Preview: Women’s Guide to Building and Protecting Your Wealth

By: Ashley Withers at Jackson Walker LLP, Christine Leatherberry at Connatser Family Law, Jennifer Lan at Haynes and Boone LLP, Kristin Fomon, CFP®, MBA at Krilogy Financial, and Hayley Collins at GoransonBain Ausley

When entering the legal market today, lawyers are excited to grow their career, but must also balance paying off six-figure student loan debt, the need to save for retirement, a house, and more. Add in a few kids and job changes later, and lawyers are happy to be covering their monthly expenses. Lawyers can be left wondering, how can I be more strategic about my financial planning? How do I build and protect my wealth? This article is meant to provide  some insights into what types of strategic decisions you should be thinking about.

(1) Eggs and baskets. Don’t put all of them in one. While it may be very tempting to dedicate all of your resources to paying off your student loans right away, the reality for most people is that student loans take time to pay off. Sometimes, ten to twenty years or more. On top of that, if you haven’t saved any money for retirement twenty years down the road, it can be detrimental to your long-term planning. Instead, divide your goals into short-term, intermediate, and long-term goals. When you have a big goal of paying off your student loans by a certain date, set that goal, but allow yourself to make payments at an amount you can afford now and then increase your payments by a small amount each quarter or each year.

(2) Reevaluate. Jobs, salaries, expenses, families. All of these items change. As you experience change, make sure that you’re reevaluating your financial plan to accommodate these changes. Changes in family dynamics merit major reevaluation. When contemplating marriage or divorce, consult with a family lawyer and a financial planner to make sure that your plan going forward accommodates your new life. Consider whether a premarital agreement or post-marital agreement benefits you. With the addition of a new child, consider investing in a college savings plan. A typical 529 plan will allow investments to grow tax-free as long as withdrawals are used for qualified higher education expenses. In addition, up to $10,000 can be withdrawn tax-free from a 529 plan per year per beneficiary when used for tuition for elementary or secondary schools. And finally, make sure you have all the appropriate estate planning documents in place to account for all these life changes. Powers of attorney and designations of guardian will ensure that you and your children are taken care of by the people of your choosing and not by as decided by a court, and a Last Will and Testament will ensure that your assets are distributed to the people of your choosing and not as mandated by Texas law.

(3) Death and Taxes. The only two sure things in life. Where possible, focus on tax-free or low-tax vehicles to achieve your financial goals. For example, depending on your income level, you may qualify to invest in a Roth retirement plan, which allows you to be taxed currently on your retirement contributions, and not upon withdrawal. Lawyers’ income level is often lowest at the beginning of their careers so this type of plan often results in paying taxes when an individual is in a lower tax bracket, and thus less tax being paid overall. Also, when planning for your eventual demise, life insurance is always a good thing to leave your loved ones. Typically, life insurance proceeds are not considered income for federal income tax purposes, but are relevant when looking at the estate and gift tax exemption, which is currently set at $11.4 million per individual. And last, but certainly not least, make sure your retirement plan, life insurance, and other assets end up in the correct hands upon your death. Not only do you want to make sure your assets benefit the parties of your choosing, you want to make sure the appropriate people are in charge of getting them there. You should consult with an estate planning attorney to put into place an estate plan (i.e., Last Will and Testament, Living Trust, and beneficiary designations) that encompasses your personal goals and objectives.

To hear more insights for building and protecting your wealth, come hear from a powerful panel on Tuesday, November 19 from Noon to 1 pm at the Belo Mansion. Panelists include (1) tax attorney Ashley Withers at Jackson Walker LLP, (2) family law attorney Christine Leatherberry at Connatser Family Law (3) estate planning attorney Jennifer Lan at Haynes and Boone LLP, and (4) CERTIFIED FINANCIAL PLANNER™ Kristin Fomon at Krilogy Financial. Moderated by family law attorney Hayley Collins at GoransonBain Ausley. One hour of CLE credit is pending approval by the State Bar of Texas.

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Articles on the DAYL website are provided for informational use only, and are in no way intended to constitute legal advice or the opinions or views of the DAYL.