Understanding Losses: Property

Property insurance provides protection against most risks to property, such as fire, theft and some weather damage. However, if property has appreciated and there isn’t sufficient insurance for replacement value, any losses must be paid out of pocket. To protect your wealth from these kinds of losses, it is important to determine replacement values so you will have adequate insurance.

 The Key Takeaways:

 Insuring for replacement value prevents having to use personal wealth to cover losses.

• Determining replacement values, and keeping them current, can guard against being over- and under-insured.

Replacement Value vs. Actual Value:

 Replacement value is the amount it would cost to replace an item or structure at its condition before the loss occurred. When an item is covered by a replacement value policy, the cost of a similar item when purchased today determines the compensation amount for that item, regardless of depreciation. For example, say an item purchased eight years ago for $2,000 was destroyed in a fire and a similar item today would cost $4,000. After being reimbursed the full replacement value of $4,000 by the insurer, the owner would pay nothing to replace the item.

Actual cash value coverage provides for replacement minus depreciation. For example, consider the same item purchased eight years ago for $2,000 and a similar item costs $4,000 today. The insurance company determines all such items have a useful life of ten years; the destroyed item had 20% of its life expectancy left. The actual cash value is equal to: $4,000 (replacement value) times 20% (useful life remaining)—or $800. After being reimbursed $800 from the insurer, the owner would have to pay an additional $3,200 to replace the item.

What You Need to Know:

Replacement value for your home is the building cost to repair or replace the entire structure; it does not include the cost of the land or the amount of any mortgage loans. A building contractor or professional replacement cost appraiser can give you estimated replacement costs. (Your insurance agent probably can give you some referrals.) Be sure to include the costs to rebuild any architectural details or unique features like upgraded bathrooms or kitchen, basement improvements, room additions, built-in cabinetry and so on.

 Actions to Consider:

1. Aim for comprehensive coverage equal to at least 100% of your home’s estimated replacement cost.

2. Be sure to increase your home’s estimated replacement cost when you remodel or improve your home.

3. Some insurance policies include an inflation provision that automatically adjusts each year for increases in construction costs in your area. Check with your insurance agent to see if you have this automatic increase or if you need to update your coverage amount each year.

4. Replacement coverage for household contents usually is calculated as a percentage of the value of the home. Items of exceptional value may need to be insured separately.

5. Consider scheduling an overall insurance review. At the Law Office of Matthew J. Tuller, we offer our client’s a comprehensive insurance review, when we create the client’s estate plan, and annually, during our estate plan maintenance meeting.

• Because our office does not sell insurance or any other financial products, we work with a select team of professional advisors who we work in conjunction with where appropriate and in the best interest of the client. 

 If you are interested in ensuring that your family is cared for after you have passed away, please call our office at 415-625-0773 to schedule your free estate planning consultation with San Francisco’s premiere estate planning attorney, Matthew J. Tuller.

How to Stop Worrying About Running Out of Money in Retirement

Many retirees today worry about having enough money for their retirement. Of special concern is if there will be enough money to provide for the surviving spouse. This is called “shortfall risk,” and it is a valid concern. People are living longer and health care costs continue rising, especially long-term care, which many seniors will need. In addition, the recent recession has given us setbacks in investments and record low interest rates. When combined, these issues can have a serious effect on retirement savings and projected income. Nevertheless, there are some things you can do now to help manage your shortfall risk and protect your assets.

The Key Takeaways: 

• The fear of running out of money in retirement is a valid concern due to increased longevity, increasing health care costs, low interest rates and the recent recession.

• Using experienced advisors who specialize in certain areas can help you increase your retirement income as well as preserve, grow and protect your assets.

The Role of Specialists:

A retirement specialist can help you determine the best strategy for taking distributions from an IRA, 401(k) and other retirement accounts; the tax implications involved; how to continue to grow your savings; when to start taking Social Security benefits; and how to plan for out-of-pocket medical and long-term care costs. An estate planning attorney can help you shield your family and your assets from probate court interference at incapacity and death, unintended heirs, unnecessary taxes and lawsuits. Other specialists can be brought in, as needed, for example, when life insurance is used to provide an inheritance for a child who does not work in the family business.

What You Need to Know:

The financial advisor who helped you grow your retirement nest egg may not be the best choice to help you determine how to utilize that money. Likewise, your business attorney is probably not the best choice to do your estate plan. An innocent error by a well-meaning but inexperienced advisor can result in a costly and often irreversible mistake.

Actions to Consider:

1. Be open to new products and strategies that you may not have considered in the past. For example, consider trusts combined with investments and property to manage the conflicting demands of income, spending, taxes, distributions and transfers.

2.  Explore new long-term care options from insurance companies. These include: 1) Asset-based long-term care (a single deposit premium; if not needed for long-term care, the benefit amount is paid tax-free to your beneficiary); 2) Life insurance accelerated death benefit (allows you to access the death benefit before you die for long-term care expenses); and 3) Home health care doublers (a guaranteed lifetime income contract that doubles your income for up to five years if you need long-term care).

3. Delay taking Social Security benefits. If you delay benefits until age 70 and live past age 79, your lifetime income will be more than if you start taking benefits at Full Retirement Age (66-67).

4. A revocable living trust will avoid court interference at both incapacity and death. This is why more people prefer a living trust to a will.

If you are interested in ensuring that your family is cared for after you have passed away, please call our office at 415-625-0773 to schedule your free estate planning consultation with San Francisco’s premiere estate planning attorney, Matthew J. Tuller.

Recovering Emotionally from Past Financial Errors

Most of us will admit to having made some financial mistakes we regret—running up credit card debt, impulse buying, or making a bad investment or business decision. While there can be significant devastation, the key is to move beyond regret into productive action. What, then, are some strategies that can restore a person’s self-confidence and avoid financial failures in the future?

The Key Takeaways:

• It’s important to know that others make financial mistakes, including the most experienced investors and successful business people.

• Recognizing and learning from our mistakes can help us to avoid repeating them in the future.

Recognize and Learn from Past Mistakes:

Sometimes a financial setback is not our fault; for example, the recent recession that resulted in losses for many in the stock market, housing and even jobs. Some of the losses were on paper, but some were realized. Even when financial setbacks like these are out of our control, we can look back and see how we might have been better prepared or reacted in a different way that would have produced better results. For example, having a bigger nest egg or emergency fund might have prevented having to dip into retirement savings or sell real estate in a down market.

Most of the time, however, we make our own mistakes. Learning from these mistakes so we don’t continually repeat them takes some introspective examination. Do you make impulse purchases? Are you wasting money because you don’t comparison shop or you buy items you don’t need or use? Are you trying to make a quick fortune in the stock market or other investments?

What You Need to Know:

You probably will make more financial mistakes in the future. (Hopefully, they will be small ones and not big ones.) Instead of dwelling on your mistakes as personal failures, learn from them, accept them as part of growing and maturing, and determine not to make the same ones again.

Actions to Consider:

1. 1. The best way to avoid financial failures in the future is to become educated. Learn about basic principles of personal finance and investing, and invest for long-term growth instead of an instant fortune. Use your professional advisors as a sounding board to guide your thinking. Evaluate why you made financial mistakes in the past and think of ways to keep yourself from those situations. For example, if you overspend when you are bored or feeling low, find other ways to lift your spirits and occupy your time.

2. When you do make a mistake, don’t panic or get depressed. Take some time to think about what you did and why, and if you can correct it. If you can’t undo your error, think about how you can live with it; you may have to cut back in other areas. Don’t beat yourself up; just try to do better the next time.

3. 3. You can also gain by learning from others’ mistakes as well as giving back by sharing your own.

4. 4. Keep focused on your long-term financial goals. Periodically evaluate where you are and encourage yourself. While you may continue to make some mistakes, recognize how much you are learning and the improvements you are making.

If you are interested in ensuring that your family is cared for after you have passed away, please call our office at 415-625-0773 to schedule your free estate planning consultation with San Francisco’s premiere estate planning attorney, Matthew J. Tuller.

Recovering Emotionally from Past Financial Errors

Most of us will admit to having made some financial mistakes we regret—running up credit card debt, impulse buying, or making a bad investment or business decision. While there can be significant devastation, the key is to move beyond regret into productive action. What, then, are some strategies that can restore a person’s self-confidence and avoid financial failures in the future?

The Key Takeaways:

• It’s important to know that others make financial mistakes, including the most experienced investors and successful business people.

• Recognizing and learning from our mistakes can help us to avoid repeating them in the future.

Recognize and Learn from Past Mistakes:

Sometimes a financial setback is not our fault; for example, the recent recession that resulted in losses for many in the stock market, housing and even jobs. Some of the losses were on paper, but some were realized. Even when financial setbacks like these are out of our control, we can look back and see how we might have been better prepared or reacted in a different way that would have produced better results. For example, having a bigger nest egg or emergency fund might have prevented having to dip into retirement savings or sell real estate in a down market.

Most of the time, however, we make our own mistakes. Learning from these mistakes so we don’t continually repeat them takes some introspective examination. Do you make impulse purchases? Are you wasting money because you don’t comparison shop or you buy items you don’t need or use? Are you trying to make a quick fortune in the stock market or other investments?

What You Need to Know:

You probably will make more financial mistakes in the future. (Hopefully, they will be small ones and not big ones.) Instead of dwelling on your mistakes as personal failures, learn from them, accept them as part of growing and maturing, and determine not to make the same ones again.

Actions to Consider:

1. 1. The best way to avoid financial failures in the future is to become educated. Learn about basic principles of personal finance and investing, and invest for long-term growth instead of an instant fortune. Use your professional advisors as a sounding board to guide your thinking. Evaluate why you made financial mistakes in the past and think of ways to keep yourself from those situations. For example, if you overspend when you are bored or feeling low, find other ways to lift your spirits and occupy your time.

2. When you do make a mistake, don’t panic or get depressed. Take some time to think about what you did and why, and if you can correct it. If you can’t undo your error, think about how you can live with it; you may have to cut back in other areas. Don’t beat yourself up; just try to do better the next time.

3. 3. You can also gain by learning from others’ mistakes as well as giving back by sharing your own.

4. 4. Keep focused on your long-term financial goals. Periodically evaluate where you are and encourage yourself. While you may continue to make some mistakes, recognize how much you are learning and the improvements you are making.

If you are interested in ensuring that your family is cared for after you have passed away, please call our office at 415-625-0773 to schedule your free estate planning consultation with San Francisco’s premiere estate planning attorney, Matthew J. Tuller.

Passion Investing as a Spark to Your Life

Bill Gates, Warren Buffet and over 50% of the Fortune 400’s The Richest People in America list have decided to give away their wealth for charitable pursuits. Of course, not many of us have that kind of money or are inclined to give away all we own. However, giving to charitable organizations is something that anyone can do, and we can all derive a similar satisfaction by investing in causes that light our passion.

The Key Takeaways:

• Investing in a cause that we feel passionate about can give our lives new purpose.

• Even if we have limited finances, we can still find ways to contribute by giving of our time and/or talents.

• Our giving can influence subsequent generations and others around us by setting an example and communicating our values.

Finding Your Passion and Renewing Your Life:

Americans like helping people and giving back to our communities. You may have already found your passion and are doing what you can to help. But if you are still searching for a way to make a difference, give some thought to what inspires you or what you care about deeply. It could be the arts, reading, the elderly, our military, disadvantaged children, teen mothers, or a clean planet. There are many organizations that need volunteers and financial help to do their good works. And, of course, most churches and religious organizations offer numerous ways to volunteer in your community and around the world. 

What You Need to Know:

One traditional way to benefit a charity is to leave a donation through a will or trust. This is good, of course, but if you contribute while you are living, there is the additional benefit of seeing the results of your contributions. You can also network with others who share your passion, which often results in greater contributions.

Actions to Consider:

1. 1. If you have children at home, include them in your volunteer work. If you make a donation, deliver the check in person and take your children with you.

2. 2. If you are retired or nearing retirement, you have the benefit of extra time to donate to your favorite causes. Some people choose to work part time in retirement so they will have extra money for living expenses and for donations.

3. 3. Include all cash donations in your spending plan so they are part of your monthly expenses. Otherwise, you risk being an emotional or impulsive giver, which can have a negative impact on your finances.

4. 4. If you aren’t sure how to contribute, ask the organization you want to help. They are sure to have a number of suggestions with different time and money commitments.

5. 5. Whenever possible, work with local organizations that benefit your community. Get to know the people running the organization so you will know if they can be trusted with your contributions. This will also allow you to see the progress firsthand.

6. 6. If you have more substantial means, a charitable trust is an excellent way to give, and such a trust gives you many financial and non-financial benefits.

If you are interested in ensuring that your family is cared for after you have passed away, please call our office at 415-625-0773 to schedule your free estate planning consultation with San Francisco’s premiere estate planning attorney, Matthew J. Tuller.

How to Leave Assets to Minor Children

Every parent wants to make sure their children are provided for in the event something happens to them while the children are still minors. Grandparents, aunts, uncles and other relatives often want to leave some of their assets to young children, too. But good intentions and poor planning often have unintended results.

For example, many parents think if they name a guardian for their minor children in their wills and something happens to them, the named person will automatically be able to use the inheritance to take care of the children. But that’s not what happens. When the will is probated, the court will appoint a guardian to raise the child; usually this is the person named by the parents. But the court, not the guardian, will control the inheritance until the child reaches legal age (18 or 21). At that time, the child will receive the entire inheritance. Most parents would prefer that their children inherit at a later age, but with a simple will, you have no choice; once the child reaches the age of majority, the court must distribute the entire inheritance in one lump sum. 

A court guardianship for a minor child is very similar to one for an incompetent adult. Things move slowly and can become very expensive. Every expense must be documented, audited and approved by the court, and an attorney will need to represent the child. All of these expenses are paid from the inheritance, and because the court must do its best to treat everyone equally under the law, it is difficult to make exceptions for each child’s unique needs. 

Quite often children inherit money, real estate, stocks, CDs and other investments from grandparents and other relatives. If the child is still a minor when this person dies, the court will usually get involved, especially if the inheritance is significant. That’s because minor children can be on a title, but they cannot conduct business in their own names. So as soon as the owner’s signature is required to sell, refinance or transact other business, the court will have to get involved to protect the child’s interests.

Sometimes a custodial account is established for a minor child under the Uniform Transfer to Minors Act (UTMA) or Uniform Gifts to Minors Act (UGMA). These are usually established through a bank and a custodian is named to manage the funds. But if the amount is significant (say, $10,000 or more), court approval may be required. In any event, the child will still receive the full amount at legal age.

A better option is to set up a children’s trust in a will. This would let you name someone to manage the inheritance instead of the court. You can also decide when the children will inherit. But the trust cannot be funded until the will has been probated, and that can take precious time and could reduce the assets. If you become incapacitated, this trust does not go into effect…because your will cannot go into effect until after you die.

Another option is a revocable living trust, the preferred option for many parents and grandparents. The person(s) you select, not the court, will be able to manage the inheritance for your minor children or grandchildren until they reach the age(s) you want them to inherit—even if you become incapacitated. Each child’s needs and circumstances can be accommodated, just as you would do. And assets that remain in the trust are protected from the courts, irresponsible spending and creditors (even divorce proceedings).

If you are interested in ensuring that your family is cared for after you have passed away, please call our office at 415-625-0773 to schedule your free estate planning consultation with San Francisco’s premiere estate planning attorney, Matthew J. Tuller.

How to Leave Assets to Adult Children

When considering how to leave assets to adult children, the first step is to decide how much each one should receive. Most parents want to treat their children fairly, but this doesn’t necessarily mean they should receive equal shares of the estate. For example, it may be desirable to give more to a child who is a teacher than to one who has a successful business, or to compensate a child who has been a primary caregiver.

Some parents worry about leaving too much money to their children. They want their children to have enough to do whatever they wish, but not so much that they will be lazy and unproductive. Therefore, instead of giving everything to their children, some parents leave more to grandchildren and future generations through a trust, and/or make a generous charitable contribution.

When deciding how or when adult children are to receive their inheritances, consider these options.

Option 1: Give Some Now:

Those who can afford to give their children or grandchildren some of their inheritance now will experience the joy of seeing the results. Money given now can help a child buy a house, start a business, be a stay-at-home parent, or send the grandchildren to college—milestones that may not have happened without this help. It also provides insight into how a child might handle a larger inheritance.

Option 2: Lump Sum:

If the children are responsible adults, a lump sum distribution may seem like a good choice—especially if they are older and may not have many years left to enjoy the inheritance. However, once a beneficiary has possession of the assets, he or she could lose them to creditors, a lawsuit, or a divorce settlement. Even a current spouse can have access to assets that are placed in a joint account or if the recipient adds the spouse as a co-owner. For parents who are concerned that a son-or daughter-in law could end up with their assets, that a creditor could seize them, or that a child might spend irresponsibly, a lump sum distribution may not be the right choice.

Option 3: Installments:

Many parents like to give their children more than one opportunity to invest or use the inheritance wisely, which doesn’t always happen the first time around. Installments can be made at certain intervals (say, one-third upon the parent’s death, one-third five years later, and the final third five years after that) or when the heir reaches certain ages (say, age 25, age 30 and age 35). In either case, it is important to review the instructions from time to time and make changes as needed. For example, if the parent lives a very long time, the children might not live long enough to receive the full inheritance—or, they may have passed the distribution ages and, by default, will receive the entire inheritance in a lump sum.

Option 4: Keep Assets in a Trust:

Assets can be kept in a trust and provide for children and grandchildren, but not actually be given to them. Assets that remain in a trust are protected from a beneficiary’s creditors, lawsuits, irresponsible spending, and ex- and current spouses. The trust can provide for special needs dependent, or a child who might become incapacitated later, without jeopardizing valuable government benefits. If a child needs some incentive to earn a living, the trust can match the income he/she earns. (Be sure to allow for the possibility that this child might become unable to work or retires.) If a child is financially secure, assets can be kept in a trust for grandchildren and future generations, yet still provide a safety net should this child’s financial situation change.

If you are interested in ensuring that your family is cared for after you have passed away, please call our office at 415-625-0773 to schedule your free estate planning consultation with San Francisco’s premiere estate planning attorney, Matthew J. Tuller.

Estate Planning in 2014 and Beyond under the New Tax Law

The recent tax legislation dealing with the “fiscal cliff”, which went into effect on January 1, 2013, included significant revisions to the estate tax law that will affect estate planning for the foreseeable future. While you may have previously read about these changes, the following serves as a summary of the exemption amounts for decedents passing away in 2014. These revisions include:

The federal gift, estate and generation-skipping transfer tax provisions were made permanent as of December 31, 2012. This is great news because, for more than ten years, we have been planning with uncertainty under legislation that contained expiration dates. Moreover, while “permanent” in Washington only means that this is the law until Congress decides to change it, at least we now have some certainty with which to plan.

Estate & Gift Tax Exemption:

The federal gift and estate tax exemption will remain at $5 million per person, adjusted annually for inflation. In 2012, the exemption (with the adjustment) was $5,120,000. The amount for decedent’s passing away in 2013 is $5,250,000. For those passing away in 2014, the exemption amount is $5,340,000. From a practical perspective, this means that individuals can make gifts during life or transfers at death up to this higher exclusion amount, and pay no federal estate tax. In addition, for married spouses, a surviving spouse can combine the deceased spouses unused credit amounts, and pass assets free of estate  tax on an estate up to $10.68 million at the death of the second spouse. This is true assuming that none  these credits or tax coupons were not used during either spouses lifetime. However, to utilize a deceased  spouses credit amount, a comprehensive estate plan must be in place to ensure these tax coupons are  preserved. Accordingly, it is crucial to have a properly drafted comprehensive estate plan in place so that you  do not pay more estate tax upon your passing.

Generation-Skipping Transfer Tax ("GST") Exemption:

The generation-skipping transfer (GST) tax exemption also remains at the same level as the gift and  estate tax exemption ($5 million, adjusted for inflation). This tax, which is in addition to the federal estate  tax, is imposed on amounts that are transferred (by gift or at death) to grandchildren and others who are  more than 37.5 years younger than you; in other words, transfers that “skip” a generation. Having this  exemption now be “permanent” allows for planning that will greatly benefit future generations. Accordingly,  for individuals with a properly drafted estate plan that includes GST planning, $5.34 million can be  transferred free from the GST tax. For married couples with estate plans where GST planning is utilized,  $10.68 million can be sheltered from the GST tax.

Annual Gifting Program:

Married couples can take advantage of these higher exemptions and, with proper planning, transfer up to $10.68 million through lifetime gifting and at death. Thus, implementing a well planned lifetime gifting programs offer a simple estate planning technique that can result in significant tax savings.

Prevailing Tax Rates:

The tax rate on estates larger than the exempt amounts increased from 35% to 40%.

Portability:

The “portability” provision was also made permanent. This allows the unused exemption of the first  spouse to die to transfer to the surviving spouse, without having to set up trust planning specifically for this purpose. However, there are still many benefits to using trusts, especially for those who want to ensure that their estate tax exemption will be fully utilized by the surviving spouse.

Annual Gift Tax Exclusion Amount:

Separate from the new tax law, the amount for annual tax-free gifts increased in 2013 to $14,000. This amount can be gifted annually, free from gift tax, to a single person or child each year. Moreover, parents can utilize an estate planning technique known as “gift splitting”, which allows parents to combine annual gifts that are free from gift taxes. Accordingly, with a properly drafted estate plan, a married couple can gift $28,000 to each child each year free from gift tax inclusion.

Annual Exclusion For Gifts To Non-U.S. Spouse:

For gifts made to a non-U.S. citizen spouse, the exclusion amount for annual gifts was $143,000 in  2014. In 2014, the annual exclusion amount for gifts made to a non-U.S. citizen spouse was increased to  $145,000.

Foreign Earned Income Exclusion:

The foreign earned income exclusion amount was increased from $97,600 in 2013, to $99,200 in 2014.

Therefore, for most Americans the 2012 Tax Act has removed the emphasis on estate tax planning and put it back on the real reasons to do estate planning: taking care of ourselves and our families the way we want. Those who might be tempted to skip estate planning because their estates are less than the $5 million range should remember that proper estate planning provides peace of mind by allowing Americans to:

1. Avoid state inheritance/death taxes that have lower exemptions than federal taxes;

2. Avoid probate, which can be quite expensive and time-consuming in some states;

3. Ensure their assets are distributed the way they want;

4. Protect an inheritance from irresponsible spending, “creditor’s and predator’s” which includes a child’s creditors, and from being part of a child’s divorce proceedings;

5. Provide for a loved one with special needs without losing valuable government benefits;

6. See that control of their assets remains in the hands of a trusted person;

7. Provide for minor children or grandchildren;

8. Help protect assets from creditors and frivolous lawsuits (especially important for professionals);

9. Protect themselves, their family and their assets in the event of incapacity; and

10. Help create meaningful charitable gifts.

For those with larger estates, ample opportunities remain to transfer large amounts tax-free to future generations. Nevertheless, with the increase in estate and income tax rates, it is critical that professional planning begins as soon as possible. In addition, with Congress looking for more ways to increase revenue, many reliable estate planning strategies may soon be restricted or eliminated. Thus, it is best to put these strategies into place now so that they are more likely to be grandfathered from future law changes.

For those who have been sitting on the sidelines, waiting to see what Congress would do, the wait is over. Now that we have some certainty with “permanent” laws, there is no excuse to postpone planning any longer. Finally, if you are taking the time to read this article, getting your affairs in order by executing a properly drafted estate plan is on your mind. Therefore, instead of making excuses as to why you are not creating your estate plan (i.e. not enough time, etc.) contact a competent estate planning attorney and unburden yourself from this concern—create a comprehensive estate plan—and obtain the piece of mind that you and your family will be taken care of even after you are no longer around. 

If you are interested in ensuring that your family is cared for after you have passed away, please call our office at 415-625-0773 to schedule your free estate planning consultation with San Francisco’s premiere estate planning attorney, Matthew J. Tuller.

The Crucial Importance Of Passing Organized & Updated Information To Your Family

Think for a few moments about what would happen if you suddenly became incapacitated or died. Would your spouse or family know what to do? Would they know where to find important records, assets and insurance documents? Would they be able to access (or even know about) online accounts or files on your computer? Would they know whom to ask if they need help?  Putting the effort in now to establish a formal document inventory can alleviate unnecessary anxiety and turmoil in the future.

The Key Takeaways:

1. If you should suddenly become incapacitated or die, your family would need to know where to find the information they would need.

2. Let your key relationships know where to find your document inventory.

3. Do not assume your process will be readily understood by others; have a trial run to make sure they can find and understand your records.

4. Keep your inventory current with an annual review.

What Information Would They Need?

There is a large volume of documents and information that your family would need during a calamitous event such as incapacitation (even temporary) or death. This basic list will help you start thinking of the critical information you would want your family to have.

• Legal documents (will, living trust, health care documents);

• List of medications you are taking;

• List of your advisors (attorney, CPA, banker, insurance agent, financial advisor, physicians);

• Insurance policies (health and life);

• Year-end bank and investment account statements;

• Storage facility location, access method, and inventory;

• List of other assets, including location, account numbers, date purchased and purchase price;

• Safe deposit box location, list of contents and location of key;

• List of people to whom you owe money (mortgage, credit cards, etc.);

• List of people who owe you money;

• Death or disability benefits from organizations; and

• Past tax returns.

Additionally, many of your records are probably on a computer or stored online. If you scan documents or receive financial statements electronically, someone else may not even know they exist. If you use a computer accounting program such as Quicken, QuickBooks or Mint, those records would be on your computer. Family photos may be stored digitally or online. Much of this information is password protected.

What You Need to Know: 

Your document inventory requires a methodical listing of both hard copy and digital forms.  While the effort will be more challenging at the start, the maintenance of the inventory is much simpler.  Be mindful that your digital footprint will likely grow much faster in the future than it has in the past.

Actions to Consider:

1. Give current copies of your health care documents to your physicians and designated agent(s).

2. Keep your original documents in one safe place, like a fireproof safe or safe deposit box. Make copies for the notebook described next.

3. Buy one or two three-ring binders to organize your personal and financial information. You can enter it by hand or create spreadsheets on your computer, but having it all in one or two binders will make it easy for your family to find and use. (If you leave it on your computer, they may never find it.) Include locations, contact information, account numbers and amounts.

4. Include a list of online accounts and how to access them (including passwords).

5. Clean up your computer desktop and put important files in an easy-to-find desktop folder.

6. Have a trial run. Ask your spouse or other family member (or your successor trustee or executor) to pretend that he or she needs to access needed information.

7. At least once a year, review and update your notebook, computer desktop files and passwords for online accounts.

If you are interested in ensuring that your family is cared for after you have passed away, please call our office at 415-625-0773 to schedule your free estate planning consultation with San Francisco’s premiere estate planning attorney, Matthew J. Tuller.

Budgeting, Part 3: Instilling Money Values in Children and Grandchildren

Money values can be a guiding light that is a component of your legacy. If communicated frequently and purposefully, these values can be an important reference for your loved ones as they learn to handle money.

The Key Takeaways:

• Having regular family discussions about household finances, shared money goals and general money concepts will, over time, communicate your values to your children and help them learn to be financially responsible adults. These discussions can also bring family members closer.

• Even young children can learn about setting spending priorities, working within a budget, saving for a larger purchase, and giving to others.

Family Meetings About Money:

Money discussions can start when children are as young as ten years old. While there is no need to go into detail about income and specific expenses, you can explain that there is only a certain amount of money and everyone needs to be careful with how it is spent. You can talk about your budget in general terms and let them know that some things, like housing and food, are at the top of your priority list. You could let the family decide how to spend the monthly entertainment budget or which charity (or even a friend) should benefit from your giving budget. You can discuss where to go on a family vacation and how everyone could help save money for it. And, by your example, you can illustrate the importance of saving.

As your children mature, you can start to teach them money management principles—how to balance a checkbook; how credit cards work; how companies make money; how simple and compound interest works; how to make and follow a budget.

What You Need to Know:

Parents often don’t want their children to know how much or how little money they have. But kids spend time in other kids’ homes, and they are quick to pick up on the differences. How you earn your money—and how you prioritize spending, saving and giving—says a lot about your values. Talking about this with your children and including them in the process will help them learn your values and guide them as they mature.

Actions to Consider:

1. Create a plan to purchase an item for your family, like a new TV or camping equipment. Include your children as you shop and compare prices in stores or online. Figure out how much your family would need to save each month to reach your goal, and encourage everyone to find ways to save. This will show your children how to plan to make large purchases without going into debt.

2. Give your children allowances so they can learn to handle their own money. Some families give each child a small allowance just for being part of the family, with opportunities to perform household chores to earn more. You could give teenagers their clothing allowance for each school semester and let them make their own purchases. However, resist the temptation to bail them out if they overspend and run short of funds—you want them to learn responsibility and make smarter purchases next time.

3. Have monthly family meetings. The regular frequency lets everyone feel they are truly involved with the family finances, gives them opportunities to ask questions, and lets them see progress and make adjustments in spending.

4. If you see your finances are going to suffer (for example, if you are laid off or incur unexpected medical expenses), let your family know right away so they will all understand the situation. They may even have some creative ways to help cut expenses or increase income. 

If you are interested in ensuring that your family is cared for after you have passed away, please call our office at 415-625-0773 to schedule your free estate planning consultation with San Francisco’s premiere estate planning attorney, Matthew J. Tuller.