easing the burden
APRIL 22, 2012 | fdlreporter.com
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easing the
burden
funeral, cemetery & estate planning
life LOVE loss legacy
April 22, 2012
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fdlreporter.com | APRIL 22, 2012
875 E. Division St. Fond du Lac, WI 920-922-6860 Serving the Fond du Lac area with Compassion and Dignity since 1857 The Book of Ecclesiastes in the Bible reads, “There is a time for everything under the Sun; a time to live and a time to die.” It takes a lot of time to meet the demands of “everything under the sun.” Much of our time is spent enjoying the blessings we received from God by living life to the fullest according to His Will. We prefer to spend less of our time thinking about our death, and yet there is a time for that too. The time of a death is painful for family and friends. Often it becomes overwhelming. We wonder if we are meeting the wishes of our loved ones as we arrange their funerals. How much time should be set aside for a gathering of family and friends to grieve and reminisce? Is there any money set aside and what can we afford to do? Pre-arranging funeral plans can help lower the stress at the time of death. Zacherl Funeral Home is family owned and has been serving the Fond du Lac area for more than 155 years. We’ve been with you during some of your most difficult times, serving you with compassion and affordable services. We would like to help make any future difficult times less painful. We invite you to ask us about pre-arranging and funeral plans. We have investment programs to help you so that there are fewer worries to add to your grieving. Pre-funded, funeral plans made at other funeral homes are welcome here. Phone us for an appointment, we welcome your questions. Please know, if you read this at a time of sorrow, we apologize. Zacherl Funeral Home is pleased to announce our employee, Mitchell Penn of Fond du Lac, who as our apprentice is finishing his mortuary education at Milwaukee Area Technical College in May. His college internship and state apprenticeship will end around November. At that time Mitch is eligible for his state license as a funeral director. Mitch is a fine asset to our staff and will be of great service to our funeral home families.
Directors, Zacherl Funeral Home and Crematory Jerome A. Wagner, Peter A. Zacherl, Tammy L. Freund (pictured left to right); not pictured, Mitchell P. Penn, Apprentice
www.zacherlfuneralhome.com
WI-5001488188
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APRIL 22, 2012 | fdlreporter.com
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expenses
Understand funeral
Tips
by breaking down services, products
When a loved one is lost, making funeral arrangements can be an emotional rollercoaster. Understanding the costs associated with each service or product can be daunting if not prepared. To help better understand what services you may need or want, the Federal Trade Commission offers the following guidelines to funeral planning. 1. Basic services fee for the funeral director and staff
behalf, including flowers, obituary notices, pallbearers, officiating clergy, and organists and soloists. Some funeral providers charge you their cost for the items they buy on your behalf. Others add a service fee to their cost. The Funeral Rule requires those who charge an extra fee to disclose that fact in writing, although it doesn’t require them to specify the amount of their markup. The Rule also requires funeral providers to tell you if there are refunds, discounts or rebates from the supplier on any cash advance item.
The Funeral Rule allows funeral providers to charge a basic services fee that customers cannot decline to pay. The basic services fee includes services that are common to all funerals, regardless of the specific arrangement. These include funeral planning, securing the necessary permits and copies of death certificates, preparing the notices, sheltering the remains, and coordinating the arrangements with the cemetery, crematory or other third parties. The fee does not include charges for optional services or merchandise.
Calculating the Actual Cost
2. Charges for other services and merchandise
The Funeral Rule does not require any specific format for this information. Funeral providers may include it in any document they give you at the end of your discussion about funeral arrangements.
These are costs for optional goods and services such as transporting the remains; embalming and other preparation; use of the funeral home for the viewing, ceremony or memorial service; use of equipment and staff for a graveside service; use of a hearse or limousine; a casket, outer burial container or alternate container; and cremation or interment. 3. Cash advances These are fees charged by the funeral home for goods and services it buys from outside vendors on your
The funeral provider must give you an itemized statement of the total cost of the funeral goods and services you have selected when you are making the arrangements. If the funeral provider doesn’t know the cost of the cash advance items at the time, he or she is required to give you a written “good faith estimate.” This statement also must disclose any legal, cemetery or crematory requirements that you purchase any specific funeral goods or services.
Services and Products Embalming Many funeral homes require embalming if you’re planning a viewing or visitation. But embalming generally is not necessary or legally required if the body is buried or cremated shortly after death. Eliminating this service can save you hundreds of
whats
inside
Understanding funeral expenses �� 3-6 Business owners should plan for ‘succession’ ���������������������������������������7 Estate Planning: An area of many important choices ������������������ 8-9 Seek advice to avoid mishandling inheritance �������������� 10-11 Cover and page 3 photos: Rienzi Cemetery in Fond du Lac County. Aileen Andrews/The Reporter
Easing the Burden, Funeral and Estate Planning is published by The Reporter, Fond du Lac. Contents of this section are published for The Reporter. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by means, electronic, mechanical, photocopying, recording or otherwise, without prior consent of The Reporter. For more information, contact Jen Memmel, at 920-9077901 or e-mail jmemmel@fdlreporter.com. General Manager/Executive Editor: Richard Roesgen Advertising Manager: Jen Memmel
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dollars. Under the Funeral Rule, a funeral provider: • may not provide embalming services without permission. • may not falsely state that embalming is required by law. • must disclose in writing that embalming is not required by law, except in certain special cases. • may not charge a fee for unauthorized embalming unless embalming is required by state law. • must disclose in writing that you usually have the right to choose a disposition, such as direct cremation or immediate burial, that does not require embalming if you do not want this service. • must disclose in writing that some funeral arrangements, such as a funeral with viewing, may make embalming a practical necessity and, if so, a required purchase. Caskets For a “traditional,” full-service funeral: A casket often is the single most expensive item you’ll buy if you plan a “traditional,” full-service funeral. Caskets vary widely in style and price and are sold primarily for their visual appeal. Typically, they’re constructed of metal, wood, fiberboard, fiberglass or plastic. Although an average casket costs slightly more than $2,000, some mahogany, bronze or copper caskets sell for as much as $10,000. When you visit a funeral home or showroom to shop for a casket, the Funeral Rule requires the funeral director to show you a list of caskets the company sells, with descriptions and
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prices, before showing you the caskets. Industry studies show that the average casket shopper buys one of the first three models shown, generally the middle-priced of the three. So it’s in the seller’s best interest to start out by showing you higher-end models. If you haven’t seen some of the lower-priced models on the price list, ask to see them - but don’t be surprised if they’re not prominently displayed, or not on display at all. Traditionally, caskets have been sold only by funeral homes. But with increasing frequency, showrooms and websites operated by “third-party” dealers are selling caskets. You can buy a casket from one of these dealers and have it shipped directly to the funeral home. The Funeral Rule requires funeral homes to agree to use a casket you bought elsewhere, and doesn’t allow them to charge you a fee for using it. No matter where or when you’re buying a casket, it’s important to remember that its purpose is to provide a dignified way to move the body before burial or cremation. No casket, regardless of its qualities or cost, will preserve a body forever. Metal caskets frequently are described as “gasketed,” “protective” or “sealer” caskets. These terms mean that the casket has a rubber gasket or some other feature that is designed to delay the penetration of water into the casket and prevent rust. The Funeral Rule forbids claims that these features help preserve the remains indefinitely because they don’t. They just add to the cost of the casket. Most metal caskets are made from rolled steel of varying
gauges - the lower the gauge, the thicker the steel. Some metal caskets come with a warranty for longevity. Wooden caskets generally are not gasketed and don’t have a warranty for longevity. They can be hardwood like mahogany, walnut, cherry or oak, or softwood like pine. Pine caskets are a less expensive option, but funeral homes rarely display them. Manufacturers of both wooden and metal caskets usually warrant workmanship and materials. For cremation: Many families that opt to have their loved ones cremated rent a casket from the funeral home for the visitation and funeral, eliminating the cost of buying a casket. If you opt for visitation and cremation, ask about the rental option. For those who choose a direct cremation without a viewing or other ceremony where the body is present, the funeral provider must offer an inexpensive unfinished wood box or alternative container, a non-metal enclosure - pressboard, cardboard or canvas - that is cremated with the body. Under the Funeral Rule, funeral directors who offer direct cremations: may not tell you that state or local law requires a casket for direct cremations, because none do; must disclose in writing your right to buy an unfinished wood box or an alternative container for a direct cremation; and must make an unfinished wood box or other alternative container available for direct cremations.
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Burial Vaults or Grave Liners Burial vaults or grave liners, also known as burial containers, are commonly used in “traditional,” full-service funerals. The vault or liner is placed in the ground before burial, and the casket is lowered into it at burial. The purpose is to prevent the ground from caving in as the casket deteriorates over time. A grave liner is made of reinforced concrete and will satisfy any cemetery requirement. Grave liners cover only the top and sides of the casket. A burial vault is more substantial and expensive than a grave liner. It surrounds the casket in concrete or another material and may be sold with a warranty of protective strength. State laws do not require a vault or liner, and funeral providers may not tell you otherwise. However, keep in mind that many cemeteries require some type of outer burial container to prevent the grave from sinking in the future. Neither grave liners nor burial vaults are designed to prevent the eventual decomposition of human remains. It is illegal for funeral providers to claim that a vault will keep water, dirt or other debris from penetrating into the casket if that’s not true. Before showing you any outer burial containers, a funeral provider is required to give you a list of prices and descriptions. It may be less expensive to buy an outer burial container from a third-party dealer than from a funeral home or cemetery. Compare prices from several sources before you select a model. Preservative Processes and Products As far back as the ancient Egyptians, people have used oils, herbs and special body preparations to help preserve the
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bodies of their dead. Yet, no process or products have been devised to preserve a body in the grave indefinitely. The Funeral Rule prohibits funeral providers from telling you that it can be done. For example, funeral providers may not claim that either embalming or a particular type of casket will preserve the body of the deceased for an unlimited time.
Rule does not cover cemeteries and mausoleums unless they sell both funeral goods and funeral services, so be cautious in making your purchase to ensure that you receive all pertinent price and other information, and that you’re being dealt with fairly.
Cemetery Sites
All veterans are entitled to a free burial in a national cemetery and a grave marker. This eligibility also extends to some civilians who have provided military-related service and some Public Health Service personnel. Spouses and dependent children also are entitled to a lot and marker when buried in a national cemetery. There are no charges for opening or closing the grave, for a vault or liner, or for setting the marker in a national cemetery. The family generally is responsible for other expenses, including transportation to the cemetery. For more information, visit the Department of Veterans Affairs’ website at www.cem.va.gov. To reach the regional Veterans office in your area, call 1-800-827-1000.
When you are purchasing a cemetery plot, consider the location of the cemetery and whether it meets the requirements of your family’s religion. Other considerations include what, if any, restrictions the cemetery places on burial vaults purchased elsewhere, the type of monuments or memorials it allows, and whether flowers or other remembrances may be placed on graves. Cost is another consideration. Cemetery plots can be expensive, especially in metropolitan areas. Most, but not all, cemeteries require you to purchase a grave liner, which will cost several hundred dollars. Note that there are charges - usually hundreds of dollars - to open a grave for interment and additional charges to fill it in. Perpetual care on a cemetery plot sometimes is included in the purchase price, but it’s important to clarify that point before you buy the site or service. If it’s not included, look for a separate endowment care fee for maintenance and groundskeeping. Visitation for 1LT David Johnson is held at Mayville High School. Members of the Vietnam Veterans of America pay their respects on Saturday, Feb. 4, 2012. Aileen Andrews/The Reporter
If you plan to bury your loved one’s cremated remains in a mausoleum or columbarium, you can expect to purchase a crypt and pay opening and closing fees, as well as charges for endowment care and other services. The FTC’s Funeral
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In addition, many states have established state veterans cemeteries. Eligibility requirements and other details vary. Contact your state for more information. Beware of commercial cemeteries that advertise so-called “veterans’ specials.” These cemeteries sometimes offer a free plot for the veteran, but charge exorbitant rates for an adjoining plot for the spouse, as well as high fees for opening and closing each grave. Evaluate the bottomline cost to be sure the special is as special as you may be led to believe.
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Realistically, planning for succession should begin as soon as the owner recognizes that he or she will want the business to continue, after his or her retirement. There are a number of factors that need to be considered. First, will the business have value without the owner? Some businesses are basically the personal effort of the owner and may not have a significant value beyond the work product of the owner. Most businesses, however, have equipment, inventory, talented employees and a loyal customer base that make it possible for the next owner to continue the success of the business. Second, who are the likely business successors? Sometimes the new owner is right there in front of you, as a co-owner, employee or family member. Other times it is a competitor, and many times it is someone you don’t yet know. Identifying your potential market is always an important step in any sale. What will be the economic and tax implications of the transfer? Will you be able to afford to transfer your ownership interest in the business and live off of the savings and retirement benefits that you have accumulated? Or, will you need to continue to draw a salary from the business? How much money will you have left after you pay income taxes? These and other related questions must be answered before any successful transition can occur.
Business owners should plan for
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So when is the right time to plan for succession? Ideally, before you start the business, because the choice of business entity can have an effect upon the method of transfer and can also have tax implications.
Historic
These are some of the basic questions that need to be addressed before any of the actual details of the transfer, such as price, closing date, payment method and documentation can begin to be addressed. These are not decisions that can be made quickly or without the input of others. A successful transition of a business involves many months of planning and no small amount of anxiety. The transferring owner will almost certainly need the input of their immediate family and will want to assemble a professional team to assist in the many technical details. That team will have at its core an accountant and an experienced business attorney.
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Ronald P. Hammer | www.averbeckhammer.com
Every business owner plans for “success.” However, many fail to plan for “succession” soon enough. Far too often successful businesses fail, or a least founder, at the time of change in business ownership. There are many reasons for this, but often the source is a failure to plan far enough in advance for the transfer of ownership.
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When do you want to transfer the business? Some people want to retire early enough to enjoy a long and healthy period of retirement. Other people never want to give up control of the business. If you are not realistic about this, there can be many problems after the transfer has occurred.
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Other professionals are often involved, including the commercial lender, insurance agent and a business broker. This story was provided by Ron Hammer of Fond du Lac, attorney at law.
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Estate Planning:
An area of many
important choices By Terrence J. Gaffney, Attorney at law
Estate planning has many facets. Estate planning for death has three major purposes: 1. to designate someone to administer your property and affairs after your death, 2. to designate who receives your property and how they receive it, and 3. if you have a particularly large estate, to minimize or avoid estate taxes.
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For passing property at death, most spouses choose to own their property jointly with right of survivorship (commonly called “survivorship marital property” in Wisconsin.) On death, all assets pass without probate to the surviving spouse. The changeover is usually automatic, though sometimes a “termination of decedent’s property interest” form must be completed and filed.
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While you may not be there to see it, if you care about those close to you who are left behind, one of your main goals should be to plan so that the transition is made easier for them.
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(called the “executor” in most other states) whom you trust to be fair and reliable, who will file a probate proceeding (when required), compile your assets, pay your bills, file necessary tax returns, and distribute all of your assets to your heirs and beneficiaries as your will directs.
Trusts are more complex and therefore more costly to prepare than wills. Under Wisconsin’s informal probate laws, probate is no longer that big of a deal. Whether a living trust is right for you requires careful analysis by you and your attorney.
Wills can be changed up until death (if you are competent.)
Can you avoid probate without a trust?
Some wills can be simple. Planning for beneficiaries too young to handle an inheritance is more complicated, calling for “minors’ trust” provisions.
Yes. If you hold property jointly with right of survivorship, or designate death beneficiaries on your bank accounts (payable-on-death, or “POD”) or securities accounts (transfer-on-death, or “TOD”) or real estate (retitling it with a transfer-ondeath, or “TOD” deed), and have proper beneficiaries on annuities, insurance policies, IRA’s, etc., these assets will pass automatically without probate.
If estate taxes are a potential issue, wills can be much more complex, requiring complicated “credit shelter trust” provisions. Such wills must be very flexible so that they also cover what happens if all of the beneficiaries are “of age,” or if estate tax is no longer a concern. Skilled estate planning professionals are particularly important here. Other than joint tenancy, are there other ways to avoid a probate proceeding? Yes: many. For the past 20 years or so, revocable, or “inter-vivos” trusts (also commonly called “living trusts”) have become increasingly popular. Trusts are usually much lengthier and complicated documents than wills. They are effective when signed, and during your lifetime you can always change or revoke them. To work best, the trust should own all your property and assets. You handle things normally, and make decisions like you always did, except that you do so as the “trustee.” If you become incapacitated, or at death, a successor trustee (someone capable and trustworthy whom you appoint in your trust) takes over. Until death, you list all the trust income on your own personal tax returns. After death, the trust continues on. The successor trustee holds, or distributes, the assets in your trust much like a personal representative would in a probate. But, since the trust owned all your assets, and it was you who died, not the trust, there is no probate. The same kind of minors’ trust provisions, and tax-saving credit shelter trust provisions, that you may use in a will can also be in your living trust. Living trusts do not shelter or protect assets from creditors or from the nursing home. While probate is avoided, certain administrative steps, and tax returns, are still required.
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If all your “probate assets” total less than $50,000, they can be transferred by an “Affidavit of Transfer,” without probate. Here again, advice from a professional is important to make sure your estate correctly goes where you want it to at death. What do you do for lifetime planning? Powers of attorney are extremely valuable tools. A financial power of attorney appoints a trustworthy agent to pay your bills and administer your affairs for you during times of illness (you’re housebound and just can’t get to the bank), incapacity or mental incompetency, or unavailability (a vacation or lengthy work assignment out of town, for example.) A power of attorney for health care appoints a trustworthy agent to interface with physicians and medical providers in respect to your medical treatment or end of life decisions when you have been declared incapacitated to do so.
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This is how you choose if you don’t want artificial life support in event of a persistent vegetative state. This can be supplemented with a “living will,” if appropriate. There is also a form (“authorization for final disposition”) by which you can prescribe what you want for your funeral and burial. When it comes to estate planning, there are many choices. Unfortunately, this is not an area where one can truly say, “It’s never too late to plan.” Terrence J. Gaffney is a Fond du Lac attorney.
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You’ll probably need a financial planner, a certified public accountant and an attorney, Brill says. Your attorney and accountant can help you navigate tax and legal issues related to the estate. Your financial planner can help you develop long-term strategies for your money, he says.
• Pay attention to taxes. — Consider this scenario: You inherit an individual retirement account worth $150,000 and decide to cash it out and pay off your mortgage. You’re out of debt, but the additional income pushes you into a higher tax bracket, resulting in a big tax bill.
• Don’t quit your day job, at least not right away. — While the temptation is strong to tell your boss what you think of him, your inheritance will last a lot longer if you continue working, says Mark Bass, a financial planner in Lubbock, Texas.
These types of missteps are common when individuals inherit IRAs and other pretax retirement plans, Brill says. Depending on your situation, you may be better off setting up a stretch IRA, a strategy that lets you take annual withdrawals from the IRA based on your life expectancy. This allows the inherited IRA to grow tax-deferred for years.
For example, suppose you inherited $1 million. You could quit your job and try to live on your inheritance. Alternatively, you could keep your job, invest the money and give yourself an annual “raise,” Bass says.
Seek advice to avoid
mishandling
inheritance By Sandra Block | USA TODAY Chelsea Logan was a month and a half away from her 21st birthday when her father died suddenly from a heart attack. As her family struggled to cope with the loss, she received another shock: Her father, a longtime federal government worker, had left her $167,000. “To hear that amount at 20 years old is kind of mind-boggling,” Logan, now 23, says. Logan, a finance major at George Mason University in Fairfax, Va., used the money to start her own business. “My inheritance has been a huge blessing,” she says. “I’m an entrepreneur at heart.” More than $41 trillion will be transferred to heirs over the next 50 years, the largest transfer of wealth in U.S. history, according
to the Center on Wealth and Philanthropy at Boston College. Much of that wealth will be passed on to people who are already affluent and presumably schooled in how to manage an inheritance. But for those who are accustomed to living paycheck to paycheck, even a modest windfall can present daunting challenges — and significant risks. USA TODAY asked financial planners and actual heirs for advice on how to manage an unexpected inheritance. Their suggestions: • Take your time. — Don’t make any major decisions or purchases until you’ve consulted with advisers who will help you make sound choices about your money, says Mitch Brill, a financial professional with MassMutual. Some financial planners recommend putting the funds in a money market fund or other low-risk investment for at least a year.
Under the 4 percent rule — which not all financial analysts agree with — you can theoretically make an investment portfolio last indefinitely by withdrawing 4 percent the first year and adjusting withdrawals by the inflation rate every year after that. On a $1 million inheritance, that’s an initial $40,000 bump-up in pay. “Some of my happiest clients invested the money and didn’t quit their jobs,” Bass says. • Be discreet — It’s not unusual for parents to leave different amounts to their children, so revealing the amount you’ve inherited could lead to family discord, says David Bakke, editor of Money Crashers, a personal finance blog. Discretion will also reduce the number of unwanted tips and investment pitches from friends and family members, says Bakke, who received an inheritance from his parents. At the same time, inheriting a large amount of money can lead to isolation, says Anne Ellinger, co-founder of Bolder Giving (boldergiving.org), an organization that helps heirs become philanthropists. “I would encourage people to tell some trusted and intimate friends, especially if it’s overwhelming or upsetting,” she says. • Address pressing financial needs first. — Before you buy a boat or invest in a business, pay off credit card debt, student loans and other high-interest debt, says Joseph Montanaro, financial planner at USAA. Make sure you have a rainy day fund that will cover at least six months of living expenses. You should also review your insurance policies, particularly liability coverage, Montanaro says. A large inheritance makes you “a more lucrative target” for litigious individuals, he says.
n Be true to your values. — In 1981, Christopher Ellinger’s grandmother left him $250,000. He and wife Anne, then in their early 20s, were working as community activists and made very little money. “He got a call saying, ‘Your portfolio’s in the mail,’ and he said, ‘What’s a portfolio?’” Anne Ellinger recalls. Christopher and Anne decided to use the money to learn about financial planning, socially responsible investing and philanthropy. That led them to create More Than Money, a non-profit education initiative for philanthropists, and later, Bolder Giving. Before Christopher’s grandfather died, they asked him to leave Christopher’s portion of his estate — about $300,000 — to charity. “We knew we already had enough,” Anne says. Chelsea Logan realized that she wanted to have more of a say in how her money is invested. She initially invested part of her inheritance with a well-known brokerage firm but felt that her financial adviser wasn’t interested in listening to her views. She withdrew the funds and put them into a no-load mutual fund account, where she makes her own decisions. That’s not the only change Logan made after she received her inheritance. She initially set out to design luxury travel bags, but after a year and a half was overwhelmed by stress. Conscious of her family’s history of heart problems, she took a couple of months off and founded a business that focuses on health. Her company, Satissimi, sells yoga wear and provides life coaching. Logan says her father, who was only 57 when he died, never took a vacation. “He had all of this money, and he never enjoyed it,” she says. “I decided I was going to pave my way and do something I really love.”
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