1. Meet with an accountant experienced in business tax law to determine what type of business entity would best suit you and your business. (See the article entitled Business Entity Comparison at www.starrcochran.com for a brief description of the various types of entities.)
2. Choose a business entity.
3. Choose your company’s name and product name (if applicable). Check with your state’s corporation commission to find out if the company name is available. At the same time, check to see if the company and product name are available as domain names at www.GoDaddy.com. Once you’ve made your decision, register your domain name. If you will be operating as a sole proprietorship, you may also register your company name with your state’s Secretary of State office.
4. If a corporation, partnership or limited liability company (LLC) is your choice, consult with an attorney or research state laws on-line governing the creation, ownership and operation of the entity. If you decide to use an attorney, pick one specializing in business or tax law. They can answer all your questions and prepare the necessary paperwork. Otherwise, begin your research on your state’s Web site. Check out the instructions for the tax forms of the entity you’ve picked and look for a link that will explain how to conduct business in your state.
5. Create and sign the business agreement. If you’re doing this yourself, there are many sites offering standard forms. Read them carefully. Make sure they reflect your intentions and those of your partner(s), if applicable.
6. File the Articles of Incorporation, LLC or partnership agreement with the Secretary of State.
7. Obtain a Federal Employer Identification Number (EIN). Go to www.irs.gov, type in “EIN” in the search box located in the upper right corner of the Web site then click on “Apply for an Employer Identification Number online.” Or, you could call the Internal Revenue Service at 800-829-4933 to obtain an EIN over the phone.
8. Obtain state and local identification numbers for sales tax and payroll reports. This may also be done through your state’s Web site. Look for tabs labeled “business.” You’ll find forms and instructions. You could always call the toll-free number listed for assistance.
9. Obtain local/city/county business licenses and permits. Again, Web sites for each of these governmental entities provide you with the necessary information as to which, if any, licenses and/permits you’ll need to conduct business in your area.
10. Establish a business checking account. Resist the temptation to run the business income and expenses through your personal checking account. This important step says you’re serious about running your business like a business. (It’s also one of the criteria that the IRS reviews to determine whether you are indeed running a business.) Fees vary widely for these types of accounts and are generally higher than for personal accounts. Start where you bank personally. Inquire about fees, minimum and maximum balances. Do you need to maintain a specific balance in the business account? Or, can the value of all of your accounts be combined for a fee waiver? How many transactions are you permitted before there is a charge? How much is it? What can you do to avoid a monthly service charge? Can you deposit checks electronically? How user-friendly is their online banking site? Meet with other business banking account managers and ask them the same questions. There are also online institutions that offer business checking accounts, which may work for you. Low cost is important, but so is convenience.
11. Deposit money into your new business checking account. The amount depends on your anticipated expenses in the immediate future. This is considered “contributed capital” so it is not considered income for bookkeeping purposes. Once your business can afford to pay you back for this contribution, it is also not income to you.
12. Conduct necessary meetings and elect a Board of Directors. This step is for corporations, which are required to meet regularly and have a board of directors.
13. Create the books. You need to make a couple of decisions here. Do you want to keep track of income and expenses yourself? Use accounting software or paper? Do you wish to use the services of an accountant? Are you going to use the cash method or accrual method of accounting? The cash method is the most commonly used and the one you’re probably most familiar with. You record income when you receive it and deduct expenses when you pay them. Using the accrual method requires you to record income when the business earns it and deducts expenses when they are incurred. The choice is made depending on several factors. If you choose to maintain the books yourself, consult with an accountant to help you decide which method is best suited for your business.
14. Contact insurance professionals to obtain the necessary liability and professional coverage. The type of business and exposure to various types of liability will determine the type and amount of insurance coverage you’ll need to protect your assets. You may need errors and omissions insurance to protect you, employees and board members; business property insurance to cover real property and contents, and/or an umbrella policy, which protects your personal assets.
15. Consider a buy-sell agreement. Death, illness, divorce, bankruptcy, sale or the retirement of an owner can have devastating consequences to a small company or family business. Buy-sell agreements are essential for the smooth transition of ownership upon the occurrence of such events. Consult with a business or tax attorney specializing in these documents to help you choose the right type and draft it.
16. Hire employees. Although you may not need to hire employees right away, as your business grows you will need help. Your state’s labor laws can be found on the state Web site, and the U.S. Department of Labor offers an online guide here: http://www.dol.gov/compliance/guide/index.htm
17. Start operations. A “soft opening” lets you work out processes and train employees before the “grand opening” of your business. A grand opening can help you reach your customers with news coverage, ads, and other marketing efforts.

1. What will we spend our money on?
2. What are our goals and dreams as a couple? Separately?
3. How will we prioritize these so we both get what we want?
4. How much should we spend on birthday gifts?
5. How much should a purchase cost before we consult with the other person?
6. Should we have allowances?
7. Should we have separate bank accounts?
8. Do we have enough money to support our current lifestyle?
9. Are we increasing our wealth?
10. Do we have a consistent savings and investment plan?
11. Do we know where our money goes?
12. Should we combine our income?

It’s no wonder then how you handle money as a couple can be a challenge, but an important one to work through. If it’s time for your household to get on the same financial page, here are some suggestions.

Set regular money meetings and then set the mood. Situations change over time and there are many topics to discuss in the area of money so it’s a good idea to get together regularly, for example, quarterly. Pick a day and time when you won’t be interrupted, and when you’re not tired or stressed. Get a sitter for the kids and turn off the phones. Have an agenda for the time allotted, and keep the amount of time reasonable – say 30 minutes. It’s plenty of time to accomplish what needs to be, and short enough that it shouldn’t discourage future meetings.

Seek neutral ground. Pick a place that’s comfortable for both of you, and private where others won’t hear your conversation. Your home’s kitchen, dining room and den are excellent choices.

Begin With a Couples Questionnaire. As mentioned above, the blending of two financial DNAs can be challenging so it’s important to begin to learn what money messages are rolling around in your partner’s head and how they mesh with yours. (There is a list of sample questions for your first session entitled “Money Questions for You and Your Partner” at www.starrcochran.com.) Without knowing what’s important to your partner in the area of money or your partner’s financial history, incorrect assumptions could be made, which could impact your ability to move forward in a positive way. For example, one partner may have a panic attack whenever money is spent and regularly reprimands the other partner for buying anything. The buyer in the couple might assume that the mate is controlling, unreasonable, or cheap when perhaps the purchasing-adverse partner grew up in constant fear of being homeless because of the father’s gambling addiction.

Choose an agenda that’s exciting for both of you then stick to it. Each of you should have a say in the subjects to be discussed so both parties will be engaged in the process. Then stay on track. One topic may lead to another, but it’s a good idea to save non-agenda items for next time. Too many side trips may thwart future meetings.

Remember good communication skills.
• Practice good listening. Really listen to your partner then wait until they are finished talking before speaking.
• Keep the “I’s” in and the “U’s” out. Talk about how you’re feeling. Blaming the other person for whatever is not going to get you anywhere. Instead of, “You’ve made a mess of our investments,” try, “I’m not comfortable with how our money is invested.”

• “We” problem-solve. How the family’s finances move forward has to be a joint effort; therefore, money discussions should have a lot of “we’s” in them. For example, continuing with the dialogue above, you could follow with “How could we invest and save so we’re both satisfied with the portfolio?”

• Watch the tone. Keep the flavor of the interaction friendly and upbeat. Communication is more about how we say the words than the words themselves. And remember, too, body language is constantly communicating even when no one is talking.

• Be honest. If you’re committed to your relationship and to working together on a better financial future, now is a good time to fess up if you’ve been less than forthright with your partner about your personal financial dealings.

• And what if your mate is giving you the silent treatment? Put a positive spin on the topic. Find out what your partner might be excited about in the next few years that you could save for such as a large purchase or a dream vacation.

Take a break. If the discussion is getting too heated or unproductive, take a break. As mentioned earlier, money matters and the discussion of them is an ongoing process so give yourselves permission to resume the conversation another time.

Let there be compromise. There is a finite amount of money that can spent, saved, invested and given away in an infinite number of ways, which means there’s needs to be a bit of give and take involved when you sit down to work through the numbers.

Figure out what’s going to work for you. As every person is different in their approach to money so is every couple and somewhere along the line you need to decide what’s going to work for each of you. The choices range from combining all money in joint accounts to keeping everything separate and various combinations in between. For example in The Bread & Butter Chronicles, Lori and Bob Formor agreed to pool their incomes and allocate an allowance to each which could be spent in any way without permission or judgment by the other. Financial autonomy is important so “mad” money or allowance is a good idea plus maybe an agreement as to how much one person can spend on one purchase without consulting the other partner.

Agree on a plan for change and identify the rewards and consequences. Once you’ve identified and agreed on what changes you’re going to make in your financial life as a couple, then determine the penalty and reward for a particular goal. Since this is about finances, rewards should not involve money and consequences should. For example, back in the Formor family, Bob agreed to sell some of his no-longer-used, gathering-dust items around their house towards a goal of $1000 in a savings account in 30 days. If he fails, he has to sell a piece from his gun collection. If he wins, well, let’s say, Bob knows exactly what he wants and it has nothing to do with money.

With money issues being the main reason for the majority of divorces, getting to know each other in this area of your relationship is well worth the time and effort. For additional resources which cover the topic of couples and money, please visit www.starrcochran.com

If the answer to any of these questions is sounding an alarm for you, you owe it to yourself to ask some questions of your own. There could be financially damaging activities going on which could adversely affect your individual financial future. Left unchecked or unchallenged, you could find yourself somewhere you don’t want to be.

Financial secrecy. In this case the spouse in charge of the family finances is not willing to share information or discuss anything relating to their finances with the other spouse. Any question about financial particulars by the clueless spouse is dismissed, ignored or otherwise averted.

Financial infidelity. This type of behavior can be as innocuous as hiding a small purchase, stashing money away for a special gift, or having a secret credit card to day trading the retirement account away. Keeping a separate financial life on the side is being unfaithful to your spouse.

Dishonesty. When asked a specific question about what’s going on with the finances, the spouse lies. For example, saying that an item was on sale when it wasn’t or spending money on one thing and saying it was spent on something else or telling a spouse what he/she wants to hear about how their investments are performing.

Dominance. One spouse is in total control of the family’s finances, including all spending and saving decisions. The other spouse doesn’t have any input in this area of their relationship. This could go so far as checking every receipt and accounting for every penny spent.

Financial irresponsibility. One spouse spends money without considering the impact of their behavior on the family’s finances or other financial obligations. For example, a spouse may go on a shopping spree at the mall or online, leaving the family without money for utilities. Or a partner incurs a new car payment, even though the couple is already drowning in debt.

When two people marry, they are joined legally as well as financially. As a result, it is important they bring the same commitment, respect, trust and compromise to their financial relationship as they should to their emotional one. If you’re interested in starting a money conversation with your mate, check out the article How Couples Can Avoid a Marital Money Meltdown at www.starrcochran.com.

Seller-financing. If the seller has substantial equity in the property, the seller acts as the bank for any or all of the financing to the buyer. Documents are prepared outlining the terms and conditions of the note, including the amount of the note, payment amount, interest rate and length of the loan.

Money partners. There are people who like investing in real estate but have no desire to perform the “hands on” part of finding and managing property. If you like the operational part of real estate investment, this type of arrangement might work for you. As true partners, it is recommended you form a partnership by way of a partnership agreement, spelling out the specifics of your arrangement, e.g. percentage of ownership, scope of responsibilities, division of management, share of income and losses, etc.

Lease to own. In this situation you would enter into an agreement with the seller to lease the property for a specified period of time, and you would be given credit, when you purchase the property, for a portion of the lease payment. The agreement would also contain an agreed-upon purchase price. This arrangement gives you the option to purchase the property, not an obligation.

Family and friends. Mixing family and finances can turn out badly. But if you treat them as you would any other investor, including signed notes with clear cut consequences, this arrangement could be a win-win for both sides. Prove to them how they’re going to get a good rate of return and when they will get their money back.

Hard money lenders. These investors loan money for short periods of time (usually for less than six months) at a high rate of return. Since these notes are private arrangements, you can oftentimes receive the necessary funds within days of the request. This type of loan is an excellent source of funds in situations when time is of the essence, when permanent financing is perhaps unnecessary, or when traditional lenders are unable to fund a loan.

Trade/barter. As Jade discovered, sometimes a situation presents itself where an exchange of services could be a source of funds. Even though there are tax consequences to barter income, the benefit of this option is that you don’t have to come up with cash.

These are but a few ideas. There are several good books devoted to this subject alone including those by Robert Allen and many written on the general subject of real estate. Check out your local library and bookstores to find the ones that work for you.

First of all, take a breath. Little can be done until you receive the death certificate, which can take weeks, and many issues are not urgent. In fact some areas are best postponed and dealt with when emotions are less raw. (See the section later entitled “Things You Can Put Off until Later.”)

Do you have a trusted friend or family member who could help you? Details of the tasks involved can be overwhelming. Emotions can cloud your ability to make decisions and the sheer activity of settling the estate can be physically challenging. An extra pair of eyes and hands can bring a welcomed peace of mind.

Gather important papers.

• Death certificate. Obtain at least five certified copies, which are provided by the funeral director. Some companies want certified copies; others are satisfied with regular copies.
• Insurance policies.
• Marriage certificate. Some companies will ask for a copy of this document.
• Military discharge papers. If you cannot locate these, write to:
  

  Department of Defense
  National Personnel Record Center
  9700 Page Blvd.
  St. Louis, MO 63132

• Will and/or Trust. Depending upon the complexity of these documents, you may want to solicit the assistance of an attorney to assure the provisions are properly executed.
• List of current assets and liabilities. If you do not have a current list, you will need to compile one. This list will include assets from brokerage and bank accounts, annuities, mutual funds, retirement accounts, real estate held for investment purposes as well as the value of your home and personal property such as vehicles, jewelry, collectibles, etc. (A sample of one is available on this website by clicking on the link Balance Sheet.)
• Children’s birth certificates and Social Security numbers. If you have dependent children, you will need this information to apply for Social Security benefits.

Apply for benefits.

Make copies of everything you send. Documents can get lost or misplaced. Also set up some sort of tracking system for the paperwork. (One is available on this website under Estate Paperwork Tracking Form.)

• Insurance proceeds. Contact your local agents if possible. Otherwise, get in touch with the company. Find out what paperwork is necessary to collect benefits from life insurance and accidental death policies, mortgage insurance policies, credit card protection policies, and from employer-provided policies.
• Social Security benefits. If your spouse paid into Social Security, you may be entitled to several benefits.
  • One-time death benefit of around $250 towards burial expenses. Your local Social Security office or funeral director can assist with the paperwork.
  • Survivor’s benefits for you or children. You may be eligible for survivor’s benefits if:
    • If you are over 60 years old.
    • If you are a disabled widow under 50 years old or
    • If you care for dependent children under 16 or disabled.

  Contact your local Social Security Administration office, call 800-772-1213 or check online at www.ssa.gov.

• Veteran burial benefit. Survivors of veterans are eligible to receive a lump-sum payment of $300 for burial expenses and a plot interment allowance of $300. (Burial in a national cemetery is free to a veteran, his or her spouse, and dependent children.) Veterans are also eligible for a headstone or grave marker at no charge. The funeral director can help you apply for these benefits or you can contact the regional Department of Veterans Affairs office.
• Employee benefits. If your spouse was employed at the time of death, there may be benefits such as:
  • Accumulated sick and/or vacation leave.
  • Life, health, accident insurance benefits.
  • Death benefits associated with your spouse’s professional organization or union.
  • Pension plan. (See information below regarding retirement accounts.)
  • Workman’s compensation benefits, if your spouse’s death was workrelated.

Begin to settle the estate.

If your spouse had a will and you were designated as the personal representative or executor of the estate, the estate may have to be probated. (Check your state’s law for its minimum estate amount.) This process includes:

• Filing a petition with the court after death along with a fee for the probate process.
• Proving that the will is valid.
• Informing creditors, heirs and beneficiaries.
• Disposing of the estate in accordance with the will.

If there is no will, the court will appoint a personal representative (usually the surviving spouse) and the estate will be distributed according to state law. Assets held jointly with someone else are transferred to the surviving owner outside of probate and outside of the will. Insurance proceeds and retirement accounts also pass to the beneficiary outside of probate.

Evaluate short term income and expenses.

Your income and expenses have just changed. A Cash Income & Expenditures Statement can give you an idea where you stand financially so you can determine what adjustments need to be made in the short-term to meet your monthly obligations. (A sample is available on this website.)

Change ownership and update beneficiaries.

• Bank and investment accounts.
• Your life insurance policies.
• Automobiles.
• Annuities and retirement accounts, including employer retirement plans and IRAs. Depending upon the type of retirement account, decisions in this area can be complex. It is recommended that you consult with a professional advisor such as a Certified Financial Planner™ or CPA or Enrolled Agent to explain the shortand long-term implications of the various distribution options.
• Credit cards. Cards issued in the name of the deceased spouse only should be cancelled. For those credit cards held in both of your names, notify the institution that your spouse is deceased and to list the card in your name only.

Ask for professional help. There’s nothing wrong with asking for help from a professional advisor. In fact, their expertise can save you time and perhaps costly mistakes.

Things you can put off until later. What a difference a year makes. These are non-critical, more emotionally driven decisions that can wait.

• Selling your possessions or giving them away.
• Moving.
• Buying things.
• Giving money away or makings loans to others.
• Investing.
• Evaluating insurance needs.
• Estate planning.
• Retirement planning.

There are few more challenging times in life than dealing with the death of a spouse. However, following these steps to get your financial affairs in order, and surrounding yourself with family and friends can make the process less overwhelming.

What’s a living trust? Do you need a trust? What’s a living will? What’s the difference between a will and a living will? Do you need a will? Or a living will? What’s a TOD account? POD account?

A living trust is a revocable trust established during your lifetime and allows the trustee for virtually complete control over the assets. Should you become incapacitated or disabled, the trust is in place to manage your financial affairs. At death, the assets are distributed and managed according to the trust document under the supervision of a successor trustee. A will is a legal document that allows you to distribute your property to those you choose, and if you have minor children, the will also gives you the opportunity to nominate a guardian. A living will is a document that outlines your medical wishes in the event you are unable to speak for yourself, such as what measures you would like to be taken to keep you alive. TOD (Transfer on Death) and POD (Payable on Death) are types of account titling which can enable you to maintain control of the account yet allow for the account to pass to the person(s) named upon your death.

Because estate planning is governed by state law, the differences among the states are as diverse as they are. Even laws in community property states vary significantly. So it is a good idea to know your options based on your state’s law. Having said that, the area of transferring assets at time of death doesn’t have to overwhelming, and the answers to a few simple questions can guide you through the decision-making process.

Would you consider yourself a do-it-yourselfer or someone who would rather rely on the advice of others? If you like to do things yourself, you will probably be comfortable doing the necessary research to determine which route will best suit your needs – a trust, a will, titling, or a combination – and then putting your choices into place. On the other hand, if you’re more comfortable with a professional, an attorney in your area specializing in estate planning can advise you as to which method would best suit your situation.

Would you consider yourself a technical person or an emotional person? If you think of yourself as being more emotional than technical, you would probably be best served by establishing a trust. Trusts allow you to take care of everything, including the financial affairs of your family after your death. If you lean towards the technical side, a will, titling and beneficiary designations might be the way to go.

Are you a private person or would you mind if your affairs were public knowledge? If you consider yourself a private person, a trust gives you that privacy plus expediency. A will is public record and it allows a certain number of months for creditors to come forward with claims, which could delay settling the estate. As mentioned earlier, assets in a trust are easily transferred and maintained because the entity lives on after death.

Do you have minor children? If you do, it is recommended you name a guardian in your will and establish a trust where your assets would be placed after your death for the benefit of your children. You will also have to name a trustee for that trust, which can be someone other than your children’s guardian.

This area is particularly important and deserves an example. Let’s say you have two children and two sets of loving grandparents who would be equally qualified to care for the children. Without a guardian provision the courts could decide to split the children between the grandparents, which may not be in the best interest of the children or conform to your wishes.

Regardless of which estate planning method(s) you choose, do something. If an individual has no will, or if the will is invalid, or if the will has been revoked, then that person has died “intestate.” Some of the disadvantages to this lack of estate planning are:

• The laws of the state will determine who will receive the property. A guardian is named by the court.
• The court appoints the personal representative, who may charge more for administrating the estate than a family member.
• For larger estates tax saving opportunities will be lost.

If your estate needs are straightforward, there are will kits available online as well as at local book and office supply stores. Check with your state’s bar association online for a list of local attorneys who specialize in estate matters then call for an estimate. As with the other aspects of your financial life, the more complicated your situation, the more sophisticated the planning options. If your estate needs go beyond straightforward, or if the process is outside your comfort zone, contact an attorney.

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