he topic of wills is not commonplace
conversation in many homes. After
all, since wills bring to mind your own mor-
tality, usually you do not look forward to
talking about them or going about creating
one. For some, wills are not discussed because
of the misconception that they're something
to do when you get older. But because death
can occur at any time in your life, it is impor-
tant to have a will in place to clarify your
intentions. Even though most people know
a will is a good thing to have, in the United
States, only 70 percent of the population
actually has one, according to a survey by
Nolo.com, an online resource that provides
consumers and small businesses with do-it-your-
self legal solutions.
Legally, wills can be created by anyone of
sound mind age 18 or older. Each state may
also pose its own restrictions. It doesn't mat-
ter how much money you have, how many
valuable possessions, etc., wills are the sim-
plest way to make sure your assets and pos-
sessions are distributed after your death in
the way you see fit.
WILLS FOR YOUNG COUPLES
If you have children, wills are particu-
larly important. A guardian can be named
for your children in the event that you and
your spouse are both unable to care for them.
By default, a parent is given custody of a
child when the other parent dies. However,
if the surviving parent is incapable or unwill-
ing to care for the child, a guardian will be
needed. Without a will, the state will deter-
mine who will become the child's guardian
-- a person whom you may not see fit. There-
fore, create a will if for nothing else than
having a way to secure your child's future.
Remember, however, to discuss guardianship
with your potential choices to ensure that
these people are able and willing to assume
the responsibility.
MAIN COMPONENTS OF A WILL
Wills often contain other information
besides guardianship, which is not limited
to, but can include, the following:
· A brief description of your assets and how
they should be divided.
· The names of beneficiaries and alter-
nate beneficiaries in the event a beneficiary
dies before you do.
· Specific gifts you'd like to make to indi-
viduals, such as the gift of a home or vehicle.
· A named executor (someone who will
carry out the terms of your will).
· Alternate guardians for your children,
in the event the first choices have become
unable to act.
Note: A living will is not part of your
will. It is a separate document in which you
specify what care you would like to receive
should you become terminally ill or uncon-
scious. It will become effective at the time you
are no longer able to make sound decisions
about your care.
WILL PREPARATION AND
STORAGE
Making a will requires a little research
and preparation. List all of your assets to
know what you're dealing with. Then also
consider your debts. You may want to tie up
debts. Debts may be paid out of your estate
prior to any assets being distributed to fam-
ily members. Remember to be extremely clear
when naming beneficiaries, so there will be
no confusion when your will is executed.
Where possible, use full names and the per-
son's relationship to you, so the will won't
be contested.
While a will needn't necessarily be drawn
up by an attorney, it could help make matters
easier. States typically require that the will be
signed in front of witnesses. The number of
witnesses varies by state.
Wills should be amended or updated every
time a child is born, you change residences,
you get remarried, or when any major change
in your assets occurs. A will can be amend-
ed but, typically, a new one is just drawn up,
superceding the old one.
The original copy of your will should be
stored in a safe place where it can be readi-
ly accessed at the time of your death. If you
have an attorney draw up the will, he or she
should be given record of where the origi-
nal is held. You can store it in a safe-deposit
box, but some states seal the box upon your
death, so this may not be the best option. If
you name a trust company as your executor,
the trust will safely hold onto your will until
it's needed.
Although the end of your life is not some-
thing you'll want to dwell on, knowing that
your wishes will be carried out in the way
you see fit can give you peace of mind.
K
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January 29, 2006
Secure Your Future
The Citizen, Auburn, New York
The Citizen, Auburn, New York
Secure Your Future
January 29, 2006
3
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Growing and Protecting Your Wealth
®
etting started on an investment
portfolio can be intimidating to
say the very least. Whether you're reluc-
tant to trust someone else with your
hard- earned money or just scared off
by an investing language you fear you
might never fully understand, starting out
in the world of stocks, bonds and mar-
kets is a big, yet oftentimes confusing,
step toward securing your financial
future. With that in mind, here's a list
of basic terms with which to become
acquainted before taking the investing
plunge.
STOCKS
· Stock: When you purchase stock
in a company, you are purchasing own-
ership in that company and are a bona
fide shareholder. The more shares you
buy, the bigger your stake in the com-
pany becomes.
· Common Stock: Stock purchased
that entitles the buyer to vote at share-
holder meetings and receive dividends
declared by the company.
· Preferred Stock: Stock purchased
that does not entitle a shareholder to any
voting rights, but gives him a higher
claim on assets than common stock-
holders. For instance, if a company was
to go bankrupt and be forced to lique-
fy its assets, a preferred stockholder
would have priority in staking a claim
to those assets.
· Dividend: A percentage of a compa-
ny's profits that is distributed to shareholders.
Distributing dividends is typically indicative
of a healthy company, and shareholders receive
a particular amount for each share they own.
· P/E Ratio: A P/E Ratio is the stock's
price per share divided by the stock's earning
per share. The value of the price to earnings
ratio shows how the price of the stock relates
to how well the company is doing with respect
to earnings.
· Bull Market: Chances are, you've heard
this term before. A bull market refers to when
a market is on a consistent upward trend
(meaning stocks are rising) and generally
reflects a strong economy.
· Bear Market: The opposite of a bull, a
bear market is when stock prices are falling and
a recession is looming.
BONDS
· Bond: Unlike stock, purchasing a bond
in a company has nothing to do with own-
ership. When you buy a bond, you are loan-
ing money to a company (or government), and
therefore are a creditor to that company, but
not an owner. You make money when buying
bonds thanks to agreeing to a predetermined
interest rate, the dividends of which will be
paid to you along with the initial amount of
your loan on a predetermined date.
· Maturity Date: The agreed-upon date
that a bond issuer will pay you back the
amount you lent plus the interest that has
accrued.
· Coupon: The predetermined rate of
interest agreed upon between you (the bond
buyer) and the bond issuer.
· Default: A default happens when a
company fails to repay a bond.
· Bond Rating: A bond rating specifies a
bond issuer's probability of defaulting
based on the issuer's financial condi-
tion and profit potential. The highest rat-
ing available (AAA) signifies a strong
investment, while the lowest (D) indi-
cates the issuer is in default.
· Junk Bond: A bond with a rating
of BB or lower, meaning the risk for
default is very high.
MUTUAL FUNDS
· Mutual Fund: A mutual fund is a
collection of stocks and/or bonds. The
easiest way to look at a mutual fund is
as if it is a company that brings togeth-
er people and invests their money in
stocks and/or bonds. The main objective
of a mutual fund is to minimize risk by
spreading out your investment dollars over
a collection of stocks or bonds, allowing
you to avoid putting all of your eggs
into one basket.
· Liquidity: An investor's right to ask
that his shares in a mutual fund be
turned into cash at any time.
· Equity Funds: Mutual funds that
invest in stocks and whose goal is to
provide long-term capital growth, par-
ticularly for those looking to secure their
financial situation come retirement.
· Fixed Income Funds: Also known
as income or bond funds, fixed income
funds are mutual funds that invest in
bonds and typically provide steady
income to investors. Those who invest in
these types of funds are often retirees or con-
servative investors.
· Money Market Funds: Money market
funds are for those with a particular aversion
to financial risk. These funds typically boast
short maturities. Similar to bonds, these are
generally IOU's issued by institutions in order
to allow those institutions some cash flow
and the opportunity to escape short- term
debt. While they offer an extremely low
amount of risk, they also offer very little
return.
These are just a few terms that should
help you get your feet wet before you dive
into the investing waters. While there are
several options out there that offer begin-
ning investors low risk, all investors, from
beginners to grizzled veterans, would be wise
to keep in mind that all investments come with
a certain element of risk and that, when it
comes to investing, the only sure thing is
that there are no sure things.
Investing for beginners
Where there's a `Will,'
there's a way
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