Most people don’t think about visiting a financial planner until they’re old enough to have some money to manage, but if your child is a recent college graduate, or in his or her final year, you may want to consider a joint trip to your financial planner. A recent article in the Boston Globe lists a number of very compelling reasons why even young adults with little or no savings can benefit from a little bit of planning.

1. A visit to a financial planner can help young adults learn early the importance of budgeting: “If you are living on your own for the first time you haven’t had the responsibility yet of paying bills and learning to make your paycheck last until the next payday… One of the basic tenets of financial planning is to know where your money is going.”

2. Start planning for retirement while you’re still young. The earlier you start, the better off you’ll be. “A financial planner can go over the various fund choices in your 401(k) or other retirement plan and help you choose one or more funds that suit your needs.”

3. Learn how to turn big dreams for the future into a reality. Whether you plan to get married, buy a house, or start your own business, “A Certified Financial Planner® can figure out how much you need to save and create a plan to make saving painless.”

4. And finally, a financial planner can help young adults learn the basic tenets and terminology of borrowing, lending, saving smart and paying off loans with interest. “Learn about interest rates and how they work, whether they are for credit cards, auto loans, student loan or other borrowing. See how compound interest can help you reach goals faster.” An early trip to a knowledgeable professional can ensure that your child doesn’t get taken in by persuasive credit card companies.

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It is common knowledge that 2010 is a great year for heirs. If you didn’t know about the 2010 estate tax repeal, all the media coverage of George Steinbrenner’s recent death (and his heirs’ lucky tax break) probably alerted you. Everybody is saying that 2010 is a good year to die… But what about those of us who plan to live through 2010?

According to the New York Times even hale and hearty individuals can save on their taxes in 2010—it just takes a little more planning. “A bigger issue [than the estate tax]… has become the gift tax, which is linked to the estate tax to prevent people from giving away their fortune in life to avoid taxes at death. It now stands at 35 percent, the lowest rate since the 1930s.” The gift tax is a tax on money or property that you give to another individual while you are still living. Currently an individual may give up to $13,000 per year (or up to $26,000 if you give as a married couple) without incurring gift tax.

If you’re a wealthy parent or grandparent trying to decrease your taxable estate through gift-giving, this is the year to do it for a number of reasons. First, of course, is the historically low 35% gift tax rate. Second, “in addition to the historically low rate, another reason to make sizable gifts this year is that the values of many assets are still depressed. Long-held stocks, real estate and shares in private businesses could all increase in value, and giving them away now will allow them to appreciate with your heirs and not in your estate.” A final reason to consider giving your large gifts before the year is over is that the 35% rate won’t last forever; the gift tax is expected to rise to 55% next year.

How can you take advantage of this lucky confluence of events? Well, as always when you’re dealing with large sums of money (not to mention dealing with the IRS), you’ll want to be careful. We do NOT recommend that you simply write a check for $13,000+. Contact your estate planner or your financial planner to find out how you can safely reduce your taxable estate while giving security to the people you love.

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When it comes to family matters, women are often the head (and sometimes the sole member) of the planning committee. Vacations, dinner parties, school activities and celebrations… many of these wouldn’t happen at all if the women of the family didn’t take the lead. Estate Planning tends to be no different: Many first phone calls, appointments, and attendance at estate planning or elder law seminars are initiated by women. However, studies suggest that this tendency in women to plan ahead may not apply to financial planning.

A recent article from CBS news suggests that although women are actively involved in family and household finances, they are less likely to be involved in long-term financial decisions. According to the article, although many women “know how to spend and get by on a short term basis… they have a time getting a grip on their long term saving and planning.” Of course this is a generalization, and won’t apply to everyone; but considering the importance of the topic, it is definitely a worthwhile subject for discussion.

Here are a few statistics to consider that impact women and their long-term financial decisions:

• Older women (65+) outnumber older men by 22.4 million to 16.5 million. (Administration on Aging)
• Poverty rates are higher among older women than older men by 20.4 to 13.1. (U.S. Census Bureau)
• The median weekly earnings of full-time wage-earning women is $657, or 80 percent of men’s $819. (U.S. Dept. of Labor)
• Not to mention that on average, it is the woman of the family who will end up putting her career on hold for caregiving duties at various times in her life (either to care for young children or aging parents.)

Put all of this together and it means that women need to take control of their finances, not the other way around! Luckily, this may not be as difficult as you think. The CBS news article mentioned above has some suggestions on how to take charge of your finances; but beyond that, planning your estate can be a huge step toward planning for your financial future as well, because any estate planning includes taking stock of of your financial assets—including savings accounts, retirement assets, individually owned assets as well as those owned jointly by a married couple.

We encourage women (and their families) to let their estate planning contribute to their financial future—it’s not just about how your assets will be distributed after your death, but also what steps you’d like to take to preserve those assets during your lifetime.

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If you (or your financial planner) have been considering creating a Grantor Retained Annuity Trust (GRAT) to avoid gift taxes on financial gifts to family members you may want to read this article from Forbes before you take the final step. According to author Seth R. Kaplan there has been much talk in Washington of late about what he calls “anti-GRAT legislation”, and although the offending bills have not passed in the Senate thus far, it seems as though it’s only a matter of time before the rules and regulations regarding GRATs change—and not necessarily for the better.

According to Kaplan, “a bill co-sponsored by 10 senators (relating to an extension of COBRA premium assistance) was introduced at the end of June containing provisions targeting GRATs, the most significant of which requires GRATs to have a minimum term of 10 years. So it appears that some form of this anti-GRAT legislation will eventually become law.”

This ten year minimum will put a stop to the short-term GRATs (2-4 years) which have been especially popular among elderly individuals (a popularity that is understandable considering that if the grantor dies before the expiration of the trust the assets will revert back to the grantor’s estate and are subject to estate taxes.) But Kaplan claims that long-term GRATs can still be “a powerful tool for effective wealth transfer planning, especially where interest rates are low and asset values are depressed but expected to rise.”

If you’ve been considering creating a GRAT, and know that you want the short-term GRAT, you’ll probably want to talk to your estate planner or financial advisor ASAP, before the restrictive legislation Kaplan is expecting comes to pass. However, the proposed legislation doesn’t have to be a loss. If you have the time, you may want to consider the benefits of the long-term GRAT.

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If you have a family trust—or are considering creating a family trust—to protect your assets you may want to ask your attorney about creating an out of state trust. It’s a grantor’s market (so to speak) and creating a trust these days doesn’t mean you have to simply accept the tax laws of your state of residence. Creating a trust in another state—with tax laws that are friendlier to trusts—is a perfectly legal option, “the only real requirement is that [you] choose an in-state trustee.”

As we mention frequently on our blog, there are many reasons for families to create a trust: credit protection, keeping assets in the family, estate planning, educational savings, and many more. Furthermore, trusts are no longer an exclusive tool for the rich and famous; trusts are useful for just about everybody, and the states recognize this.

“States such as Alaska, Delaware, Nevada, New Hampshire, South Dakota and Wyoming have modified their trust laws in recent years to make them more attractive to individuals and families, including nonresidents, looking to minimize taxes, shield assets from creditors and preserve family assets in the event of a divorce, among other things.”

If you would like to explore your options for out-of-state trusts we recommend working with your local attorney, someone you trust who can meet with you when needed, who can draft the trust documents for you. Your local attorney can then have a licensed attorney from the state of your choice review the documents for state-specific issues.

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If you and your spouse complement each other, work well together, and support each other, does it makes sense to go into business together? Can you effectively be partners in marriage, partners in parenting, and partners in business? Although it may not be easy, many couples have proven that the answer is yes—a business partnership with your spouse can be very rewarding.

As rewarding as it can be, there are a few steps that must be taken in order to protect your partnership—inside and outside the office:

• Have a detailed plan that you both agree on
• Be specific about each of your job descriptions to avoid stepping on each other’s toes
• Agree on the amount of risk you are both willing to take
• Know each of your strengths and weaknesses
• Have a safety net
• Be sure you are both contributing to your own retirement plans
• Don’t skimp on the paperwork; have an attorney draft the documents you need to protect your business and your personal assets
• Plan personal time together when work is “off-limits”. Vacations, regular date nights, a business cut-off time—all of these can be helpful in setting boundaries and preserving the romance
• Hope for the best, but plan for the worst: have your attorney help you draft a buy-sell agreement in the event that one (or both) of you someday wants to gracefully step down

Being in business with your spouse can be paradise or perdition, and at times it will probably be a little of both. Each family—and each family business—will be different, and our office can help you navigate the tough legal terrain to find the best fit. Being prepared and taking the right legal steps will bring paradise a little closer by allowing you to relax and enjoy what you and your spouse have built together. Whatever your arrangement, don’t neglect the future. In business, having a good plan is the best protection there is.

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Property ownership under the law is an interesting topic. No one ever thinks about property ownership until they buy something, like a house. Then one generally asks the real estate broker how they should hold title to their home. The problem with asking the broker is that the broker doesn’t really know. Each state in the US has its own rules about property ownership. If one person owns the property, the question is simple to answer. The person owns it outright. Questions arise when 2 or more people want to own the property together. The most common ways to own property in Arizona are the following: tenants in common, joint tenants with rights of survivorship, community property and community property with rights of survivorship. When you own a parcel of real estate with someone else, let’s say a married couple, there is not much difference in property ownership methods while both of you are alive. Each owner owns 1/2 of the whole. The differences show up when one person dies. Let’s look at each method of ownership separately. To make this easier the couple will be called A/B. A is the husband and B is the wife. Let’s assume A dies first. If the couple owns the property as tenants in common, on A’s first death, the survivor B keeps 1/2 of the property; and A’s heirs get the other 1/2. Generally, the heirs have to probate the estate to get their share. At B’s later death, B’s share passes to B’s heirs, also by the probate process. Typically couples use this method to protect children of a prior marriage and other loved ones. If the couple owns the property as joint tenancy with rights of survivorship, on A’s death, B keeps all of the property. There is no probate when A dies. However on the second death, the assets pass to B’s heirs. A’s heirs are left out. There is generally a probate on the second death. Typically couples use this method when there are no children from a prior marriage or other loved ones to protect. For the next two examples, the couple has to be legally married in a community property state, in order for the rules of community property to work. If the couple owns the property as community property, on A’s first death, the survivor B keeps 1/2 of the property; and A’s heirs get the other 1/2. Generally, the heirs have to probate the estate to get their share. At B’s later death, B’s share passes to B’s heirs, also by the probate process. There may also be an income tax benefit if certain income tax rules apply. The same rules apply here as apply in tenants as common. Typically couples use this method to protect children of a prior marriage and other loved ones If the couple owns the property as community property with rights of survivorship, on A’s death, B keeps all of the property. There is no probate when A dies. However on the second death, the assets pass to B’s heirs. A’s heirs are left out. There is generally a probate on the second death. Once again, there may be an income tax benefit if certain income tax rules apply. The same rules apply here as apply in joint tenants with rights of survivorship. Typically couples use this method when they don’t need to protect children of a prior marriage or other loved ones So finally, the best way to own property depends on each person’s inidvidual situation and the state in which they live.

A lot of what we as estate planners do is help you protect your assets: We help you protect your assets for your children when you die, we help you protect your assets when you are elderly and need long term or nursing care, we help you protect your business or investment assets from frivolous law suits… but we can also help you protect your assets during marriage.

“During marriage?” you may ask, “Why would I need to protect my assets during marriage? I would trust my spouse with my life.” This may be true (in fact, we very much hope it is true) but statistics show that more than 50% of marriages end in divorce, yet according to this article by Robin Epstein and Amy Epstein Feldman only 3% of marrying couples bother to create a prenuptial agreement. The low number may speak for the optimism of marrying couples, but not for their common sense.

A prenuptial agreement is not an admission that you don’t really think your marriage is going to work. On the contrary, prenuptial agreements can be useful in many situations, not just in cases of divorce. If you are entering into a second marriage and have children from a previous marriage a prenuptial agreement is absolutely essential to ensure that your children are entitled to any assets you bring from your previous marriage. If you or your fiancé comes to the relationship with heavy debts a prenuptial agreement can ensure that your marriage doesn’t begin under the weight of all that debt. And a prenuptial agreement can be a precursor to your eventual estate planning.

If you are planning a wedding in the near future, our firm can help answer any questions you may have about prenuptial agreements without any obligation. But really, knowing the many ways a prenup can protect you, your spouse, and your children—is there any reason not to have one?

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If there is one way to be sure money stays in the family and grows over time it is through real estate. Despite the year-to-year ups and downs of the real estate market, the value of real property continues to grow over the long term.

Real estate is often considered a comparatively easy way to maintain and grow wealth because it doesn’t require the kind of daily attention—or stress!—that a business demands. Depending on the type of property, real estate typically requires duties that are annual or month-to-month, such as maintaining the physical structures, paying property taxes, making insurance payments, getting updates from property managers, and the like.

What real estate investors might be slow to realize is that property ownership carries with it significant liability risks. Unless the precautionary measures are taken, one small misstep can result in the loss of all your real estate holdings. Imagine it, one person slips and falls in front of one of your properties, and suddenly ALL of your holdings are at risk.

Preventing this kind of mess is not as difficult as you might think—for example, putting each of your properties in its own separate legal entity is one technique that can be used to protect all of your properties (and yourself) from lawsuits. Our firm can help you with this and other asset protection techniques.

We know how important it is to keep your family and your finances safe, and we are dedicated to helping you achieve that security. Call our office and let us tell you how we can put our expertise to use for your benefit.

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Somewhere between Family Law and Estate Planning lie Prenuptial Agreements. These documents—once avoided at all costs by all but the super-rich as pessimistic or unromantic—are now considered by just about every financial advisor or specialist to be good financial planning, good estate planning, and just good sense.

Prenups are no longer just for the rich and famous, and they’re not for people “who will probably get divorced anyway.” A prenup is a good idea for the small-business owner, the older bride or groom with children from a previous marriage, the newly-graduated student with a huge amount of credit card debt, and the expectant heir or heiress. In fact, according to this article in USA Today even “Personal-finance expert Suze Orman encourages every engaged couple to get one to protect their current and future assets as well as to shield themselves in case a mate secretly runs up massive credit card debt (which could damage both partners’ credit scores).”

And we’re not talking about your parent’s prenups anymore. As with most things, prenuptial agreements have evolved over the years: “Some prenups touch upon more sentimental topics, such as who keeps the heirloom silverware received as a wedding present…” and “Some prenups address issues such as adultery, frequency of intimacy, limitations of weight gain, the scheduling of housekeeping and provisions for pets.”

If there is a wedding somewhere in your near future consider calling our office to talk about whether a prenuptial agreement might benefit you and your fiancé. Prenups may have a reputation as being unromantic, but what could be more romantic or loving than planning your future… together.

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