How to Ensure Your Life Insurance Benefits Go to Your Heirs

from Brett Lee Shelton, licensed Family Business Lawyer™

Recently, 11 major life insurance companies agreed to pay $763 million to the heirs of deceased policyholders after it was discovered the companies continued billing customers for their policies even after they were dead.

This agreement is the second in the last two years to be reached with insurance companies, which had previously agreed to provide restitution and do a much better job of locating beneficiaries after being sued by the attorneys general of several states for not paying out benefits to the heirs of deceased policyholders.

This pattern seems to indicate that we all need to do a better job to ensure that the life insurance benefits we pay out come back to our heirs in the way we intend.  Here are 5 tips for making sure your heirs benefit from your life insurance benefits:

Be truthful in your application.  If you have not been completely forthcoming about a major medical issue or your health habits (smoking, drinking, etc.) in your application for a life insurance policy, that policy could be declared null and void and your heirs would be out of luck.

Don’t let it lapse. If your family is counting on life insurance benefits to pay the bills if something should happen to you, and you have not been paying the bills for the policy, your family is left unprotected.

Have a beneficiary bench. Having a beneficiary on your policy who dies before you do is a recipe for disaster – and it happens much more than you think.  Designate a secondary as well as a final beneficiary for your life insurance benefits, and update them as the need arises. We recommend naming your trust as the beneficiary of your life insurance benefits, rather than naming an individual or even series of individuals.

Play it safe.  If you die because you engaged in risky behavior (not covered by the policy) – or you take your own life – your heirs will likely receive back only what you paid in premiums, and not the full value of your policy.

Talk about it.  The primary reason that a vast majority of potential beneficiaries never see a dime in life insurance benefits is because policies were lost or misplaced and family members were never told of their existence in the first place.  So if you have a life insurance policy, let your family know.  And ask them if they have one, too.  We prepare a Family Wealth Inventory (and keep it updated annually) for all of our clients.  Give us a call if you’d like us to help you with this too and ensure your family never loses track of any of your assets after you are gone.

If you would like to have a talk about protecting your family through estate planning, call our office today to schedule a time for us to sit down and talk. We normally charge $750 for a Family Wealth Planning Session, but because this planning is so important, I’ve made space for the next two people who mention this article to have a complete planning session at no charge. Call 303-255-3588 today and mention this article.

When Do You Need to Be Considering Your Business Agreements?

from Brett Lee Shelton, licensed Family Business Lawyer™

If you are running your own business and not looking at agreements regularly, it’s likely you are overlooking an important piece of your business and taking unnecessary risks.  The truth is that you do not need to have written agreements to have a valid agreement, but it sure does help when there is a dispute about who intended what.

What really matters is the agreement process you enter into with the people who matter.  Let’s look at some of the relationships in which this would be the case:

Partners – if you are in business with one or more other people and you do not have a partnership or shareholder agreement, you are at risk.  Your agreement needs to cover what happens if one partner wants to leave, if one partner dies, if one partner wants to buy the other out and more.

Employees/Independent Contractors – if your business has employees or you hire independent contractors to perform business functions, you will need an agreement to spell out their duties and compensation as well as any company policies they are expected to adhere to.

Customers – if your business has clients or customers, your relationship with them should be governed by a written contract or by the Terms & Conditions of the product or service they purchase from you.

Vendors –you must have agreements with the vendors who serve your business.  Specifically, if you use creative types, such as graphic designers, web developers, or copywriters, you want to absolutely, positively make sure your agreement has a “work for hire” clause in it. Without it, you don’t actually own the intellectual property your vendor is creating for you.  Call us if you need a vendor agreement.

Website Visitors – if your business has a website, it must also include Terms of Service, Privacy Policy and other disclaimers and disclosures that govern the relationship with visitors to the website.

Every business has at least one of the above – so if you run a business, you need to get comfortable with executing contracts.  And forget any preconceived notion you have that contracts have to be complicated – they don’t!

You can even have us prepare a standard template you can use over and over again. But whatever you do, do not overlook the importance of well-drafted, well-considered agreements. You put agreements in place because you care about the people you are doing business with.

A Creative Business Lawyer™ can help you create a contract for any business relationship you have that will precisely define the relationship between you and your partner, your employees, your contractors, your customers and for your website.  Having contracts in place protects your business from potential costly litigation and will deter others from taking advantage of you.

If you’re a small or mid-size business owner, call us today at 303-255-3588 to schedule your comprehensive LIFT™ (legal, insurance, financial and tax) Foundation Audit.  Normally, this session is $1,250, but if you mention this article and we still have room on our calendar this month, we will waive that fee.

Protecting Your Small Business from Cybercrime

from Brett Lee Shelton, licensed Family Business Lawyer™

The Association of Certified Fraud Examiners has reported that companies with fewer than 100 employees lost an average of $155,000 annually as a result of fraud, identity theft and cybercrime.  Here are some tips for protecting your small business from becoming a victim:

Protect bank accounts and credit cards.  First, be sure that your personal banking and credit accounts are kept separate from business accounts.  Be stingy with issuing company credit cards and pay bills online.  Use a secure mailbox for sending and receiving mail.  Check your bank accounts daily online for any suspicious activity.

Firewall protection. Be sure your business computers are fully protected with a firewall and have anti-virus, malware and spyware detection software installed on every computer.  Have a robust back-up system for all your business data.

Dedicated banking computer.  Use a dedicated computer for all online banking activities and make sure it is never used for web surfing or other online activities that could make it more vulnerable to a cyber attack.

Password policy. Invoke a password policy company-wide that is changed every 30-60 days.

Educate employees.  Educating employees on threats and prevention methods is your best defense.  Hold regular training sessions and be sure to educate new hires.  Before hiring anyone, conduct a background check to ensure you are hiring the right people – but check with a Creative Business Lawyer™ to be sure your checks are in compliance with local laws.

Insurance.  Get an insurance policy that protects you against any loss or liability suit that could arise from cybercrime.

A comprehensive asset protection plan for both your business and personal assets is a must for any business owner.  If you’re a small or mid-size business owner, call (303)255-3588 today to schedule your comprehensive LIFT™ (legal, insurance, financial and tax) Foundation Audit.  Normally, this session is $1,250, but if you mention this article and we still have room on our calendar this month, we will waive that fee.

5 Steps to Fix Your Battered Retirement Plan

from Brett Lee Shelton, licensed Family Business Lawyer™

It’s no secret that a majority of Americans are ill-prepared for retirement.  A recent Forbes.com post detailed the 5 steps you can take now to being repairing the hole in your retirement plan:

1.  Pay yourself first. Set up an account that is not easy for you to access and start filling it with a significant percentage of your pay (10% or above).  You can accomplish this by participating in your company’s 401(k) plan and making sure you contribute at least the minimum amount to get the employer match (free money!).

2.  Load up on tax breaks. Another benefit of participating in a 401(k) is that it lowers your taxes without you having to do all the paperwork.  A 401(k) is also portable if you change jobs.

3.  Estimate your retirement needs.  Don’t believe that you will be able to sustain your current lifestyle on Social Security alone; it won’t happen.   Experts say you need to have enough saved to match at least 70% of your pre-retirement income.  Not sure how you will get there?  A Personal Family Lawyer can help advise you on strategies, depending on your current age, income and estimated retirement age.

4.  Plan conservatively.  Don’t think you can count on a bull market to fund your retirement.  Estimate a reasonable return on your investments when planning your retirement, and balance risk and reward as you near your retirement date.

5.  Take charge. You need to take charge of your retirement plan by checking regularly to see if you’re on track to retire with the amount of income you need to support the lifestyle you want.  Know exactly how your plan is – or is not—working and adjust accordingly by considering how you can create an income stream for yourself that you can count on throughout the rest of your life, instead of relying on savings or your retirement account at all.

If you would like to learn more about retirement planning, call our office today to schedule a time for us to sit down and talk. We normally charge $750 for a Family Wealth Planning Session, but because this planning is so important, I’ve made space for the next two people who mention this article to have a complete planning session at no charge. Call (303)255-3588 today and mention this article.