May 2009 How to Choose a Guardian When You and Your Spouse Can’t Agree By Thea Beatie Eliot For some people, choosing a guardian is easy. For others, it can be very difficult. One of the most common challenges that faces couples who are having trouble choosing a guardian is that they can’t agree. In fact, this challenge prevents many people from doing any estate planning at all. In my experience, employing an objective process to choosing a guardian can help to defuse much of the emotion that often bogs down these discussions. To help break through the barrier that occurs when couples can’t agree, I’ve devised the following 7-step process. Step One: Get Motivated. Know that if you don’t nominate a guardian for your kids, it will be up to a judge to decide without the benefit of your understanding of your children or the cast of characters. None of us knows when we’re going to die and it’s unlikely that you’ll die prematurely. But if something does happen to you prematurely, the results can be disastrous. Disputes can arise among even the most loving families when your wishes aren’t clearly spelled out and legally enforceable. Your kids would already be devastated by their loss. Don’t let them be harmed further by a court battle. Step Two: Let Go. Most importantly, realize that there truly is no “good answer” to this question. You are far and away the best people to take care of your child. Having them be raised by anyone else if something were to happen to you would only be what’s known as a “necessary evil.” For some reason, for many people it’s easier to search for the “least bad” answer instead of the “best”. Step Three: Make Your List of Candidates. You and your spouse should each make your own list of everyone who would be better to raise your kids than foster care. Think beyond your siblings and parents. Include people like cousins, aunts, uncles, godparents, nieces and nephews, friends, college roommates and any childcare providers with whom your family has a special attachment. Do not consider financial resources. A good estate plan will ensure there are enough financial resources by preserving your existing assets or making up the difference with term life insurance. Step Four: Make Your List of Attributes and Values. You and your spouse should each make your own list of the attributes and values you consider most important in raising your children. This includes things like age of the guardian, parenting style, parenting experience, existing relationship with your kids, geographic location, political affiliation, religion, disciplinary style, etc. Be mindful of what’s truly important for your kids to you and try to avoid worrying about what others might think or feel. Step Five: Combine Your Lists of Attributes and Values. You and your spouse should trade your ranked attributes and values lists at this point. Each of you should share your most important values and attributes and discuss why they are important to you. Your spouse may have thought of important things that you did not and vice versa. Try to combine your lists into a single list of 4 to 6 of your most important attributes and values. If your lists overlap a great deal, this will be easy. If they don’t overlap at all, each of you can choose an equal number of attributes and values (2 or 3) to add to your combined list. Step Six: Compare Your Combined Short List of Attributes and Values to Your List of Candidates. Together, you and your spouse should go over your lists of candidates in light of your combined list of attributes and values. Consider each person in turn and write down the number of each of your top attributes and values that this person shares. Read more of “How to Choose a Guardian…” on page 3 Surviving and Thriving During Crisis byChuckBowes It seems everyone has taken a deep breath in the past few weeks and starting to wonder “now what do I do?” I am hearing more people ask how to move forward after enduring tremendous economic declines. There are two primary strategies to help you survive and thrive during this financial crises: first gain perspective and second take prudent measured actions. In terms of gaining perspective, I’m not simply taking about studying past bear markets. While the lessons we can learn from studying past returns are important, they often are drowned out by the fear of “this time is different.” And you know what? This time is, in fact, very different. Collateralized debt obligations, credit default swaps and a list of other financial instruments were only developed in the last 12 years. Not to mention the rise of China, fall of the dollar and the free flow of capital around the world like never before. Consider the bear market of 197374. In 1973 the S&P 500 returned 14.67 percent followed by a further drop of -26.46 percent in 1974. And if I really study the data, I can see ’73 and ’74 were just the last painful years of a terrible 10-plus years of equity investing. Yet it is plausible that if someone had the courage to invest $100,000 in 1973 and “hang in there” through 2 multiple recessions and market crashes, they would have had $1,972,000 at the end of February 2009 (not a bad return since it is 50 percent less than it would have been 18 months earlier). But I still don’t “feel” better knowing others have gone through this and prospered by taking a long-term view and staying disciplined. In 1973, the Vietnam War was grinding on and, for the first time, America failed to achieve her goals in a war. Oil and gasoline prices were as high or higher than last summer, in relative terms, a president was getting impeached and the country was questioning its moral character and direction. Those were certainly “unprecedented events.” If we put ourselves in the shoes of people who have gone before us, we can gain perspective critical to helping us craft our course of action during today’s tumultuous times. So what is that course of action? Each of you is in a unique situation with different goals, so your specific action plan is unique, but there are some strategies we can all consider. • Refinancing: Mortgage interest rates have fallen and refinancing could be a critical component to longterm success. For example: If you refinance a $625,000 loan from 6.25 percent to 4.75 percent, you can lock in a very low rate and free up $588 each month. • Reassess: Those of you who pur- chased your home in the last five years should consider having your home value reassessed by the county appraiser, as you may qualify for a reduction in property taxes. • Re-bid: Anyone who is considering a major capital expenditure should get a fresh round of competitive bids. Businesses of all types are hungry for work and you could be the beneficiary. • Re-invest: Notice I did not say “stay invested.” For many, it has been tough to stay committed to regular savings and investment plans. For those with a more flexible savings approach, it can be even harder to invest because of the emotional pleasure of building cash surpluses in uncertain times. It is possible that implementing a serious investing program today could decrease the time it takes to achieve your goals. Here are a few ways to think about reinvesting: Re-direct the savings from your refinancing into your investment portfolio. It is easy to set up an automatic deposit so you don’t have to “see” the money come and go. Make a one-time “make up” contribution to a child’s or grandchild’s 529 account. Or encourage “education gifts” this year in place of more traditional gifts. If you did take some money out of your portfolio, consider developing a systematic reinvestment program so you don’t have the burden of having to “find the market bottom.” If you are fortunate enough to have built up some extra cash, consider lump sum or systematic investment programs to deploy the funds into your investment program. Continued on page 3 “How to Choose a Guardian...,” continued from page 1 Eliminate anyone who does not share any of your top attributes or values. Rank the rest in order of those who share the most of your top attributes or values to those who share the fewest. This might be your final answer – that is, there may be one clear first choice and a couple of backup options. In any event, try your ranked list of candidates on for size and see how it feels. If either of you feels uncomfortable, talk about why and see where you might be willing to compromise. If you get bogged down, take a break, but make a commitment to pick it back up in a day or so. But don’t delay past a week because this is the kind of thing that if it can be put off, it will, sometimes indefinitely. Step Seven: Consult An Expert If Necessary. If you can’t reach consensus after going through this process, it’s time to consult an expert. A counselor or therapist who works with couples and/or an attorney who plans from a parent’s perspective can be an invaluable resource in that instance. Remember, you and your spouse are clearly the best people to parent your kids. But if something happens to you and you haven’t specified who should care for them, you run the risk of putting your children, your family and friends through a lot of unnecessary pain. It is so much easier for you to take care of this today than for them to deal with it later. Thank YOU for recognizing our efforts by sending your friends and family! We invest 100% of our time and energy to delivering first-class service to our clients. As a result, our valued clients, partners, and friends refer their family, friends and associates to us. We build strong, lifelong relationships one person at a time. Christine Vine, Heidi Crowell, Melissa Hereford, Sarah Kowalczyk, Adryenn Ashley, Sheri Scott Huette, Pamela Fox, Juliana Billups What People Are Saying About Us "As a mother, Thea is relentless in her pursuit to protect children should the "unthinkable" occur. She is incredibly knowledgeable about the law and how best to protect your family, but more importantly she knows how to have the hard discussions and ask the difficult questions without ever making you feel awkward." Jennifer T., Mother of 1, Berkeley, CA “Surviving and Thriving During Crisis,” continued from page 2 Ensure your workplace savings plans are being fully utilized. Simply remember the mathematical fact: As stock prices decline, the future expected return increases. A portfolio that experiences regular investments during down markets will outperform a more static portfolio. Lastly I think we can all reflect on others who are in far worse situations than our own and be glad we have the opportunity to gain perspective and take prudent actions. It is certainly not an easy thing to do, but then again most things worth doing are not all that easy. Chuck Bowes, CFP® is a founder of Runyon & Bowes LLC who lives in the Bay Area with his wife and two children ages 8 and 6. With offices in San Francisco, Walnut Creek and Newport Beach Runyon & Bowes helps individual and families achieve what is most important to them through comprehensive planning and wealth management services. He can be reached via: [email protected] or (877) 768-4802 ext. 4 3 LOOK INSIDE: How to Choose a Guardian When You and Your Spouse Can’t Agree and ask for Thea’s Mother’s Day Special! Session in May! Call Paula at (415) 451-0123 a Free No-Obligation Family Wealth Planning for qualifying new clients who schedule We have 2 more Mani-Pedi Gift Certificates Tell Your Friends and Family – Happy Mother’s Day! 700 Larkspur Landing Circle, Suite 199 Larkspur, CA 94939 Celebrating Motherhood Mother’s Day is this month so I’ve been thinking a lot about my mom. I know I’m not alone in saying that I owe so much (besides that little thing called my very existence) to my mom. She’s an incredible and inspiring lady. My mom taught me not to accept the limits that other people, society or even I might try to impose on myself. “Failure to ask is an automatic no” and “Just keep pedaling” are some of her favorite sayings. At age 76, she is a Photoshop expert, was on Facebook before I was and recently went indoor skydiving. My love for my mom is boundless, I admire her and I am tremendously grateful for her presence in my life. You can see some photos on my blog at www.TheaLaw.com/blog. I can only hope to one day be as inspiring to my daughters. For all you moms out there, Happy Mother’s Day! Our influence on our children cannot be overstated; we truly do one of the most important jobs on earth. Wishing you health, wealth and happiness,