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Living together is not what it used to be

By Bill Schmick
iBerkshires Columnist
Times are changing. Over 12 million Americans now "live in sin," as my parents would say, and their numbers are increasing every year. As long as they remain together, everything is copacetic, but what happens when they break up?
 
Thanks to the economy, demographics, and life-style choices, young couples today are living together and having children despite their unmarried status. In my own family, my niece is pregnant, unmarried, and has no intentions of tying the knot. Although her partner is the love of her life, they have decided (for now) to keep it that way.
 
And in today's economy, there may be a lot of good reasons not to get married. Number one among them may be affordability. In my example, both parties are young and work in a drugstore, stocking shelves and clerking. They live with his mother because they can't afford to get a place of their own. You might ask why in the world they have decided to bring a child into the world under these economic circumstances, but that's none of my business and more and more young people see nothing wrong with it.
 
It could be that like most unmarried couples they are going through what I call a "test-drive" period to feel more emotionally and financially secure before making a more permanent commitment. That happens all the time. However, there are other reasons why getting married is no longer the first choice.
 
As earnings and education levels among men and women are flattening out, there is no longer a crying need by some women to get married just to make ends meet. It was a traditional cultural bias that no longer has relevance. Many of these educated couples are making good money but still hesitate to marry.
 
Statistics don't lie and the most recent data suggest these trends are growing. Nearly two-thirds of women, ranging from the ages of 15 to 44 years old, have reported in a Centers for Disease Control (CDC) study that they have experienced periods of cohabitation. That is a 41 percent increase since 2002.
 
And the more education a woman receives, the more likely she will have lived with a domestic partner. Last year, the Wall Street Journal found that 58 percent of women with four years of college have lived with a domestic partner at some point. It also appears that 39 percent of cohabitating adults have children. Some already had kids, while 25 percent of these couples gave birth while in unmarried relationships, according to the U.S. Census Bureau. That's double the rate reported in the early 2000s.
 
But it is not just young folks that are choosing to live this way. Older Americans are opting for unmarried relationships at a faster rate than younger people. And these Baby Boomers have no intention of tying the knot. Retirement homes, for example, are evidently hot beds of "illicit" relationships.
 
There are plenty of financial reasons why seniors may not want to get married. Oldsters who have been married before have financial complications and could risk the loss of certain benefits by getting remarried. Pension's benefits, social security, health insurance and alimony come to mind. Then there is the inheritance you are leaving to the kids and/or grandchildren. For many, who have already spent time and money on estate planning, simply don't want to make any changes and don't feel they need to as an unmarried couple. Then there are the kids, themselves.
 
A lot of adult children have a hard time accepting Mom or Dad's new relationship. Fears that their parent will be taken advantage of, ("is my inheritance threatened?") or left heartbroken is enough to cause arguments and tensions. As a result, many seniors won't remarry and just don't tell their children about these relationships. 
 
That can cause yet another potential headache down the road.
 
In my next column, we will discuss the financial pitfalls of these new relationships. No one wants to contemplate a break-up, but they do occur, and when they do, neither party has a legal leg to stand on. It is worse if children are involved. They are ways, however, that both partners can be protected, so stay tuned for Part II.
 
Bill Schmick is registered as an investment advisor representative and portfolio manager with Berkshire Money Management (BMM), managing over $200 million for investors in the Berkshires.  Bill's forecasts and opinions are purely his own. None of the information presented here should be construed as an endorsement of BMM or a solicitation to become a client of BMM. Direct inquiries to Bill at 1-888-232-6072 (toll free) or email him at Bill@afewdollarsmore.com.
     

Independent Investor: Don't Worry, Be Happy

By Bill Schmick
iBerkshires Columnist

It is official: the happiest country in the world is Norway, with Denmark the runner-up, according to the World Happiness Report. What lessons can we learn from this survey and what, if anything, should we do as a nation to join their ranks?

Where, you might ask, do we here in the U.S. rank? The answer would be No. 14, down from No. 3 in 2007. The least happy inhabitants on Earth appear to be in Africa while the average Chinese person is no happier than he was 25 years ago, despite the country's much-lauded economic miracle.

How do a pair of tiny countries stay so happy for so long?  It sure isn't the weather, where it is so cold that summers require overcoats and the days can last so long that they keep tourists complaining about lack of sleep. Or is it?

Clearly, the people there have a lot of money. Norway, for example, is the sixth wealthiest country in the world. They can thank the North Sea's oil discoveries 40 years ago for that. Denmark also has a high GDP per capita, but so do we, and yet we placed far lower. One answer is what these people actually do with their money.

These countries make it a priority to give their citizens economic security. Take health care, for example. While our government is in the throes of reducing the number of Americans who will be insured through health-care, in Norwegian society citizens pay a maximum of $300 a year for doctors, hospitals, and other medical services. After that, the government pays for everything for that year. In addition, they get other benefits such as all children's medical expenses are paid for by the government, including childbirth and five weeks paid vacation.

Think of it, as our Baby Boomers worry over how they will pay for their future medical bills, people there feel a great deal of security about their medical future. And it doesn't end there. Everyone receives a pension at 67 and education is free through the university level. In exchange, Norwegians pay higher taxes than we do. Is the trade-off worth it? Well, if happiness is a measure of worth, the results seem to indicate it is.

In our country, at least on the East and West Coasts, winters are relatively mild compared to Scandinavia. And yet, so many of us fight depression over the winter months. How is it that people in Scandinavia, where it snows all the time, can maintain their good spirits? One reason may be that bad weather forces people to band together and to support each other against the elements.

Here in the Berkshires, for example, many of us can't wait for the next snow storm because we ski, snow shoe, tube, or all of the above, before the last snowflake falls. Norwegians, like we in the Shire, have a positive attitude toward negative weather. Norwegians have a saying that "there is no such thing as bad weather, only bad clothing." Tell me about it!

My wife's family is from Norway. For years, she has been bugging me to make a visit and meet her extended family. They are like other Norwegians. They have tons of community spirit developed by staying in one place, living their lives, passing down their family homes to their kids and so on.

Unlike the two of us, who have moved maybe six times in 17 years, Norwegians describe themselves as "place bound" and are proud of it. The good news is that I will get a first-hand experience of Norway in August, when we will spend two weeks meeting and greeting her family. I will have more to say upon my return. In the meantime, however, it appears that happiness has more to do with community than money. That, my dear reader, should be taken to heart. America today is all about us versus them; our right, versus their wrongs. If there was ever a prescription for unhappiness, all we need do is look at ourselves as a nation for the reasons why.

Bill Schmick is registered as an investment advisor representative and portfolio manager with Berkshire Money Management (BMM), managing over $200 million for investors in the Berkshires.  Bill's forecasts and opinions are purely his own. None of the information presented here should be construed as an endorsement of BMM or a solicitation to become a client of BMM. Direct inquiries to Bill at 1-888-232-6072 (toll free) or email him at Bill@afewdollarsmore.com.
     

The Independent Investor: Trump's Budget

By Bill Schmick
iBerkshires Columnist

It was late, "skinny," and guaranteed to send Washington lawmakers up a wall.  President Trump's first crack at a budget, released on Thursday, makes drastic cuts to many sacrosanct departments and programs while boosting spending in others.

If you haven't strapped in quite yet, now is the time to do so. The president's 53-page budget (less than half of his predecessor's lean, 134 pages) makes dramatic cuts to departments such as the Environmental Protection Agency (minus-31 percent) and the State Department (minus-28 percent), while increasing defense spending by $54 billion.

Areas that would also be hit hard were foreign aid, grants to multilateral development agencies such as the World Bank and United Nation's climate change initiatives. Clearly, "America First" was front and center in making these decisions. Here at home, renewable energy research and carbon dioxide emissions reductions would also be jettisoned, if the president gets his way.

The Agricultural Department, a bastion of American protectionism, was cut by 21 percent. It would see loans and grants for wastewater slashed, headcount reduced, and a program that gives U.S. farmers tax credits by donating crops for overseas food aid would disappear.

Nineteen organizations that count on federal funds for support such as public broadcasting and the arts would cease completely. Home heating subsidies, clean-water projects and some job training would also go by the wayside. The Housing Department's community development grants, along with 20 Education Department programs, including some funding programs for before and after-school programs, felt the ax. Anti-poverty programs were targeted as well.

In contrast, defense spending will be boosted by $54 billion, money for veterans would increase 6 percent and the White House is asking for a $1.5 billion down payment for the building of Trump's "Great Wall." In many ways, Trump's budget looks like a typical GOP blueprint but there are some differences.

For example, Trump wants to strip infrastructure funding from federal agencies, largely the purview of the Department of Transportation (highways, bridges and airports) and the Army Corp of Engineers, which takes care of the nation's inland waterways. Congress controls where that money is spent. We are all aware that historically, a large part of government spending programs is simply an exercise in legal bribery.

Each congressman and senator gets their "taste," depending on how powerful they are and how good they are horse-trading in the cloak room. Bridges to nowhere, choice contracts to favored construction companies — the litany of kickbacks, waste, and cost overruns go hand-in-hand with what we know as government spending.

Here comes Trump. By taking the purse strings away from Congress, he intends on keeping control of how much gets spent on what (and who benefits). Trump is throwing down the gauntlet to the business-as-usual crowd of Washington politicians on both sides of the aisle.

The ink isn't even dry and already the politicians of both parties are "outraged," "concerned," or "doubtful" in commenting about the White House budget proposals. In truth, presidential budgets are simply a "wish list" and should be taken as such. However, once again, the new president is hell bent on fulfilling his campaign promises.

I would expect Republicans will support the president's budget in theory but when it gets down to the nitty gritty, they, like the Democrats, will make sure that business remains "as usual" unless the new president can out-Trump them.

Bill Schmick is registered as an investment advisor representative and portfolio manager with Berkshire Money Management (BMM), managing over $200 million for investors in the Berkshires.  Bill's forecasts and opinions are purely his own. None of the information presented here should be construed as an endorsement of BMM or a solicitation to become a client of BMM. Direct inquiries to Bill at 1-888-232-6072 (toll free) or email him at Bill@afewdollarsmore.com.
     

The Independent Investor: America's Road Toward Universal Health Care

By Bill Schmick
iBerkshires Columnist

The GOP's plan to repeal and replace the Affordable Care Act was introduced this week.  As one might expect, the Republican Party's long-awaited plan was met with a firestorm of protests from just about every conceivable lobbying group. That's exactly what one should expect, given that there is so much at stake.

Headlines throughout the week warned that if the plan were passed in its present form, health-care premiums could rise by 30 percent or more. Seniors could pay far more for coverage under the new plan, while between 6 million and 10 million people would lose their health insurance coverage altogether. The poor would get short shrift, while the wealthy would benefit most.

The new plan dubbed "The American Health Care Act," (if all goes as planned) will be rolled out in three phases under a budgetary process that would allow Republicans to pass the bill through a simple majority in the Senate. The problem is that although Republicans are unanimous on the need to repeal the Affordable Care Act (ACA), the party is divided in how to replace it.

Readers might recall that after the landslide Republican victory in the general election, many Americans were worried that Obamacare would be abolished altogether. The doomsday crowd is convinced that the country's health care insurance coverage will go back to the way things were prior to the ACA. I argue that it is too late for that.

Regardless of what you may think of President Obama, he and the Democratic Party set this nation on a new course. It will, in my opinion, result in universal health-care coverage for all.

"But look at what the GOP is proposing," argue the critics.

My answer is that it is early days and the legislation in its present form will not survive. The Senate (including many moderate Republicans) recognizes that there are deep flaws in Speaker Ryan's plan. But some changes are necessary; otherwise the present program will simply sink further into disrepair.

Please remember, however, that even Barak Obama, in rolling out the Affordable Care Act, conceded that the legislation was not perfect. He fully expected revisions and amendments to the original act. Unfortunately, thanks to a partisan Congress, those amendments never took place. Instead, the opposition simply demanded a repeal of Obamacare, but a funny thing happened on the way to the forum. Uninsured Americans actually saw the benefit of government-sponsored health care, regardless of its imperfections.

Remember, too, that in its present form, the House bill hands over huge benefits to those with the highest income (the one percent) at the expense of the very people who voted for our new president — older blue-collar whites. At least half of Trump's constituency came from white voters without college degrees and the House bill hurts them in multiple ways.

Under Obamacare, in 20 of the 30 states Trump won, non-college whites gained more than any other group. The number of uninsured noncollege white folk fell by 39 percent. Older whites, above the age of 45, provided 56 percent of Trump's vote. This group will be especially hard-hit if House Republicans get their way. They won't.

Four Republican Senators have already gone on record opposing the House bill's Medicaid provisions.  Now that the ball is in their court, I believe Republican lawmakers will soon discover (if they haven't already) that replacing the plan will not be that easy.

And whatever the plan that is finally passed in Washington, D.C., it too will be changed and amended for years to come. Similar to the evolution of Social Security from 1934 into the 1960s, the American version of universal health care will be a process of trial and error until we get it right. And make no mistake, we will get it right. All it requires is patience.

Bill Schmick is registered as an investment advisor representative and portfolio manager with Berkshire Money Management (BMM), managing over $200 million for investors in the Berkshires.  Bill's forecasts and opinions are purely his own. None of the information presented here should be construed as an endorsement of BMM or a solicitation to become a client of BMM. Direct inquiries to Bill at 1-888-232-6072 (toll free) or email him at Bill@afewdollarsmore.com.

     

The Independent Investor: Pet Trusts Are the Way to Go

By Bill Schmick
iBerkshires Columnist

If you have been avoiding a visit to an estate planning lawyer, despite the pleading of your spouse, your kids or grandkids, consider this: your pet's future well-being could be in jeopardy without a legal safeguard.

As I wrote in my last column, new legislation is surfacing in a number of states that recognizes our concern for our pets. Even though we consider our pets part of the household, legally, your pet is not considered a human. Instead, they are considered tangible property and, generally speaking, tangible property cannot be named as a beneficiary of a trust.

Many states, however, are allowing legally enforceable documents that can guarantee a pet's continuing care. Forty-six states and the District of Columbia have passed statutes specific to pet trusts, according to the Animal Law Review. In Massachusetts, legislation was passed in 2011 to provide for pets' welfare after their owners' demise.

"The definition of tangible personal property hasn't changed," explained attorney Holly Rogers, an expert in the area, "but legislatures have recognized a compassionate exception when it comes to our pets."

The primary legal document required to safeguard your pet is a pet trust, according to Rogers:  "It can be as simple as 'I leave $20,000 to my sister, Betty, for the care of my cat, Fluffy.'"

The pet trust can be a stand-alone document, inserted into your will, or worked into your existing revocable trust. And, as we have written in the past, everyone should have a will or trust anyway. A trust is especially important if minors or adults who can't care for themselves are involved. A trust allows your beneficiaries and your pets to avoid probate which is time-consuming, public and expensive. Trusts also allow for tax-planning if you are leaving a substantial inheritance to your beneficiaries.

For those of us that want more than a simple directive, a pet trust can be drafted with any amount of complexity. Rogers who does estate planning for her Massachusetts clients, is the local "go-to" lawyer when it comes to pet planning.
 
"I have created trusts where there are multiple layers of contingencies," she says. "The trust can name trustees and caretakers both appointed within the document, in which the trustee insures that the pet is cared for and disburses money to the appointed caretaker, and provides specific provisions for the pet's care and the duties of the trustee and caretaker. Responsibilities can be broadly or narrowly defined depending upon the owner's wishes. "

How much can you expect to pay for a pet trust? It depends on who you go to and the level of complexity that you demand. Holly Rogers would be much more reasonable. She estimates a range of $250 for an amendment to add a simple pet trust to your existing will or trust to as much as $1,500 for a soup-to-nuts drafting of an estate plan for you and your family in which your pet trust is part of the package.

Bill Schmick is registered as an investment advisor representative and portfolio manager with Berkshire Money Management (BMM), managing over $200 million for investors in the Berkshires.  Bill's forecasts and opinions are purely his own. None of the information presented here should be construed as an endorsement of BMM or a solicitation to become a client of BMM. Direct inquiries to Bill at 1-888-232-6072 (toll free) or email him at Bill@afewdollarsmore.com.

     
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Bill Schmick is registered as an investment advisor representative and portfolio manager with Berkshire Money Management (BMM), managing over $200 million for investors in the Berkshires. Bill’s forecasts and opinions are purely his own and do not necessarily represent the views of BMM. None of his commentary is or should be considered investment advice. Anyone seeking individualized investment advice should contact a qualified investment adviser. None of the information presented in this article is intended to be and should not be construed as an endorsement of BMM or a solicitation to become a client of BMM. The reader should not assume that any strategies, or specific investments discussed are employed, bought, sold or held by BMM. Direct your inquiries to Bill at 1-888-232-6072 (toll free) or email him at Bill@afewdollarsmore.com Visit www.afewdollarsmore.com for more of Bill’s insights.

 

 

 



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