Worried about getting on that plane because you don’t have a plan?  What will happen to the kids?  To the retirement plans?  The home?  You’re not alone if you have these concerns when you’re traveling on vacation.  We all worry about our mortality and capacity and how the inevitable will affect those we love.

Did you know that in 90 minutes or less you could have wills, powers of attorney, and HIPAA releases comprehensively created and executed?  Your plan can save amazing amounts of heartache, headache, time and money.

Some of my favorite client sessions have been for those about to fly off to some exotic locale.  Typically, they’re apologetic.  Like, “Matt, I know we’ve said we need to do this for some time.”  I respond, “Yeah, I was going to procrastinate but I decided to wait until tomorrow to do so!”

“We leave this Friday.  Can we have something done?”

“We’ll have it all ready for you Thursday, giving us enough time to make any changes necessary.”

“Really?”

“Yes.  Relax.  And know you’ll be able to completely enjoy your trip because it will be done.”

Admittedly, it’s more dangerous for us to drive on the freeway than it is for us to fly or board that big ship.  But we think about things differently when we’re traveling.  Whatever it takes to get it done.

Think of everything you own:  life insurance policies, annuities, IRAs, 401ks, retirement plans, pensions, brokerage accounts, all the bank accounts and money markets and CDs, your home, other real estate, business interest, autos and finally, all the stuff in and around your home and on your property, furniture, computers, TVs, firearms, tools, paintings, pianos . . .

We’re going to classify your assets as either probate or non probate.

Probate assets are those controlled by your will: the home and other real estate, the cars and the personal property, the stuff in your home and cars.

Non-probate assets include life insurance, IRAs, 401ks and 403bs, and certain bank accounts and brokerage accounts.  They go directly to the beneficiaries you have designated.  The will does not control their distribution.  Read the prior sentence again.   So accounts you own JTWROS (joint tenancy with rights of survivorship), or you’ve made POD/TOD (payable on death/transferable on death) go to those persons who survive you.  Life insurance proceeds and IRA’s go to the beneficiaries you’ve designated.

I can’t tell you how many times my clients have looked at me in shock when they’ve fully grasped this.  Let me tell a common tale:  Mom survived dad.  Her daughter has become her big helper again.  They re-titled accounts JTWROS and made daughter beneficiary for the other financial products.  Mom’s will is good and valid and says all her assets go equally to her two sons and one daughter.  They all think the estate, the probate and non-probate assets, will be split evenly when mom dies.  But oh no, they won’t.   Just the house and the stuff in it will be split evenly.  It’s worth $150,000.  The non-probate assets will go completely to daughter.  Those assets are worth $500,000!  Well, what can daughter do?  Two things:  One, she can receive the assets and make gifts to her two brothers and suffer transfer tax consequences (think “gift tax” and IRS form 709).  Two, she can disclaim the asset (if she officially and correctly does so fast enough) and then the assets become probate assets and then the will can control.  Do you know how to “disclaim” properly?

You see, planning means taking care of these things now, so that later it truly is simple for the survivors.  No guessing, no wondering, no need to fight.  Planning promotes harmony.

Stay tuned for how to make your non-probate assets probate assets, and vice-versa!

I have a friend who is a successful man and he’s produced a massive amount of material on a certain subject.  He has done this for no other reason than it is his passion and what he feels is God’s calling on his life.  His material came to the attention of a non-profit organization that wanted to bring him on board and give his material a wide and vast audience.  A contract was signed.

This situation probably happens more often than we think.  The question that came to my mind when I heard the story is… Did you give them your intellectual property (IP) rights?  Why would I ask that?

Well, in a situation such as this, it is common for the author, my friend, to give up his rights in order to have the material obtain an audience.  It may be even more common for nothing to be said or signed at all in regards to the IP rights of the material.  The danger in signing away rights to material you produce is that the person, or in this case the organization, now owns them and owns how the material will be distributed.  That includes controlling how, when, and why the original author uses the material.

The danger in not having the IP rights addressed is that both sides will think they own them and that could lead to some nasty legal battles down the line.  Some might say this case is special because this is a non-profit organization and everyone should be willing to sacrifice for the greater good and no one in the organization should be able to get royalties for their IP.   In this situation, I told my friend that protecting his IP doesn’t have to be about profit or royalties.  He did not have to take royalties for his intellectual property to retain the rights.  I encouraged him to make it clear in the future who owns the rights and to make it clear on paper.

If you have a passion and that passion produces something tangible, protect what you produce.  You do not have to be in the mindset of making a buck to protect your IP.

There is a myth out there that if a couple lives together for 10 years, they are considered husband and wife under Texas law.  While it is possible that this hypothetical couple could be considered a married couple in the state of Texas, the length of time that they lived together is not the basis of the marriage.

Under Texas law, a couple is informally married, more often referred to as common law marriage, if they meet three requirements.  These requirements are as follows: 1) the man and woman agreed to be married, 2) after the agreement, the couple resided together in this state as husband and wife, and 3) they represented to others that they were married.  Tex. Fam. Code §2.401.

But what does this mean?  Does the agreement have to be in writing?  How long does the couple have to live together?  What does it mean to represent oneself as a married couple?  These are all questions that commonly arise when confronted with the issue of whether or not a couple is married under the eyes of the law.

Case law tells us that an agreement does not have to be in writing.  In fact, the couple does not even have to state to each other that they are entering into an agreement; they simply have to live as if they were in agreement.  In regards to the length of time necessary for residing together, the court has said that one night may be enough to prove that the couple is married.  This is a very extreme circumstance, but nonetheless, it is possible to be married after only one night of residing together. Lastly, the representation to others does not need to occur on a daily basis.  Establishing representation may be as simple as establishing a joint bank account, filing a tax return together, or introducing your significant other as a spouse at a party; the couple does not need to constantly tell others that they are married.

I hope that this information puts an end to the 10-year myth, but it should in no way be considered the end all to the determination of whether or not a couple is married.  My examples above are extreme.  If you have a question about common law marriage, please see legal counsel.

photo credit, Jacob Enos

The ultimate goal of many individuals is to start a business and be their own boss.  Prior to forming a business, you should seriously consider creating a business plan.  Not only should this business plan lay out your long-term goals including product, market share, and accounting; the plan should also contain mini-goals that are easily measured and will lead to success in your long-term goals.

Additionally, you may be tempted to save money by drafting and filing your own corporate documents.  This decision may not affect your overall success and profitability.  However, what happens if you fail to fully analyze your overall business goals and create a complete business plan prior to filing?  The result may be that you have created the wrong type of entity or you have failed to properly administer the entity you created.

The analogy I like to use is a map. All the destinations on the map represent all the possible directions your business could take.  Without a clear goal, you may become distracted, lose focus, and end up off course.  However, if you fully analyze what your ultimate destination is and how you will get there, you will be less likely to go off course without considering the consequences of your detour.  Furthermore, making the wrong strategic decisions during entity formation may ultimately be equivalent to crashing into a construction barrier—it WILL slow you down and it MAY end your venture entirely.

To ensure the greatest chance of success, you may wish to consult an attorney who can walk you through the different entity types.  During these explanations, the attorney should give you the pros and cons of each entity type and advise you of the tax consequences and liability issues associated with each.  While consulting a professional may be more expensive initially, it will likely save you money and headaches in the future.

photo credit, Daquella Manera

Who’s on your Dream Team?  Effective estate planning requires teamwork.  What do I mean by teamwork?  To ensure that your plan will accomplish and exceed your goals, you should create your Dream Team.  As a general rule, this Dream Team will include your accountant, attorney, financial advisor, and insurance agent; however, at a bare minimum, your team should include your attorney and financial advisor.

The two most important factors when assembling your team are trust and communication.  You should trust every member of your team completely and know that each member has your best interest and ultimate goals as their central focus.  This may mean that you have to “interview” several professionals for each position prior to making your decisions.  This is not as daunting as it sounds.  Most people have already picked one member of their dream team and are comfortable working with that individual.  Your existing team member should be able to point you toward other professionals that conform with your stipulations for team members.  Using referrals to fill vacant Team positions allows you to use trusted references instead of making blind decisions.

The second factor is communication.  Your team should be able to efficiently communicate with you in terms that you understand.  You should feel that you are able to question and ask for clarification of any issue that may arise so that you understand your plan and how your plan will achieve your goals.  Additionally, your Dream Team should be able to effectively communicate with each other to ensure that all pertinent information is shared and accessible.  The sharing of information will ensure that all members are fully informed and able to make the best decisions to fulfill your ultimate estate planning goals.

photo credit, Horia Varlan

My wife and I have always believed that America IS the land of opportunity.  We believe that our life is what we make out of it.  However, after we both finished graduate school the total debt we owed sucked the life right out of our hopes of ever being financially successful.  That is until we heard Dave Ramsey.  A good friend invited me to The Total Money Makeover Live last year. I was already a huge Dave fan, but being there really set me on fire.  I went home and tried to get started working the plan.  In September, we went through Financial Peace University.  In January, The Spahn Law Firm sent me to Financial Counselor Training so I that can help bring hope to others who are struggling financially.  Spending a week with Dave’s Team was amazing.  I was able to see firsthand the passion that Dave and his team have to change the lives of hurting people.

For us, learning about God’s plan for managing money has opened a whole new world.  No longer do we have to use our future to pay for our past.  While we are nowhere near being completely out of debt, we have a plan and get excited every time we pay off something else. With each debt paid we gain more traction and get more excited.  We have also been blessed to travel in the last few months and it is great to pay for the trip before you leave, and not have the bills follow you home.  In the past, we would spend several months paying off a trip.  Now, we are able to fly, book hotels, rent a car and do anything else we need to without a credit card.  It is great to feel the chains of credit bondage lift away link by link.  Today We Will Live Like No One Else So That Later We Can Live Like No One Else.

photo credit, flickrfavorites

The Background:  My husband and I are recent law school graduates, we both have student loans, and we’re newlyweds.  We both accumulated a fair amount of credit card debt during law school.  To top it off, my husband is a JAG Officer and we live abroad, which has severely restricted my income.  That being said, when my husband got his assignment, we knew we had to get serious about paying down debt.  The question was how to get our finances under control.

We had about six months to get a good start on our finances before we moved abroad.  As we already had a small savings account that grew with each paycheck, we decided to create a budget and focus on the credit card debt.  Enter a complication—since my husband and I would be living separately while he was in training, we needed two household budgets!  One is hard enough, but two!!

So, we got creative and figured out where to make cuts.  This didn’t mean that we only ate ramen, but we’re not perfect.  When we seriously looked at our expenses, we were able to identify several areas that we could cut back without drastic changes.  For example, one area where I spent a lot of money was books.  I discovered that I could sell the thousands of books (I’m not exaggerating!) that were cluttering shelves and go to the library.  Another big part of our plan was that we consolidated all our non-student loan debt into a 2% interest, fixed payment loan through our bank.  This means that we pay less each month, and most of our payment pays principal, so the balance is rapidly shrinking!  We still have our student loans to contend with, but there is a LOT less financial pressure.  We have dwindling balances for our other debt and our savings account is growing rapidly.

Our “abroad” budget is still being determined, but at this rate we’ll be debt free in less than 5 years.  That is a great feeling!

I have not always been a Texan, but I like to say that I was quickly adopted.  One thing that has always appealed to me about Texans is the infectious independent spirit that is Texas.  Texans don’t like people telling them what they can and can’t do.  They don’t like the feeling of losing independence by giving someone else power over their lives.  This can easily be seen in political rhetoric, and it gets us stirred up when we get a whiff of outsiders telling us what to do.  While politics and government power are important and valid concerns, perhaps that fighting independent spirit could also be focused on our individual finances.

Proverbs 22:7 refers to a borrower as the slave of the lender.  That is something to think about as you look at your finances.  In my mind, financial slavery and the Texas spirit don’t mix and as we look at the landscape of our state perhaps we could focus some of our fighting spirit on destroying personal debt and regaining financial freedom.  A debt free Texan is a free and independent Texan, and an example of someone who has fully embraced the spirit of Texas!

photo credit, Brian L. Romig

With Dave Ramsey’s Total Money Makeover live event in San Antonio  just a day away, everyone in our firm has been focusing on their own financial freedom.  We’ve all been encouraged to express this journey in the form of a blog so that we can share a bit of ourselves with you.  I’ve had a chance to read through my colleagues’ stories and I have to say, I am nowhere near any of them.  So here’s my short story to all of you out there that are still like me.

My Dad first introduced me to Dave in 2006.  I was in my second year of law school and quite frankly I could have cared less what my Dad and Dave were saying.   I had a ton of student loans from my private undergraduate education and I was racking up more student loans on my now private law school education.  I was living a life style well beyond my means and I didn’t care.

Fast forward two years.  I’m a licensed attorney looking for a job and I have debt surrounding me everywhere I turn.  For many this would be the eye opener, but no, not me.  I began to change my lifestyle, but only slightly.  I was still living beyond my means, but since it wasn’t as bad as before, I figured I was doing great.

Fast forward another two years to present date.  I’m still in debt, and I still have a long way to go.  I’m only just now getting a budget and trying to live within my means.  I know it will be long time before I am anywhere close to being debt free, but I also know that it is possible as long as I stay committed.

So for all of you out there who are just like me, let’s jump together.  We can do it!

photo credit, laurenatclemson