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Together with one of our clients, I discussed special needs planning with radio host Jeffrey Callison this morning. We were featured on a segment of Insight on Capital Public Radio.
Many thanks to Jill Swett for helping me to raise awareness about this kind of planning, which is absolutely critical for parents of children with special needs. I am so grateful for such a wonderful client and for the opportunity to serve her family for years to come.
If you'd like to hear the audio, please Click Here To Listen. And, especially, if you know someone who has a beneficiary with special needs, please point them to this blog post or to our office at 916-273-9040 / wyattlegal.com.
My wife and I had dinner with my grandmother not too long ago. During the course of our meal, she asked me how business was going. I told her that things were good for us, but that a number of friends and clients were experiencing tough times.
Then she said, "I think we are in a depression."
At 92 years old, my grandmother has a particular understanding of the word "depression" that most of us cannot fathom. It means struggle, fear, and broken dreams on a gigantic scale.
As I responded over dinner, I don't think we're headed into a depression. Though bad, the numbers I see simply do not suggest that level of decline.
But what if my grandmother is right? What if we are in the middle of a prolonged economic downturn -- a Second Great Depression?
We have to remember that after declining in the 1930s our economy grew like crazy (in real dollars). To be sure, the economy had ups and downs during those subsequent years. But it's no exaggeration to say that America was the most prosperous country on Earth after the Great Depression.
Why was that?
I believe that our country has thrived over the last 60+ years primarily because of certain competitive advantages. Chief among those was (and is) the ingenuity and perseverance of our people. Another advantage was (and is) the wonderful reality that in America a person can more fully reap the rewards of the intelligent risks they take.
No economic slump -- not even a Great Depression -- can by itself eliminate these competitive advantages. A free country full of creative and industrious people incentivized to take smart risks is hard to keep down.
In my view, the only thing that could dim a bright future for us is our own panic and overreaction. That's because fear could lead us to adopt "solutions" that actually make the problems worse. Although effective public policy certainly has an important role to play, I don't think it will be the primary cause of recovery. (In fact, bad public policy could be the primary cause of the next downturn!)
As a small business owner who feels the ebb and flow of our economy quite acutely, I worry more about the long-term burdens and disincentives created by politicians than I do about whether America has the "stuff" to rise again.
What do you think?
Last Friday, after nine months of court filings and procedures, our office completed a probate. What makes this case especially unfortunate is that the person who died actually had an appointment with us to establish a living trust a couple months prior to his death. The week before his appointment he called to postpone. His reason? He didn't feel well. Despite our best efforts, he was never able to reschedule. He died leaving a big and expensive mess for his family.
For those who don't know, probate is what ordinarily happens to an estate whenever someone dies with real estate or more than $100,000 in probatable assets (e.g., a brokerage account), provided they don't own those assets in an up-to-date living trust. It's basically a lawsuit that your estate files against itself, with your money, for the benefit of your creditors. On average, it takes about 12 to 15 months in California to probate an estate. The cost is roughly 5% of the gross value of the estate.
Probates are fun and lucrative for attorneys. They are nothing of the sort for families. My hope is that no one reading this post will ever put their family through a probate.
A well-designed living trust protects you if you become incapacitated and your family if you pass away. If the trust is kept current, you can have meaningful peace of mind knowing you did the right thing for those you love. If you spend the money to put a quality trust in place, it will keep them from having to go to court. It can even protect them from losing their inheritance to divorce, lawsuits, creditors, immaturity, and unnecessary estate taxes.
None of those protections are available if you wait too long.
Please don't put off this critical planning. If you did your planning a while ago and haven't heard from your attorney in the last five years, it's time for a review. There have been significant changes in the law that may have invalidated some of your planning. A bad trust is sometimes worse than no trust.
We'd be glad to meet with you without charge, as a reader of this blog, to start a plan or review an old one.
I've gotten a number of requests for information about the scope of FDIC/SIPC coverage.
The FDIC protects you against the loss of your deposits if an FDIC-insured bank or savings association fails. FDIC coverage is limited to certain dollar amounts (see below).
The SIPC program is quite different in that the government insists it's not really insurance. Subject to certain limitations, SIPC will actually work to return your cash, stock and other securities if they go "missing" because your brokerage is closed due to bankruptcy or other financial difficulties.
With respect to either program, how you would benefit depends on your particular facts and circumstances. This blog entry will point you to the resources you need to have the confidence you seek.
FDIC: If you are interested in calculating your FDIC coverage, you can find everything you need by clicking the following link to the FDIC website. You'll see that in some circumstances, having an account in a living trust can multiply your insurance coverage. You'll also see that thanks to the law President Bush signed on October 3, 2008, the basic limit on FDIC coverage has jumped from $100,000 to $250,000 per depositor. The $100,000 limit will return on January 1, 2010.
In case you're wondering, the FDIC does not cover credit unions. Fortunately, that's not a problem because another independent federal agency, the NCUA, insures participating credit union deposits on precisely the same terms as the FDIC. Click the following link to go to the NCUA website and calculate your coverage if you have deposits at a participating credit union.
SIPC: If you want to know how the SIPC protects you, click on the following link to the SIPC website. You'll see that if the SIPC cannot get your property back after a brokerage goes bankrupt, it will supplement what it can get for you up to $500,000 for securities and $100,000 for cash.
© 2008 Brian D. Wyatt, A Professional Corporation (All Rights Reserved)