was here, I also go to participate in a panel of Mommy Bloggers, in which we spoke to big corporations about how to leverage the influence of mom, met with editors from Parents Magazine, Ser Padres (the Spanish version of Parents Magazine), and American Baby, and taped three episodes of Better TV.
Oh, and perhaps the highlight of the whole trip? While at CNBC, I got my hair and makeup done by the amazing Laura, who does hair and makeup for Donny Deutsch, Maria Bartiromo, and Suze Orman.
No wonder they all look so great! This woman knows what she’s doing and she’s got all the inside scoop on everyone’s careers. I learned so much just talking to her!
With Love,
Alexis
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Can’t Afford Your Mortgage - Help Is Here
“Can’t Afford Your Mortgage? Help Is Here!”
By Debbie Tretheway & Michelle Alessi
The Hope for Homeowners program will continue FHA’S existing and successful efforts to provide aid to struggling families trapped in mortgages they currently cannot afford. Under the program, certain borrowers facing difficulty with their mortgage will be eligible to refinance into FHA-insured mortgages they can afford. By continuing to slow the rate of foreclosures this program will support FHA’S existing effort to stabilize local housing markets. The program will last from October 1, 2008 through September 30, 2011.
Sustainable, Absorbability, Homeownership
Hope for Homeowners maintains FHA’S long-standing requirement that new loans be based on a family’s long-term ability to repay the mortgage. Only your primary residence is eligible for FHA-insured mortgages.
Borrowers must also meet the following eligibility criteria:
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Your mortgage must have originated on or before January 1, 2008
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Your mortgage debt must be at least 31 percent of your gross income
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You cannot afford your current loan
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You did not intentionally miss mortgage payments; and
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You do not own a second home.
Features of FHA-insured loans under the new program include:
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30year fixed rate mortgage
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Maximum 90 percent loan-to-value ratio; you cannot borrower more than 90% of the homes current value determined by FHA appraiser
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No prepayment penalties
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$550,440 maximum mortgage amount
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New loan will replace any existing liens
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New home appraisals from Fill-approved appraisers.
Homeowners May Already Be eligible For Assistance
Families should not wait to seek mortgage relief. You can determine if you are already eligible for mortgage assistance through FHA secure. FHA’S existing refinancing program. Obtain information through any of the following options:
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Contact a local, HUD-approved housing counseling agency at HUD.GOV
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Contact the HOPE NOW Alliance at (888) 995-HOPE
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Call FHA at (800) CALL-FHA
This article was written by Debbie Tretheway & Michelle Alessi: “Our vision is to design customized loan programs that fulfill our clients’ present and future needs. Working in harmony with our clients, professional colleagues, and community, we aim to maximize The Power Of Two Working For You.” Visit www.debbieandmichelle.com for more information.
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I’m Scared Too … What to Do Now
I was going to write to you today with 6 actions steps to take to prosper now. But, I logged into my Schwab account yesterday to find out that I had lost over 1/3 of the account value in my investment account, ½ the value in my Roth IRA and ¼ of the value of my Traditional IRA.
I wanted to cry. Ok, truth be told, I did cry a little bit.
Then, last night, I had a dream that my teeth were falling out. I haven’t had one of those in a long while. I only have them when I’m stressed. It’s from grinding my teeth.
And, I realized that without even being consciously aware of it, I’m massively stressed about by what’s going on around me. If I am, you are.
Truthfully, I have nothing to be stressed about. My business is better than ever. I live in paradise and even if I lost every bit of money I’ve accumulated in investment accounts, I’d still be just fine.
But, all of this economy stuff has impacted me at a core, subconscious level. It’s uprooted financial fears that are grounded in my childhood and the past and while not based in my current reality are clearly still there.
How do I know?
I find myself distracted. First thing this morning instead of focusing on my business, I was obsessing about the money lost in my investment accounts. I find myself searching the net for information about the economy and what’s happening out there.
Not focusing on my business or on anything that I can control.
And if I’m distracted, I bet you are too. So, the 6 action steps will have to wait until tomorrow because what I have to say today is too important and if you don’t heed this message, you will be too stuck to get into action.
That’s the real danger of what’s happening in the economy. Many thanks to Stephen Fairley for helping me see this clearly.
What I feel inside of my body and I think you do too is overwhelming fear
Here’s the problem:
What we focus on grows.
As the news media, the internet and people around us spout the doom and gloom news about the economy, we experience fear on a bodily level. Even when that fear is not externally justified because our own situations are pretty darn good (for example, this is a great opportunity for people who were previously shut out of the housing market to own their own homes), the fear is in the air and it can be hard to ignore.
And if you are like me and have financial fear deeply rooted in your consciousness as a result of growing up with programming that have led to lack consciousness, unresolved emotions can rear their ugly heads and manifest themselves in illness, general dis-ease, and worst of all distraction.
If you are a business owner, you cannot afford to get distracted by this fear. Distraction leads to lack of focus, which leads to decreased action, which leads to a decrease in your business. This is the biggest danger to your business, not the economy.
If you are able to get out of the fear and FOCUS your business will be successful. No matter what happens with the economy, you will find a way to thrive. Haven’t you always?
And, if you haven’t, it’s a perfect time to start learning how.
So, what should you focus on? Only that which you can control.
Most of what is going on is outside of your control. You cannot control the ups and downs of the Dow. You cannot control everything going on out there.
The only thing you can control is yourself and your own response to what’s happening.
You can control your personal actions. So, pull yourself away from the news and the internet and take a few minutes to make a list of everything that is within your control and focus on only those things.
If you have money invested in the stock market that you know you are going to need within the next year, liquidate those accounts and get them into FDIC insured bank accounts, which is where they should have been in the first place. Don’t beat yourself up if they weren’t. Just be thankful that you learned from the mistake before you lost all of your money and take action now.
If you have money invested in the stock market that you are not going to need for another 20 years or more, leave it where it is and do NOT LOOK at the account values again. Everytime you look remind yourself that you have just lost focus and bring yourself back to awareness of what you can do now.
Here’s a great exercise - each time you find yourself losing focus, take out a piece of paper and make a list of everything you can do right now to increase your income, then start to take action on those items.
If you are ambushed by co-workers or friends who insist on ratcheting up the fear level or spewing negative prophesies, tell them you are not willing to do that today and send them this article to read.
If you feel like you need to indulge your fear a little bit, take 5 minutes and write down everything you are afraid of and the worst case scenario if all of those things actually happen. Write down your beliefs about those outcomes and inquire within as to whether those beliefs are really true.
I think what you’ll find if you do all of this is that you are okay. All of your needs are truly met in this moment and that the fear is just a big test to see how committed you are to your path of success.
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What Now? How to Find the Golden Opportunities Right Beneath Your Feet
Yes, the economy is in the toilet. Yes, it’s a scary time. And, yes there are loads of opportunities.
It’s true. If you stop watching the nightly news and start listening to the right people – people like Suze Orman, Ramit Sethi, Dave Ramsey, Bill Bartmann and JD Roth – what you’ll hear is that there are opportunities to be had during these times of turmoil. Great opportunities.
Bill Bartmann made a BILLION dollars during our last economic crisis.
Even where it appears that there is pain happening all around you – people losing their jobs, stock market losses, and retirement plans being devastated – if you can see through that outward appearance to another layer of depth you will prosper during this time.
So, what are the opportunities?And, how do you find them?
That depends on your current situation.
Here’s the first opportunity:
Honestly assess the reality of where you are right now. There’s no more hiding. It’s time to come out of the darkness and shine a light on where you really are. What a beautiful opportunity!
Today, in this moment, you get to start over from a place of new awareness. You get the opportunity to learn from your mistakes. You get to move out of shame, guilt and fear into the light of truth, beauty and honesty.
It starts with getting honest about the reality of your situation.
Over the past few years, most Americans saw their wealth increase more than they could ever imagine. The equity in our homes exploded. We had more access to credit than ever before. Jobs were plentiful. And salaries were steadily increasing.
Good times.
How did you respond during these good times?
Did you get caught up in the buying frenzy, increase your debt load and use this new found money to buy (or lease) new cars, big screen TVs, toys for your kids, and clothes for yourself?
Or, did you use your access to capital to start a new business or expand an existing business?
Perhaps you kept your eye on your future and put money away in 529 plans and retirement accounts.
Maybe you invested in real estate either in your own backyard or across the country where home prices have dropped precipitously.
Whatever you did, my bet is that you are freaking out a little bit now. Wondering if you made good choices. And what the results of those choices will be. Fretting over what to do next.
Good. Either way, you are thinking. You are becoming aware. You are discovering that what you do and how you think has ramifications down the line. It’s time to wake up.
So, what should you do now?
That’s opportunity number two.
You get to decide from this day forward how you want to show up in the world. Five to ten years from now, everything will be different. Housing prices will be going back up. The stock market will be out of the toilet. Jobs will be plentiful. Where will you be?
More importantly, who will you be?
Will you have the cash in 2010 when some people think our real estate market will bottom out to buy or will you be sitting around in 2020 when prices are through the roof again wishing you hadn’t missed the boat, again!
How you respond NOW will determine the answers to these questions. Note my use of the word respond. You can choose to RESPOND to what’s happening right now or you can choose to REACT.
You don’t have control over the stock market or the effects of the bailout plan. You do have total control over you. That’s an opportunity.
If you react, chances are you will over-react. You will move into fear, guilt, shame and anger. You will try to blame other people for your situation. You will fail to take responsibility for your own circumstances and see yourself as a victim. You will miss the opportunity that is right here in front of you.
Or you can respond. If you choose to respond instead of react, you will be empowered to make smart decisions. You will take responsibility for your current situation and see it for the learning experience it is and make the decision to get informed and educated. You will recognize that you are not a victim and there is no one to blame. You will forgive yourself for the poor choices you made or congratulate yourself for making smart choices.
If you made poor choices over the past few years and you are in debt up to your eyeballs, trying to hold onto your house or have perhaps lost your house already, and you don’t have a job or a business that is supporting you, it’s time to get serious.
Here’s the opportunity!
Take a good hard look at the income you need each month to clear up your debt and start investing in yourself, look around the house and see how you can simplify, what you can eliminate from your life, to see what you can sell, and either get a job or buckle down in your business and focus on your income producing opportunities.
Start taking the small actions you need that will allow you to feel good about yourself again.
Either way, I recommend you use this as a time to get informed. Not from the nightly news. Not from your friends. Not from Twitter or Facebook. Get informed by doing your own research, your own investigation. Meet with your own trusted advisors. If you don’t have any, get some.
And keep (or start) taking care of yourself. Go to the dentist. Exercise. Eat right.
The more you take care of you, the more you’ll start to realize you deserve it. The more you begin to realize you deserve it, the more you’ll start asking for what you want and the more you’ll start getting it. The more you get what you ask for, the more you’ll be grateful and take care of yourself. It’s a perfectly beautiful feedback loop. Get it going.
In a couple of days, I’ll give you 6 concrete steps you can take right away to start prospering now.
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Family Financial Freedom Notebook
Lots of people are wondering, what do I do know that the economy appears to be melting down?
First and foremost, don’t panic. You are not going to end up standing in line for the soup kitchen. Not if you’re reading this right now.
What you are going to do is get more aware of your family finances, learn to live within your means and generally gain awareness you didn’t have before.
Then, you’re going to look back on this “financial crisis” as the best thing that ever happened to us.
One of the most important things you can do is to establish a family freedom notebook. This is a notebook that you use to keep track of everything related to the financial well-being of your family.
At a minimum, here’s what you put in it:
1. Monthly bank statements for every bank account you have, including any custodial accounts in your kids’ names (keep 12 months worth of statements in the notebook and then scan and archive older statements).
2. Monthly brokerage account statements for every brokerage account you have, including college savings accounts, like 529s (keep 12 months worth of statements in the notebook and then scan and archive older statements).
3. Monthly retirement account statements for each of your retirement accounts (keep 12 months worth of statements in the notebook and then scan and archive older statements).
4. Monthly insurance policy statements for each of your insurance policies ((keep 12 months worth of statements in the notebook and then scan and archive older statements).
5. Copies of your insurance policies (keep these forever).
6. Documents related to any other assets owned, such as the pink slip for your car or lease papers if you are leasing your car.
7. Monthly mortgage statements (keep 12 months worth of statements in the notebook and then scan and archive older statements).
8. Monthly credit card statements (keep 12 months worth of statements in the notebook and then scan and archive older statements). Also, in this section, keep a list of all of your credit card numbers, along with their security codes and the 800# on the back of the card. This list will be a lifesaver if you lose your wallet.
9. Any other loan statements or statements evidencing liabilities you may have, such as student loans, personal loans from parents or car loans.
10. Family Profit and Loss Statement: This is a monthly updated ledger of all income that comes into your family and all expenses that go out.
11. Family Balance Sheet: Updated monthly, this will list out the current values as of month’s end for each of your accounts, including liabilities.
12. Estate Planning Section: Your whole estate plan would be too big to keep in your Family Freedom notebook, but you can keep a CD or jump drive with your estate planning documents on it and any documents related to the transfer of assets into your Living Trust. Plus, keep your long-term guardian nominations and your Kids Protection Plan, medical powers of attorney for your kids, and your own health care directives and powers of attorney in this section as they will need to be accessed immediately if anything happens to you.
13. Other personal legal documents: if you own property with anyone else, have entered into any business arrangements, or have personal legal agreements, keep those in this section.
14. Pay stubs: keep a year’s worth of the part of your pay stub that shows how much you got paid, how much went to taxes and how many hours you worked. I can’t tell you how many non-breadwinner spouses have told me they don’t know how much money the breadwinner spouse makes. Bad idea. Make sure you know and have the records.
15. Social Security Statement: You know that green and white letter you get in the mail each year that says how much you’ve paid into social security and how much you can expect to get, keep it here. I can’t promise you’ll actually get this as our system may not have the money to fund it, but you can at least keep the record that shows you paid into the system.
Obviously, this notebook contains very sensitive information, so consider keeping it in a small fireproof safe in your house. Just make sure the safe is not one that can be lifted up and carried away by a thief. Make sure it’s the kind that anchors into the ground or the wall.
Please note: this is not a household notebook or a Family Emergency notebook. That’s a whole different animal and something that SHOULD be kept accessible to other family members, babysitters and household helpers.
If you have other suggestions for the Family Financial Freedom Notebook, please post them here in the comments. I love to hear your ideas.
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