A LASTING LEGACY.Here's how to guarantee that the fruits of your labor are passed on the future generations FRANCES LEWIS SEES HERSELF AS A SURVIVOR. SHE grew up in a poor, but close-knit family in Detroit, and married when she was age 21. "During our first year of marriage, my husband and I only had $27 between us," recalls Lewis, an "emancipated e·man·ci·pate tr.v. e·man·ci·pat·ed, e·man·ci·pat·ing, e·man·ci·pates 1. To free from bondage, oppression, or restraint; liberate. 2. housewife" who went back to school in her late 20s. Her five sons were ages 5, 6, 7, 8, and 9 when she received her Bachelor's degree in elementary education elementary education or primary education Traditionally, the first stage of formal education, beginning at age 5–7 and ending at age 11–13. from Wayne State University Wayne State University, at Detroit, Mich.; state supported; coeducational; established 1956 as a successor to Wayne Univ. (formed 1934 by a merger of five city colleges). . Today, the 64-year-old grandmother and soon-to-be retired educator is crafting an estate plan in order to make sure her loved ones loved ones npl → seres mpl queridos loved ones npl → proches mpl et amis chers loved ones love npl are taken care of in the event of her death. Lewis' impressive estate comprises life insurance policies, retirement funds, several rental properties, and a Coverall cov·er·all n. A loose-fitting one-piece work garment worn to protect clothes. Often used in the plural. Noun 1. coverall - a loose-fitting protective garment that is worn over other clothing cleaning franchise--Williams Lewis Connections Inc. Lewis started saving shortly after entering the workforce in the early 70s. As soon as she was eligible, she began participating in a 403(b)-retirement savings plan (designed for civil service employees). She started with just $10 out of every paycheck. "I still remember the exact [amount] I was making--$7,716 a year," she jokes. She gradually increased her contributions so that by the time she retires in February 2001, she will be saving over 30% of her bi-weekly salary. Over the years, Lewis also invested roughly $100,000 in real estate, then built, purchased and later rented out property that once belonged to family members land willed to other relatives). Lewis says that she and her late husband, Thomas Sr., a retired janitor with Chrysler Corp., had wills. However, it wasn't until five years ago, after her husband's death, that she began to work seriously with a financial advisor. She set up a custodial account Custodial Account 1. An account created at a bank, brokerage firm or mutual fund company that is managed by an adult for a minor that is under the age of 18 to 21 (depending on state legislation). 2. A retirement account managed for eligible employees by a custodian. for two of her grandchildren, Monklue, 13, and Thomas Jr., 10, to help provide for their college education and other living expenses. She also has created and transferred the bulk of her assets into a living revocable rev·o·ca·ble also re·vok·a·ble adj. That can be revoked: a revocable order; a revocable vote. Adj. 1. mist, which she is transferring to First of Michigan, a division of Fahnestock soon. Lewis understands that one of the most important reasons for estate planning Estate Planning The overall planning of a person's wealth, including the preparation of a will and the planning of taxes after the individual's death. Notes: Contrary to popular belief, estate planning involves much more than preparing a will, and it is not only for the is addressed in principle No. 10 of the Declaration of Financial Empowerment (DOFE DOFE Department of Energy ), which is to ensure that your wealth is passed on to the next generation. For too long, this has not been a tradition among African American African American Multiculture A person having origins in any of the black racial groups of Africa. See Race. families, but that's now changing with more people like Lewis practicing generational wealth-building. Transferring wealth means more than just building it through equity investments or building the value of a business. You must engage in solid tax planning Tax planning Devising strategies throughout the year in order to minimize tax liability, for example, by choosing a tax filing status that is most beneficial to the taxpayer. for your heirs. Without careful planning, your rock-solid estate could shatter, leaving your heirs with a mere fraction of the assets you intended. The following steps will safeguard your legacy: * Coordinate and monitor your assets. Your estate comprises your cash and cash equivalents (e.g., stocks and bonds), real estate, and personal property. Before you can figure out what you want to give and to whom, you need to understand what you actually own. To begin an estate plan, you will need to gather deeds, bank account records, stock certificates, life insurance policies, and other pertinent documents. * Determining your net worth which is the value of your real and personal property (e.g., your collection of black memorabilia), minus your debts. Figure out how your property will be distributed in a tax-efficient manner. Many stock brokerage accounts are called joint tenants with fights of survivorship survivorship n. the right to receive full title or ownership due to having survived another person. Survivorship is particularly applied to persons owning real property or other assets, such as bank accounts or stocks, in "joint tenancy. , says Gail Perry-Mason, first vice president of financial services The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. , First of Michigan. "This title results in the immediate transfer of the account upon death to the surviving joint owner," she explains. "Many assets are distributed according to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. beneficiary designations such as life insurance, retirement plans, and annuities." * Prepare a written will. A will is the most basic of estate planning tools. In all states, it is the only estate-planning tool through which you can assign personal guardians for your minor children, notes Laura Spinale, author of the Smart Guide to Estate Planning (John Wiley John Wiley may refer to:
While wills are legal documents that delineate what part of your estate your loved ones get, they are virtually always subject to a long--and often costly--probate process. (The court process where a judge makes the determination that the will is valid.) Probate takes an average of nine months to two years. Any debts owed by the estate will be paid from your assets before the remainder is passed on to your beneficiaries. Life insurance, individual retirement accounts (IRAs), and other retirement plans usually bypass probate. In general, under state intestacy The state or condition of dying without having made a valid will or without having disposed by will of a segment of the property of the decedent. intestacy n. the condition of having died without a valid will. laws (should you die without a will), you can expect your spouse to get half of your assets and your kids to divide the other half. If you die without a spouse or children, your parents get first claim on your goods, followed by siblings. If there is no one to claim your assets, they may go to the state, depending on your state. Name an executor executor n. the person appointed to administer the estate of a person who has died leaving a will which nominates that person. Unless there is a valid objection, the judge will appoint the person named in the will to be executor. , the person who is responsible for carrying out your terms. This includes collecting the estate's assets, paying its debts, filing and paying taxes, and distributing the remaining assets to the beneficiaries. No matter how simple a document, have an attorney help you draw up a will. A word to the wise: Make sure that you are very specific in sections on personal information. For example, Spinale says, you want the courts to know that the words "my wife" means your current wife and not your ex-wife, or that the phrase "children" includes your biological kids, your stepchildren, and those born out of wedlock wed·lock n. The state of being married; matrimony. Idiom: out of wedlock Of parents not legally married to each other: born out of wedlock. . You must have your will notarized. A copy should be accessible to your heirs as well as your executor. But bear in mind, though, that a will is part of public record, so anyone can view it * Place your assets in trust. More than just a financial arrangement for rich kids to attend college, trusts are sound estate planning tools. Anyone with real property (rental or residential) in more than one state or business interests or someone who wants to maintain privacy over his or her affairs, should seriously consider a trust, advises Mark A. Mitchell, a financial planner Financial Planner A qualified investment professional who assists individuals and corporations meet their long-term financial objectives by analyzing the client's status and setting a program to achieve these goals. with AXA AXA Anguilla, Anguilla (Airport Code) AXA Alpha Chi Alpha AXA Animal Crossing Ahead (online forum community/guide to the game Animal Crossing) AXA Auxiliary Artery Financial Advisors in San Juan Capistrano, California San Juan Capistrano is a city in southern Orange County, California, USA, located approximately 23 miles southeast of Downtown Santa Ana. The current OMB metropolitan designation for San Juan Capistrano and the Orange County Area is “Santa Ana-Anaheim-Irvine, CA. . A trust holds property--cash, stocks, bonds, real estate, and other assets--that is eventually transferred to a trustee (a person or corporation), the legal administrator of the trust for the beneficiary. The trust is managed for the benefits of the trustor (the person who created it) or beneficiaries. A trust created during the trustor's lifetime is called a living trust. You can create one of two kinds of trusts: revocable--you can change or rescind it--and irrevocable--you can't touch it. A charitable remainder trust charitable remainder trust (Charitable Remainder Irrevocable Unitrust) n. a form of trust in which the donor (trustor or settlor) places substantial funds or assets into an irrevocable trust (a trust in which the basic terms cannot be changed or the gift withdrawn) is an irrevocable trust Irrevocable Trust A trust that, once its setup, cannot be changed at all. Notes: This is to prevent fraudulent activities. See also: Exemption Trust, Trust, Unit Trust Irrevocable trust A trust that is unable to be amended, altered, or revoked. , usually used by people who have at least $100,000 to give, which allows you to give property to a needy cause. Assets in a revocable living trust are included in your gross estate taxes for federal tax purposes. However, irrevocable trusts are often used to reduce the cash value of one's estate for tax purposes. With irrevocable trusts, the IRS An abbreviation for the Internal Revenue Service, a federal agency charged with the responsibility of administering and enforcing internal revenue laws. no longer considers you to be the owner of the assets. Another benefit is that assets transferred into a trust are immediately available to your heirs. This saves them the time and expense of probate court probate court n. A court limited to the jurisdiction of probating wills and administering estates. Noun 1. probate court - a court having jurisdiction over the probate of wills and the administration of estates . Unlike wills, trusts are not considered a part of public record. You'll need to appoint a trustee to manage your assets. A trustee can be a personal friend, spouse or family member, or an institution, such as a bank. For minors, consider a Uniform Transfer to Minor Act (UTMA See Uniform Transfers to Minors Act. ) and a Child's Trust. A UTMA holds, invests, and reinvests money until the child turns age 18 or 21. A Child's Trust lets you state when that child can take full control of the assets. Certain mutual funds, such as the American Century This article is about the term used for American power in the 20th century. For the investment company, see American Century Investments. "American Century" is a term coined by Time Giftrust (www.americancentury.com), let you place a monetary gift in an irrevocable trust to be paid on a specific date--say high school graduation--as long as it's ten years after you open the account. * Make sure you have adequate life insurance. The general rule of thumb is that you don't need life insurance unless someone else depends on your income for financial support--children, spouse, or sickly relative. There are several variations of term and cash value policies. Which one you choose will depend on your needs. In order to understand how much life insurance you need, first determine the needs of your family after your death. Funeral costs is the most obvious one. Your spouse will probably have to pay outstanding medical bills. The mortgage, car payments, utilities, and the like don't cease to exist, once you die. According to Mitchell the formula you use should take into account the difference between the amount it takes to support your family based on the current standard of living and the likely income of your surviving spouse after your death. Work with a financial planner to help you calculate your family's income needs and what sources of income will be available to them after your death. There are several resources, including the National Network of Estate Planning Attorneys (303-446-6100), American College American College is the name of:
Your estate should include measures to protect you and your assets if you're no longer able to manage your financial affairs. Planning for such afflictions usually begins with a durable power of attorney durable power of attorney A legal document conveying authority to an individual to carry out legal affairs on another person's behalf. , a document that names an agent who can take charge by signing checks, paying bills, and making other financial decisions on your behalf. Wills, trusts, and other estate planning tools make sure that your assets are transferred into the hands of your loved ones. You never stop planning your estate--it is a lifetime process, which you should review annually. Your family life will change. Your financial situation will change. Tax and estate laws will change. Your estate plan should change with the times. YOU CAN'T TAKE IT WITH YOU Estimate your estate; estate tax; and probate costs YOUR ESTATE
Value of the property you will own when you die? $--
(e.g., cash, securities, real estate,
and personal property)
What you will own with someone else when you die? $--
(joint tenancy)
Life insurance $--
Property for which you have "Power of Appointment" $--
Monetary gifts that you can revoke or amend $--
TOTAL $--
Deductions from your estate $--
Funeral expenses $--
Administration costs $--
Debts and mortgages $--
Marital deduction $--
Charitable gifts $--
TOTAL $--
TOTAL VALUE $--
(total of your estate minus the deductions from your estate)
NOTE: By 2006, legacies totaling $1 million or less won't be subject to federal estate taxes (ranging from 37% to 55%). Check with your local government to find out about state and inheritance taxes. COMPILED FROM THE SMART GUIDE TO ESTATE PLANNING(JOHN WILEY & SONS) For more information on DOFE, go to www.blackenterprise.com to get a complete list of all 10 principles or call 877-WEALTHY to get your free Wealth Building Kit. LINDA WARREN Linda Pearl Siegert Warren (b. July 2, 1945) is an American author of contemporary romance novels. Biography Warren was born Linda Siegert in Brazos County, Texas in 1945. IS NOT UNLIKE MOST 30-SOMETHINGS. Over the next two years, she dreams of owning her own home. The Cleveland native is also gearing up to meet astronomical college costs by the time her two-year-old daughter Ebony, turns 18. While Warren is not saddled with heavy credit card debt Credit card debt is an example of unsecured consumer debt, accessed through ISO 7810 plastic credit cards. Debt results when a client of a credit card company purchases an item or service through the card system. or student loans, she has gotten off to a slow start in terms of saving and investing. A single working mother Warren says her biggest financial hurdle is the $450 a month she shells out in day care expenses. "I will have that expense for another two years; after which, I will have that money freed up to invest," she says. Warren understands the value of investing through 401 (k) retirement plans. It wasn't until recently, however that she worked for someone who offered such a company-sponsored savings plan. After two years on the job, the executive assistant to a plant manager at DuPont is eligible to participate in a 401(k) plan, with her company matching half of her contributions. Warren, who is the youngest of five children, admits that while she was growing up her parents never talked about buying stock or the importance of good credit. Over the years, she has read up on the stock market and how to maintain good credit. She hopes to work for her current employer another 10 years or more, giving her plenty of time to maximize her retirement savings. THE ADVICE Linda Warren has the opportunity to dramatically improve her financial standing. For one, she's not overburdened o·ver·bur·den tr.v. o·ver·bur·dened, o·ver·bur·den·ing, o·ver·bur·dens 1. To burden with too much weight; overload. 2. To subject to an excessive burden or strain; overtax. n. 1. with debt. And at age 33, she has plenty of time to build a sizable nest egg Nest Egg A special sum of money saved or invested for one specific future purpose. Notes: Examples of the purposes for which nest eggs are usually intended include retirement, education, and even entertainment (vacations and cruises). and put herself in a position to pay part of her daughter's college tuition The examples and perspective in this article may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. College tuition . To help Warren reach her goals and craft a realistic financial plan, BLACK ENTERPRISE had her meet with Cleveland-based Stephen Washington, a financial advisor with Allison Street Advisors. * Participate in her company's 401(k) savings plan. Warren should start immediately contributing to her 401(k)plan, Realistically, she should try to contribute up to $200 a month out of her salary, since one of her main objectives is to save for a down payment on her first house. Once she has purchased a home, she should consider contributing the maximum amount allowed ($10,500 annually) to her 401(k). In addition, she should invest her 401(k) dollars in a large-cap growth stock mutual fired and, as her assets begin to accumulate in the plan, she can diversify her holdings. Given her age and number of years to retirement, a large-cap growth stock mutual fund would be a good place to start. * Continue building up her child's college fund. She should continue to invest $50 a month into the Stein Roe Young Investors Fund. a large-cap growth fund that invests in child-oriented companies. Once Warren purchases a home, Washington Home is an unincorporated community in Pierce County, Washington. It lies on the Key Peninsula and borders the waters of Carr Inlet, an extension of the Puget Sound. Home is now primarily a town of beach homes, although around the turn of the twentieth century, it was considered a advises, she should try to contribute between $100 to $150 to the fund. * Place winnings into a money market account. Warren should take the $2,000 that she received as a winner of the BE Financial Fitness Contest and open tip a money market account. Essentially, this will become the money that she will use as a down payment on a new home. She is going to need to save between 5% and 10% for her down payment, as well as some additional monies for expenses associated with moving into a house. Based on the housing market in Cleveland, first-time owners can get a home for between $75,000 and $100,000, sometimes less. She should contribute a minimum of $100 a month to this account until she reaches her goal. * Invest her bonus money. Each quarter she gets a bonus from her employer that averages out to roughly $400 per quarter, Instead of spending that money on miscellaneous items, Warren should devote 75% of her annual bonus check to a money market account that will be part of the down payment fired for her home. * Put more money toward her credit card debt. There is nothing earth-shattering about $1,000 in credit card debt. While Warren may not pay it off in one lump sum Lump sum A large one-time payment of money. , she should always make sure that she's paying well above the minimum monthly payment due--perhaps 25% of that amount. Paying the minimum basically only enables you to make payments on interest, but not the principal. Linda Warren Household Income Gross Salary $32,000 Profit sharing (bonus) $1,000 TOTAL $33,000 ASSETS Checking $ 400 Savings 1,000 College Fund 2,000 TOTAL $3,400 LIABILITIES Credit card debts $1,000 Auto loans 7,000 TOTAL $8,000 NET WORTH -$4,600 DECLARATION OF FINANCIAL EMPOWERMENT From this day forward, I declare my vigilant and lifelong commitment to financial empowerment. I pledge the following: 1 To save and invest 10% to 15% of my after-tax income 2 To be a proactive and informed investor 3 To be a disciplined and knowledgeable consumer 4 To measure my personal wealth by net worth, not income 5 To engage in sound budget, credit and tax management practices 6 To teach business and financial principles to my children 7 To use a portion of my personal wealth to strengthen my community 8 To support the creation and growth of profitable, competitive black-owned enterprises 9 To maximize my earning power Earning power Earnings before interest and taxes (EBIT) divided by total assets. earning power 1. The earnings that an asset could produce under optimal conditions. For example, AT&T may currently be earning $2. through a commitment to career development, technological literacy Technological literacy is the ability to understand and evaluate technology. It complements technological competency, which is the ability to create, repair, or operate specific technologies, commonly computers. and professional excellence 10 To ensure that my wealth is passed to future generations. |
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