9 Ways to Protect Your Money

Whether you retire, get an inheritance, get a bonus, life insurance proceeds, get proceeds from a divorce settlement or win the lottery, have children, siblings or work a 9-5 you need to protect your money. Basically, no matter how much money you have you need to protect it.

It is important to protect your money because it provides many benefits: provides security for you, your family and your heirs; makes funeral preparations easier, reduces tax liability, prevents the government from taking you to probate court and reduces estate taxes.  

Life is full of surprises but minimize surprises to your family by protecting your money and making your wishes known.  Here are some instances when you need to protect your money:  if you own a business, if you are single, if you have children, if you get married, if your spouse has a lot of debt or bad spending habits or if you get divorced or are planning a divorce.  Here are 9 ways to protect your money.

1. Get a prenup.  If you have things of value or are concerned if you get divorced your spouse will get half of your assets consider getting a prenup.
2. Stay informed.  Call your mortgage company to find out what would happen if the business went under and what are your options. Develop a plan to protect your mortgage.
3. Diversify. Make sure your bank is FDIC insured. If not, move your money to a bank that is. If you have more than $100,000 in your bank, split the account into multiple accounts.  Open additional accounts at others banks and keep the balances below $100,000.
4. Plan.  Consider buying a safe for your home or apartment and keeping some money in your safe in the event your bank goes bankrupt and you need to access money quickly.
5. Insurance. Buy auto, health, homeowners, life, disability and long-term care insurance. At a minimum have adequate auto, health, homeowners and life insurance.
6. Backup. Make copies of all of your financial statements, bank cards and legal paperwork and store in a waterproof fire proof safe in your home and store a second copy at a secure location away from your home.
7. Review. Review paperwork yearly to ensure beneficiary information is up-to-date.  Add statements in the will and/or trust in the event an unexpected death to ensure your wishes are included in all legal documents.
8. Estate Planning. Create a will, living trust, tax deferred investments, etc. to protect your money and reduce tax liability.
9. Know the laws. Know the laws in your state regarding estates and protect your money.

Tips for Estate Planning

An estate is property owned by you at the time of your death including: real estate, bank accounts, stocks, bonds, mutual funds, life insurance policies, and personal property such as cars, jewelry, and art. Estate Planning ensures that your property and health care wishes are honored, and that loved ones are provided for after your death. Estate planning can include wills, trusts, and health care directives.

According to Retirement Made Simpler, in 2009, women, younger and lower-income adults were less likely than men, older and higher-income adults to say they participate in a 401k plan offered by their employers. Approximately 53% of adults feel that even if their 401k account has lost value, it is as important to continue contributing to it. Here are some tips for estate planning.

Will Preparation:
1. If no will court decides who gets your assets
2. Living spouse and children get assets and if no children next to kin gets assets
3. Identifies who will take care of children and who manages will
4. Minimizes legal and court fees
5. Laws vary by state
6. No absolute right to estate
7. Signed by 2-3 witnesses

Living Trust:
1. Maintains privacy
2. Minimize gift and estate taxes
3. Can’t have trust without a will
4. Can put conditions on how your assets are distributed after you die
5. Covers only specific assets (life insurance, property, etc.)
6. Use if you have a net worth of $100,000 or more
7. Use if you want to maximize estate tax exemptions

For more information on estate planning visit moneycentral.msn.com/quiz/make-a-will-quiz/home.aspx or www.nolo.com/products/nolos-online-living-trust-NNTRUS.html.