Staying Married: Staying Married: Don’t be a Silent Partner or the Don’t be a Silent Partner or the

‘Loan Survivor’….. ‘Loan Survivor’….. Leaving a LegacyLeaving a Legacy

Chapter 4Chapter 4

The BasicsThe BasicsMerging of your assets and managing your Merging of your assets and managing your credit with the right attitude should get your credit with the right attitude should get your marriage off to a good start to being a “Money marriage off to a good start to being a “Money Smart Couple.”Smart Couple.”Assuming that your marriage thrives, you will for Assuming that your marriage thrives, you will for sure be faced with more complex financial sure be faced with more complex financial challenges and decisions such as how to challenges and decisions such as how to acquire assets, meet your financial goals, pass acquire assets, meet your financial goals, pass an inheritance onto your heirs, and how to leave an inheritance onto your heirs, and how to leave a legacy of support to your chosen philanthropic a legacy of support to your chosen philanthropic interest.interest.

Being SilentBeing SilentAs part of their gender, women, especially those As part of their gender, women, especially those who are in a position of earning less than their who are in a position of earning less than their husbands – or even depending on them husbands – or even depending on them financially at some point a big concern is getting financially at some point a big concern is getting their fair share of the property and not being left their fair share of the property and not being left alone to rear children with less than adequate alone to rear children with less than adequate assets.assets.Despite this concern, women often by choice or Despite this concern, women often by choice or default find themselves out of the loop-in terms default find themselves out of the loop-in terms of participating in decision-making or knowledge of participating in decision-making or knowledge of those decisionsof those decisions

Being SilentBeing Silent

The moral of this scenario: Much as you The moral of this scenario: Much as you love your husband, and he loves you, love your husband, and he loves you, being a “Money Smart Woman” and a being a “Money Smart Woman” and a “Money Smart Couple” means never “Money Smart Couple” means never depending on him/her alone to plan for depending on him/her alone to plan for your future, or your family’s - especially your future, or your family’s - especially when you consider that women are when you consider that women are statistically more likely to be the survivor in statistically more likely to be the survivor in the relationship. the relationship.

How You Hold Your PropertyHow You Hold Your Property

If you have assets on your own prior to marrying, it If you have assets on your own prior to marrying, it is probably a good idea to keep them in your own is probably a good idea to keep them in your own name. As you acquire property and assets name. As you acquire property and assets throughout your marriage, you will probably hold throughout your marriage, you will probably hold much of it jointly with your spouse.much of it jointly with your spouse.Ironically, the longer you are married, however, Ironically, the longer you are married, however, and the more you are financially successful you and the more you are financially successful you are, the more it will make sense to split up your are, the more it will make sense to split up your assets again. (We will explore this thought later.)assets again. (We will explore this thought later.)

How You Hold Your PropertyHow You Hold Your Property

Pay attention to the way in which you and Pay attention to the way in which you and your husband own property.your husband own property.What’s generally known as “What’s generally known as “Joint Joint Ownership”Ownership” is actually shorthand for two is actually shorthand for two different ways of owning propertydifferent ways of owning property– Joint tenancy with the right of survivorshipJoint tenancy with the right of survivorship– Tenancy by the entiretyTenancy by the entirety

Joint Ownership Joint Ownership Although joint tenancy is more common, tenancy by the Although joint tenancy is more common, tenancy by the entirety can give you a bit more protection because entirety can give you a bit more protection because neither of you can divide the property without the other’s neither of you can divide the property without the other’s consent. Also, the property is protected against your consent. Also, the property is protected against your husband’s creditors, as long as you didn’t also sign the husband’s creditors, as long as you didn’t also sign the debtdebtTenancy by the entirety is not recognized in all statesTenancy by the entirety is not recognized in all statesBoth forms of joint ownership provide a survivorship Both forms of joint ownership provide a survivorship feature that is especially attractive to married couples. If feature that is especially attractive to married couples. If you or your husband dies, you automatically become the you or your husband dies, you automatically become the sole owner of the property. In short, the property sole owner of the property. In short, the property bypasses probate.bypasses probate.

Joint OwnershipJoint Ownership

A couple of quick points about joint A couple of quick points about joint ownership:ownership:– Control of jointly held property is sometimes Control of jointly held property is sometimes

muddled….For example, and depending on muddled….For example, and depending on what is involved, you or your husband may be what is involved, you or your husband may be able to dispose of property without the other able to dispose of property without the other person’s knowledge like in the case of a joint person’s knowledge like in the case of a joint banking account. For those things like stock banking account. For those things like stock or a home, that will require both signatures or a home, that will require both signatures and therefore be more difficult to sell without and therefore be more difficult to sell without the other person’s knowledge.the other person’s knowledge.

Joint OwnershipJoint Ownership

Despite what you might think, joint ownership is Despite what you might think, joint ownership is not substitute for a will.not substitute for a will.Note: It is possible to co-own property without Note: It is possible to co-own property without being joint owners. If you take title as tenants in being joint owners. If you take title as tenants in common, you and your husband will have the common, you and your husband will have the same ownership rights during your lifetime but same ownership rights during your lifetime but neither of you will have the right of survivorship neither of you will have the right of survivorship and your will will dictate what happens to your and your will will dictate what happens to your share of the property if you die say to someone share of the property if you die say to someone other than your husbandother than your husband

Joint Ownership – The Bottom LineJoint Ownership – The Bottom Line

As you migrate into marriage and then As you migrate into marriage and then through marriage, you need to be aware of through marriage, you need to be aware of how you own property.how you own property.Whom would you ask if you have Whom would you ask if you have questions about these issues?questions about these issues?

What’s His and What’s HersWhat’s His and What’s Hers

You may end up deciding that the best course You may end up deciding that the best course for you and your husband is a careful mix of joint for you and your husband is a careful mix of joint and individual ownership depending on the and individual ownership depending on the property involved.property involved.Savings and Checking AccountsSavings and Checking Accounts– You may want to keep an account of your own if you You may want to keep an account of your own if you

want to make independent spending decisionswant to make independent spending decisions

Your HomeYour Home– Own your home jointly, especially if you live in a state Own your home jointly, especially if you live in a state

that recognizes tenancy by the entiretythat recognizes tenancy by the entirety

What’s His and What’s HersWhat’s His and What’s Hers

Your CarYour Car– Consider keeping your car and other vehicles Consider keeping your car and other vehicles

in individual names. in individual names. Stocks and BondsStocks and Bonds– Can be registered in both names, requiring Can be registered in both names, requiring

both signatures or they can be held in both signatures or they can be held in street street namename which can be dealt with by either of the which can be dealt with by either of the joint ownersjoint owners

Keep It All In The Family and Keep It All In The Family and Estate PlanningEstate Planning

Estate PlanningEstate Planning is a fancy term that means is a fancy term that means distributing your property and planning for your distributing your property and planning for your children and other heirs after your deathchildren and other heirs after your deathEstate planning isn’t just about financial assets. Estate planning isn’t just about financial assets. If you have children, your wealth is incalculable. If you have children, your wealth is incalculable. It’s critical that you specify how the children It’s critical that you specify how the children should be taken care of in your absence, and should be taken care of in your absence, and how your family’s finances should be handled on how your family’s finances should be handled on their behalf.their behalf.

Estate PlanningEstate Planning

Is about “the who, what, when, and how” Is about “the who, what, when, and how” – Whom do I love?Whom do I love?– What people and organizations do I want to help?What people and organizations do I want to help?– What do I want to have happen if I die, retire, or What do I want to have happen if I die, retire, or

become disabled?become disabled?– When do I want to transfer property?When do I want to transfer property?– How do I want to accomplish all of that?How do I want to accomplish all of that?

All of these questions are important, especially if All of these questions are important, especially if you have children. you have children.

Be on Top of Your Game!Be on Top of Your Game!

Do not assume anything. Talk to your Do not assume anything. Talk to your spouse/partner about what arrangements spouse/partner about what arrangements both of you should make in the event of both of you should make in the event of his death, or yours. his death, or yours. BE INFORMED, NOT IGNORED.BE INFORMED, NOT IGNORED.

Life Insurance Made EasyLife Insurance Made Easy

The PurposeThe Purpose– To take care of the people who depend on To take care of the people who depend on

you and who would suffer financially if you you and who would suffer financially if you weren’t around to provide for themweren’t around to provide for them

This is particularly important for stay-at-This is particularly important for stay-at-home moms who are completely home moms who are completely dependant on their husbandsdependant on their husbandsOnce you have children, life insurance Once you have children, life insurance becomes a major priority!becomes a major priority!

Insurance CoverageInsurance CoverageInsurance coverage should equal 5 to 10 times your total Insurance coverage should equal 5 to 10 times your total household income. To make things simple, let’s split the household income. To make things simple, let’s split the difference and recommend buying insurance equal to difference and recommend buying insurance equal to about 8 times your annual incomeabout 8 times your annual incomeTerm InsuranceTerm Insurance– Easiest type of insurance and the least expensiveEasiest type of insurance and the least expensive

Recalculate your life insurance needs at various points in Recalculate your life insurance needs at various points in your life. At some points more than others, you may your life. At some points more than others, you may need more coverage.need more coverage.Remember the “R” and the “A” in the ERA!Remember the “R” and the “A” in the ERA!

Where there’s a Will,Where there’s a Will,There’s SecurityThere’s Security

Write a will that’s sets out your plan for Write a will that’s sets out your plan for how your assets should be distributed and how your assets should be distributed and your children provided for. your children provided for. If you die without a will your state’s one-If you die without a will your state’s one-size-fits-all plan kicks in, and it may not be size-fits-all plan kicks in, and it may not be tailored to your or your children’s needs.tailored to your or your children’s needs.Here’s what a will looks like!!!Here’s what a will looks like!!!Handouts from WPB Roundtable Handouts from WPB Roundtable discussion featuring Liz Hutchins.discussion featuring Liz Hutchins.

Famous People and Their WillsFamous People and Their WillsFamous people who have died intestate: Presidents Famous people who have died intestate: Presidents Abraham Lincoln, Andrew Johnson, and U.S. Grant, as Abraham Lincoln, Andrew Johnson, and U.S. Grant, as well as Howard Hughes and Pablo Picasso.well as Howard Hughes and Pablo Picasso.Others to note: Heath Ledger did not update his will to Others to note: Heath Ledger did not update his will to reflect or provide support for his daughter, Matilda, or his reflect or provide support for his daughter, Matilda, or his former girlfriend. Leona Helmsley's will specified that her former girlfriend. Leona Helmsley's will specified that her dog, Trouble, would receive $12 million for its care after dog, Trouble, would receive $12 million for its care after her death. Former Supreme Court Chief Justice Warren her death. Former Supreme Court Chief Justice Warren Burger jotted a short will that overlooked the matter of Burger jotted a short will that overlooked the matter of estate taxes, costing his heirs thousands of dollars. estate taxes, costing his heirs thousands of dollars. Richard Nixon left behind specific instructions on how to Richard Nixon left behind specific instructions on how to handle his personal papers. handle his personal papers.

Famous People and Their WillsFamous People and Their WillsHENRY FORD, American Industrialist - Ford's worth HENRY FORD, American Industrialist - Ford's worth amounted to $600 million, primarily as stock in the Ford amounted to $600 million, primarily as stock in the Ford Motor Co. Having previously provided for his wife, he Motor Co. Having previously provided for his wife, he gave all the Class "A" nonvoting stock of the Ford Motor gave all the Class "A" nonvoting stock of the Ford Motor Co. to the Co. to the Ford FoundationFord Foundation. The Class "B" voting stock . The Class "B" voting stock was divided into 5 equal shares, for his son, Edsel, and was divided into 5 equal shares, for his son, Edsel, and his 4 grandchildren.his 4 grandchildren.FLORENCE NIGHTINGALE - British Nurse. The FLORENCE NIGHTINGALE - British Nurse. The founder of modern nursing left pound 36,128. She founder of modern nursing left pound 36,128. She refused burial in Westminster Abbey and gave her body refused burial in Westminster Abbey and gave her body ""for dissection or postmortem examination for the for dissection or postmortem examination for the purpose of Medical Sciencepurpose of Medical Science." The provision was ." The provision was ignored. She was buried at East Wellow, among her ignored. She was buried at East Wellow, among her ancestors.ancestors.

Famous People and Their WillsFamous People and Their WillsJOHN D. ROCKEFELLER - American Oilman And Philanthropist. JOHN D. ROCKEFELLER - American Oilman And Philanthropist. After assets were transferred to the After assets were transferred to the Rockefeller FoundationRockefeller Foundation, the , the residual estate of $25 million was left in trust primarily to Mrs. residual estate of $25 million was left in trust primarily to Mrs. Margaret Strong de Cuevas, his granddaughter, and her Margaret Strong de Cuevas, his granddaughter, and her descendants. Rockefeller did so, to the exclusion of his other descendants. Rockefeller did so, to the exclusion of his other grandchildren, because they had already been provided for "when grandchildren, because they had already been provided for "when the time came that I felt it wise to place upon my children the the time came that I felt it wise to place upon my children the responsibility of owning and administering substantial sums." responsibility of owning and administering substantial sums." ANDREW CARNEGIE - American Industrialist & Philanthropist ANDREW CARNEGIE - American Industrialist & Philanthropist After selling out to J. P. Morgan for $400 million in 1900, Carnegie After selling out to J. P. Morgan for $400 million in 1900, Carnegie devoted the balance of his life to giving away his fortune.  He felt devoted the balance of his life to giving away his fortune.  He felt that, after one's family's needs were provided for, the wealth which that, after one's family's needs were provided for, the wealth which remained was to be held only as a public trust, "... to be remained was to be held only as a public trust, "... to be administered for the benefit of the community."  Carnegie administered for the benefit of the community."  Carnegie built 2,509 built 2,509 free librariesfree libraries in following this philosophy, spending over $56 million. in following this philosophy, spending over $56 million. Before his death, he had managed to give away over $308 million. Before his death, he had managed to give away over $308 million.

Protect Your ChildrenProtect Your Children

Don’t put off writing a will. Over 50 percent of Don’t put off writing a will. Over 50 percent of Americans die without a will. Often times it costs Americans die without a will. Often times it costs more to die without a will than it does to bite the more to die without a will than it does to bite the bullet and get one while you are alive. If you die bullet and get one while you are alive. If you die intestate, the state decides what to do with your intestate, the state decides what to do with your assets.assets.Protect your most precious assetsProtect your most precious assets– Your ChildrenYour Children

Guardianship of your ChildrenGuardianship of your Children

Look to your generationLook to your generationStick close to homeStick close to homeName one guardian, not twoName one guardian, not twoConsult the prospective guardianConsult the prospective guardianConsult the kidsConsult the kidsSplit the responsibilitiesSplit the responsibilitiesRevisit the plan – The ERARevisit the plan – The ERA

Other Pieces of the PlanOther Pieces of the Plan

A Durable Power of AttorneyA Durable Power of AttorneyA Durable Power of Attorney for Health A Durable Power of Attorney for Health Care or Health Care ProxyCare or Health Care ProxyA Living Will – Life Sustaining TreatmentsA Living Will – Life Sustaining TreatmentsTrustsTrustsRevocable Living Trusts – transfer assets and Revocable Living Trusts – transfer assets and

keep control of themkeep control of themBypass Trusts- unlimited marital deductionBypass Trusts- unlimited marital deductionTestamentary Trusts or incentive trustsTestamentary Trusts or incentive trusts

Other Pieces of the PlanOther Pieces of the Plan

Planning for Taxes – soon phase out of Planning for Taxes – soon phase out of estate tax so that by 2010 there will be no estate tax so that by 2010 there will be no estate tax but will be revisitedestate tax but will be revisitedLiz Hutchins – WPB Roundtable – Dec. Liz Hutchins – WPB Roundtable – Dec. 1111thth discussed new tax laws discussed new tax laws

Leaving a Charitable LegacyLeaving a Charitable Legacy

Charitable Intentions – Charitable Intentions – A very meaningful way to support your charity of choice A very meaningful way to support your charity of choice

is by making arrangements in your will to leave a gift. is by making arrangements in your will to leave a gift. These gifts are often very tax efficient ways to pursue These gifts are often very tax efficient ways to pursue philanthropy. Through effective estate planning you philanthropy. Through effective estate planning you can leave gifts of cash, property, stock, etc. to your can leave gifts of cash, property, stock, etc. to your favorite charity and perpetuate your legacy through favorite charity and perpetuate your legacy through these actions.these actions.

Assigned beneficiaries for philanthropic purposes – For Assigned beneficiaries for philanthropic purposes – For example through an IRA, through an assigned example through an IRA, through an assigned beneficiary of a 401K, or life insurance.beneficiary of a 401K, or life insurance.

Long-Term-Care InsuranceLong-Term-Care InsuranceA Woman’s IssueA Woman’s Issue

What is long term care insurance?What is long term care insurance?Long term care insurance helps pay for long term care services Long term care insurance helps pay for long term care services needed due to a chronic disease, serious accident, sudden illness, needed due to a chronic disease, serious accident, sudden illness, or cognitive impairment such as Alzheimer's, that limits a person's or cognitive impairment such as Alzheimer's, that limits a person's ability to think or reason.ability to think or reason.

Long term care services may be provided by a health care Long term care services may be provided by a health care professional (a nurse, for example), a home health aide, or other professional (a nurse, for example), a home health aide, or other personal care providers, like family members and personal care personal care providers, like family members and personal care attendants.attendants.

Long term care insurance can pay for varying levels of care in a Long term care insurance can pay for varying levels of care in a variety of locations, ranging from a few hours of care per week at variety of locations, ranging from a few hours of care per week at home to round-the-clock care in a nursing home. home to round-the-clock care in a nursing home.

Long Term Care InsuranceLong Term Care InsuranceWhy is long term care insurance a woman’s Why is long term care insurance a woman’s issue?issue?Women are more than likely the caregivers. Too Women are more than likely the caregivers. Too often, women find themselves facing a difficult often, women find themselves facing a difficult choice between caring for a loved one’s well choice between caring for a loved one’s well being and caring for their own.being and caring for their own.But just as they are likely to be the care givers, But just as they are likely to be the care givers, they are more likely to be the recipients of care they are more likely to be the recipients of care because with increased age come increased risk because with increased age come increased risk for illness and diseases that require long term for illness and diseases that require long term care.care.

Long Term Care InsuranceLong Term Care InsuranceIn addition, Josefina Carbonell, US Assistant In addition, Josefina Carbonell, US Assistant Secretary for Aging, states that over half of Secretary for Aging, states that over half of employed women who were providing care for a employed women who were providing care for a relative had to make accommodations at work, relative had to make accommodations at work, like coming in late, taking time off, etc. like coming in late, taking time off, etc. Moreover, one in five of women caregivers had Moreover, one in five of women caregivers had to give up work temporarily or permanently, to give up work temporarily or permanently, according to the National Alliance for according to the National Alliance for Caregiving/AARP survey in 2002.Caregiving/AARP survey in 2002.In Alabama alone, it is estimated that the annual In Alabama alone, it is estimated that the annual cost of staying in a nursing home for one year is cost of staying in a nursing home for one year is $55,000.$55,000.

How to Evaluate a PolicyHow to Evaluate a Policy

A well-chosen policy that pays for both nursing-A well-chosen policy that pays for both nursing-home care and at-home care can protect the home care and at-home care can protect the assets you’ve spent a lifetime accumulating and assets you’ve spent a lifetime accumulating and buy priceless peace of mindbuy priceless peace of mindBenefit AmountBenefit Amount– Your policy will pay a certain benefit per day of any Your policy will pay a certain benefit per day of any

nursing-home staynursing-home stay

Waiting PeriodWaiting Period– The amount of time between when you enter a The amount of time between when you enter a

nursing home and when you insurance begins to paynursing home and when you insurance begins to pay

How to Evaluate a PolicyHow to Evaluate a Policy

Benefit PeriodBenefit Period– Usually continue for a period of 2 years to an Usually continue for a period of 2 years to an

unlimited amount of timeunlimited amount of timeShared-Care policiesShared-Care policies– Buying an amount of time as a coupleBuying an amount of time as a couple

If you and your husband each purchase a 3 year If you and your husband each purchase a 3 year policy and he only uses 1 year you will now have policy and he only uses 1 year you will now have 5 years of long-term-care insurance to use5 years of long-term-care insurance to use

How to Evaluate a PolicyHow to Evaluate a Policy

Home CareHome Care– Choose a policy that pays as much for home Choose a policy that pays as much for home

care as they do for nursing-home carecare as they do for nursing-home care

When to BuyWhen to Buy– Most cost effective- start looking in your 50s Most cost effective- start looking in your 50s

and 60sand 60s

Long term care Long term care (continued)(continued)

Share comments on long term care Share comments on long term care insurance in classinsurance in classYour assignment:Your assignment:Two sources for long term care insurance Two sources for long term care insurance and why you will or will not need long term and why you will or will not need long term care insurance.care insurance.

Second Marriages and Second Marriages and Special IssuesSpecial Issues

Merging of assets and how to hold property?Merging of assets and how to hold property?Is a prenup in order? A Is a prenup in order? A PrenupPrenup is a legally enforceable is a legally enforceable contract between souses-to-be that spells out what will contract between souses-to-be that spells out what will happen to your property when one of you dies or if there happen to your property when one of you dies or if there is a divorceis a divorceA postnup is a legally enforceable contract that is signed A postnup is a legally enforceable contract that is signed after you are married.after you are married.You might be a candidate for these type of agreements if You might be a candidate for these type of agreements if you or your husband make a high salary, have children you or your husband make a high salary, have children from a previous marriage, one of you is paying for child from a previous marriage, one of you is paying for child support, or you have agreed to pay for professional support, or you have agreed to pay for professional education, etc.education, etc.

Sharing Your IntentionsSharing Your IntentionsTell Your KidsTell Your Kids

However you decide to split up your However you decide to split up your property, tell your adult children what property, tell your adult children what you’re doing-- especially if you don’t plan you’re doing-- especially if you don’t plan to divide your assets equally among family to divide your assets equally among family membersmembers

Don’t Stop Now!Don’t Stop Now!Re-title propertyRe-title property --such as your home, vacation --such as your home, vacation home, or car--if you and your husband would home, or car--if you and your husband would benefit from a change in the form of ownership.benefit from a change in the form of ownership.ReviewReview with your husband your financial with your husband your financial documents, including retirement and estate documents, including retirement and estate plans, credit-card statements, life-insurance and plans, credit-card statements, life-insurance and health-insurance policies, and any business-loan health-insurance policies, and any business-loan documents.documents.

Don’t Stop Now!Don’t Stop Now!

UpdateUpdate your beneficiaries and your will if you or your beneficiaries and your will if you or your husband has experienced a major life eventyour husband has experienced a major life eventDraftDraft a will and other important documents like a a will and other important documents like a power of attorney, living will, health care proxy power of attorney, living will, health care proxy and name guardians for your childrenand name guardians for your childrenLook intoLook into long-term-care insurance for your long-term-care insurance for your husband and yourself if you’re age 55 or older husband and yourself if you’re age 55 or older and haven’t already done soand haven’t already done so

Don’t Stop Now!Don’t Stop Now!

ConsiderConsider the pros and cons of prenuptial the pros and cons of prenuptial agreement if you’re embarking on a agreement if you’re embarking on a second marriage (or a first one if you and second marriage (or a first one if you and your husband-to-be have high incomes your husband-to-be have high incomes and substantial assets).and substantial assets).MaximizeMaximize your philanthropic impact by your philanthropic impact by leaving a legacy for a charity in your will or leaving a legacy for a charity in your will or by designating a beneficiary for a trust, life by designating a beneficiary for a trust, life insurance, IRA or 401Kinsurance, IRA or 401K

And Six Things you Both Need And Six Things you Both Need to Knowto Know

Retirement PlansRetirement Plans– Take time to fully acquaint each other with all your Take time to fully acquaint each other with all your

retirement plansretirement plans

Credit card documentsCredit card documents– It pays to know how much you both oweIt pays to know how much you both owe

Power of AttorneyPower of Attorney– If you have assets that you don’t own jointly, each of If you have assets that you don’t own jointly, each of

you should have power of attorney for the otheryou should have power of attorney for the other

And Six Things you Both Need And Six Things you Both Need to Knowto Know

Wills, trusts, and life insuranceWills, trusts, and life insurance– Don’t put these in a Bank’s safe deposit box the bank Don’t put these in a Bank’s safe deposit box the bank

may delay access to the documents when one of you may delay access to the documents when one of you dies dies

Health insurance policiesHealth insurance policies– If you and your spouse are covered under different If you and your spouse are covered under different

insurance plans, familiarize yourself with each others insurance plans, familiarize yourself with each others plansplans

Business loansBusiness loans– If one of you owns a business or is a partner in a If one of you owns a business or is a partner in a

professional firm, you should both know about any professional firm, you should both know about any personally guaranteed loans.personally guaranteed loans.