Kirkland. Furthermore, future properties should each have a separate L.L.C. This will isolate legal responsibility in case of a lawsuit to one property. They should also get a personal liability umbrella insurance policy. The umbrella policy would dictate that their liability level coverage on homes and autos be reviewed and perhaps increased by their property and casualty insurance provider. The umbrella policy would provide a higher level of liability coverage for them and a shield if they were ever sued regarding their real estate ownership.
Prepare for the unexpected. In addition, Norris has no long-term disability coverage. Kirkland says he should get disability insurance that covers 60% to 80% of his income. Although they are in good health, neither of them has long-term care insurance, which provides for cost of care if either became chronically ill, disabled, or infirm. The couple may be able to get attractive rates now given their age and health.
Furthermore, Norris has a one-time death benefit of nearly $25,000 that has no beneficiary designation. ‚ÄúThey should verify all their beneficiary designations on their insurance and retirement plans,‚ÄĚ says Kirkland.
Get ready for the future. Neither Norris nor Reneau have wills, revocable trusts, or durable powers of attorney for healthcare. Kirkland says they should seek the help of an attorney who specializes in estate planning to draw up those documents.
Reneau is currently contributing 4% to her retirement plan, and the max is 8%. They should both consider increasing their contributions to the $20,500 level this year to help fund their retirement goals. Reneau‚Äôs asset allocation is 70% stocks and 30% cash. Reneau should revisit that allocation and do another risk tolerance questionnaire with their broker.
Norris & Reneau Curl
Gross Income¬†¬†¬† $167,000
Norris‚Äô 403(b)¬†¬†¬† 106,000
Reneau‚Äôs 401(k)¬†¬†¬† 72,000
Reneau‚Äôs Pension¬†¬†¬† 155,000
Rental House¬†¬†¬† 530,000
2002 Ford F150 Truck*¬†¬†¬† 9,360
2001 Corvette*¬†¬†¬† 20,830
2001 BMW 540i*¬†¬†¬† 13,600
1972 Sea Ray Boat¬†¬†¬† 7,000
CD¬†¬†¬† ¬†¬†¬† 2,200
Individual Stocks¬†¬†¬† 835
Mortgage on Rental House¬†¬†¬† $143,750
Mortgage on Condo¬†¬†¬† 332,600
Home Equity Line of Credit¬†¬†¬† 136,000
Auto Loans¬†¬†¬† 29,435
Personal Loan¬†¬†¬† 28,800
Total ¬†¬†¬† $670,585
Net Worth¬†¬†¬† $676,440
*Estimated trade-in value according to Kelley Blue Book
This story originally appeared in the January 2009 issue of Black Enterprise magazine.