Cathy Curtis

The Complete Guide to Buying a New Car as a Solo Woman

Buying a New Car As a Solo Woman

The world continues to evolve in many ways. However, when it comes to buying a new car, it often feels like stepping into a time machine—especially if you’re a solo woman.

Data shows that women buy 62% of new cars in the United States and influence 85% of all car purchases. Yet many car dealers are still ripe to take advantage of female shoppers, at least according to the numbers. In fact, one Yale study has repeatedly found that car dealers offer higher list prices to women than men, by about $200 on average.

Indeed, there are likely many reasons for this discrepancy. Still, one way to ensure you get the best deal when buying a new car is to prepare accordingly before signing the papers.

Luckily, my husband Rob handles all car purchases in our household. Because even though I’m financially savvy, I know what I don’t know when it comes to cars. However, I remember many frustrating experiences buying a new car as a solo woman. I hope this article helps the next time you’re in the market for a new vehicle.

Tip #1: Do Your Homework

Kelley Blue Book reports that women are twice as likely as men to be undecided on new vehicle type. Unfortunately, walking into a car dealership with no plan in place leaves you open to potentially unsavory sales tactics.

To avoid making a purchase that you may not be happy with in the long run, be sure to do your research ahead of time. Websites like Edmunds.com, Kelley Blue Book, and Car and Driver provide in-depth information on pricing, safety, and other features. You can also read reviews to understand how certain cars measure up against others.

In addition, visit the dealership’s website ahead of time to familiarize yourself with what they have in stock and the respective sticker prices. That way if the dealer directs you to the most expensive version of a particular vehicle, you know if there are more affordable versions available.

Lastly, once you know which cars you’re interested in, go directly to the corporate website—for example, Acura.com or Ford.com—to see what deals they’re currently offering. Many times, brands will offer incentives that can reduce your final price significantly.

These steps may seem tedious, and it may not excite you to research cars online. However, the more information you have ahead of time, the better deal you’re likely to receive when buying a new car as a solo woman.

Tip #2: Know What You Can and Can’t Negotiate

Depending on the market environment, you may have limited room to negotiate the final price of your vehicle. Even so, it’s helpful to know what you can negotiate when buying a car as a solo woman, as well as what’s set in stone.

First, know that the MSRP—the Manufacturer’s Suggested Retail Price—is just that: a suggestion. As independent franchises, car dealers have the latitude to sell the cars on their lot for any price they choose. In other words, the MSRP should be the starting point for your negotiations.

To better understand your ability to haggle the MSRP, you should also know the dealer’s invoice price and the car’s market value. The invoice price is how much the dealer paid the manufacturer for that vehicle. While you can ask the sales manager for the invoice price, websites like Consumer Reports may provide more straightforward information. In addition, Edmunds.com and KBB.com can show you what other people in your area have paid for similar cars recently to help you determine the fair market value.

So, what can’t you negotiate? Taxes and registration fees are non-negotiable when buying a new car. In addition, dealers won’t negotiate the cost of transporting the vehicle from the factory to the dealership. But beware of dealers attempting to add a second freight charge to the final price of the vehicle. This fee should be negotiated down or eliminated—and may be a sign that you don’t want to do business with that dealership.

Finally, keep in mind that some dealers are moving towards “no-haggle” pricing, especially if you’re looking at a used or certified pre-owned car. If this is the case, typically your only room for negotiation is on your trade-in value, financing terms, and the price of any add-ons.

Tip #3: Know What Your Trade-In Is Worth

If you plan to trade in your current vehicle when buying a new one, doing your research ahead of time is essential. Many dealers will assume you don’t know what your vehicle is worth and intentionally try to low-ball you on price. They may also try to tell you your car is in worse condition than it is.

When buying a car as a solo woman, don’t begin any negotiations until you know what your trade-in is worth. A good place to start is KBB’s “My Car’s Value” tool. Simply enter your VIN or make and model and answer a few questions about features and overall condition. KBB will then quote you a private sale price, trade-in price, and instant cash offer. Typically, the price you can realistically get for your trade-in falls somewhere between the trade-in price and instant cash offer (assuming the information you enter is accurate).

However, in certain cases you can get a better offer for your car than the Kelley Blue Book value. Therefore, it’s also helpful to check online dealers like Carvana and CarMax. Carvana gives you what they call a “real offer” for your car in less than two minutes. CarMax will also give you an instant offer online.

These three resources will give you a pretty good idea of what you can reasonably get for your trade-in. Once you have a quote from each, be sure to take screenshots or print them out so you can show the dealer what others are offering for your vehicle if necessary.

Tip #4: Understand Your Financing Costs

Unless you plan to pay in cash, you’ll likely need to finance the cost of your new vehicle. Unfortunately, the financing discussion can be one of the most confusing aspects of buying a new car as a solo woman if you don’t prepare ahead of time.  

One of the best ways to prepare is to know your current credit score. Most credit bureaus and credit card companies let you check your primary FICO® Score for free. You also have a separate FICO® Auto Score, which dealers use to determine your creditworthiness.

If your overall credit score is strong and you’ve diligently paid your car notes in the past, your Auto Score is probably fine. However, if you’re nervous, you should also check this score before buying a new car.

Once you know your credit score, you’ll have a better idea of the interest rate you can expect on your car loan. If your credit score is strong (typically above 700), you’re likely to qualify for any dealer financing promotions. In many cases, the promotional rate is more attractive than what you’ll pay for a third-party auto loan.

On the other hand, if the dealer isn’t offering any financing incentives, you may want to research your bank or financial institution’s auto loan terms and see if you qualify. Having this information ahead of time will better prepare you to negotiate with the dealer and avoid overpaying for your new car.

Tip #5: Avoid Common Negotiation Pitfalls

When buying a car as a solo woman, the sad truth is that the dealer will try to take advantage of any knowledge gaps. For example, when negotiating price, they’ll likely ask you what you want your monthly payment to be.

Don’t share this number with them! Only negotiate the final price of the vehicle. You can also try to improve your financing terms, but only do this once you’re satisfied with the final price of the car.

It’s fine—and even advisable—to determine what your budget is ahead of time. However, sharing this number with the dealer allows them to manipulate the other terms of the transaction in their favor while still meeting the upper end of your monthly budget. For instance, they may quote you a higher price but stretch your loan term out six or seven years to lower the monthly payment.

Alternatively, they may try to push you into a lease by offering you a lower monthly payment. And while in some cases a lease may make sense for your budget and lifestyle, you should only lease a car if this is your intention. Otherwise, you’re locking yourself into a contract and have no asset to sell if your plans or financial circumstances change.

Secondly, the dealer will likely try to sell you gap insurance and a pre-paid maintenance plan. You don’t need to buy either of these, no matter what they tell you!

Instead, check with your insurance company to see if your auto insurance includes gap coverage. If not, you can likely add it at a very low cost.

Additionally, a pre-paid maintenance plan may make sense in certain cases. But trying to do the math on the spot is nearly impossible. Bottom line: don’t let the dealer pressure you into something you’re not sure about.

Tip #6: Be Ready to Walk Away When Buying a New Car as a Solo Woman

Of course, the first rule of any negotiation is to be ready to walk away. If you’re not completely happy with the terms of the transaction or the vehicle, don’t sign the papers. In many cases, taking a break from the negotiation gives you more leverage to ask for what you really want. It also gives you more time to research your options in the meantime.

Buying a car as a solo woman can be a stressful and frustrating experience. Yet the more information you arm yourself with ahead of time, the more empowered you’ll be to buy it on your terms.

Curtis Financial Planning specializes in helping independent women thrive today and plan for tomorrow. If we can help you take control of your personal finances, please get in touch.

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S4E2: Estate Planning with Heart with Patricia De Fonte

Estate Planning with Heart with Patricia De Fonte

Patricia De Fonte Shares Why She Practices Estate planning with Heart

My guest today is Patricia De Fonte, founder of De Fonte Law based in San Francisco. Patricia practices estate planning with heart and is focused on working with happy, proactive people who want to protect their heir’s privacy. Through her estate planning process, her goal is to give her clients the tools they need to become savvy and successful people.

However, what’s unique about De Fonte Law is how they develop values-driven estate plans that empower heirs and preserve family harmony. In addition, they work with all members of the community, operating from the belief that estate planning is for everyone.

Moreover, Patricia has been recognized as a San Francisco Super Lawyer due to her dedication to estate planning and her clients. Additionally, she recently won the 2021 Better Business Bureau Torch Award for Ethics in the San Francisco Bay Area. She is also a graduate of Golden State University, where she adopted social justice as a core value.

In this episode, Patricia and I discuss a variety of estate planning topics, including:

  • Why everyone needs an estate plan.
  • Why an estate plan is more than a will.
  • The importance of choosing an estate planning attorney you trust and how to find an attorney whose values are aligned with yours.
  • Patricia’s estate planning with heart process and how she works with her clients to create a personalized estate plan that reflects their values and preserves family harmony.
  • Finally, some of the common misconceptions many people have when it comes to hiring an estate planning attorney.

Indeed, Patricia offers several nuggets of wisdom during this episode, and I think you’ll benefit from hearing her take on estate planning. Lastly, be sure to check the show notes for more information and resources related to this episode.

With that, I hope you enjoy my conversation with Patricia De Fonte as much as I did.

Episode Highlights

  • [04:30] Patricia De Fonte explains what an estate plan is in plain English and what documents a comprehensive estate plan typically includes.
  • [11:32] What Patricia De Fonte recommends using to direct your assets instead of a will.
  • [20:36] The importance of choosing an executor or trustee you can trust to manage the distribution of your estate according to your wishes.
  • [32:44] How to find an estate planning attorney you can trust and who is well suited to your needs and objectives.
  • [40:11] Cathy and Patricia discuss some of the most common mistakes people make with their estate planning documents.
  • [45:28] Patricia De Fonte shares some of the biggest misconceptions people have about estate planning based on her experience.
  • [54:42] What to do if you don’t know who to appoint as executor of your estate.
  • [1:05:06] Patricia shares additional questions you should ask any estate planning attorney you’re considering engaging.

Links Relevant to this Episode

De Fonte Law’s Website

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S4E2 Transcript: Estate Planning with Heart with Patricia De Fonte

Cathy Curtis: Welcome to my podcast, Financial Finesse. I’m thrilled to have you here to talk about estate planning.

Patricia De Fonte: Thank you so much for having me. I love estate planning. I’m a big nerd about it, and I will talk about it anywhere to anyone.

Cathy Curtis: Okay, great. Well, I’m sure you’re in the minority about loving estate planning. But maybe you can help our listeners love it too. And so that’s going to be our goal for this podcast.

Patricia De Fonte: I love it. I love it.

Cathy Curtis: Tell us briefly what do you want the listeners to know about you?

Patricia De Fonte: Sure. So, my name is Patricia De Fonte. And I am the founder of De Fonte Law, where my team and I practice estate planning with heart. My hashtags are love is love, families belong together, Black Lives Matter, stop Asian hate, ruthless. Why do you care? You care because when you’re trying to find the right estate planning lawyer for yourself, you have to share values, you have to have a good certain vibe with that person. Maybe you don’t mind telling the person all about your own worries and troubles.

Patricia De Fonte: But you also have to tell the estate planner about the alcoholism [inaudible] You have to tell the estate planning lawyer that you’re really afraid about your mom’s spending habits. You have to put it all on the table. Otherwise, a good lawyer cannot craft a plan that doesn’t just say where your stuff goes when you die, but really takes care of the people that are counting on you now, that would be beyond bereft if they lost you, your death will have a financial impact on them. And things need to be set up properly, so we don’t inadvertently hurt somebody [inaudible].

[04:30] Patricia De Fonte explains what an estate plan is in plain English and what documents a comprehensive estate plan typically includes.

Cathy Curtis: Great. Thank you for that. So, now you’re describing what an estate plan is right there in a few sentences. But I’m going to have you step back in an even simpler language for somebody who always hears this, you need an estate plan. They may even have an estate plan, but they don’t understand it. So, what exactly is an estate plan? And I was talking to you before we started that I wish the word estate could go away because it conjures up English manners and stuff. And it’s not. It’s what you own when you die and where’s it going to go? So, let me let you take it from here.

Patricia De Fonte: Yeah. It’s so much more than that. So, estate planning, from my perspective, I have an LLM in Estate Planning, Probate, and Trust Administration. I went to night school, it’s a master’s degree. It’s a whole big deal. And this area of the law touches on every other area of the law. So, we worry about family law, and corporate law, and intellectual property law, it’s endless. But from your perspective, from a client’s perspective, from a consumer perspective, it’s really just three things. What about me? What kind of documents do I have to put in place to make sure people know how to take care of me if I can’t take care of myself if I hit my head? Or if I slide into incapacity? How do I let people pay my rent, collect my wages, make sure I don’t get thrown out of my apartment, talk to my landlord, call my employer for my disability payments if I’m incapacitated?

Patricia De Fonte: So, what about me, that’s advanced healthcare directives. You can get one free doctor, you can do it for free, do it now. You can Google it. Whatever state you’re in, Statutory Advanced Health Care Directive. Go to it, print it out, fill it out. If you’re confused by it, ask your doctor, they will be so happy to have this conversation with you. Then you just get it notarized and you give it to the people that you love and you tell them what is supposed to happen so that there is no confusion. When it comes to your stuff, it’s a little more complicated. You need a power of attorney, there are lots of different kinds. I want you to do that with a lawyer. And the reason for that is that if you don’t do it with a lawyer, it’ll probably get rejected.

Cathy Curtis: Hmm. Talk about that just a little bit, if you don’t mind.

Patricia De Fonte: Well, imagine being on the receiving end, you work at the bank or you — the bank is a good example. You work at the bank and a person comes in with a durable power of attorney and it’s not signed by a lawyer because most of them are assigned by the lawyer who prepared them. How would you feel? Wouldn’t you be a little bit afraid to give this person the money that’s in the account? You’d probably want to see more documentation, you’re probably going to [inaudible] up to legal. So, then once it goes up to the legal department, that’s a black hole. I don’t know how long it’s going to be in there. So, if you were trying, like, let’s say you’re a married couple, and you’re trying to get into your spouse’s bank account, to get the money to pay the mortgage, you’re locked out. You’re locked out.

Cathy Curtis: Yeah. This is such an important point because you’re stressed out at that point in your life, right? The last thing you want to do is deal with paperwork and then you run into a roadblock like that.

Patricia De Fonte: Exactly.

Cathy Curtis: So, that’s such a real-life situation that you just described for people.

Patricia De Fonte: And you know what? You can ask your investor advisor, your bank, your employer, hey, do you guys have a power of attorney that you guys use? Do you guys have permission slips if I hit my head to let certain people and to do certain things? How does it work with your company? How can I do this? Sometimes they have stuff. I know that when I work with clients, sometimes they bring to the signing meeting forms that their financial advisor has provided for them allowing — because their financial advisor doesn’t want our form. They want their own specific form. So, that’s number one.

Cathy Curtis: Right. [inaudible] custodians, right?

Patricia De Fonte: Yeah.

Cathy Curtis: Custodians want to use their own form sometimes.

Patricia De Fonte: Exactly, exactly. So, that’s number one, what about me? Number two is, what about my stuff? So, there are basically three ways for your stuff to pass on to someone else after you die. Number one is the laws [inaudible]. What they use as the table of consanguinity. Those are ridiculous words, sounds like a vampire branch. All it means is that in every state, there is a statute that says when you die, this is who gets your money. And it can be a little bit more complicated than that. But there is a statute that says when you die, this is the person or the people who will get your stuff. So, if you do nothing, there’s a plan for you. Oh, by the way [crosstalk]

Cathy Curtis: [inaudible] want it to be that may not be who you want it to be.

Patricia De Fonte: Right. Yeah. That’s just the rule. And by the way, there’s — Well, on what about me, if you don’t take care of this, you might have to be conserved. So, the government does have a plan for you, if you don’t make your own plan. And that plan is hopefully it’s somebody who really loves you and not somebody who just wants to take all your stuff, goes to a court and convinces a judge to put them in charge. Conservatorship, which now everybody has heard about because of Britney Spears. That’s an extreme example, but these things happen all the time. So, if you don’t take care of what about me, Advanced Health Care Directive, durable power of attorney, you might wind up being conserved. And we don’t know what that means because you don’t have your own documents, you don’t leave instructions [inaudible].

Patricia De Fonte: So, what about my stuff? Intestacy, you haven’t done anything. You could use a will. So, now you’re going to say I don’t like what the statute says. I don’t want everything to go to whoever I want my stuff to go to Jordan. Great. So, when you die, that will, and I’m a California lawyer. So, in California, when you die, the will is brought to the courthouse and the judge stamps it, and then anybody who wants to look at it and come and look at it. They all wind up on the dark web, all of them.

Cathy Curtis: It’s not private. That’s a — [crosstalk]

Patricia De Fonte: It’s not private. And so poor Jordan who is thrilled to learn that they are in line to inherit whatever from you, starts getting calls, people start coming around, grifters, everybody’s got their hands out because everybody knows not only that Jordan is going to get something, but exactly what Jordan is going to get. It puts Jordan in a terrible position. Now what if Jordan is terrible with money? Too bad. What if Jordan’s on drugs? Too bad. What if Jordan is receiving Social Services? And now you’ve kicked Jordan into an economic level where he no longer gets his services. Now you’ve ruined his life. So, you really have to be careful when you’re giving people money through a will, that you are really, really thinking about what it’s like for them to receive those assets that way. [crosstalk] At my firm, we just don’t do that.

[11:32] What Patricia De Fonte recommends using to direct your assets instead of a will.

Cathy Curtis: Right. On your website it says you don’t divvy up — You don’t advise people to use a will for doing this purpose. And you just described some very scary reasons why not? Yeah.

Patricia De Fonte: Yeah, they make me nervous.

Cathy Curtis: And so what is your preferred way, and what do you recommend?

Patricia De Fonte: Yeah. So, the third way is using a living or revocable trust. By the way, there are other mechanisms. If you have piles and piles and piles and piles of money. There are all kinds of tricky, interesting, irrevocable trusts that you can use that’s way beyond what we’re talking about. We’re talking about the basics. So, a revocable, or living trust is a terrific tool. For a married couple, or for an unmarried couple two trusts drafted correctly. When one partner or spouse dies, that survivor gets privacy, they don’t have to go to the courthouse, all their deceased spouse or partner’s assets aren’t listed for everyone to see. Nobody knows what they’re going to get.

Patricia De Fonte: They also, if it’s drafted properly, they get to do some asset protection planning, right? Maybe they’re nervous about some creditor stuff. Maybe the surviving spouse is a contractor or in a high litigation profession. They get to do some tax planning. We don’t know what Congress is going to do, we don’t know what your local state assembly is going to do, and we don’t know what the voters are going to do that is going to result in big tax problems for you down the road. So, it’s really important to have a document that’s really flexible for that surviving spouse to make really good decisions on the ground when that first spouse dies.

Patricia De Fonte: Now, when the second spouse dies, what we’re really looking at is who are the beneficiaries? And how do we best take care of them? But we also have to think about this poor person who loves you, probably, or is getting paid to do this who is the successor trustee, the person in charge of giving everybody this stuff. We need to make sure that the trust is drafted in a way that it honors them, that doesn’t say the trustee has to give everybody money right away. How about a little holding period? How about a little time for them to marshal the assets, wiggle out of paying any bills that might be doue,deal with that last tax return. Just get their sea legs because you know, it’s probably someone you’re close to and they’re grieving. And they don’t need everybody calling them and yelling at them about stuff and money.

Cathy Curtis: And by law you have time to close an — [crosstalk]

Patricia De Fonte: Yep, you have time.

Cathy Curtis: How much time do people usually take and is there an amount of time that’s not okay?

Patricia De Fonte: I think generally a year-ish. And it would depend on really like, what assets are we worried about? And was everything in the trust? Or are there all the outlying things, but I would say generally about a year. And so I like to draft a trust that says whoever’s getting anything, you’ll get it about a year after I die. Because I want to give my person who loves me and is doing this job for me some time to get organized so that they can do this.

Cathy Curtis: Do you actually put that language in the trust?

Patricia De Fonte: I do.

Cathy Curtis: Oh, okay.

Patricia De Fonte: I do. Yes.

Cathy Curtis: I haven’t seen that before.

Patricia De Fonte: And then when we think about the children, or anybody that you’re leaving really big amounts to, there’s a statistic that says that 33% of people who inherit lose it within three years. Why? Not because they’re dumb. Because people come around, because they’re vulnerable, because they’re grieving because they don’t understand what it means to have that kind of money. So, it’s really important to work with a lawyer who knows about this statistic, recognizes it and sets your beneficiaries up for success. I like to draft a trust — [crosstalk]

Cathy Curtis: I want to step in and just say something here, because it’s not only because they’re grieving, or they get taken advantage of. I don’t think people realize how fast even a relatively large sum of money can be spent down without really thoughtful planning. So, someone in here, it’s 500,000. It’s almost like they think they’ve got millions and all of a sudden they’re quitting their job. I see that happen all the time. Inherit money, quit job.

Patricia De Fonte: Yes. And it makes no sense.

Cathy Curtis: Then they think they’re going to go back to work and they don’t. And before you know what they’ve spent on half of their inheritance, and they’re starting to feel really guilty.

Patricia De Fonte: Yep. Now they’re back in therapy for guilt for not taking care of the money.

Cathy Curtis: Yeah. Yeah. [crosstalk] I’m sorry. You work with people to try and prevent that from happening, right?

Patricia De Fonte: Yes, yes. So, our trust contains a provision that says the beneficiary can use money from the trust to pay their CPA, their financial advisor and their lawyer. So, before they start taking out big sums of money, let’s help them build a good professional team, so that they understand what it means to pull money out of the trust which can be a little tax bomb, and so that they understand what they’re doing with the money. And I never like to draft a trust that says, you get your money when you’re — a really typical scenario is 25, 30 and 35.

Patricia De Fonte: Well, what if you’re getting RSUs? What if your company just went IPO, there’s a big tax black eye, and it’s a wonderful thing, but it’s a lot of tax. And then if money also has to come out of the trust, you’re not actually getting to keep a whole lot of that money, you’re going to be thrown into a very high tax bracket. It’s really important to have a trust that says, listen, at certain ages, certain intervals, the beneficiary can pull money out. I generally like to do 15% at first, and then maybe 50% four years later, and then another four years later, you can have the rest of it as kind of a…

Cathy Curtis: Okay. Let me ask. Is this just for young beneficiaries or do you recommend this for…

Patricia De Fonte: Nobody’s ever ready to lose their mother. 50 year olds will quit their job if they inherit $750,000.

Cathy Curtis: Yes, I know. Okay. I want to delve into this a little bit. So, I know you have to have standard language and all estate planning documents, wills, trusts, you know. But attorneys can craft their own documents to a degree, right? And it sounds like that’s what you do. You really thought through your client’s needs and what may happen and you’re instilling language in there — they have to agree to what you’re suggesting. But you have these documents that you’ve crafted yourself with your team to suit each client’s needs. Is that right? I mean, I don’t know if you’d call them customized, but it kind of sounds like it.

Patricia De Fonte: So, I think it’s really important to say this, we use drafting software. And I think it’s critical for attorneys unless they are at a very large firm, to use drafting software, and good drafting software. The reason for this is that the law is alive. There might be a case in a bankruptcy court in Fresno that has a direct impact on the way that we draft gifts and estate planning. So, the software company that I use, they have an online community forum, they’re constantly doing education. When a new case comes out, we get a memo. And then when they update the software, they send us an email and show us where in the software it was changed and what that means. So, we stay abreast of the law. If you talk to a lawyer, and they say, oh, I have my own forms, well, how many people work for you? And they say, no one did not work with them. It’s just not a good idea. It’s not a good idea. And the software is expensive, but it is the cost of doing business. It’s an investment.

Cathy Curtis: Okay. What percent of estate attorneys do you think use drafting software?

Patricia De Fonte: I would say a huge percentage use drafting software, a huge percentage.

Cathy Curtis: All right. You’re saying that’s a red flag if they don’t?

Patricia De Fonte: Yeah, unless it’s a really big firm where they actually part of the team is tasked with that type of work. They have paralegals and junior associates, who it’s part of their work to keep up with the law and making [inaudible].

Cathy Curtis: So, in other words, don’t hire a solo attorney that doesn’t use drafting… I mean, I know you [inaudible] but it sounds like that — [crosstalk].

Patricia De Fonte: I think it’s a good bright line rule.

Cathy Curtis: Yeah, okay. Be careful.

Patricia De Fonte: I wouldn’t do it.

Cathy Curtis: Okay. So, I’m going to step back one minute, and we’re going to revert back to what is an estate plan. So, part of it is the me stuff, part of it is what I do with my stuff. And the me stuff has more to do with when you’re still alive. You want your health care plan, and you want someone to take over if you can’t take care of your own finances. That’s the me part, the durable power of attorney, and that health care… What’s the name of it now, health care proxy?

Patricia De Fonte: The Advanced Health Care Directive.

Cathy Curtis: Advanced health care, okay, those. And then the stuff is, you still do a will, right? Even though you don’t use it as…

Patricia De Fonte: Yeah, you do.

Cathy Curtis: You still have a will and a trust, and that designates what happens with the stuff and also who does that for you too.

Patricia De Fonte: [inaudible] in charge. Right, exactly.

[20:36] The importance of choosing an executor or trustee you can trust to manage the distribution of your estate according to your wishes. 

Cathy Curtis: Yeah. One question about what you’re saying about a will not being private, which it’s not, it’s public, and a trust being private. So, there are certain protections in the public process because there’s court of law, checking off all the boxes, right? In a trust, there’s really nobody supervising that executor. So, how important is it that you pick somebody that you really trust?

Patricia De Fonte: I know, I know. It is so much fun, the first meeting with clients because they have to fill out intake forms. And in my firm, before we even really look at those forms, other than cursory, we’re asking tell me about yourselves, your parents, we want to hear about about your siblings, who do you love, who do you trust, who’s in your life, who’s the inner circle, who are your people. Oh, let’s look at your list of stuff, [inaudible] your stuff. And then towards the end of the meeting, then we start talking about, well, who’s in charge in various scenarios. And sometimes, again, we put that together, and then we say, okay, now we’re going to look at that document that you filled out, where you took your first stab at who should be in charge of different things.

Patricia De Fonte: So, many times I look at that document, like who are these people that you neither love nor trust? Oh, that’s my cousin. They’re a hedge fund manager. But while we were talking, I realized, they don’t know me, they don’t know my children, they’re not… I thought because they were money, people, that they’d be the perfect person. But once you explain that, there will be a lawyer, that the trust can pay for that, that they’ll have help, that what they really need at core is to be a really decent human being that I trust completely, who’s going to do things in my best interest because of our relationship? And if you don’t have that person, then we have to talk about a private fiduciary, then we hire a professional who, with errors and omissions insurance and you know, all of that. So, we make sure that we have that correct person.

Cathy Curtis: Right. Because it really is a private process. There is nobody telling you you have to give that 50,000 to Aunt Mary. You just do it because that’s what the deceased person [inaudible].

Patricia De Fonte: I mean, if you don’t do it you’re going to get sued. Once you die your trust is supposed to be given to everybody who’s named in the trust, all of the beneficiaries, all the charities, all the people.

Cathy Curtis: Who is responsible to do that, though?

Patricia De Fonte: The trustee.

Cathy Curtis: Yeah. Who’s…

Patricia De Fonte: But generally if someone has died and nobody’s doing anything, people will start… If they don’t do it, someone will go to the courthouse and say, well, clearly, there’s no trust. I’m going to open a probate. So, there are ways to force the issue to flush the document.

Cathy Curtis: Okay. But I still think it’s really important to drive home, you have to choose somebody that you trust and also probably detail-oriented. Although if you write the trust right, you can let the executor know they can hire people to help them, right. And you probably make that really clear. Because most people are so busy, and they have to take care of an estate and it’s hard. I’ve done it in my family, it’s a lot of detailed work. And I do detailed work so it’s easier for me. But not everybody… [crosstalk]

Patricia De Fonte: Let me tell you about my favorite. My favorite, favorite provision is the ancillary or special independent trustee. So, your person is happy, they’re doing the work, they’re working with the lawyer and the CPA and the financial advisor. It’s all happening. But then, let’s say your kids start going crazy. They start showing up at Thanksgiving demanding their money, they’re on drugs, different things are happening. So, your person, your successor trustee might say, you know, I’m happy doing all this technical work, but I can’t deal with these kids. They can not only hire somebody to do that, but if you hire someone to do it, you’re still ultimately responsible.

Cathy Curtis: Right. Right.

Patricia De Fonte: In the trust I draft, you can appoint someone to take on the fiduciary obligation for that task. So, let’s say that all of a sudden the beneficiary is on drugs. Well, that’s really a difficult scenario. You want a professional who knows how to deal with that. And so you do that. Or maybe they’ve had something happening in their own lives, and they just need to reel back. Like, oh, it’s all been going great. But now I have to take care of a sick family member. So, for six months, I’m handing this over to someone else. There have to be pressure release valves in the documents because if the worst thing happens, you die young and your children are very young, this trust can go on for decades.

Cathy Curtis: Yeah. How many trusts do you think have all of those different clauses and think through all those different scenarios that could happen?

Patricia De Fonte: I wonder, I do see a lot of trusts that were drafted by other lawyers. And I always say why didn’t you go back to that lawyer? Most of the time, it’s the person is retired, right? And they don’t have these provisions. It is kind of a new wave of thinking. I also see in the older truss, a lot of you get your money when you’re 25, 30, and 35, which is very old thinking, we don’t do that anymore. We let them pull it out. If you’re fine, and you’re not on drugs, and you’re not — if you’re okay, then you can pull out up to this amount of money. We never want to give somebody money if it’s going to hurt them, either financially, or like, physically. We just don’t want to hurt somebody with money.

Cathy Curtis: Right. It sounds to me that you really get to know your clients. So, can you just describe, someone hires you, what is the process like? They don’t have an estate plan? Let’s say they’ve not done any estate planning. They have beneficiaries on their IRAs, but that’s about it. What happens?

Patricia De Fonte: Yes. Can I jump — I just want to jump back to number three, which is what about my kids and then all due process. Okay. So, the third part of estate planning we did, what about me, what about my stuff, the trust, what about my kids? It is very typical for a lawyer, and you’ll see this on any DIY form and you’ll see it in the statutory forms that you’ll have in various states, you’d name the children and put their birth dates, sometimes social security number, [inaudible], and then the names of the guardians and their home address and their phone number. We established that will is a public document, it’s going to wind up on the dark web, bad people are going to get their hands on it.

Patricia De Fonte: Here in California, we don’t have to provide that information in the will, we can use a side document. It’s not permitted in every jurisdiction, but in ours it is. So, at my firm we have — it starts out at six pages. Who are the emergency contacts? Because your children might have to go live with someone else if you’re incapacitated. Guardianship is not only about death. And then who’s in… So, we want to list emergency contacts, who are very short-term and we want to list who are the guardians in the event of a long-term incapacity or death. And then education, religion, firearm, social media, other really important family members, other people who carry your stories. Who are the people that you don’t want your kids around ever? Maybe it’s your ex, maybe it’s their other biological parent, and you have sole custody.

Patricia De Fonte: We have to provide all this information because just you writing it down, doesn’t make it. So, a judge is always going to step in and look at the situation on the ground and say what is in the best interest of these children? You may have chosen Pat and Chris and they were perfect. But at the time that you are no longer available, Pat and Chris are getting a divorce, or Pat has three DUIs or Chris’s parents is living with them, and terminally ill, it’s basically a hospice. So, we’re not putting children in that home. So, you really have… Or maybe the person that you like doesn’t look good on paper. I’ve worked with clients where they wanted the children to live with a family member who had lupus. Well, it doesn’t look good on paper. So, we wrote pages and pages and pages about she has her own children. We are well aware of her diagnoses. We know, without saying, we know the other brother looks better on paper, we don’t like him for this.

Cathy Curtis: This is amazing. Okay. So, you do… [crosstalk]

Patricia De Fonte: That’s number three; what about my kids?

Cathy Curtis: You don’t — Yeah, that’s so important, number three. Okay. You’re saying that the will does not have to be the document that names the guardian of the children?

Patricia De Fonte: In California. In other states, I don’t know.

Cathy Curtis: And that is really good to know. Because like we said before, it’s public knowledge. And there’s all kinds of really personal info on there. And instead, what is this doc… Is there an official name for this document?

Patricia De Fonte: There is not an official document that you have to fill out. My firm, just… When I had my estate plan done about 10 years ago, the lawyer gave it to us and I wasn’t an estate planning attorney at that time. I thought oh, this is so nice. And I just thought it was difficult. I just thought that’s what everyone did. And then I started my firm, got the master’s degree, started my firm, and nobody was doing it. And now all of my friends are doing it because I keep giving my form to other lawyers saying, oh, did you know about this? Do this, I didn’t invent it. It’s not proprietary to me. It’s wonderful. Do this. And what’s really fun about that document is that it keeps growing.

Patricia De Fonte: So, I work with a therapist. And now there’s a paragraph about access to mental health. I work with a family whose child has come out and said, I’m transitioning. Great. Now we have language about that. So, every scenario…  I had a client who’s stepmother dragged them into a cult. So, our paragraph on the client’s feelings about religion, do we want religious instruction, we don’t, this, that, there’s a whole paragraph about pseudoscience that he wrote, and then it’s so many other clients, it resonates with them. So, it can really be if you just write from your heart, you can just do that, you can do this one on your own, just have it notarized.

Cathy Curtis: Be interesting to see what other states do this. I’m going to have to look that up. So, one small technical question, which ties into what we’re talking about. So, you do do a will and a trust, someone dies, does that will become a public –min the public domain?

Patricia De Fonte: It will.

Cathy Curtis: Always?

Patricia De Fonte: Yeah.

Cathy Curtis: So, it really is important to pay attention to what you put in that document and no personal… Social security number, oh my gosh.

Patricia De Fonte: Madness.

Cathy Curtis: And as little personal info as you can in, other words, and do most of it in the trust instead.

Patricia De Fonte: Yeah. Hi, my name is Patricia. I’m married. I have two children with my spouse, I have no other children. I have a trust. And then eight pages of technical instruction from the probate [inaudible].

Cathy Curtis: Yeah. Okay. Can you just see all… And then this is probably happening for decades, people combing the newspaper for who died and what public documents can I look for, blah, blah, blah.

Patricia De Fonte: One of my professors told the story of his mother in rural Alabama. Every Friday, one of her girlfriends would go to the courthouse and get all the wills that had been lodged that week with the county state. And Sunday after church, they would sit around and talk about who was getting what and who left so and so out of their… Because everybody knew everybody.

Cathy Curtis: Oh, my gosh.

Patricia De Fonte: Oh, yes.

Cathy Curtis: People’s worst…

Patricia De Fonte: This has been going on forever.

Cathy Curtis: Yeah, yeah.

Patricia De Fonte: And it used to be harmless gossip over brunch. It’s not harmless gossip over brunch anymore. Now it’s dangerous. Now it’s dangerous.

Cathy Curtis: Interesting. Okay. So, you sound like a really good estate planning attorney.

Patricia De Fonte: I’m a really happy, enthusiastic estate planning attorney.

[32:44] How to find an estate planning attorney you can trust and who is well suited to your needs and objectives.

Cathy Curtis: So, let me ask you, someone needs an estate planning attorney, what is the very best way, and smartest way to go about finding one?

Patricia De Fonte: I love this. If you have a really good financial advisor, they should have a really broad team of estate planning lawyers that they work with, lawyers who work with different types of clients and have different types of specialties and expertise. And so that’s a great place to start, is talk to your financial adviser and really tell them what you’re looking for. What kind of experience you want to have if you don’t have a really great financial advisor? Sometimes if you have a wonderful insurance person, they can also, they should also have good connections.

Patricia De Fonte: Ask your most organized friends. Ask the people in your life who really, really have it together, who have an estate plan, who have a financial advisor, who don’t DIY their insurance, they probably have good people for you. So, now you’ve probably got a list of names. I really like using your personal network so you get a flavor of, okay, who worked with who and how did it work? And then go online and take a look. Then start booking some calls. And you really, you don’t need to talk to the lawyer for more than 15-20 minutes. Because what you’re looking for is that feeling. And then you want to ask them about their process. And then there’s some questions that I want you to ask all of them all the time.

Patricia De Fonte: The first thing I want you to ask is do you use software? And I talked about that earlier why that is so important. And if they don’t, how do they make sure their documents are up to date? The next thing I want you to ask them is about other practice areas. It can be a big red flag if an estate planning lawyer, because remember, estate planning touches on so many other areas of the law. And it’s huge. There are not that many areas of law where you can get a master’s degree. That’s how epic and serious this can be. So, we want to be very careful that we’re not working with someone who does estate planning and bankruptcy and family law and real estate and on and on and on and on. Some firms see estate planning as a profit center. Oh, you buy the software, and tippy tappy, tippy…documents and money. No, that’s not estate planning. It’s just infuriating.

Patricia De Fonte: So, you really want to work with somebody that really dedicates their practice to this. It can be fine if they also… I have wonderful colleagues who dedicate part of the practice to real estate, because they’ve been doing this for so long and they’ve worked with so many real estate investors that they also know how to do the LLCs and they also have a broker’s license because it made sense. Or they also do bankruptcy because they worked with so many people who have gone through that. And so there can be natural add-ons. And you just want to ask, why do you also do that? How does that tie into your practice?

Cathy Curtis: Right. Can I go back one thing on the documents again, the software?

Patricia De Fonte: Yeah.

Cathy Curtis: If they don’t have the software, and you should ask how are they updating your documents? But how often are the documents updated? Isn’t it only and this is something I don’t know, isn’t it only when the client comes and says, I need to make a revision, can you update… [crosstalk].

Patricia De Fonte: So, those are two different things. So, you want to make sure the law firm that you’re working with has the most up-to-date documents. That their documents are right up to date [inaudible] of the law today for you.

Cathy Curtis: Right. And that’s how [inaudible].

Patricia De Fonte: Now, if things change after you sign, that’s why estate planning is not a one and done, you have to keep coming back. Every three years, you have to come back and say how are we doing? How’s it looking?

Cathy Curtis: Yeah. And also has anything changed that [inaudible] that you need to update, or you need [inaudible]. Okay. Good. Thank you. Sorry, I just wanted to clarify that.

Patricia De Fonte: So, we want to ask about software, we want to make sure they’re not doing a bunch of other different types of law, we want to make sure we have a good vibe. And we definitely want to talk about how much time are we going to spend together? My firm, four hours. Not all in a row, nobody wants to be in a four-hour meeting. But there should be a really long meeting where the lawyer learns a lot about you and you’re really not learning anything. You’re just wondering, why don’t they stop asking me so many impertinent questions?

Cathy Curtis: Yeah, that’s hard.

Patricia De Fonte: We can’t stop because we have to get to the bottom of everything, we need to know all of it.

Cathy Curtis: Do you warn them that it’s going to be a four-hour brain dump.

Patricia De Fonte: No, no, no. No, we don’t do four hours all at once. I can’t be in a four-hour meeting.

Cathy Curtis: Okay, good.

Patricia De Fonte: No, no, no. No meetings should ever be more than two hours. There should be a really good long, at least 90-minute substantive meeting about the lawyer getting to know you and your people and your staff and your philosophies. The lawyer should always send you drafts of every single document you’re going to sign. A lot of them will just send you the summary of the trust, because I swear to God, they think you don’t understand the documents. You understand the documents just fine. I promise you. If the lawyers get to drafting documents, they should be really good at explaining them to you and you should be able to read them.

Cathy Curtis: And if they’re really good draft, they’re probably in more plain English than a lot of them.

Patricia De Fonte: Exactly, exactly, exactly. I think it’s a scam if you get a document that has no headers and is single spaced. What is that? I can’t even read that. My eyes just close, it’s just depressing. So, you want to make sure you’re going to get full drafts of all the documents and an opportunity to meet with a lawyer to go over them. And not, here are the drafts, let me know if you have any questions. How rude. Of course you have questions, but you don’t even know where to start. At my firm, what we do is we highlight the parts that we really want you to look at, the personalization. And you know, start out easy. Did we spell all the names, right? Does this…

Patricia De Fonte: When we talked about what’s supposed to happen if you’re in a coma, did we get the flavor? Did we talk about your Catholicism the way that you wanted it talked about in your Advanced Health Care Directive? Did we talk about that, and we want to go over all that in the meeting, and more. We’re going to take you right through the documents and say, this is what this document does. Here’s who you put in charge. Now let’s look at all the responsibilities. Now, let’s go back to the person, is that person? Does that feel good? Okay, good. We’re done. Forget that we even did that next [inaudible]. You don’t have to hold on to it forever, but you have to hold on to it during that meeting. Right?

Patricia De Fonte: Then we let clients sign their documents, either online or in-person with a notary. So, they have that option. And you know, we’re still in the time of COVID. Many of my clients have very, very young children, a lot of older people have a lot of health concerns, they don’t want a notary in their house. I’m sure the notary is fine, but the notary goes from place to place to place to place. We don’t know what happens in these places. So, online notarization is a really wonderful tool. There needs to be a third meeting. And the third meeting is, okay, you signed your documents.

Patricia De Fonte: Now, you have this trust, and it says all your stuff is going to go to this person, you have to put your stuff in that trust. How do you do that? So, you need written instructions, your lawyer should have made you before you met with them the first time provided a full list of all of your assets. You need that list, because at the end, after you sign your document, you’re going to use that list, and you’re going to check off, oh, I put that in my trust, I put that in my trust and it’s going to make you feel [inaudible].

[40:11] Cathy and Patricia discuss some of the most common mistakes people make with their estate planning documents.

Cathy Curtis: Let me make a really clear point here that estate planning attorneys don’t necessarily do that for you, right? And they can’t do that in some cases. So, this is a step that I know gets missed because I see it with clients, they don’t put their accounts or whatever in their trust after they leave the attorney’s office.

Patricia De Fonte: You know, some firms, especially firms that work with elderly clients, they do, they will work with the clients, and they’ll get this done. My clients are younger and what I’m afraid of is if I don’t force them through this meat grinder, if I don’t make them do this, and then follow up with them relentlessly, to make sure they did it, that a few years out, they’re going to buy a house, they’re going to open a new bank account, they’re going to get a new job, and they’re going to forget, they’re just going to forget about it completely. So, another way that I like to build some structure around that is we send copies of the certification of trust, which is just a little short document that you signed under penalty of perjury, and it’s notarized. It says here’s the name of my trust and here’s the date that I signed it, and I’m the person who created it. Just very simple document.

Patricia De Fonte: And your financial adviser can use that, your insurance broker can use that for your casualty insurance, your life insurance broker can use that who give it to the CPA, also, because they see all your stuff every year. They get to see every single account that you have. And they can say, look, you own all these things as trustee, but not this one checking account at the credit union. Why is this? You need to call your estate planning lawyer. And so we write to all of our clients’ advisors, with permission, and provide this document and also a copy of the funding instructions that goes asset by asset by asset type, to provide really robust instructions.

Cathy Curtis: [inaudible] what happens if you don’t fund your trust? It’s called fund your trust, putting stuff in your trust. What happens if you die?

Patricia De Fonte: Well, if you haven’t changed the beneficiary designations on your bank accounts, whoever’s listed there gets the money. If you haven’t changed the beneficiary designation on your life insurance policy, and it’s still your ex spouse, guess who gets the money? They do. They get the money. If you forget about real estate, there are petitions that you can do your person, your successor trustee, the person who’s in charge of your stuff after you die, they can approach the court and say, Your Honor, they forgot to… But the problem with that is okay, it’ll eventually go where you want it to go to the person you want it to go to. Stressful, super expensive, and it doesn’t avoid a really expensive court process where there are all these legal fees that come out to tens of thousands of dollars, just by statute. It’s really, really wasteful.

Cathy Curtis: And time consuming, right? These things don’t…

Patricia De Fonte: Really time-consuming. Really, really time-consuming. So, I think it’s critical to work with a lawyer who’s going to spend three or four — about four hours with you, learning about you, teaching you about the documents, showing you how to make sure that your trust has everything in it that needs to be in it. And then there should be follow up. We send our clients, I think there are nine emails that go out after that final meeting, don’t forget about your digital assets. Don’t forget to share your best health care directive. Here’s a quiz for your digital assets. Here’s how… Think about sharing. There’s four different levels of sharing. What’s comfortable for you, how do you want to do it? And remember, you have your documents on paper, so you have to take care of those, and you have them electronically, so you gotta take care of that. And then we follow up every year. It’s just automated. [inaudible] is everything, okay? Call us if you are not done putting your stuff in your trust and call us if there’s been a change.

Patricia De Fonte: We offer every three years, we want to see you for free for one-hour. That’s how paranoid we are. And we catch things all the time and I want to talk about what we caught. Clients came to me, they just wanted to make a couple changes, because she had inherited some beautiful [inaudible]. Okay, fine. We’ll talk about that, but I have my agenda that I want to do first, and it turned out, how are your parents? Oh, my mother, she’s going to pass away, she was doing some estate work, she gave me $500,000. I said where’s the money? I don’t see it in your account, I don’t see an account on here with that money in it. Oh, no, we put it in this other account. I said, but that’s your stuff. Why is it in his? So, we cleaned that up. They were underinsured because their house had increased a lot in value and they hadn’t been doing their insurance audits. There were like two or three other things that we caught that have nothing to do with the documents.

Cathy Curtis: You check on that too, the insurance levels?

Patricia De Fonte: Well, I ask them, when is the last time you talk to your broker? And they say, oh, probably not since the last time we talked to you. I’m like I told you, here in the Bay Area, you have to talk to your broker every year because property values go up. Oh, we forgot. Okay. But you got that email telling you to do it. So, we know that life is busy and hectic, and it’s easy to forget. And so we really feel a responsibility to our clients to create a lifelong relationship.

[45:28] Patricia De Fonte shares some of the biggest misconceptions people have about estate planning based on her experience.

Cathy Curtis: That’s wonderful. That’s really, really great. I want to talk to you about some typical perceptions of people and estate planning. One is, people think it’s very expensive and I think that’s one reason that people put it off. Right? They think they’re just paying to get some documents. And I hate to say it, some attorneys, that’s what they do, they give the document and not a lot of personal attention and follow-up and all those things. You get that big giant binder that no — I don’t know, if you do those big… Do you have to do a big giant binder? Is that… Okay.

Patricia De Fonte: We want a big giant binder because whoever’s in charge, if you’re not in charge, they need it. They’re going to want one big giant binder that they can throw on a lawyer’s desk and say, what do I do? It’s not good if your whole estate plan is just trapped on your laptop. Nobody knows that it’s there, they don’t know how to get to it. Even if they can now they’ve printed it all out. But it’s a mess. You want this.

Cathy Curtis: A binder.

Patricia De Fonte: You want a big binder.

Cathy Curtis: Okay, I love it.

Patricia De Fonte: A big colorful one that’s easy to spot.

Cathy Curtis: That is good.

Patricia De Fonte: I had clients, their lawyer gave them documents in a manila envelope, the originals, didn’t scan them, just handed them the originals. They moved, and they could not find their documents. They had to redo everything in an emergency situation so that they could close on a house.

Cathy Curtis: Oh, dear. [crosstalk] And so how long do you keep client… Well, it sounds like you don’t disengage from your clients.

Patricia De Fonte: I do officially and legally disengage. I am not obligated to call my clients every time there’s a change in the law. Because otherwise that would be my whole job and I would go insane. But I do offer them as a courtesy, every three years I will give you, with me, one hour of my time. As the firm founder, I will give you one hour with me because [crosstalk] I love you and I want to take care of you.

Cathy Curtis: Is that something you actively engage about? Like three years, you send them an email… [crosstalk].

Patricia De Fonte: Yes, [inaudible] right to them. Yep. We chase them.

Cathy Curtis: Okay, good.

Patricia De Fonte: Because we worry.

Cathy Curtis: Yeah, yeah. Okay. So, back to this misperception about hiring an attorney.

Patricia De Fonte: Yeah, let’s talk about it. Okay. So, if estate planning is about what about me, what about my stuff, what about my kids? If you think about what about me, you’re an adult at 18. So, estate planning is not always 500 pieces of paper in a giant binder. Sometimes it’s somebody’s graduating from high school, they need an Advanced Health Care Directive. They need a durable power of attorney and maybe they need a little will. Because they have some things, they have some nice things that have been given to them by their family. Right? And it was just going to go to the parents and it’s just some stuff, it’s fine. You can just do that.

Cathy Curtis: Oh, talk about that, that parents can’t get access to health care records after what age?

Patricia De Fonte: I know definitely after 18. I don’t know if it’s sooner than that. I know I’m blocked out from my teenage son’s at the pediatricians from some things already.

Cathy Curtis: Yeah. So, they need that advanced care directive.

Patricia De Fonte: Yes. You absolutely. Everybody, 18 years old, it should be part of graduating from high school. Here’s your diploma, go sit with that lawyer, do your Advance Health Care Directive. Yes. Yeah. So, really… So, it’s not just for rich people, and it’s not for old people, and you don’t have to wait until you have a baby. It’s for everybody. And if you are a single person, you don’t have that other person who’s automatically going to go out and hustle and make more money if you become incapacitated. You don’t have that automatic other. So, you really need to create a plan that’s not just the documents. Work with a lawyer who’s going to help you figure out, oh, if I can’t work, then what happens? Well, let’s talk to your financial advisor. I’m sure she’s already talked to you about disability insurance, but let’s really push that button now. Let’s get into that.

Patricia De Fonte: If you’re an unmarried couple, you guys are legal strangers. If you don’t have documents, one of you is living in the other one’s house, the homeowner dies, I don’t know where you’re going to live, probably not there. Family might throw you out. You have to protect yourself, you have to protect each other. And that starts whether or not you have kids, whether or not you have money, and whether or not you have a house. Because people always think I have to be old, rich, own real estate, or have a baby. Sure. Those are all natural triggers. But no, you don’t. And I work with a bunch of absolutely lovely, proactive, single people who want to really feel in control and know that if they hit their head, if they’re in an accident, they know that the right people are going to step in and take charge.

Cathy Curtis: Yep. Okay. And you’re talking about a subject that’s near and dear to my heart. So, I wouldn’t mind spending a few minutes on this, single people in estate planning. Because I work with a lot of single women, that’s kind of my specialty. And one of the challenges that comes up is if they’re not married, they don’t have children, they’re an older adult sometimes so a lot of relatives have passed on. Maybe their parents are gone, and they feel a lot of anxiety, sometimes shame, all these different emotions around the fact that they don’t have, right away, specific people that they want to give their stuff to, and it creates so much anxiety. How do you counsel somebody through that process?

Patricia De Fonte: It’s really difficult. Refusing to talk about it in the first instance, because clients will come to that first meeting, and they just want to talk about who’s going to be in charge and all this stuff. And I just say, I have no idea who any of these people are, I don’t know what your stuff is. So, you, please let me do this the way that I do this so that I can understand.

Cathy Curtis: Your process.

Patricia De Fonte: And then you can shorthand everything. And then you can tell me that Francine is in charge, and Joseph gets everyday because right now I have no idea who they are. For all I know, they’re your two cats. I don’t know. And so really getting them, you know, tell me about — Tell me about your parents. What was it like growing up with them? Do you have siblings? Have they passed on? Are their nieces and nephews? Who’s the inner circle? Who are your closest friends, who do you spend time with? Who do you spend the holidays with? Really getting to a point because very often people will say I don’t have anyone. It’s incredibly rare. It’s really, really, really rare that people don’t have anyone. But because they put this… [crosstalk]

Cathy Curtis: [inaudible] they have to give to relatives, that they…

Patricia De Fonte: No. No. So, I was thinking more of like who’s in charge, right? And they always think about, I always ask, well, so what do you do with your time? Where do you hang out? Are you involved with nonprofits? Where did you go to school? You know, what’s the fabric of your life? What’s important to you? Because who are you going to leave your stuff to? Your family. You either like them or you don’t. You don’t have to leave your stuff to your family, you either love them or you do not. Or they’re rich and you don’t care and so you don’t have to do that. Your friends, you could change a friend’s life, you could pay off their student loans, you could eliminate their terror of dying without enough money, you could leave your friends money and say we always said we were going to take that cruise to the South Pole, go do it. You can do whatever you want with this money, but go to the South Pole, right? And take a picture of me with you.

Patricia De Fonte: And then charities, charitable organizations, religious organizations. And when we get to that part of the meeting, I’m saying, so you know, you talked about this person and that person, and we talked about these charities. So, that’s kind of like, there’s the bubble. Now, let’s talk about your house, let’s talk about your car, let’s talk about your stuff. Let’s talk about the cash. Let’s talk about your retirement account. So, we’ve kind of got the people, and we got the stuff and let’s start matching things up. And then we need to go fast, because otherwise the wheels start spinning. No, but maybe this, that… I’m like, no, no, we don’t do 4.2%. We’re not going to do that.

Cathy Curtis: Yeah. Okay. Let me go back to the beginning question, because sorry, I messed up a little. The first time you were talking about who’s going to be your executor, successor, trustee. That’s a biggie, and you were describing, you find out who their…

Patricia De Fonte: Who the people are.

Cathy Curtis: People are and then you get to where does this stuff go? Because both…

Patricia De Fonte: Yeah. But within who the people are, that’s also who’s going to be in charge? And who’s going to get all this stuff? And that’s what I want to know. Oh, your best friend, she have kids? Because you probably love your best friend’s kids. I love my best friend’s kids like they’re mine.

[54:42] What to do if you don’t know who to appoint as executor of your estate.

Cathy Curtis: Well, let me give you — Let me just ask you one other. So, what if they truly cannot come up with somebody that they would trust and know would do it? Because you know, a person appointed as an executor doesn’t have to say yes, right, because [inaudible]. Do you ever recommend that people hire independent fiduciaries and does that work?

Patricia De Fonte: I have had exactly one client pull the trigger on that. I’ve had lots of clients interview them, but I’ve had one client do it.

Cathy Curtis: Yeah. Okay, so…

Patricia De Fonte: But one thing that does come up is, and it’s funny, because I’ve worked sometimes with, like a little group of friends and they’re all naming each other, and not necessarily giving each other their stuff, but they are relying on each other. Often what we’ll do is we’ll say okay, so Francine is going to be the successor trustee. And you know, the trust has language, she can have this independent special ancillary person to do things. But you know what? If she just can’t deal at all, if she doesn’t want to do it, she can appoint a private fiduciary. So, at that point, I’ve died. She’s sitting with the lawyer, the lawyer will have, a good trust administration lawyer will know about your private fiduciaries; [crosstalk] can introduce Francine to a few, and she can pass the baton.

Cathy Curtis: [inaudible] down the road.

Patricia De Fonte: Yeah. Well, she’s not… Yeah, you just kick it down a little bit, but you have to ask them, are you okay with this? Are you okay if name you and then when the time comes, you can pass the baton. And so as people are because often that’s where there’s all of a sudden, real money to deal with this. Because there’s a life insurance policy, right, that just all of a sudden, there’s all this liquidity and the lawyer’s happy to deal with it and the fiduciary is getting paid and it’s all very real. Because it’s hard, especially if you’re 40 or 50, you could have years and years and years. And who is this private fiduciary? And what if they die and [inaudible] stressful.

Cathy Curtis: It is stressful. So, I am asked often by my clients to take on this role, right? And you know I can’t. It’s [inaudible] 100% conflict of interest. But they trust me, I know every single detail about [inaudible] I mean, it makes sense. Right? I would be the logical person. And so I have had to come up with ideas for them that I tell them no I can’t. So, this comes up for me a lot. Who ends up being…

Patricia De Fonte: It’s common.

Cathy Curtis: Yeah, it’s a tough one. So, I’ve done online searches for independent fiduciaries. I haven’t nailed that area yet at all.

Patricia De Fonte: Yeah. There is the Private Fiduciaries Association of California. They have a website. And you know, they come in different flavors, because also we kind of don’t know what the issues are going to be. Especially if it’s a private fiduciary in the event of an incapacity, like sliding into dementia. You want someone who knows how to navigate that. Which is very different from liquidating an estate and handing out money. [inaudible] completely different skills. So, I like the idea of let Francine figure it out. Let Francine work with the lawyer to find the right person for whatever that scenario is going to be.

Cathy Curtis: Yeah. And you put a clause in the document saying that Francine has the ability and the [inaudible].

Patricia De Fonte: Yes.

Cathy Curtis: …to be able to do that. I think that’s so key. Yeah. Okay. I want to segue to how you work. So, you do the trust and deal with the house and the taxable assets. How do you coordinate in the client’s retirement accounts in the designated beneficiary situation? You look at that whole picture, right?

Patricia De Fonte: We look at everything.

Cathy Curtis: Okay. All right. Because that’s tricky and it’s so important.

Patricia De Fonte: It’s so important. So, as I said, before, we send all of our client’s advisors copies of this certification of trust, for the beneficiary designation changes. And we talked to every client about the life insurance, and we talked to every client about because… Let me back up. So, when you have the stuff that’s going to go in your trust, you can absolutely transfer your pets, your pants, your pots, your real estate, easy. Your intellectual property assets, fine. Some things you just cannot own as a trustee, you just can’t, by law. You can’t own your retirement account as a trustee. And usually, when you have a living trust, you’re not owning your insurance policy as a trustee, you’re just owning it as a person. And then you name a beneficiary, often the beneficiary is the trust, not always, but often.

Patricia De Fonte: Retirement accounts are special and tricky and difficult. It depends. And your lawyer really has to spend time with you to figure out who’s going to get this money. And it can be, sometimes it’s obvious, it’s my spouse, and when I die, it’s my kids. But if it’s not obvious that way, then you really have to look at the current strange laws that are in place and figure out who is this going to be best for. Who can I help the most with this money? And for clients who have charitable inclinations I really like using a retirement account because there’s no taxes paid by the charity. They just get the money, it’s clean, and it keeps them out of the trust. Because remember everybody who’s a beneficiary of the trust gets to see the trust.

Patricia De Fonte: And if you start saying things in your trust, like I want 20% to go to the SPCA, and the other 80% to Francine. I don’t know, Francine’s very busy today. The trust can force — No, let’s say that France is in charge and the person who’s going to get all the money is Jordan. So, there’s the SPCA and Jordan. The SPCA can force Francine to sell every pillowcase, every knife, every fork, every spoon in that house, and get it all the way, like distill everything and monetize every little thing, and then split it.

Cathy Curtis: Oh, wow.

Patricia De Fonte: It’s horrible. The SPCA is a powerful organization, but they have to do this. And that’s why you see those estate sales. That’s why you see them. If you want to leave money to a charity and your trustee, either leave them a specific dollar amount, or you give the trustee very clear permission to say, when I die, let people who love me into my house, you choose who they are, let them take stuff. Anything that people don’t take, donate it. You can donate my car if it’s not easy to sell. If I have a business, you figure out if it’s worth selling, or you just shut it down. Let the trustee do whatever it is that they need to do without having to monetize everything. Because once you get charities in the mix in a trust, they have an obligation. They are required to push for every penny.

Cathy Curtis: Yeah. They’re not being greedy. It’s just what they have to do.

Patricia De Fonte: No. Yeah, they’re not trying to be unreasonable.

Cathy Curtis: Yeah. No, that makes total sense. Okay. Stepping back on that, it is still fine to give percentages to family members?

Patricia De Fonte: Yeah.

Cathy Curtis: It’s this charity…

Patricia De Fonte: It’s a charity that’s the problem.

Cathy Curtis: Fascinating. Okay. Okay. And what about people who say, I just want to give my IRA to my estate? Can you do that?

Patricia De Fonte: You can, and a lot of people do. And let’s go back to, like, the classic nuclear family, right, it’s going to go to my spouse, but if I die, then I want everything to go to my children. Right now, that’s complicated. It used to be that you could leave your retirement account to a baby. And when that baby grew up, they would start taking the money out, whatever their required minimum distribution age would be at that time. The laws have changed dramatically. So, now, a younger person only has 10 years, 10 years from when they become an adult, to take that money out. So, now, putting it through a trust, just… There were mechanisms that we used to use that made sense.

Patricia De Fonte: Now the mechanism that we use, if we’re trying to protect people from the perils of inheritance, if we’re trying to protect people from liquidating a retirement account, and spending it all in a frenzy, it has to flow through the trust. But there are all these sometimes negative tax consequences. It is a sticky, tricky area. If you have large retirement accounts, you might want to think about having a completely separate trust just for those accounts. And you really have to think about the beneficiaries. You really… Because if you already have these massive life insurance policies that would take care of your kids, maybe the retirement accounts can go to your siblings who don’t have the money that you do. [inaudible] different way to think about retirement accounts now.

Cathy Curtis: Yeah, it’s a… [crosstalk].

Patricia De Fonte: Or you can just keep changing it. As life changes, you just keep changing.

Cathy Curtis: Yeah, yeah. So, and as part of your practice, do you help people work through that new wrinkle of having — [crosstalk].

Patricia De Fonte: What I do is I spot the issue. If they don’t have a financial advisor, I make them, I drag them to talk to a few people. And I think they really do understand that we spent these four hours together over six to 12 weeks. I want to see you every three years, and I’m here if you run into a snag related to your estate plan, but there’s so many things I can’t help you with. And the law is alive and Congress is crazy and this is a lot of money. And you might feel like I can do my own investments. It’s beyond your investments, you have to have an advisor.

Patricia De Fonte: And what if you’re in a couple, and you’re the one doing it, and you die, your surviving spouse, they’re lost and vulnerable. They don’t have someone to turn to. They don’t know how to find a financial advisor. So, I really do push my clients to interview and start some kind of a relationship with someone, so that if and when things start happening, you have your person, and someone that you can turn to with all this crazy stuff that comes out of DC. Not to mention, if you’re in California, it’s even worse. And if you’re in San Francisco, it’s even worse. So, you really need that person who has the overview of everything and can tell you oh my gosh, this article came out you better call your estate planning lawyer. Oh, my gosh, I read this, you better call your CPA. Or I want to see you.

Cathy Curtis: Yeah, this brings up a really good point. I am sure that you get asked all kinds of questions from your clients about things that you do not do.

Patricia De Fonte: Oh, yeah.

[1:05:06] Patricia De Fonte shares additional questions you should ask any estate planning attorney you’re considering engaging.

Cathy Curtis: Especially because you’ve got your fingers in everything, right? You really are talking about every aspect of their finances. But if you’re not an investment advisor, you’re not a CPA, you’re not a… So, what are the most common things that the listeners should know that estate planning attorneys do not do, and that they…

Patricia De Fonte: Yes. Yeah, we’re… Okay. Another thing that I want you to ask when you’re interviewing estate planning lawyers is, do you have a large professional network, people you know really well that you refer your clients to for other things that you won’t be able to help me with? If they don’t say yes, just walk away, because you might think you have it all handled, but it’s complicated. You might need a real estate lawyer, a family law attorney, you might need umbrella insurance through a broker, not DIY, you might need a financial advisor, you might need a money coach, you might need an organizer, you might need somebody who is a Medicare specialist. It goes on and on and on and on. You might need an intellectual property lawyer, you might need a corporate counsel, because you created a business on LegalZoom. That’s not allowed at my firm. No, we don’t do DIY anything here. We pay other people to take care of us.

Patricia De Fonte: So, you really do need an advisor. If your lawyer gives you a referral, say why this person. And your lawyer should be able to say, oh, because when you said this, or I see this in your asset profile, and when I send you the email of tips on the questions I want you to ask that person, I’ll put it in there. And you can even forward it to them. If you really want to look for a well-connected lawyer, because estate planning clients need so much, and we say estate planning lawyer, we tend to stay in our lane. We do estate planning, but we really can’t talk about all the other things. And we can spot an issue like, oh, I’m not sure about your insurance, I want you to go talk to a professional because it just doesn’t feel right that you have been doing all your own insurance, and it’s at all different companies and you’re not sure how much it is. And even if you knew how much it is. I don’t know if that’s enough, because I don’t know anything about insurance.

Cathy Curtis: Yeah. By the way, it’s similar for financial advisors. I can give only so much advice about estate planning, and then it stops because I am not an estate planning professional. Same with tax advising. I can do tax planning and I do. I know a lot about the tax law, but I don’t do tax preparation. So, everything is really, really specialized. And thankfully, there are a lot of specialists out there for people to utilize.

Patricia De Fonte: I really like thinking about building a team, creating a team. We all have a team. Whether it’s your hair, nails and makeup team. Whether it’s the team that helps you get your kid to and from school and soccer, like you know, that mom’s squad that everybody has. You’re grown, you’re 18 and up. If you need to have a good insurance person, you need to have somebody to talk to you about money, you should have a lawyer that you know so that maybe you’re going to have a landlord tenant issue.

Patricia De Fonte: Well, if you have a really good estate planning lawyer, they’ll know somebody, because they have to know real estate lawyers who know all the landlord tenant lawyers. So, we’ll get your issue, narrow it down for you and bring you to that person. We can be your hub, just like your financial adviser can be your hub. We’re going to help. And we’re all friends with each other, and we all talk all the time, and we learn from each other. So, whatever it is that you bring to your financial advisor, I’m eventually going to hear about it over lunch, and it’s going to help seven other people.

Cathy Curtis: Yeah, very good point. So, this has been so really interesting to me.

Patricia De Fonte: So much fun.

Cathy Curtis: Yeah, so much fun. You’ve given out so many gems. Tell the listeners where you are, how you can be notified if they need it, and all [inaudible].

Patricia De Fonte: Sure. Yes. And if I could, so here I am. I’m an estate planning lawyer and I’ve got a pie. And this is a little glass of champagne [inaudible] and I have this necklace, which is the apple pie tree of life. So, when I was little asked my dad, what happens to us when we die. And he said don’t worry about it. We just walk past the sun, pass the moon until we get to the apple pie tree. So, all of my clients, all my branding, here’s the pie on the binders, all my clients receive a pie. I wear my necklace almost every day.

Cathy Curtis: Oh, my God, they receive a pie?

Patricia De Fonte: Yeah.

Cathy Curtis: Where do you get the pies from?

Patricia De Fonte: Three Babes.

Cathy Curtis: Oh. Oh, I love Three Babes.

Patricia De Fonte: Three Babes. Yes.

Cathy Curtis: Oh, that’s great. [crosstalk] When do you give them the pie? First meeting, second meeting, when they get [inaudible].

Patricia De Fonte: After signing because you’ve done all the hard work, we did your estate plan, you cleaned up your insurance, I made you stop using your stupid LegalZoom LLC and get serious. Like, you had to go ask the guardians if they would do it, you talk to your parents, like you’ve done so many things. I have tortured you 18 different ways. But you haven’t felt it because everybody at my firm we deliver with heart. Right? So, it’s all been very sweet and nice. But we know it’s hard and so we always finish with pie. And you get the binder… [crosstalk]

Cathy Curtis: Were you delivering pies during COVID? Or did you — You didn’t see clients during COVID, did you?

Patricia De Fonte: No. I do not see clients at all.

Cathy Curtis: Yeah, okay.

Patricia De Fonte: Most of my clients have babies, so we do not get together.

Cathy Curtis: So, you ship the pies?

Patricia De Fonte: Babes ship the pies. Yeah.

Cathy Curtis: Yeah, okay. Great.

Patricia De Fonte: The Three Babes. My law firm is called De Fonte Law. If you ever meet a De Fonte, they are either related to me or married to someone who is related to me. So, I’m easy to find.

Patricia De Fonte: So, you can always just Google De Fonte Estate planning and I pop right up. I do a lot of workshops, so you can find me on Eventbrite and on Facebook. Come to a workshop, come learn with me. Maybe you hate the sound of my voice. Maybe you could just go one more hour and really dig into some basics. And we’ll talk more about low cost options and how to find a lawyer and like international issues. We can dig into that kind of stuff. De Fonte Law PC where we practice Estate Planning with Heart. Thank you so much for having me here today. I love talking about this stuff.

Cathy Curtis: I know. It was fantastic. Thank you so much.

Patricia De Fonte: Thank you.

Cathy Curtis: Okay, take care.

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S4E1: Advancing Democracy Worldwide With Your Investment Dollars

Democracy Investments

Democracy Investments Is On A Mission To Promote Democracy By Shifting Capital Flows

In this first episode of Season 4, I interview the management team from Democracy Investments: CEO Julie Cane, Chief Investment Officer Chris Browne, and Chief Economist Rick Rikoski. These three individuals have decades of financial services experience and unique back-stories, all of which influenced them to collaborate in creating an investment management firm that’s committed to advancing democracy worldwide. And I really believe this conversation couldn’t have been more timely given Russia’s ongoing attack on Ukraine and the explicit dangers of authoritarian government.

This team’s mission is to incentivize democracy by directing capital towards the economies of democratic nations and away from authoritarianism. In fact, by holding an exclusive license agreement with the publishers of The Economist, they leverage The Economist’s Democracy Index to measure and rank countries globally based on their democratic values and practices. Democracy then uses this information to construct a diversified international index. This is the basis for their flagship ETF, the Democracy International Fund.

In this episode, we discuss the genesis of Democracy Investments, as well as their investment philosophy and approach. Additionally, we talk specifically about Russia’s war in Ukraine and more broadly about the global trend towards authoritarianism. Lastly, be sure to listen all the way through to the end, as we discuss why investors who want to make an impact with their investment dollars may want to consider the Democracy International Fund.

With that, I hope you enjoy my conversation with Democracy Investments as much as I did!

Episode Highlights

  • [05:47] The team shares their insights into the Russia-Ukraine crisis and events leading up to it.
  • [08:41] Democracy Investments explains their methodology and why they believe overweighting democracy is a good investment decision on multiple levels.
  • [19:11] Cathy asks the team to explain why parts of the world are trending towards authoritarianism.
  • [22:23] The team shares their thoughts on why ESG investors should consider the “D” first when making responsible investment decisions.
  • [30:25] Cathy asks where the U.S. would rank on the Democracy Index if Democracy Investments managed a global fund.
  • [35:10] The team offers final thoughts on how investors can access their fund and why now may be the right time to consider the Democracy International Fund.

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Oil’s Wild Ride

Rising Oil Prices

Much like stocks, oil prices have been on a rollercoaster ride recently. Triggered by Russia’s invasion of Ukraine, prices spiked to their highest levels since 2008 this month and then tumbled into bear market territory five days later. (In general, a price drop of 20% from a previous high represents a bear market.)

The recent drop in oil prices is the fastest decline into bear market territory since April 2020. Then, prices fell more than 20% and turned negative in a single day. Yet a dramatic change in oil prices typically doesn’t trigger the same emotional response that a similar change in stock prices would. Perhaps this is because oil markets tend to be even less understood than equity markets.

To put the many headlines you’re likely seeing about oil into perspective, I thought it would be helpful to provide an overview of how oil markets work, why we’re seeing volatility right now, and what this means—or doesn’t mean—for gas prices.

What Is the Oil Market?

There are two primary markets for crude oil: the physical market and the futures market. In the physical market, large producers like Exxon Mobil pump oil from the ground and sell it to processing companies, which then refine it into products like gasoline and jet fuel. A handful of companies act as middlemen, shipping oil around the world through various channels.

Meanwhile, the oil futures market is an electronic financial market consisting of banks, brokerages, and firms that deal in energy. Producers, refiners, traders, and other market participants use futures contracts to lock in oil prices for future transactions. For example, Southwest Airlines uses futures contracts to mitigate rising oil prices and keep costs low for its customers.

In the physical market, private deals between buyers and sellers determine prices. Details of these transactions aren’t widely available, making the physical oil market somewhat murky. Companies like S&P Global Platts publish daily price estimates known as spot prices based on discussions with traders.

The futures market is more transparent. Futures trade on two main exchanges, CME Group’s New York Mercantile Exchange in the U.S. and Intercontinental Exchange in London. The prices of these contracts are widely available.

Types of Crude Oil

Crude oil is graded according to thickness and sulfur content. Light, sweet crude oil is the highest grade and therefore the most sought after, as it is easier and cheaper to refine.

West Texas Intermediate (WTI), the primary oil benchmark for North America, is light and sweet because it contains very little sulfur. It is sourced primarily from inland Texas and is one of the highest quality oils in the world. Because the fracking boom has turned the United States into the world’s largest producer, WTI prices are followed globally.

WTI is similar to Brent crude, which they produce off the coast of Northern Europe. Brent is the main oil benchmark for most of the world. It is also very high quality, although it has a slightly higher sulfur content than WTI. Typically, WTI is ideal for gasoline, while Brent is ideal for diesel fuel.

Meanwhile, countries like Canada, Venezuela, and Russia, among others, produce sour crude oil that has a higher sulfur content. Lower-quality crude oil is cheaper to produce but more difficult to refine.

Global Oil Production & Consumption

Established in Baghdad, Iraq in 1960, the Organization of the Petroleum Exporting Countries (OPEC) is comprised of 13 nations that collectively control about 80% of the world’s proven oil reserves. These countries supply roughly half of globally exported crude oil by value. However, this percentage has been steadily declining in recent years. Outside of OPEC, the United States and Russia possess the largest reserves.

The following graphics show the top 10 oil producers/consumers and their share of the world’s total oil production/consumption, according to the most recent data from the U.S. Energy Information Administration (EIA).

In 2020, the world’s top five exporters of crude oil were Saudi Arabia (17.2% of global exports), Russia (11%), Iraq (7.7%), the United States (7.6%), and United Arab Emirates (7.2%). Russia is still a top exporter. However, it’s worth noting that the country’s oil exports by value declined more than 40% from 2019-2020.

In addition to oil, Russia is a major producer, consumer, and exporter of coal and natural gas, as well as the various refined products made from them. According to the IEA, Russia’s fossil fuel industry produced the energy equivalent of 11 billion barrels of oil in 2019.

Currently, Europe and China account for about 90% of Russia’s total exports. Within Europe, dependency on Russian oil and gas varies by country. By comparison, only 3.5% of the United States’ oil imports came from Russia in 2021—the highest percentage in over two decades (but not the highest value).

U.S. Oil Production & Consumption

Since 2008, the value of U.S. oil imports has fallen over 62% due to a surge in domestic production. Currently, about 35% of U.S. supply comes from international partners, compared to about 65% produced domestically.

Meanwhile, U.S. oil exports have increased nearly 3,000% after the United States ended a four-decade-long ban on oil exports, dating back to the Arab Oil Embargo of 1973. In other words, the United States is now less dependent on other countries for our oil and is becoming a more important exporter of oil to other countries.

The United States is becoming increasingly energy-independent. However, it continues to import lower quality oil from countries like Russia to make use of its existing infrastructure. According to Ryan Kellogg, a professor at the University of Chicago, the U.S. spent billions of dollars on its refining capacity in the 1990s and early 2000s. As such, it doesn’t make economic sense to let that equipment sit idle. In addition, domestic production is not yet at the level where the U.S. can stop importing heavier, sour oil from other nations.

What Affects Oil Prices?

Like other markets, supply and demand determine oil prices. Anything that affects either side of this equation can send prices up or down.

Historically, geopolitics have played a significant role in the direction of oil prices as producers jockey for position. In addition, changes in the global economic outlook can affect supply and demand.

Oil prices can also move in tandem with financial markets. For example, it’s not unusual to see oil prices drop when equity markets decline. In the futures market, speculative bets by traders can also influence prices.

What’s Responsible for Recent Volatility in Oil Markets?

In early 2020, demand for oil dropped sharply as Covid-19 cases surged globally. Government-issued lockdowns stopped people from driving to work, grounded airplanes, and slowed the pace of global trade. As a result, oil prices fell to their lowest levels in decades.

Oil prices have been on the rise as the global economy recovers from the effects of the pandemic. However, the Russia-Ukraine crisis exacerbated already inflated oil prices and is largely responsible for the uptick in volatility more recently.

When Russia invaded Ukraine in late February, the price of oil surged to over $110/barrel, a 15% increase from the previous week. Russia is the world’s third largest producer of oil after the United States and Saudi Arabia. Indeed, sanctions on Russian exports and reluctance to purchase Russian oil sent prices upward.

The United States is more insulated from the crisis that other countries—Europe, for example. Still, the shift in global trade flows has caused a lot of market uncertainty over the last month. Indeed, the Biden administration has banned Russian oil imports. However, this most recent price drop was due to the realization that Europe wouldn’t be abandoning Russian oil just yet, easing pressure on the rest of the world’s oil supply for the time being.

The Relationship Between Oil and Gas Prices

Gas prices have also been on the rise due to record-high inflation levels. But many consumers are wondering why the recent decline in oil prices hasn’t affected prices at the pump yet.

You may not be as affected by rising gas prices if you drive an electric vehicle or gas is a small part of your budget. However, the average American spends anywhere from 2-4% of their overall income on gasoline, and for lower earners a much greater percentage. When gas prices go up, these Americans then have less money to spend on other goods and services. This, in turn, can affect the broader economy.

Although oil prices influence gas prices, it’s not a cut-and-dry relationship. Retailers set their gas prices based on replacement cost. Therefore, there’s typically a lag between changes in oil prices and changes in gas prices.

When wholesale prices increase, retailers will often take a hit to their margins first to remain competitive with other retailers nearby. Similarly, retailers may hold their gas prices steady despite a lower delivery cost to make up for the margin they lost during the price increase.

In addition, there’s usually a drop in demand when gas prices spike as consumers top off their tanks in anticipation. This slowdown in demand affects when retailers schedule their next fuel delivery—another reason the prices of oil and gas don’t always move in tandem.

What Does All of This Mean for Your Investments?

Though it’s impossible to predict the future, we’re likely to see more volatility as the war in Ukraine continues. And while we’re currently experiencing a particularly painful period as prices rise and our account balances fluctuate, the good news is these things tend to be cyclical. Investors have historically been rewarded for staying the course—especially when it feels most uncomfortable to do so.

If you’re an ESG investor, you will not be participating in the rising stock values of oil and commodities companies due to the supply squeeze. However, I believe the long-term outlook for companies that incorporate ESG practices into their operations is still strong, as I write in my most recent op-ed for CNBC. You can read the full article here if you’d like to learn more.

As always, please feel free to contact us if you’d like to discuss any of this further.

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The Russia-Ukraine Crisis Explained

The Russia-Ukraine Crisis Explained

The following is an overview of the Russia-Ukraine Crisis given what we know currently.

In a speech last night, Russian President Vladimir Putin announced that a “special military operation” would begin in Ukraine. Russian military forces attacked a broad range of targets across Ukraine last night while Russian President Putin vowed to replace Ukraine’s government. Many are worried that Russia’s aggressive stance and wide-scale military attack could potentially spiral into the largest European military conflict since the Cold War.

How Did We Get Here?

When the Soviet Union broke up in the early 1990s, Ukraine, once a cornerstone of the former Soviet republic, was the third-largest nuclear power in the world. Ukraine eventually made the decision to denuclearize, and in a series of diplomatic agreements, Ukraine gave its nuclear arms back to Russia. In exchange, Russia provided Ukraine with security assurances that protected the country from Russian attack.

Russia tested these assurances in 2014, when it illegally annexed the Ukrainian territory of Crimea. Though relations between the two countries have been strained since, tensions escalated in early 2021 when Ukrainian President Volodymyr Zelenskyy pressed President Biden to let Ukraine join NATO.

Putin sees NATO’s expansion eastward as an “existential threat” and has demanded a legal guarantee that NATO will not hold any military activity in eastern Europe and Ukraine. Last spring, he began sending troops near the Ukraine border for “training exercises” and has steadily increased Russia’s military presence near the border.

Despite diplomatic efforts to diffuse the situation, Russia invaded its ex-Soviet neighbor Thursday morning, days after Putin announced that Moscow would officially recognize two Russian separatist regions in eastern Ukraine, Donetsk and Luhansk. This move prompted Germany to halt certification of Nord Stream 2, one of two pipelines that Russia has laid underwater in the Baltic Sea. These pipelines are in addition to Russia’s land-based pipeline network that runs through eastern Europe, including Ukraine.

Why Nord Stream 2 Matters

Many believe Putin is using Nord Stream 2 as a tool to weaken Ukraine and make the EU more dependent on Russian natural gas. If certified, Nord Stream 2 would likely send pipelines across Ukraine offline. This would deprive Ukraine of approximately $2 billion in transit fees from Russia. It would also undermine any previously perceived protection from Russian military action.

The price of oil spiked to a seven-year high following Russia’s invasion of Ukraine. Indeed, it remains unclear what the near- and longer-term impact of the certification delay and a possible Russian retaliation will be on Europe’s economy. Almost 38% of the natural gas used by the European Union last year was imported from Russia, according to Eurostat. Meanwhile, government figures say Russian natural gas accounted for nearly 27% of the energy consumed by Germany.

The Russia-Ukraine Crisis’s Effect on U.S. Stocks

U.S. stocks fell sharply Thursday morning. The Dow Jones Industrial Average fell more than 700 points after the opening bell. Plus, the Nasdaq opened in bear market territory, down over 20% since peaking in November. In addition, the S&P 500 Index has declined just over 11% year-to-date, placing it squarely in correction territory. (As a reminder, a correction is a market decline of more than 10%. Meanwhile, a decline of 20% or more is a bear market.)

It’s not unusual for geopolitical and other external events to shock financial markets. Yet historically, stock volatility has been temporary following such events. In fact, since World War II, stocks were higher three months after a geopolitical shock. And following about two-thirds of those events, they were higher after only one month. The chart below helps illustrate this point.

What Does the Russia-Ukraine Crisis Mean for Long-Term Investors?

While volatility is always unsettling, it’s not unusual given the many uncertainties this conflict creates. We don’t know how this will play out, nor do we know how long it will last. However, we are likely to see more volatility in the near-term. Nevertheless, there are a few aspects of the current situation that may help ease your anxiety.

  1. In the United States, the median stock market drawdown due to geopolitical shocks was -5.7%, according to data from Deutsche Bank. Moreover, these drawdowns tend to take around three weeks to reach a bottom and an additional three weeks to recover. On average, the market was 13% higher from the bottom 12 months after.
  2. The U.S. economy remains relatively strong, making us more resilient to broader economic repercussions. It may be worth noting that the last crisis in Ukraine in 2014 had little impact on the U.S. economy. That said, it’s unclear if the current crisis will change the Fed’s plan for increasing interest rates.
  3. Volatility often provides investors with the opportunity to purchase stocks at discounted prices, which can boost long-term investment results.

In general, I don’t believe external events like the Russia-Ukraine crisis warrant dramatic changes to your long-term investment plan. Historically, investors who stay the course during periods of uncertainty ultimately reap the benefits. I have no reason to believe this time will be different.

I’ll be monitoring the situation closely and will keep you updated as appropriate. As always, I’m here to support you if you have any questions or want to discuss your financial plan in more detail.

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A Quick Guide to Protecting Your Privacy Online

Protect Your Privacy Online

The internet has changed the way we connect and transact—in many ways, for the better. However, as we become increasingly dependent on digital platforms, it’s important to be aware of the associated threats to our personal privacy and security.

Indeed, identity theft reports in 2020 were more than triple the number from 2018, according to the Federal Trade Commission. As hackers and identity thieves proliferate, knowing how to protect your privacy online is critical. Fortunately, there are steps you can take to secure your personal information, so you don’t become a victim of identity theft.

Consider these four steps to protect your privacy online:

Step #1: Secure Your Network and Devices

A good first step to protect your privacy online is to secure your home network and any devices connected to the internet.

Secure Your Home Wi-Fi

If left unsecured, your home wifi network can be a major threat to your personal privacy. Internet users nearby may be able to monitor your online activity, including sensitive information you share over the network. Not to mention, someone could use your network to conduct illegal activities. 

To avoid these risks, be sure to encrypt your home network. Encrypting scrambles information sent through the network, reducing the risk that others will be able to breach your privacy. You can encrypt your home network by updating your router settings to either WPA3 Personal or WPA2 Personal.

Avoid Public Wi-Fi Networks

When you access the internet through a public wifi network, your privacy and security are at risk–even when the network is password protected. The easiest way to protect your privacy online in a public area is to simply not connect to the wifi network. However, if doing so is unavoidable, consider using a virtual private network (VPN).  

A VPN allows you to securely connect to public wifi by encrypting any data you send over the network. Though there are free VPN options available, it’s worth investing in a VPN service to protect sensitive information—especially if you travel frequently or work remotely full-time.

Update Your Operating System and Browser

If your operating system, browser, or antivirus software is outdated, hackers can compromise your devices more easily. To protect your privacy online, it’s important to routinely check for updates and install them when available. In addition, make sure your firewall is recent, as some versions no longer protect against today’s malware.

Use Strong Passwords

More than half of Americans surveyed admit they use the same password across multiple accounts, according to a recent report by SecureAuth. Unfortunately, if there’s a data breach on one of your accounts, any other account that shares that password is also vulnerable. 

You can organize your passwords and protect your privacy online with a password manager. In addition, consider turning on two-factor authentication wherever possible, as it requires a second check to log into your accounts.

Step #2: Avoid Email Scams

About 200,000 new phishing sites crop up each month, according to the Anti-Phishing Working Group. To avoid these scams, a good rule of thumb is to never click on any suspicious links in an email, especially if you don’t recognize the sender. In addition, never share sensitive information like passwords, account numbers, or your social security number over email.

Step #3: Keep an Eye on Your Digital Footprint

Social media can make it very easy for people to access your personal information these days. If you’re active on social platforms, be mindful of what you share online. Certain details that may seem innocuous—like your birthday or phone number—can be useful to identity thieves and allow them to access more sensitive information.

In addition, it’s a good idea to keep an eye on what others post about you online in case they’re sharing information on your behalf. You can also set up a Google alert for your name and other people or organizations you’re closely associated with, such as your employer, so you’re notified when your digital footprint is updated.

Step #4: Monitor Your Credit 

An effective way to protect your privacy online and catch potential data breaches early is to monitor your credit score and report. Unexpected changes can be a good indication that someone else is using your identity.

At a minimum, you should request a free copy of your credit report annually. There are also a variety of apps and services that alert you when there’s a change to your credit report. In addition, they allow you to monitor your credit more frequently. For example, many credit card companies include this service as a benefit for their customers.

If you believe your personal information has been compromised, you may want to freeze your credit temporarily. This prevents anyone from accessing your accounts without your specific consent.

Protect Your Privacy Online and Secure Your Financial Future

Identity theft can be emotionally and financially devastating. In some cases, it can damage your reputation and credit and impede your progress towards financial goals. As online scams and data breaches become the norm, it’s more important than ever to protect your privacy online.

A trusted financial advisor can help you safeguard your personal information and protect your assets. If Curtis Financial Planning can help you sleep better at night knowing your financial future is secure, please contact us.

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Happy Holidays: The Gift of Financial Self-Care

Financial Self Care

We originally published Happy Holidays: The Gift of Financial Self-Care in December 2016 and decided to give it a refresh for 2021. 

The holiday season is a once-a-year mash-up of magic and madness. Indeed, it can be a challenge to find balance between the two. The moments of wonder with family and friends go hand-in-hand with the chaos of shopping, rushing, eating, and drinking–sometimes to excess. ’Tis the season to be jolly, and the season only comes once a year – so enjoy!

And as you make your Gift List, be sure to treat yourself to something special: the gift of financial self-care. The enjoyment and reward will last longer than anything you can buy in a store.

Get a head start on New Year’s resolutions by setting fresh financial goals for the new year now. Then, you can truly embrace the eat-drink-and-be-merry holiday philosophy, knowing you have set yourself on a path towards financial freedom.

Financial Self-Care: Three Easy Steps to Begin

1. Automate your savings program.

Avoid the anxiety of wondering if you are saving enough by automatically setting aside money from your income each month. Either set up a transfer from your checking account to your investment account, or contact your payroll department to have dollars sent directly from your paycheck to your investment account.

  • You can direct your savings to either a taxable brokerage account (unlimited amount), or to an IRA or Roth IRA if you’re eligible.
  • This automated savings program will supplement your monthly contribution to a 401(k) or 403(b) and, if the funds are invested, will have the added benefit of dollar-cost averaging, which tends to boost returns over the long haul.

2. Open your investment account statements – both retirement and taxable – at least quarterly, and review the contents.

Financial self-care involves giving yourself the gift of knowledge. Knowledge is power, and the more you learn, the more in control you will feel. “Clueless” is a 1990s coming-of-age comedy, not a way to feel about investments! Things to look for:

  • Familiarize yourself with your financial statements, and call your custodian or advisor to ask about anything you don’t understand.
  • Is all your money invested, or have you unintentionally left cash in the account that isn’t working for you?
  • What is your Big Picture – otherwise referred to as your asset allocation? How much is invested in stocks, and how much in bonds? Are you comfortable with the allocation knowing that a higher percentage of stocks means greater volatility? Conversely, are you content with the level of bonds, knowing the returns may be lower than what you need to reach your goals?
  • What is your year-to-date rate of return? How does this measure of investment performance compare with your financial objectives?

3. And finally, do something about those old 401(k)’s you’ve almost forgotten about.

Like the reliable jacket that’s been languishing in the back of a closet, those forgotten accounts are an easy refresh to your financial “wardrobe.” Roll over an old 401(k) into your current 401(k) if your plan allows, or into an IRA account. (It’s likely you already have an IRA, so it means receiving one less statement each month/quarter!) If you don’t like to invest, the easiest approach is to roll the old account(s) into your current 401(k) and invest it in your existing choices.

Financial Self-Care = Satisfaction, Empowerment, and Confidence

You know the feelings you get when you finally purge your closet (or even clean just one messy drawer)? Multiply the accomplishment factor by about one hundred, and those are the feelings that result from completing something on your financial self-care check list. Pat yourself on the back – this is a gift that will keep on giving, long into the future.

Now, go out and Eat, Drink, and Be Merry… Happy Holidays!

Do you want to manage your money (and life!) better?

If you want to think differently about the relationship between your spending, your values and your happiness, then get your FREE copy of The Happiness Spreadsheet.

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5 Inspiring Statistics About Women and Investing

Women and Investing

As a financial advisor who works primarily with women, I’m all too aware of the gender investment gap. Not only are women paid less than men on average (and therefore have less money to invest), but many women aren’t confident in their investment abilities. Unfortunately, this can result in lower returns—a contributing factor to the retirement savings shortfall.

That’s the bad news. The good news – there’s evidence that this gap may be closing. Fidelity recently released its 2021 Women and Investing Study, which provides some interesting insights into women’s attitudes and behaviors about investing. The study’s key finding: more women than ever are taking a seat at the investing table.

Here are five inspiring statistics about women and investing that may make you feel more optimistic about your financial future:

#1: 67% of women are now investing outside of retirement compared to just 44% in 2018.

When it comes to closing the gender investment gap, younger women seem to be leading the charge. Indeed, 71% of Millennial women invest outside of retirement, according to Fidelity. But, the numbers are encouraging among older generations as well. Two-thirds (67%) of Gen X women and 62% of Baby Boomers say they invest outside of retirement.

So, what’s holding women back from closing the gap completely? According to Fidelity, 70% of women say they need to know more about picking individual stocks. In addition, 65% of women said they’d be more likely to invest or would invest more if they had clear steps to do so.

#2: When women invest, we see better results than men do.

Based on an analysis of more than 5 million Fidelity customers over the last ten years, women outperformed their male counterparts by 0.4% annually, on average. According to a recent CNBC article, there are many reasons women tend to be better investors than men.

For one thing, women trade less, which helps avoid unnecessary fees and many of the pitfalls associated with market timing. In addition, women tend to invest more consistently, meaning we like to have a strategy in place and follow it. Interestingly, none of these reasons has anything to do with knowing how to pick the right stocks. Instead, they require discipline.

#3: 9-in-10 women plan to take steps within the next 12 months to help their money work harder to grow.

Nearly 70% of women surveyed said they wish they had started investing their extra savings earlier. On the bright side, 90% of women say they plan to take steps to remedy this situation in the next 12 months. Specifically, their goals include:

  • Improving their financial literacy.
  • Creating a financial plan.
  • Reaching out to a financial professional.
  • Investing more of their savings.

#4: 64% of women would like to be more active in their finances, including investment decisions.

Perhaps some of the good money habits we developed during the pandemic contribute to these inspiring statistics about women and investing. For example, half of the women surveyed said they have been more interested in investing since the start of the pandemic. And 42% of women say they have more money to invest than they did pre-pandemic.

However, despite women wanting to invest more, the vast majority still don’t feel confident when it comes to long-term planning and investing for the future. Only 19% of women feel confident selecting investments that align with their goals. Meanwhile, only 31% feel confident planning for financial needs in retirement. (If this sounds like you, here are 5 Ways to Boost Your Financial Confidence.)

#5: 71% of women said they felt more confident once they set up a financial plan.

An overwhelming theme throughout the Fidelity study is that women feel better when they have a financial plan. Yet, though interest in investing is on the rise, less than half of women say they would know what to do if they had $25,000 to invest in the stock market today.

Unfortunately, this lack of confidence goes beyond women’s financial lives. More than a third of women said their financial situation keeps them up at night at least once a month. The primary culprit? Their long-term finances.

If these statistics about women and investing have inspired you to take the first step towards securing your financial future, a trusted advisor can help.

If your finances are keeping you up at night or you simply want a clear path towards your financial future, working with a trusted financial partner can help. In fact, 86% of women agree that having their investments managed by professionals makes life less stressful, according to Fidelity.

Curtis Financial Planning can help you develop a plan for your future and align your investments with your goals and values. To get started, please schedule a call.

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Sustainable Investing Simplified

Sustainable Investing Simplified

Over the years, the nomenclature around sustainable investing has morphed to the point of confusion. Besides “sustainable,” other descriptive terms for this investment style include environmental, social, and governance (typically referred to as ESG), socially responsible (SRI), and impact investing. You may also see the terms green, values-based, climate, intentional, or personal investing used to describe this investment approach.

While the terminology may vary, there’s a common theme inherent to this investment style. People who invest sustainably not only want to grow their wealth, but they also want to support their values with their capital.

What is Sustainable Investing?

In traditional stock analysis, investors evaluate a variety of fundamental factors to determine a stock’s expected return. For example, they may look at a company’s earnings and growth prospects to determine if it’s a good investment. The underlying belief is that if a company is profitable, its investors should profit as well. Unfortunately, traditional investment analysis doesn’t consider how a company makes its money.

A sustainable investment approach takes traditional analysis a step further by including environmental, social, and governance factors in the analysis. The goal is to reward companies that not only take care of their investors and stakeholders, but that also care about their employees, the planet, and society in general.

Indeed, numerous studies have found that companies that score well on ESG factors perform better over time. Since many of us are investing with a long-term view for retirement, investing in companies that operate responsibly can be both financially and personally rewarding.

Let’s take a closer look at the individual elements of ESG:

In many cases, ESG can be used interchangeably with sustainable investing. Here’s a deeper look into each ESG factor.

The E, which stands for environment, measures how a company uses energy and resources. Today, carbon emissions and climate change are critical environmental issues encompassed in the E analysis.

S stands for social and addresses employee and labor relations, diversity and inclusion, and reputations fostered between people, institutions, and communities.

G, or governance, refers to a company’s internal system of practices. In other words, it considers the procedures a company follows to govern itself, make effective decisions, comply with the law, and meet its stakeholders’ needs.

Unfortunately, analyzing securities for these criteria can be challenging since there aren’t uniform ESG reporting standards yet. However, as investor interest grows, so has the industry that rates companies for ESG performance. This trend suggests the future of ESG investing may offer greater opportunities for investors who wish to align their investments with their values.

How to Invest Sustainably

Investor interest in ESG investments hit an all-time high during the Covid-19 pandemic. In fact, Morningstar reported that ESG funds captured $51.1 billion of net new money from investors in 2020—a record and more than double the net inflows in 2019.

As interest in responsible investing gains momentum, sustainable investment strategies are increasingly becoming more accessible to individual investors. Whereas options were once constrained to mutual funds, there’s now a wide variety of ESG exchange-traded funds (ETFs) available. Specifically, the number of sustainable mutual funds and ETFs available to U.S. investors rose 30% year-over-year in 2020, according to a report issued by Morningstar earlier this year.

In addition, ESG strategies are no longer limited to stock funds. There’s also a growing number of options entering the ESG bond fund universe. Meaning, investors can now incorporate sustainable investment strategies across their entire asset allocation if they want.

Women and Sustainable Investing

Interest in sustainable investing appears to be growing among all types of investors. However, women have long led the charge in ESG investing since values-based investment strategies entered the scene.

For example, a recent client survey conducted by RBC Wealth Management found that women are more than twice as likely as men to say it’s extremely important that the companies they invest in integrate ESG factors into their policies and decisions. Another report from Cerulli found that the majority of women in the U.S. under age 60 favor ESG investing. 

Why do these statistics matter? Today, more than half of women in the U.S. are the primary breadwinners in their families, according to research from Prudential. And 30% of women surveyed are married breadwinners who are producing more than half of their household income. In other words, as our financial power grows, our investment decisions can have a greater impact on how companies address environmental, social, and governance issues.

At Curtis Financial Planning, we help you invest in strategies aligned with your values, so you can feel better about your financial decisions. Please get in touch if you’d like to learn more. We’d love to hear from you.  

In the meantime, if this brief primer on sustainable investing interests you, please take this survey. You’ll find out what issues you care most about when it comes to your investment dollars.

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