Be Aware of these Four Cons

We’re all aware of how technology has greatly benefited our society. We can access goods, services, and information with great ease at the touch of a button. The flip-side of that is that this same technology has also spawned countless new opportunities for dishonesty and crime.

It is unlikely that any person who has a telephone, cell phone, or computer has not been the subject of an attempted criminal act, or at least of a scam that may precede an actual crime.

According to a survey by True Link Financial, approximately $12.76 billion is stolen from older Americans each year through identity theft and scams. To help protect yourself, be aware of the most common scams out there.

“I’m Calling from Microsoft Tech Support.”

If you receive a call from someone saying they are from Microsoft and a problem has been detected on your computer, don’t believe them. Microsoft does not make these types of calls. The people making the calls are trying to lead you to a website that will unleash malware designed to steal your usernames and passwords for online accounts where they can access your banking and credit card information.  If the caller gets you to go to a website, it may look very official, but remember, Microsoft will never contact you this way.

“I’m Calling from the Internal Revenue Service.”

According to the AARP Fraud Watch Network, this is one of the most often-reported scams. The caller will state that you either owe back taxes that must be paid immediately or that you are due a refund that can be collected online. In either case, the goal is to get you to a website that will launch malware on your computer in an attempt to seek your financial information and bank account numbers or that will facilitate the theft of your identity. The caller will likely sound very authoritarian and may even be able to state the last four digits of your social security number. But even if the caller gives you a number to call to “verify” that the call is from the IRS, or gives you a “case code number,” don’t participate. Like Microsoft, the IRS will never initiate contact with you by phone. Instead, it will always send a communication through the U.S. Postal Service.

Calls from No One

A common precursor to scam calls is a call on your phone where no one speaks. You may hear clicks on the other end. But rather than assume it was a wrong number, assume it was an automated call to validate a working telephone number that can be called later by a scammer. It is best to utilize the caller ID that is available on most phones and to avoid phone calls from numbers you don’t recognize or numbers that don’t display any information.

Chip Cards

The new chip cards for debit and credit use are much safer than magnetic swipe cards in that they change the code each time they are used. While that provides more protection when a retailer suffers a data breach, scammers are catching up quickly and using new and different tactics. They will send emails pretending to be your financial institution stating that financial information must be provided via a particular linked website. The link will cause malware to be released which searches your computer for account numbers, passwords, and other financially sensitive information.

The best rule to follow in thwarting scammers is to never navigate to a website or click on a link when directed to do so by an unsolicited caller. If you receive an e-mail or phone message asking you to call a number, don’t call that number. Instead, locate the appropriate number for the entity and call that number to determine whether the communication is legitimate.

Yes, technology makes things much easier for us, but it can make us vulnerable if we’re careless. Proceed with caution in all things financial and put the brakes on when things don’t add up. That’s where we can help. You see, we don’t just prepare estate planning documents for our clients and send them on their way. We develop ongoing, lifelong relationships which facilitate our clients’ protection and prosperity in ways traditional estate planning law firms don’t – and quite frankly, won’t. We’re here to support and advise our clients about more than just their estate plans – like a “suspicious” phone call from the IRS, for example. If that sounds like the kind of relationship you’d like with your lawyer, give us a call.

Work-Life Balance: A Personal Perspective

Pick up the latest copy of just about any business magazine, and you’re likely to find at least one article on work-life balance. Employers all over the country are talking about how to retain employees by enhancing work-life balance. But the conversation really can’t stop or start with employers.  It must start with you.

For the next two weeks, use a tracking calendar to track all of your waking time. It’s easy to do this using a google calendar that you set up specifically for identifying what you spend each hour of your day doing.

Then, at the end of the week, identify how much time you spent on self care, how much time you spent on family, and how much time you spent working.

You’ll quickly be able to see where you might be out of balance.

While it may be counter-intuitive, investing in your self care first, family second and work third, is the equation that will keep you happier at home and at work, which ultimately translates to a more positive bottom line for you and your employer.

If you are out of balance, first and foremost, take personal responsibility by using a time blocking calendar to block time each week for self care.

This may mean putting time on your calendar for exercise, medical and dental appointments, pampering, and play.

Block this time and keep it as sacred as you would a meeting with your boss, or one of your co-workers or clients.

Then, block time for family activities. And notice what you have left over for work.

If you find that you cannot realistically complete your work in the time you have left over, consider having an honest and direct conversation with your boss (or yourself, if you are the boss), about how you can get more support.

Knowing what you want and asking for it are the first steps to taking personal control of your circumstances and creating the life you want, and it gives your employer the opportunity to have you doing your best work and retain you as a team member they want for the long-term.

How does this tie into estate planning for your family?

Proactively planning for death is one of the best ways we can come into alignment during life. We support you to make the most of your life by guiding you to face the reality of death through our estate planning process.

Your real wealth is not just your financial wealth, but includes your most valuable non-renewable resources, time, energy and attention. Through our planning process, we can help you reclaim what really matters.

Contact us for a Family Wealth Planning Session and make conscious choices about how you use your whole wealth during your lifetime and pass what really matters to your loved ones when you are gone.

Life Is Multifaceted: Teach a Child to Be Open and Embrace Complexities

When you picture a “normal” family, what do you see? Is it the traditional notion of one male parent and one female parent, two kids, and a family pet? Or do you see something different? Or perhaps you reject the notion of a “normal” family altogether?

Recent court and legislative activity have opened the institution of marriage to same-gender couples. Regardless of your political position or whether you think this is a wise move, it is happening. Today 1 in 4 children under the age of 18 are being raised by single mothers without a father in the picture at all. And nearly 30% of all families today are single parent families. 5% of children aren’t living with a “traditional” parent at all, but with grandparents or other family members.

Simply put, mainstream society is changing in our country.

Sometimes, with affluence comes reinforcement of our personal norms. We often attend institutions – like churches and schools, for example—where most everyone else looks and thinks like we do.

While we may feel most comfortable in these arenas, we need to push the boundaries with our kids for their sake. Regardless of our politics, visible American culture is changing. We cannot expect voluntary segregation of our society—by race, socioeconomic status, or any other factor—to continue.

So how can we help our kids be open to cultural and familial differences and to embrace the complexities therein?

Children are best prepared through modeling and practice. This is the true inheritance we leave behind.

Be cognizant of the cultural norms you promote without saying a word, through your choice of neighborhoods, entertainment, institutions, and even the company you keep. It is critical that American children remain open to differences and complexities, to enable them to work and play with those who may be different from them as our society moves forward to keep in step with the ever evolving nature of our world.

Ultimately, estate planning isn’t just about passing on your money. We call it Family Wealth Planning because it’s about passing on your whole family wealth, which includes your values, insights, stories and experience, most of which is passed on without awareness. When you can bring awareness to this planning, beyond just the financial pieces, you are giving your children a true gift that doesn’t just last a lifetime, but many generations.

Parents experiencing our Family Wealth Planning process repeatedly tell us that the process itself guides you to see many of the parts of true inheritance that you are likely overlooking, and the process itself has them feel better about themselves as parents as well as adult children of their own parents.

Got a Job? Here’s How You Can Save Money You Might Be Losing Right Now

Did you know there are many steps that you can take to save money via your employment?  Some of these strategies work by allowing you to pay for things with pre-tax money, which could up to 40% (depending on your tax bracket) right back into your pocket.  Others provide benefits through your employer that are not taxable to you on your individual income tax return, again reducing your tax liability.

Saving through Pre-Tax Contributions

There are several ways you can save money at work by paying for things out of your gross income (that is your pre-tax income).  Perhaps the three most significant pre-tax expenses you can pay for through your employer are 401(k) contributions, medical flexible spending accounts (“FSA”), and dependent care reimbursement accounts.

You can make retirement contributions to either an employer-sponsored 401(k) plan or to a traditional individual retirement account, tax-free.  In addition to saving money in the short run by decreasing your taxable income, you’ll be building a nest egg for your later years. You will pay taxes when you take money out of the account, but we always suggest to defer taxes when you can.

In addition to contributions to a retirement account, the regulations of the Internal Revenue Service also allow for both medical flexible spending accounts and dependent care reimbursement accounts.  With these types of accounts, you contribute pre-tax money, effectively securing a discount on eligible medical or dependent care expenses.

Saving through Nontaxable Benefits

Pre-tax expenses are not the only way your job can help you save money, however.  The Internal Revenue Service allows employers to provide their employees with many benefits that are not taxable to the employees.

Here are several benefits your employer can provide, which you do not need to report on your individual tax return:

  • Employer-paid health insurance premiums;
  • Employer-paid parking, to a maximum of $240 per month;
  • Health club access for a gym on your employer’s property;
  • Employer-paid educational classes, up to a maximum of $5,250; and
  • Employer-paid life insurance coverage, up to a maximum of $50,000 in benefits.

You might be surprised at the number of savings opportunities you can leverage from your employer.  In addition to providing a paycheck, your employer can improve your financial condition in many other ways.  And over the course of a career, the savings can really add up. It may be time to talk with your employer about providing some of these benefits.

By the way, if you own your own business and set your business up properly, you can be the employer providing yourself with these benefits. Contact us to discuss the possibilities.

Should I Pay Off My Mortgage Now or Save More Money?

To many people, living debt-free is a lifelong dream. It’s the picture of the easy life. Retired with no debt. . .

You may be surprised to learn, however, that debt-free is not always the best decision – particularly if the choice is between paying off a mortgage or using the money more wisely to invest in a future using low-interest rate funds.

What?  I Shouldn’t Pay Off My House?

Most of us don’t have that much extra cash lying around.  We simply don’t have the luxury of being able to pay off our family home and maxing out our retirement contributions and investing in a side business. It’s pretty much an either-or proposition.

With that said, from a financial standpoint, it is usually most favorable to make additional contributions to a company 401(k) program, if your company is matching your contributions, or investing in growing a side business, rather than using extra money to pay off the mortgage.

Putting money into a 401(k) plan has many advantages:

  • Taxes on these contributions are deferred;
  • Employers often max 401(k) contributions, doubling your money;
  • Money can be liquidated for unexpected expenses; and
  • In most cases, if you are connected to how your 401(k) is invested, investing the extra money could result in a more significant return than the interest you are paying on your mortgage, leading to greater net wealth in retirement.

Creating a side business has many advantages:

  • You can create a side income stream that provides you with the kind of security a job working for someone else never can;
  • You can write off business expenses for things you are already paying for already, such as using the home office deduction to deduct part of your home costs;
  • You can use your creativity, knowledge, experience, and other resources gained over a lifetime of learning to help others and get paid for it;
  • You can employ your children, teaching them financial principles and how to be personally sovereign from a young age;
  • You can learn, grow and evolve – starting and running a business is one of the best ways to push the edges of your own comfort, bringing you closer and close to true internal liberation.

And, remember this: Mortgage interest deductions help when tax time rolls around.

After all is said and done though, the mortgage versus 401(k) versus side business decision is a personal one that you must ultimately make for yourself.  Just keep in mind that if your priorities are financial, it is probably best to lean towards making additional contributions to your retirement account or starting a business, rather than paying down your mortgage.

Can I Benefit from a Reverse Mortgage?

It seems that we can’t turn on the television or radio without hearing an ad for a “reverse mortgage.” So what is a reverse mortgage exactly, and who can benefit from using one?

A reverse mortgage is a type of loan taken out against your home. With a reverse mortgage (as with a traditional mortgage) you are borrowing against your home equity which is the difference between your home’s market value and the amount you owe on your mortgage. The difference in a reverse mortgage is that you do not have to pay it back while you are alive. Instead, the loan is paid off after you pass away.

What Are Some of the Benefits of a Reverse Mortgage?

Reverse mortgages can be a fantastic tool, depending on your goals. They can provide additional income and improve your cash flow, particularly if you have already paid off your home. Here are some reasons to consider a reverse mortgage:

  • They can help you maintain your financial independence by providing additional income;
  • They can allow you to stay in your home until you die;
  • For most people, the risk of default is low; and
  • They are not taxed.
  • One of the best things about a reverse mortgage is that the amount paid back will not exceed your home’s value.

What Are Some of the Disadvantages of a Reverse Mortgage?

As with any financial tool, reverse mortgages are not for everyone or every situation. Before you decide to take out a reverse mortgage on your home, you should consider the following potential disadvantages:

  • Interest costs are higher because you are making no payments;
  • The amount paid back after your death will cut into the estate left for your family or heirs; and
  • Because they are based on a formula, the amount you can borrow is lower than with traditional home equity loans.

Reverse mortgages can also be complicated and rather difficult to understand. The bottom line is this: A reverse mortgage is one financial tool you can use to achieve your goals. However, before you commit to a large loan, you should make sure you understand all aspects of the loan. If you are not sure whether or not a reverse mortgage is right for you, talk with a trusted financial adviser or attorney.

Town Demolishes House While Owner Is in Hospital

Imagine this: your elderly uncle with no family near his home travels South to Florida for surgery and has to stay there unexpectedly for a number of months. While he is away, his home is demolished by the city, including all of his possessions.

This just happened to a 69 year-old veteran and home owner in West Hemstead, New York. Due to medical complications with his surgery, he was unexpectedly gone for a number of months.

When he returned home, he found that his home had been torn down by the city. He had lived in the house since infancy and all of his possessions had become part of the rubble. Neighbors had complained about the condition of the house and claimed they thought that no one lived there.

Owners of homes or other structures that have become dilapidated need to be aware of laws that permit municipalities to take action against them. Typically, towns and cities have building codes and standards which must be met, and they have inspectors with the authority to declare properties unfit for use.

These cases start when the city declares an abandoned house or building structurally unsound and orders that it be demolished. The city will first look to the property owner to carry out the demolition, but if that does not happen, the city undertakes the task itself and then demands payment of demolition costs from the owner.

While avoiding the destruction of someone’s home should be a goal of government officials charged with enforcement of building codes or urban renewal programs, that is obviously not always the case. It is up to each of us to care for our family members, especially those who are elderly and do not have close family nearby. One of the best ways you can do that is to ensure all of your senior family members have a relationship with a trusted advisor, such as a personal lawyer, to ensure that all of their assets are protected in the event of a long-term incapacity or illness.

Watch Out for Predatory Tax Liens on Your Family Home

As our parents and other loved ones age, they may need a little more attention from us. Parents, grandparents, aunts and uncles, or even neighbors who are aging may want to be seen as strong and independent. Often, however, their abilities to take care of household and financial affairs begin to erode as they get older.

What’s at Risk?

One such example which can have catastrophic consequences is the failure to pay property taxes. A lot of retired people struggle to make ends meet and may not be able to pay their taxes as they come due. This puts their home at risk because unfortunately, governments have processes in place to collect back taxes by placing liens against the property.

Worst Case Scenario

Different locales have different approaches to filing liens against property, but one place where it has become predatory is Washington, D.C. There, the city made a policy change in 2001 that has had devastating effects on homeowners. Prior to that time, the city would sell a lien at auction to individuals who could then charge interest on the amount due until it was paid. If it was not paid, the city could move to foreclose on the property.

The change in 2001 allowed the purchasers of the liens to go directly to court to foreclose on the property they purchased. This attracted predatory lenders from other states that became very aggressive in pursuing the foreclosures. In many cases, people who owned their homes free and clear lost them over unpaid taxes of less than $500. Once the investors buy the liens, they can begin charging interest and legal costs, which often causes the homeowner to be less likely to be able to pay off the lien.

It is true that homeowners have ample time and notice to pay the taxes, even after the liens are sold, but Washington’s story is replete with cases of owners with dementia and other serious illnesses. Because of these types of conditions, many owners were not aware of or did not understand exactly what was happening. And without family or friends looking out for them, the predators can have a field day.

Thankfully, Washington is in the minority of governments that allow this predatory approach to tax collection, but your loved ones could still be at risk. Those of us with elderly family members and friends need to pay attention to ensure they stay on top of financial matters. Respect their pride, but make sure they get the help they need so they are not taken advantage of. If you have an elderly loved one you want to ensure has the support and protection he or she needs, contact us. We can help.

This article is a service of Tyler S. Hinz, Personal Family Lawyer®.  One of the main objectives of our law practice is to keep families out of court and out of conflict. Our office can help you protect those you love using a Family Wealth Planning Session. Call our office today. We’ll help you identify the best strategies for you and your family.

Planning for Charitable Giving

January 1 wipes the slate clean for your tax deductible charitable contributions. That might be a good time to reassess your approach to donating to charities. Most of us respond to some of the appeals which come through various avenues such as unsolicited phone calls, campaigns at work, or church related charities. Whatever the source of the appeal may be, however, most people are inconsistent givers and fret when finding a way to say no.

A Better Way

A solution to the dilemma when to give and when not to, is having a plan in advance. Knowing ahead of time how much you are willing to contribute to charities and those specific charities to which you will give makes it easier to deal with those groups not on your “list”. Hard-charging solicitors are more likely to back off when informed that you have a charitable giving plan to which you strictly adhere. To begin creating your own personal charitable giving plan, first look at your past giving patterns and amounts. Did you take an itemized deduction? If yes, you can start with that amount and decide whether it is too high or too low. Many people do not keep track of all they have given, and some may even overstate the amount. Whatever the case, decide on an amount you want to give and then make a list of the organizations to which you will donate. Once you identify the recipients, you can decide how and when you want to make your contributions. If cash flow is an issue, you might set up a schedule for contributions. Consultation with the charity may provide some knowledge of what works best for that organization.

An Even More Coordinated Approach

If you want to provide a one-time outlay that gets your charitable funds set aside, a donor-advised fund can be established through a financial services firm. This way, a contribution to the fund can be made and then disbursed at later dates. The tax deduction is based on the contribution to the fund rather than to individual organizations. This also allows other family members to contribute if they would like to simplify their charitable gift-giving, too. A plan for charitable giving that specifies an amount and the recipients, in advance, takes away the angst of considering numerous solicitations that come randomly throughout the year. Knowing you have an action plan in place makes it that much easier to either ignore solicitations or provide a standard response.

This article is a service of Tyler S. Hinz, Personal Family Lawyer®.  We believe in developing trusting relationships with families for life. That’s why we offer a Family Wealth Planning Session, ™ where we can help identify the best financial strategies for you and your family. You can begin by calling our office today to schedule a time to identify the best strategies for you and your family.

Mark Zuckerberg Did Not Pledge 99% of His Facebook Stock to Charity 

By now you’ve heard that Mark Zuckerberg and Priscilla Chan are donating 99 percent of their Facebook shares — currently worth more than $45 billion — to charity, or at least that’s how the story has been reported. Yet that is not what they did at all. (And it’s quite surprising that respected publications like the New York Times and Forbes would get it so wrong with both publications touting Zuckerberg and Chan for their hefty “donation to charity.”)

There’s no charity happening here. And there’s nothing that says Mark and Priscilla are donating 99% of their Facebook stock to charity, ever. To a mission, yes. But to a charity? No.

In an open letter to their daughter, Mark and Priscilla said they would give away 99% of their FB stock over their lifetime to advance the mission of the Chan Zuckerberg Initiative LLC.

Specifically:

As you begin the next generation of the Chan Zuckerberg family, we also begin the Chan Zuckerberg Initiative to join people across the world to advance human potential and promote equality for all children in the next generation. Our initial areas of focus will be personalized learning, curing disease, connecting people and building strong communities.

We will give 99% of our Facebook shares — currently about $45 billion — during our lives to advance this mission.

An SEC filing on the same day said that Zuckerberg would sell or gift no more than $1B of FB stock each year for the next three years.

On December 1, 2015, our Founder, Chairman and CEO, Mark Zuckerberg, announced that, during his lifetime, he will gift or otherwise direct substantially all of his shares of Facebook stock, or the net after-tax proceeds from sales of such shares, to further the mission of advancing human potential and promoting equality by means of philanthropic, public advocacy, and other activities for the public good. For this purpose, Mr. Zuckerberg has established a new entity, the Chan Zuckerberg Initiative, LLC, and he will control the voting and disposition of any shares held by such entity. He has informed us that he plans to sell or gift no more than $1 billion of Facebook stock each year for the next three years and that he intends to retain his majority voting position in our stock for the foreseeable future.

Somehow, the media read these two events as Zuckerberg giving 99% of his FB stock to charity, but that’s not what’s happening. Still, It does appear that Mark and Priscilla have the best intentions, even if they are not receiving the best advice. They want to put their Facebook fortune to work solving the two world problems they deem most important — advancing human potential and promoting equality.

But they have not given away their money at this time; they “might” sell or gift up to $3 billion of Facebook stock over the next three years to do it. But they have not legally obligated themselves to do that.

Many have claimed that they did it for tax purposes, but the reality is that the structure Zuckerberg and Chan used won’t provide any tax benefits at all, unless and until the LLC donates Facebook shares to charity later on.

So, what could Mark and Priscilla have done instead?

According to nationally-known estate and asset protection attorney, Steve Oshins:

“They should create different types of asset protection trusts. What if there was a class action against them for violating a billion people’s privacy rights, for example?”

In a case like that, Zuckerberg and Chan could lose everything, including the assets of the Chan Zuckerberg Initiative, which do not appear to have been structured with any asset protection in mind.

Or, what if Mark and Priscilla die young, unexpectedly and everything goes outright to their child? Once she turns 18, the initiative and all the money in it plus all of their other assets would be hers, without restriction, and would not be protected from lawsuits, divorce or a future bankruptcy. Everything they’ve worked so hard to create could be lost.

Ideally, Zuckerberg and Chan would have a trusted adviser to guide them in understanding how best to structure their resources for maximum impact as well as to educate future generations to keep growing the assets and maintain their positive contribution to the world, rather than squandering them as many children of the ultra-wealthy do. Every culture has the saying akin to “shirtsleeves to shirtsleeves in three generations”, or “clogs to clogs in three generations”, and so on .. ” and there’s a good reason why.

Oshins said “Many of these young billionaires don’t have top estate planning and creditor protection attorneys. That is why we often see them lacking these types of vehicles.” i.e. vehicles that maximize asset protection and the wise stewardship of money. While the young wealth creators of Silicon Valley clearly desire to make an impact on global issues, they may not be thinking long term enough. Using business lawyers to structure matters of family wealth is a common error and may mean their resources are not used in a wise manner to achieve their mission beyond their lifetimes.

While Mark and Priscilla can use the Chan Zuckerberg Initiative as a vehicle for educating their daughter about how best to use the resources that will be at her disposal, the questions becomes whether they themselves will they get the guidance they need to do that?

With proper insight Mark and Priscilla have the potential to structure their assets in trusts that can educate not just their daughter, but future generations as well, to not only preserve the family wealth, but to also invest it in the future Mark and Priscilla aspire to create. If not, there’s a chance that their wealth could ultimately go the way of the Vanderbilt family fortune, gone within 200 years, lost to poor investments, weak philanthropy, and aggressive partying.

Two hundred years may seem like too long of a game to consider, but in the context of our lives on this planet, it’s the blink of an eye. Would Cornelius and Billy Vanderbilt, the first two generations who created the Vanderbilt fortune, have done something different had they known how much would be wasted by their progeny?

For many people, it makes sense to consider the long term effects of your wealth and resources. While Zuckerberg and Chan talk in their letter to their daughter about making long term investments over 25, 50 or 100 years, they might consider looking even farther out to 200, 500 or even 1,000 years. It would be catastrophic to have $45 billion squandered in this generation or two simply as a result of poor planning, management and education. If this wealth or any amount of wealth is to have a lasting influence then people must actively plan now to ensure an edifying future.