WHAT IS A LIQUIDITY CRISIS?

WHAT IS A LIQUIDITY CRISIS?

by Frank Givens

What is a liquidity crisis? First of all, I don’t think all this up. It is an accumulation of ideas that have come my way. This particular subject is well documented in financial and economic journals. A liquidity crisis is a period of de-leveraging. It is when money and credit are in short supply.

Institutions like banks and investment companies (mutual funds) dump stocks wholesale to satisfy withdrawals. It is a time when fear grips business and industry. “Liquidity” is the capacity to turn assets into cash, or the assets in a portfolio that have the capacity to be converted to cash. Cash itself (i.e. money) is “The” liquid asset. Cash becomes king!

Debt of course eats liquidity. Borrowers can be characterized in three ways. There are those who can pay their debts from income. There are those who rely upon increasing values to satisfy debts. There are those who rely upon rolling debt and lower interest rates to satisfy debts.

These are the kind of economic times that our folks warned us would come. They may not have been familiar with the terminology, but price rations the available resources. Price is the fulcrum between supply and demand. In this present phase of the economic cycle, demand is fueled by liquidity, not speculation.

I’ve been reading a classic in economics, Manias, Panics, and Crashes by Charles Kindleberger. Our current situation falls into a well worn pattern that Kindleberger terms a “hardy perennial”. (It also demonstrates, in my opinion, that social engineering does not cure the evils of capitalism).

The cycle goes something like this: Profit is the incentive that fuels/creates economic expansion. In the pursuit of profit, we become dissatisfied with “small gains.” Increasing prices entice investment. Speculation leads away from rational behavior. Making money never seemed easier. A follow the leader process develops. Banks make riskier investments in this more optimistic climate. Easy credit fuels the fire of speculation. Everyone wants a piece of the action.

Individuals and business ignore evidence that it would prefer not to think about. Consciousness is repressed (modern economists call it cognitive-dissonance). Eventually this mania gives way to reality. A “displacement” like a surge in oil prices changes expectations. The cycle continues and the party always comes to an end! Good times give way to panic and then the markets crash! We have a liquidity crisis. Those who can pay their debts are separated from those who can’t. Asset values slide to equilibrium, often overcorrecting. And the process starts over!

The risk today is that fiat money (bailouts) will distort incentives to produce. But that is in the future and is a whole other economic story.

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Frank Givens, CPA, is a partner in the firm F.O. Givens & Co. in Senatobia, Miss. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. Frank can be reached at 662-562-6721.

Why Talk About Taxes Now?

Why Talk About Taxes Now?

By Beth B. Burgess, CPA

With summer upon us, most people aren’t thinking about their income taxes. As a matter of fact, most people want to think about taxes as much as they want to have a voluntary root canal. And actually, the root canal may place first since the person is usually sedated for that procedure and I can’t provide that convenience along with the delivery of an income tax return. So, that leaves me with a slight disadvantage toward keeping my clients and friends pumped up about taxes and accounting issues.

With another tax season behind us, it always pays to plan ahead for next year. This year, I had an unusually large number of clients who were “unprepared” for tax season and everything that I would need to complete their return. And as most everyone has heard, we’ve got a number of changes for 2009 that you may need to plan for.

Here’s a quick list of items to keep in your “2009 Income Tax Folder” (If you don’t have one, go ahead and get one. It will be worth it.):

• Copies of your car tag receipts - This is my most often forgotten item. We need the ad valorem taxes for your itemized deductions. We don’t need to know that your tag says 1HOTMOM but that is pretty cool.
• HUD-1 settlement statements on any real estate purchases, sales or refinances. Many times these statements reflect deductible expenses such as points or real estate taxes paid at closing.
• Receipts for charitable contributions. Whenever you are cleaning out those closets, make sure to get a receipt for your donations of goods to charities. So many times, I have clients tell me that they donated items to Goodwill or Salvation Army but failed to ask for a receipt. Also, go ahead and provide a value of your donated goods. This is a lot easier to assess at the time of the donation rather than a year down the road when you are frantically trying to get your tax stuff together. Donations to your friends, kids or neighbors are not tax deductible.
• Receipts for college tuition and books. These expenses are easier to keep up with as you pay them, so make a copy and put it in your tax folder.
• Copy of your new car purchase papers reflecting sales tax paid. This deduction is now available to non-itemizers.
• Copy of your real estate tax payments made during 2009. There is a deduction available for non-itemizers as well as people who itemize.
• If you use your vehicle for business, make sure and keep a log of your business miles. This deduction adds up rather quickly. You are also entitled to deduct mileage for medical purposes if you itemize your medical expenses.
• If you are blessed with the birth or adoption of a child during the year, your tax professional will need to know the child’s social security number and date of birth. You will also need to provide information on your child care payments in order to take the Dependent Care Credit. Certain adoptions expenses may qualify for a credit also. We know you are equally proud of your new Yorkie so feel free to send us a picture but don’t expect to claim the little fella on your return.
• Don’t forget to let your accountant know that you moved! You wouldn’t want us to move and not tell you, would you? If your move is associated with a job change and you move more than 50 miles from your old job, then you can most likely deduct the unreimbursed costs of your move.
• If you change your marital status during the year, you should let your accountant know. Your marital status as of December 31 determines whether or not you file as married or single. Many times, you will need to adjust your withholding when you change your marital status.
• Job changes affect your taxes! If you change jobs, you will be asked to fill out a new Form W-4 withholding statement. Make sure this is filled out properly to avoid unpleasant surprises next April. Also, if you become self employed or take on a second job, you may need to pay quarterly estimates.
• Considering retirement? Did you know that your social security income can be taxable? Many times this comes as a shock to new retirees. Let your accountant plan with you for retirement so you can enjoy your days fishing with the grandkids.
• If you pay quarterly estimated tax payments, keep a copy of your check and payment vouchers so that your accountant will have a confirmation of what you have paid. As hard as it is to imagine sometimes people “forget” to pay these and if we assume that they are all paid, we are guaranteed a dreaded letter from the IRS.
• Rather than wait until tax season to update your bookkeeping on your small business, why don’t you go ahead and ask for some help on getting started with QuickBooks or some other accounting program? The “off season” makes for a more relaxed time to assist clients with bookkeeping set up and maintenance. Plus, we can help you reduce your accounting fees down the road by getting everything set up correctly on the front end.
• If you make energy efficient improvements to your home in 2009, these may qualify for a tax credit. Make sure and put all of your receipts in your tax folder.
• Generally, retired persons are required to take a distribution from their IRA each year. This requirement has been waived for 2009. So, if you don’t need the money, you may want to evaluate if it is best to postpone withdrawing any funds this year.

As you can tell, I get real excited about taxes. I think about taxes 12 months a year. Most people think I’m pretty strange. Actually, I’m just trying to be helpful. Planning ahead really does save money. I haven’t met anyone yet that didn’t like to save money. Organize and plan. Tax season will be back around before you know it.

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Beth is president of Burgess ∙ Crechale, PA in Flowood, Mississippi. The firm specializes in small business accounting, consulting, tax preparation and retirement plan administration. When Beth isn’t busy solving tax crises, she enjoys spending time with her husband and daughters and cooking for college kids.

CALIFORNIA NIGHTMARIN’

CALIFORNIA NIGHTMARIN’
By Robert McElvaine

“The past is never dead. It’s not even past.”
— William Faulkner
Requiem for a Nun (1951)


“. . . for time past is not believed to have any bearing on time present or future, out in the golden land where every day the world is born anew.”
— Joan Didion
“Some Dreamers of the Golden Dream” (1966)

Let’s talk about California and what it may be saying to us in Mississippi and the rest of the nation about the journey we have been on over the past three decades and where we may be headed now.

It may seem that California has little to say to us in Mississippi. The two states have long been at the opposite poles of America. As the quotations above from leading writers of the two states indicate, so much in our state is tied to the past, while in California it often seems that there is no past.

Here are the contrasting ways in which the states tend to be seen around the country and the world:

Mississippi has been haunted by the Ghost of America Past.
California is haunted by the Ghosts of America Present and
America Yet to Come.

If the states were theme parks, California is Tomorrowland.
Mississippi is Yesterdayland.

Mississippi is about never forgetting the past;
California is about completely forgetting the past.

California has long been seen as being on the cutting edge of progress and change. By the 1960s, the nation's westward movement had been replaced by new trends emanating from California and moving eastward.

“All that is constant about the California of my childhood,” Joan Didion wrote of her home state in 1965, “is the rate at which it disappears.”

Mississippi, on the other hand, has been a place wholly rooted in the past and the most resistant to change.

The rate of change in the two states is even reflected in nature. California is famous for the sudden upheavals of its massive earthquakes. In Mississippi, we have what amount to slow-motion earthquakes in the form of the expansions and contractions of Yazoo Clay.

The geographic extremes in California are vastly greater than in Mississippi. California has, in close proximity, the lowest place in the United States, Death Valley, and the highest in the contiguous 48 states, Mt. Whitney, from 282 feet below sea level to 14,505 feet above—a range of 14,787 feet. Mississippi is all within the narrow range of 806 feet from sea level to the top of the generously named Woodall “Mountain.” (Recall that when Martin Luther King looked forward at the 1963 March on Washington to the day when freedom would ring from various mountains in the South, he referred only to “every hill and molehill of Mississippi”).

In weather, the differences are in some respects not as great. Mississippi has its long, hot summers, in which the weather stays almost exactly the same for weeks on end. Southern California’s weather often seems similarly unchanging. But both locales are subject to “weather of catastrophe”— flash floods with houses sliding down eroded embankments and the warm Santa Ana winds bringing onrushing fire and madness in people in California, and tornadoes and hurricanes in Mississippi.

Yet even in weather, there is much of an omnipresent feeling that the apocalypse may be right around the corner in California. Again, it is Didion who says it best: “The violence and the unpredictability of the Santa Ana affect the entire quality of life in Los Angeles, accentuate its impermanence, its unreliability. The wind shows us how close to the edge we are.”

Mississippi is all about permanence, but the very nature of California is that nothing is intended to be permanent. Movie sets are removed after the picture is finished. Houses slide down cliffs. The ultimate fear is that much of the state will be destroyed by “The Big One”—a gigantic earthquake.

It is very easy to depict California and Mississippi as polar opposites:

“Going south” has a very different meaning than “going west.”

Mississippi was about tradition;
California was about innovation

Mississippi is wet and humid;
California is dry.

Mississippi is all about old;
California is all about new.

Mississippi was the Old South;
California is the New West.

California is change.
Mississippi is anti-change.

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What, then, can California have to say to us that is worth listening to?

Actually a majority of Mississippians have been listening to and following what has come out of the Golden State for a fairly long time. California was, more than a quarter century ago, the source of a political movement embraced by many Mississippians and of a leader who came to be revered in Mississippi.

In the 1970s, both the conservative anti-tax movement and Ronald Reagan came to us out of California. (We won’t talk now about the other two presidential gifts California presented to the nation, Herbert Hoover and Richard Nixon.)

The nation’s sharp turn to the right took off in 1978. One of the leading indicators of this turn was the passage that year of California Proposition 13, the Jarvis-Gann Initiative, which severely limited property taxes and made future increases in all types of taxes very difficult. It was the beginning of a disaster caused by unchecked direct democracy. Voters in California have increasingly bypassed the legislative process by making key decisions through referenda. That may sound good, but what has happened, unsurprisingly, is that the voters keep voting to tax themselves less and spend more.

The result has been disaster. Before the passage of Pop 13, California had perhaps the best public school system in the nation. In recent years, California schools have ranked last, below Mississippi’s. Today, California is teetering on the edge of one of those cliffs, with a mudslide on the way.

It may not always be true that “you get what you pay for.” But it is usually true that “you don’t get what you don’t pay for.”

Three years after Prop 13, Mr. Reagan brought that California state of mind to Washington.A recent letter to the editor in the Los Angeles Times got it right:

“Ronald Reagan’s dream is finally realized. California will now be a model for a Republican utopia. No taxes. No services. I’m from the private sector, and I’m here to help you.”

California nightmarin’ has become a reality.

Mr. Reagan told us in his first inaugural, “Government is not the solution to our problem; government is the problem.” He set out to lessen that problem, cut top tax rates, and reduce the regulatory powers of the government.

Most Mississippians cheered. The majority view here has long been that big government is dangerous. It is. What is dangerous about it, though, is not the noun, government, but the adjective, big. If big government is dangerous, does not the same apply to big business? Not according to those who joined in the Reagan Revolution. Their attitude was: Don’t worry about how big financial institutions become; they can’t harm us.

We now ought to know better.

Indeed, the need for big government lies very largely in the existence of big business, from which we need powerful government to protect us.

It should be clear now that, under current circumstances, President Reagan’s statement needs modification to: “Big business is not the solution to our problem; business that is too big is the problem.”

♦ ♦ ♦

Democracy is clearly the best political system, but our nation’s Founding Fathers had the good sense to realize that democracy carries with it inherent dangers and so provided a system of checks and balances to rein in its potentially detrimental excesses.

Capitalism is clearly the best economic system, but what we need now are some Fathers and Mothers with the good sense to realize that capitalism carries with it inherent dangers and so to provide a system of checks and balances to rein in its potentially detrimental excesses.

Some of those checks and balances were provided in the New Deal, but they were broken down by the Reaganites, especially during the eight years of the second President Bush.

In California, a large part of the problem is democracy without checks and balances. In the nation as a whole, a large part of the problem is capitalism without checks and balances.

California’s task now is to try to find a way to restore political checks and balances. The nation’s task now is to restore and improve upon those economic checks and balances.

California has always been the cutting edge of the “Reagan Revolution” and that edge has now cut it to the point of the state bleeding out. We need to apply a national tourniquet to stop the bleeding before the nation succumbs to this Golden Bear Flu.
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Robert McElvaine is the Elizabeth Chisholm Professor of Arts & Letters and Chair, Department of History, at Millsaps College in Jackson. He is also the author of several books, most recently Grand Theft Jesus and is a regular contributor to huffingtonpost.com. McElvaine lives in Clinton and is currently at work on a book about the Sixties.

Turning Adversity into Success: Business Survival in Today's Climate

By: Mark A. Chinn, Attorney at Law

There are few businesses that have not suffered in the economy which some experts say started plunging into recession in November of 2007. This recession reached its peak when the markets exploded downward in the Fall of 2008. This makes any business person ask, “How do I survive in this environment, with the whole financial world seeming to collapse around me?” In this article, I will outline some solutions to this problem of survival. These solutions have been gleaned from many years of operating my own family law practice and reading and writing and speaking on topics of practice management.

Tip 1. Carefully Examine Your Business Model and Service. When there are cash flow problems, the first fear that any entrepreneur has is that he has done something to ruin his business. This fear is paralyzing at times and totally unproductive. The way to deal with this fear is to call a meeting of your trusted partners or employees and ask some questions and discuss them. These are some questions you can ask:

• Is there anything wrong with what we are trying to do here?
• Are we delivering the service that we promise?
• Have we had complaints that we need to address?
• Is there anything fundamentally wrong with the clientele we have been trying to reach?

Odds are that the conclusion of this meeting will be that there is nothing wrong with your business model or service. From this conclusion, you can then go forward with confidence to address the things affecting you from the outside.

Tip 2. Create A Plan and Identify the Final Safety Net. There is a temptation in crises to try and solve the problem all at once; to look for the “silver bullet” solution and go for it. Such a response might be a knee jerk decision to cut overhead by laying off significant numbers of employees who are really essential to delivering your companies service. This can be a big mistake. Instead, break your solutions to the problem down into phases and identify when each phase might be necessary. This will create a more methodical and measured response which is less likely to detract from your firm’s ability to deliver service or which might destroy morale. Here is an example:

Phase 1. Cut Unnecessary Expenses and lay off fringe or non essential personnel. Arrange credit line. Identify sources of funds for emergency.

Phase 2. Make significant overhead cuts, which would include salary and benefit reductions. Ask the employees for help and input into how they think this should be accomplished. In other words, empower your associates and employees to help save the company. Re-examine the products of the company, the pricing, and the targeted clientele. Make changes which may increase cash flow but which will not significantly change the companies’ brand of product or service.

Phase 3. More serious salary reductions or layoffs. This may involve a trimming of previously critical employees. Look for other expense cuts that were previously thought to be untouchable, such as health insurance for employees or pension matching programs.

Phase 4. Cut overhead to bare minimum and look at other areas of business previously eschewed to see if the economy has opened up another business niche after closing your previous niche.

Phase 5. What is the bottom line of survival. For most professionals, this may mean getting rid of all overhead and operating out of the home. Talk to people who already operate like that and find out what their lifestyle is like. You may find that lifestyle attractive, and therefore a solid safety net. In other words, there is no final disaster if everything doesn’t work out the way you planned.

Tip 3. Cut Expenses. Over the last 30 years that I have studied and practiced business, the thinking has generally been that the entrepreneur’s mentality should not be focusing on cuts in overhead, but increases in revenue. In other words, don’t count paper clips. Focus on getting clients in the door who will want to reward you financially for your service. This particular crises requires a different mind set in my opinion. This is a time to cut expenses. This is a time to throw some things overboard and make the ship lighter.

The way to start cutting expenses is to make a commitment to develop a new mentality of saving expense and money where ever possible. This should be done on both a personal and business level. I think many of us today remember that our parents had that mentality and maybe so did we, but most people lost that mentality in the business frenzy of the last thirty years. Start by making cuts off non-essentials. You might cut the fresh flowers in your reception room or the music on hold. You might cut personal expenses by eating at home more often or depriving yourself of simple luxuries such as a golf cart or a beauty treatment.

Cutting such expenses may not put a very big dent in the budget, but it will create a positive feeling that you are taking action to respond to the crises.

Tip 4. Get Help. Your associates, partners and even employees want to help. They know your business and they care about its success. They can give you answers that you would never think of. One way to do this is to meet with just a few of your most trusted associates or employees. Share the problems with them. Let them know what the company is facing. Tell them that cuts to overhead are generally not going to be significant until salaries and benefits are reduced. Tell them the choices you see. For example, one choice would be to lay off a number of people. Another would be to cut salaries by a percentage. Another would be cutting time worked or the taking of non paid vacations or sabbaticals. If you get positive feed back from your trusted group, ask them if they think the rest of the group would like to be involved. If that seems to be a positive avenue, have your trusted employees arrange a meeting of all of the employees and discuss the alternatives and come up with some solutions. Business books and coaches have preached for years that if you want to know how to create incentives for your employees, “just ask them what they want.” The same is true for how to respond to a crises. Ask the employees how they would like to respond. This will empower them and create ownership, which will be positive for them and the business.

Tip 5. Ropes Course Rules. Entrepreneurs are much like jungle animals: always on the alert for danger and disaster. This quality helps the entrepreneur be aware of what he needs to do to be successful. It also helps them to anticipate difficulty and plan ahead. Unfortunately, this quality can also be his enemy, because it can cause the entrepreneur to focus on the negative problem and not the positive solution. One example I use for this comes from a day when I participated in a ropes course exercise. I am afraid of heights. But one day I was asked to participate in a ropes course with a group. This required me to climb a wall and then navigate various ropes and wires strung a distance between trees about thirty feet in the air. Of course, participates are protected from real danger by protective wires, but the height and difficulty play with the mind. Though terrified of heights, I had no choice but to do the exercise because I wanted no one to know I had fear. On the first tight wire, I learned the following rules which I coach my clients to use in getting through adversity:

“Take one Step at a time.”

“Focus on your goal (i.e. the other tree)”

“Don’t look down (meaning, don’t allow yourself to think about how far you might fall)

“Remember, there is always a safety net.” (meaning, even if you fall, you are not likely to fall all the way to the group.)

Tip 6. Stay Positive. Our firm follows the motto that we “turn adversity into success.” We coach our clients in maintaining a positive attitude through difficult times and looking for ways to create a better life out of the storm. One image we like to use is the image of a surfer before a hurricane. Remember Jim Cantori from the weather channel standing at the point on the beach where the eye of the hurricane is expected. Almost without exception, he tells the camera to “pan back” to catch surfers taking advantage of the high pre-hurricane surf. These surfers are turning a destructive storm into the ride of a lifetime. We coach ourselves to handle difficulties in our practice by looking for ways to turn what appears to be an unfortunate outcome or response into a positive. We ask ourselves, “how can we turn this into an opportunity.” There are two aspects to this approach which are essential to remember. The first is that it is important to realistically appraise the danger. Keeping a positive attitude does not mean burying your head in the sand. The second aspect is that worrying about danger is a waste of time and can actually defeat you efforts to survive. Your mind set should be the same and Jon Elway facing a last minute drive for a touchdown and that probably sounds something like this in the huddle: “Okay guys, you know what we need to do, now lets go do it.”

Tip 7. Work Vigorously. Our firm coaches our clients that adversity is best faced by paying close attention to the health of their minds, their bodies and their spirit. This is also the motto on the wall of the YMCA. It is always good to pay attention to your overall health, but in crises, it is absolutely essential. It is well documented that physical activity improves the immune system and produces endorphins and other body chemicals that raise a persons spirits and capacities. Join a gym aeriobics or fitness class or hire a trainer and attend the training religiously three times a week for at least an hour. Train so hard you have to sit down for 20 mintues before you can even make it to the car or shower. Intense training will clear your mind and give you confidence. This will help you deal with crises.

Tip 8. Take it One Day at a Time. After evaluating your situation and developing plans for how to deal with it, take things one day at a time. Remember the ropes course image and just put one foot in front of the other. If you try to run to the next tree, you are likely to fall.

Instead of thinking, “Oh my goodness, I need $50,000 in the next three weeks or I’m going under, focus on what you can do today. Instead of focusing on all of the business you might need in the next thirty days to survive, focus solely on getting that next client. This mind set is so crucial to life, we find it all over in the spiritual and faith world. Those who study yoga are familiar with the concept of meditating on “being present.” In the Judeo Christian world, this philosophy is found in the Bible with scriptures such as “This is the day the Lord hath made, rejoice and be glad in it.” Or, “Do not be anxious about tomorrow.”

Conclusion. This is a different time. The ways of the past twenty or thirty years will not aid entrepreneurs in survival today. The mind set must turn from going full speed and spending whatever it take, to getting lean and focusing on net profit instead of big dollars. Survival is not for the feint of heart and it does not come naturally to most. Any one who wishes to survive must develop new habits and be willing to take unpleasant steps, such as terminating valued employees. The survivor must accurately appraise his danger but never focus on it. The survivor becomes the conqueror when he practices an attitude of turning adversity into success.

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Mark A. Chinn operates a family law practice in Jackson, Mississippi. He is the author or co author of five books including How to Build and Manage a Family Law Practice, published by the American Bar Association. For more on Mark see www.chinnandassociates.com.

Environmental Economics

Environmental Economics

by Frank Givens

Rotary International has some great programs. If you don’t know about them, look on the website at Rotary.org and when you find something you are interested seek out a local Rotarian. He or she will be glad to help. Here are the three big ones. Most common is the Rotary Exchange program where a young person (ages 14 to 18) can attend high school in another country. Another is the Ambassadorial Scholarship for undergraduate and graduate students to study in another country. A third is called GSE (Group Study Exchange) and is a cultural and vocational exchange for those ages 25 to 40 in the early stages of their careers.

A few years ago, I had the good fortune of leading a GSE team of young professionals to Norway. You travel from community to community and visit people who are in your own profession. You attend Rotary Club meetings and tell about your home and work. You stay in the homes of local Rotarians. You are treated like royalty. On this trip I learned a valuable lesson about the economy of environmentalism.

When it comes to the environment we all want to preserve it for future generations. After that, there isn’t much consensus. But we know what happens to the goldfish bowl if the water doesn’t get changed. So where do we find solutions? First, the best thing for the environment is a strong free economy. You don’t see a strong economy unless it is free. And you don’t see a good environment unless the economy is strong. You might say that these factors are interdependent.

In Norway, they have had two environmental and economic disasters, not entirely of their own making. And they got one really big break for the economy. In the old days, their economy was built on fish and timber. At some point the waters were over fished and the fish stock became depleted. At some point the timber began to die from acid rain. Russia (that command economy, environmental disaster of a nation) was polluting the air.

When it affected their pocketbooks, Norwegians became environmentalists. Their big break came from oil in the North Sea. They are the third largest exporter of oil and gas. As a result, they have the national wealth to provide for the social systems that are in place.

So what does all this mean for us? We must protect our economy as well as our environment. Government can set policy. Education works. Beyond that, should government do more, can government spend tax dollars without harming the economy? Keynes may say yes, Friedman or Hayek would say no. Can the justice system rather than budgets keep the environment clean? What part of the resources can the government take to spend and we have a free economy? Does really big business become a branch of the government? Our children need to learn about economics. And there are some questions we can’t answer. That’s economics. So learn, participate, think and vote. That’s all folks.

Frank Givens, CPA, is a registered representative with and securities are offered through LPL Financial, Member FINRA/SIPC. Frank can be reached at frank.givens@lpl.com. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

GRANDPARENTS’ RIGHTS

GRANDPARENTS’ RIGHTS

Thomas W. Crockett

As difficult as it is to believe, baby boomers have entered and continue to enter in droves that exalted, privileged and sometimes heartbreaking status of grandparents. As long as the intra-family relationships between the in-laws, step-families and other combinations resulting from our complex society, ripe as it is with divorces, remarriages and other disruptions, remain healthy, grandparents can have a fulfilling and loving relationship with the grandchildren, and become a part of the extended family that all children need so much in these turbulent times.

Things do go wrong, however, and the closest of relationships can be disrupted by the divorce or death of one of the parents, leaving the grandparents to deal with the son or daughter-in-law, who may have (and sometimes with good reason) become hostile to the grandparents and takes out this hostility by denying the grandparents visitation. Sometimes, even if the marriage is intact, both parents may unite against the grandparents to deny visitation.

When the relationship between the grandparents and the parent or parents has become so hostile as to be irreparable, grandparents need to know what legal rights they have to require the custodial parent or parents to allow them visitation. The Mississippi statute grants grandparents the right to petition the court for visitation rights in two circumstances:

First, if a parent dies, or loses custody or parental rights, then that parent’s parents have the right to petition the chancery court for visitation rights.

Second, any grandparent who is not entitled to petition under the above facts may petition for visitation if the grandparent has established a viable relationship with the child (which means a relationship in which the grandparent has voluntarily and in good faith supported the child financially in whole or in part for not less than six months), or had frequent visitation including overnight visitation for a period of not less than one year.

Although the grandparents have the right to petition, the visitation is still subject to certain restrictions, the most important of which is that the visitation is in the child’s best interest.

Assuming that the court finds that the visitation is in the child’s best interest, the additional factors the court will consider in determining the grandparents’ rights are:

(1) amount of disruption visitation will have on grandchild’s life,

(2) suitability of grandparents’ home with respect to amount of supervision,

(3) age of grandchild,

(4) age and physical and mental health of grandparents,

(5) emotional ties between grandparents and grandchild,

(6) moral fitness of grandparents

(7) distance of grandparents’ home from child’s home;

(8) any undermining of parent’s general discipline of grandchild,

(9) employment of grandparents, and

(10) willingness of grandparents to accept that the rearing of the child is the parents’ responsibility and that the parents’ manner of child rearing is not to be interfered with.

Although these rights are there to be used in extreme cases, the enforcement of them is costly in time and money, disruptive of relationships, and uncertain of outcome. Avoid the need to do so by respecting, understanding, and even tolerating the parents – both of them – as they muddle through the difficult job of rearing children. In short, grandparents’ legal rights are like good credit; they should be used only when absolutely necessary.

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Thomas W. Crockett is a shareholder in Watkins Ludlam Winter & Stennis, P. A., which has offices at 190 E. Capitol Street, Suite 800, Jackson, MS 39205-0427; One Hancock Plaza, 2510 14^th Street, Suite 1010, P. O. Drawer 160, Gulfport, MS 39502; and 8925 East Goodman Road, P. O. Box 1456, Olive Branch, MS 38654; tcrockett@watkinsludlam.com

SURVIVING AND PERHAPS THRIVING DURING RECESSIONS

SURVIVING AND PERHAPS THRIVING DURING RECESSIONS

by Frank Givens

If you haven’t heard about the economy, the recession, the stock market, the stimulus plan then you must be hiding under a rock.

Most financial experts agree that we haven’t hit the bottom of this and it will likely take years for our economy to be back to pre-recession levels.

I have seen some organizations that have not only survived but done well during the last two recessions. There are several common characteristics shared by these companies before, during and after the recession.

So what did they do? They didn’t get sick and go to bed; they didn’t roll over and die. They did more than “make do” and they continued to succeed during a recession.

They all had a strong strategic vision and knew who they were before, during and after the crisis. Before it began they controlled costs and established a rainy day fund which they then used during the crisis. They continued to advertise, reduced costs without long-term damage to business and they figured out ways of growing new revenue.

These same basic ideas can be applied to the family. Communicate with your family—be honest about your financial situation. If you don’t have a rainy day fund, start one. Savings accounts are free and usually require just a small deposit to activate.

Let your teenagers get a job to pay for their own spending money. If you’re eating out every night learn how to cook. There’s a reason that the “greatest generation” grew up during the Great Depression.

When my daughters were little one of their favorite books to have read aloud was the Laura Ingles Wilder series. As Pa used say, “It’s better to be safe than sorry.” He was talking about not falling in a well, but the same is true for your long-term and short-term financial goals.

Today, yes, the economy is bad. History tells us that eventually the economy will turn around. Hopefully, the young people witnessing this today will make better choices about spending and saving in the future because of what has happened.

Frank Givens, CPA, is a registered representative with and securities are offered through LPL Financial, Member FINRA/SIPC. Frank can be reached at frank.givens@lpl.com. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.