TECHNO MATERIAL

Out of every hour of commercial television your family watches, you’ll see about ten minutes of advertisements. You can continue to watch, turn down the volume and talk about something else, or you can substitute your own commercial.
• Invent a Product. What new product or service would your children like to advertise in a thirty- or sixty-second commercial break? They should plan their substitute advert for half as long to compensate for false starts and typical under-estimations.
Perhaps the children can come up with a jingle or catchy slogan. If you have a cassette recorder, encourage them to pre-record the advert once they have written and rehearsed it; otherwise, they can rehearse and perform live.
During one of the programme breaks, quickly turn down the volume or turn çff the TV altogether and let the children take over. Whenever they feel like repeating their advert, let them. Don’t you have to listen to real commercials again and again?
• Public Service Message. In addition to showing advertisements, channels sometimes also broadcast public service messages.
Your children may enjoy producing a public service message. This may require a little reading and research at the library. Perhaps they can instruct their audience in home fire safety, ask their co-operation in saving water or electricity, or warn them about a local outbreak of meningitis.

Jeff thought he had lost just about everything when his wife, Nancy, died of breast cancer at age forty-foui leaving him with their two young children to raise. As it turned out, his losses were just beginning.
Before I met Nancy, I had sort of thought I would never get married or have kids, but she was different. She had moved from New York to California six years ago and found she just loved it here. About six months before we met, she bought a house for $225,000. It was kind of run-down, but she wanted to fix it up. That’s how we met. I’m a contractor with my own firm, and I came over to give her some estimates. I ended up doing the job for free—because six months later we were living together. We worked on the house together and it was transformed. Supposedly it’s worth about $300,000 by now.
To our surprise, Nancy got pregnant—she had never thought she could—and soon we were married, with two daughters. After our daughter was born, Nancy’s mother came to visit, and she didn’t like me at all; I know she thought I wasn’t good enough for Nancy. But it didn’t really matter, because she lived in New York and we hardly ever saw her.
Last year, Nancy was diagnosed with breast cancer. She had surgery, radiation, chemo, the entire treatment. The whole process scared us because we never really knew if Nancy was going to be okay or not. We realized that we never had given much thought to these things and that we didn’t even have a will. It was Nancy who insisted we have one drawn up. The house was still in her name, just as it was when we met, but in the will she left it to me. It was a given that I’d take care of the kids; I love my girls. She knew I’d find a way. In the end things happened so fast. Nancy wanted to die at home, but the health insurance didn’t cover the hospice care. So when the time came, I paid for it with credit cards. It was hard. 1 wasn’t working very much because I wanted to be with her all the way through this.
After Nancy died three months ago, I went back to the lawyer to see what came next. Maybe I should have just taken the kids and left town. The probate fees on the house are going to be enormous. No way do I have that; all our savings went to the hospice people, and now I have credit card bills, too, plus I gave up a lot of jobs to be with my wife. The lawyer says that unless I pay these probate fees, he will probably force the sale of the house. That’s not all. Now Nancy’s mother has flown out from New York, says she wants the kids, that she can give them private schools, and that I’m not a good father. That’s not true, and the attorney says it will never happen, but now I have attorney’s fees up to here. Even if I could get the money for the probate fees—which feels like making bail or something—now I’ll have to sell the house anyway, to pay the attorney’s fees and the credit cards. So the kids and I will lose the house regardless. All that work we put into it. I thought nothing could get worse after I lost my wife. I thought wrong.

Probate fees vary from state to state—but you get the idea. Probating a will takes time and money, no matter what state you’re in. If your estate is very small, you might be able to avoid probate with a simple will. Assets valued at less than $60,000 to $100,000 (depending on the state) can be transferred to your heir by a simple process called probate affidavit. It costs very little, doesn’t take much time, and makes it easy for your survivors to receive what you want them to. Probate affidavit forms are available in most banks at no cost. Be careful, though. Your estate could be worth more than you think. See page 107 for assessing your net worth.
Keep in mind, too, that wills can be contested, which means that anyone who thinks he or she should have something in the will that the deceased left to someone else has the right to come to the court and ask for it. Then the judge has to decide. Also, although people commonly use wills to specify guardians for their children, this recommendation is not binding. It can only express one’s wishes. Even though Jeff is the legal father, and even though the will expressed Nancy’s desire that he be the sole guardian of the children, the legal guardianship of children always rests in the hands of the court. Nancy’s mother knew what she was doing when she flew to California to ask the court for the children. Will she get them? It’s unlikely, but the court will make its decisions based on whatever it feels is in the best interest of the children.
Could Nancy have arranged her affairs differently, to save all this agony and expense? At least some of it could have been avoided if Nancy had set up a revocable living trust.

Where you want your money to go is one concern. Where you don’t want it to go is just as important.
ANNIE: Ever since Daddy died, it’s been a nightmare.
SARAH: My husband, Harry, fought with Peter, our son, for years, and always said he wouldn’t get another dime. We had to give him money so many times; over the years, that’s tens of thousands of dollars. The worst thing was when Harry died, Peter didn’t even come to his funeral, couldn’t be bothered. I will never forgive him for that. I decided then that was that. I won’t let him have another dime, just like Harry said. Last year I moved here from Florida to live near Annie, my daughter, and my grandson, William. I trust Annie, she never wanted a thing. Peter is living in our house in Florida and wants it put in his name. No way. He can live there, but nothing more. Not one penny.
ANNIE: Mama kept all the money in a brokerage account in Florida. Daddy liked the person who handled it, so she thought, Why not just leave it there? What did we know? Daddy always took care of everything, so when we would get these statements from Florida, we just filed them away. Mama hardly goes out on her own anymore because she’s afraid she’ll trip and fall. But she loves to cook. Most nights William and I go over, and she makes us a great dinner. One night when we got there she was waving this power of attorney form around that Peter had sent her, and she was having a fit.
SARAH: I’m getting older, yes, but not senile, as you can see. Peter is trying everything to get his hands on my money. Can you imagine? He sends this note that says, “Mama, just sign here.” Power of attorney. If anyone is going to take over for me, I want it to be Annie. I trust her with my life. I just want him to leave me alone. And when I die, I want the money, what’s left of it, to go to Annie and William. Not a penny to that son of mine who wouldn’t even come to his own father’s funeral.
This story is dramatic—and it gets worse. But I’ve seen many cases like this. Money can tear apart families, even families that were closer than this one to begin with, faster than anything else.
I met Annie and Sarah when they were referred by another client who thought they needed some financial help, and I was dceply relieved that they came when they did. Time was of the essence. I opened all the Florida statements that they had filed away, and they were stunned to find out that Sarah’s assets added up to more than $3 million. They had no idea. I noticed something else: many, many trades of stocks and bonds had been going on in her account. How could Sarah have known this, when she didn’t even open the statements or mail that came from the brokerage house? A few calls to the broker later and we found out that it was Peter who was trading the account. The broker figured it was okay because Peter was Sarah’s son. This was no excuse and his actions could have cost• that broker his job, but Sarah felt that Harry had liked him and that was good enough. Even so, we convinced her to transfer the entire account to a reputable broker here in California, where she lived. She also worked with an estate and trust lawyer, Janet, an associate of mine I have come to trust by watching how she has worked with other clients in the past, to make decisions about how to best protect her estate.
We put together her revocable living trust and began transferring her assets into it. The assets would remain in her name throughout the rest of her life, then would pass directly to Annie. Because of Sarah’s age and frail health, we also gave Annie durable power of attorney for health care, which is covered later in this chapter. Because the estate was large, and because we all felt that Peter would do whatever he could to claim whatever he could, we took an additional precautionary step. We videotaped Sarah talking about the trust, expressing what she wanted to have happen to her estate when she was gone. As we went through the process, Sarah decided in the end that she wanted to leave Peter $10,000. Although frail, Sarah knew exactly what she wanted and what she was doing, and the video reflected that.
Everything went fine for about four years, but as Sarah’s health continued to weaken, she decided she wanted Annie to step in as the new trustee of the trust. This meant that Annie would be the one who could decide what was to happen with the money in the accounts, write checks against them, and generally oversee everything. They came back to my office, and it was an easy process to change the name of the trustee from Sarah to Annie. Janet then informed in writing all the institutions that held Sarah’s money that Annie was the new trustee.
About two weeks later Peter called to say that he was coming to visit Sarah; this was a first, and it made Annie very nervous. Still, she agreed to join her brother at her mother’s house for dinner the night he was due to arrive. When she got to Sarah’s condo, however, the locks had been changed. After meeting with the super and calling a locksmith, Annie gained entry and found her mother gone, her suitcase gone, her checkbook gone—and the pills she needed to take every day still on the night table. Five days later the authorities found her in a hospital in Florida. She had collapsed from dehydration and starvation.
Annie and William, in a panic, flew to Florida to bring Sarah home, and her story emerged slowly. Peter had taken his mother to the bank and tried to close out her account—but wasn’t able to, since Annie was now the trustee of her mother’s trust. He was able, however, to clean out her safety-deposit box of quite a lot of cash that Sarah liked to keep there just in case. Then he flew her to Florida, made her sign another power of attorney form he’d drawn up. That was all Sarah would say about the last time she saw her son. As Annie and William were bringing her home, Sarah died.
After Sarah’s death Peter was notified about the trust and how much he was to get. He was furious. He claimed that his mother had promised to transfer the deed to the house over to him while she was in Florida. He claimed a lot of other things as well. He threatened to sue. But we sent his attorney a copy of the trust and a copy of the video, and that was that. Even though Peter was actually living in the house, the trust made Sarah’s wishes crystal clear. Her trust overrode Peter’s claims and threats. The trust protected what Sarah wanted to have happen to her money. Had Sarah had a will, not a trust, the probate fee on $3 million would have been $82,000.
One footnote to this story: Because there was a lot of money at stake here, and because Sarah and Annie were afraid that others might find out how much money they had, their privacy was a big concern to both of them. So there was yet another reason why they were better off with the money in a trust rather than in a will. Wills are public documents, and after someone has died and his or her will has been probated, anyone can go down to the courthouse and look up the information within it. With trusts, only the people you want to se them can see them.

No problem, as long as you don’t die.
If you do die—no, when you do die—your loved ones will soon find that by not taking action, you have left their inheritance up to the state.
Let’s say you own your house, which was part of your divorce settlement, in your own name. Since divorcing, you’ve remarried and are hopelessly in love with your new hubby. Still, because of the terrible divorce you went through, you feel a little safer keeping the house in just your name. Your two children from your first marriage have never liked the idea that you remarried, and even though they’re grown, they’re extremely possessive of the house they grew up in. If anything were to happen to you, you would want your new husband to be able to stay in the house for as long as he likes, then title would transfer to your kids. But you haven’t got around to creating a will or a trust.

The agent was so nice, Linda thought. He came all the way to her house.
I’ve always had it in my head that I want my kids to have insurance when I die, and $1.5 million is the figure I always thought sounded right. I have a comfortable income from my work—in fact, 1 was the one who paid the settlement in my divorce—but I have no savings, really, and the income will stop when I die. The kids don’t really see their father, and he has children from his second marriage, so this is all they’d get, ever. My father always said life insurance was a great way to save. I always remembered that. I finally got around to it three years ago—I was fifty-three.
The agent was so nice. He came all the way to my house, which is way out of town. On a Saturday! I was so impressed. When he came, I told him what I wanted and he had his computer with him, so he did the figures right there. He said it would be $22,500 a year for twenty years and that was that; the kids would have their money. In my head I added it up. It meant that I’d be putting in $450,000, and they’d get $1.5 million—a good deal, no? So I said fine, and every June 1 since, I’ve sent in my $22,500.
This last yea though, I got a notice that said since interest• rates have been so low, I would have to pay the $22,500 for an extra three years to keep the $1.5 million death benefit, and if the rates stayed this low or went lower, I might have to pay longer. I called up the agent, and he said that it is possible, even though it isn’t probable, that if interest rates didn’t pick up, I might have to pay that money for quite a while longer than I was told. The best that could happen is that I’d have to pay it for twenty-three years in total. But I think he was saying that I might just have to go on paying it forever.
Had I known that, I would have thought twice about this. It just doesn’t seem right. I asked him what if I stopped now and cashed in the policy, how much would I get? He said $36,000. But I’ve already paid $67,500! I got so confused. He had told me the same thing my father always said, that this was a great place for saving money, regardless of the insurance, because they were giving a guaranteed seven percent interest rate. So how do I end up with only $36,000? And what do I do now?
This is when I met Linda, now fifty-six, who still had it fixed in her head that she wanted $1.5 million in life insurance for her kids. But think about it: For the insurance company to pay that $1.5 million, plus all the commissions and expenses buried in the policy, don’t they have to earn more than $1.5 million from Linda’s money? Of course they do.
This is why they are having Linda pay that extra $22,500 a
year for three years right now. If their performance on how they invest Linda’s money, and the money of everyone else covered by their plans, falls short of what they want, no problem. They’ll just tell Linda she’ll have to keep paying that $22,500 a year for as long as they like. And why does Linda, after putting in $67,500, have only $36,000 in cash value in her policy? Simple. Especially in the first few years of the policy, the bulk of her money goes to pay the agent’s commissions; the insurance company also has to take its share. It is totally possible that the agent received that very first year a commission of $18,000, well worth his time that Saturday when he came out to her house. So, $18,000, give or take, of her first payment of $22,500 went out the window as soon as she paid it. In all likelihood the agent also “earns” around $2,000 every year she pays her premium from then on. Not bad.
What is also important to remember when buying universal] whole life or, for that matter, any insurance is to study the chart or illustration your agent will show you of what your premium is going to buy you.
All illustrations have a projected earnings side and a guaranteed earnings side. The projected side shows how this policy is projected to perform if everything goes according to plan. I can still remember seeing projections on certain life insurance policies of what they would be worth if interest rates stayed at 14 percent, which is what they were when these policies were being sold. Policyholders were in for a rude awakening when interest rates came tumbling down and the policies stopped paying the 14 percent. Projected earnings are “in a perfect world” earnings.
If you look at the guaranteed side of the illustration, it will show you the absolute minimum death benefit, given the highest mortality charges (the maximum the company can charge you for the insurance) and the lowest possible interest rate they can pay you. If you look at the guaranteed side and decide that yes, it still feels like a great deal, buy it by all means, but I doubt you will feel this is the case. If Linda had looked at the guaranteed side of her illustration, she would have seen that the $22,500 would go on for the rest of her life in the worst-case scenario. She hadn’t understood that and wouldn’t have taken the policy if she had. Her agent had emphasized only the projected values. A responsible agent will always, even without your asking, point out the worst-case possibilities as well.

Once a fund starts to do well, the word gets out and it seems as if everyone wants to invest in it. A fund that continues to take on new investors’ money and keeps getting larger and larger is known as an open-end mutual fund. This means there’s no set limit as to how much money they’ll permit to be invested in the fund. At their discretion, the manager and others in authority may sometimes close the fund to new investors once they’ve taken in more money than they feel is manageable, but this is
decision they can make anytime, as they go along.
How Is an Open-End Fund Priced?
At the end of each day, the manager totals up the entire value of the portfolio that constitutes this mutual fund. He divides that total by how many shares are owned by the investors. This figure, whatever it comes out to, is called the net asset value, or NAV It is what each of your shares is worth. If you are a new investor and want to invest $1,000 into this mutual fund, and the NAV that day was $10 a share, you would own one hundred shares of the mutual fund. If the fund’s value goes up by $.25 a share, you will make $25. The more shares you have, the more you make, and the more you lose if the fund goes down.

There is another type of mutual fund, known as a closed-end fund. This is where from the very beginning the number of shares that can be sold to the public is decided ahead of time; once the shares are sold, the fund is closed to new business. It won’t issue new shares, the way the open-end funds will. New people can buy into a closed-end fund only if someone who owns it wants to sell it. Essentially it’s priced and traded just like a stock—so the value of its shares may not correspond exactly to the value of its holdings.
For our purposes here, though, we’re dealing with open-end funds. These are the ones you usually hear people talking about, and these are the ones commonly offered in 401(k) and 403(b) retirement plans.

The day your home business reaches the level where you can earn money from the work of others is the day your riches will begin to pile up. Why? Because you can accomplish only so much by yourself. Beyond this you need the help of others.
You must, however, be careful when using others to pryamid your riches. For instance, you’ll soon go broke if you pay a man $10 per day to work for you and he earns only $8 per day for your business.
you have twenty people working for you and you lose $2 per day
each you’ll soon have little left other than an empty purse.
So be sure each person you hire at least earns his keep. Better yet, follow the advice of Paul L., a brilliantly successful home hair stylist. Paul helps restyle women’s hair, advises them on the style of clothes that make them look their best, and offers guidance on other aspects of good grooming.
“When my business became so 1arge I couldn’t handle it by myself, I began looking for help,” Paul recalls. “As I analyzed the
that I wanted to fill I realized that I’d have to train the person, watch his work closely for the first few weeks, pay extra payroll taxes, etc. In other words, the new person would have to earn for me more than his salary because it would cost me money just to have
on the payroll. This was the best decision I ever made.
“As a pure guess I told myself that each person I hired must earn
least twice as much for my company as I would pay him. Thus, a man being paid $100 per week had to bring in no less than $200 per week in business. The extra $100 per week goes towards payroll taxes, benefits, and my profit on the person’s work. After all, I should receive some return for providing the job, taking the risk, etc.
“I learned, as I hired more people, that my ‘two-times’ figure was
little low. I should have made it two and one-half times. Also, I learned that some large companies use about the same two-times- salary figure; others use a four-times figure. This is an important way of taking care of overhead—that is all the costs you have to pay just to stay in business.”
One of the best ways to pyramid your riches is by hiring more people for your business. Just be sure you understand, and use, the two-times or better rule for covering overhead and you’ll solve most
the problems new home fortune builders face.

After predicting a punchline or event on a favorite show, your child may pipe up, ‘I remember when I wrote that!’ With this activity, your child will get the chance to come up with some new lines.
Suggest that he or she writes to the producer of a favorite programmed requesting a sample script. The whole family can read the sample script aloud, each person taking one or two parts as needed.
After coming up with a plot, your child may want to review some of the scriptwriting conventions and take a turn at writing a show segment. When finished, your scriptwriter can ask family members to assemble for another reading — this time a reading of his or her own script.
Upon hearing the lines, the scriptwriter may want to make some changes or additions. If your family has a video camera or access to one, it might be fun to tape the script using the family players and a few simple props and costumes.