Wealth Protection: Avoid Losses with Trusted Advisors
In order to need wealth protection, you must first create wealth. It is difficult to create wealth if you are unable to preserve it.
Every time you lose a dollar, it is not just a dollar lost, but a compounded dollar lost. When you are able to hold on to that dollar, your wealth will compound from a higher floor.
There are many different ways that a Loss can occur including: Fees, Taxes, Penalties, Frivolous Spending, Lawsuit Judgments, Risky Investments, and Loss of Income (just to name a few). It is always a good idea to pay for the time and expertise of people who devote their lives to understanding and preventing loss in all of these areas.
The Key Takeaways to avoid losses
- When you protect your wealth, compounding growth allows you to build on a much larger base.
- There are an infinite amount of ways you can lose your wealth.
- Expert trusted advisors’ will help you identify these risk and will be able to suggest solutions to protect your wealth based upon your level of risk tolerance.
Reduce (Prevent) Losses and your Wealth will Grow
Anytime you can avoid a loss, you will preserve wealth. Below are five areas in which losses commonly occur:
A person’s income is rarely guaranteed. Income can be lost due to unemployment, or unexpected illness or injury. It is generally best to have adequate disability insurance, health insurance, and a rainy day emergency fund that will cover at least six months of lost income. This will help to preserve the rest of your wealth until you recover or find other income.
If you have a loss on property that is not insured for its full replacement value, you will pay for the uninsured part of that loss out of your own wealth. Periodically review the full replacement values of your property and maintain adequate insurance. In addition, if you get married you may want to consider speaking with a lawyer for setting up a strategy on how to keep your assets separate. In California, if you deposit your separate property into a joint account with your spouse, there is a good chance that the money will become “commingled” . This can lead you to having to split the assets with your spouse in the event of a divorce, or having to pay high attorney and accountant fees to try and trace the assets to keep them separate. Either way, this call be avoided by some up front planning.
Choose your investment manager carefully. Ask how losses can be avoided. Look at past performance history of each investment, but be aware that one with the highest returns may also have the highest losses and a volatile historical record. Take the time to review your asset allocations, investment manager’s performance, and level of risk, and make changes when necessary.
If you have any investment real estate that has renters, consider putting that real esate into an Real Estate LLC, to protect your personal assets from claims made by the renters.
Most people think about income taxes when considering tax management. However, other taxes are also important to manage, like capital gains taxes or matching gains and losses when selling investments or property. An experienced estate planner can help you with estate tax planning and income tax planning for wealth transfers during your lifetime and after death, including the sale or transfer of a business.
Many fees, such as investment product fees, trading expenses, and insurance product surrender charges, can be avoided or lessened with a comprehensive financial plan. It is important to periodically review the total fees that are being paid for managing your money. Keep in mind that it is not uncommon for a financial advisor to have a fee that they charge annually to manage your money, and that the investments that they choose may have an additional fee. Fee’s are not bad for good service, however, just make sure that you understand exactly what you are paying.
Summarizing Wealth Protection: What You Need to Know
An experienced estate planning attorney well versed in setting up trusts, can also help you shield your family and your assets from probate court interference at incapacity and death, unintended heirs, unnecessary legal fees and taxes, and lawsuits.
Additional Actions to Consider
- If you need an advisor who specializes in a certain area, ask for referrals from other advisors, your banker, friends and business acquaintances. If you start hearing the same name several times, you’re probably on the right track. You can also check websites for reviews such as Avvo.com, Yelp.com, the Better Business Bureau, or Google+.
- Take the time to research and understand any strategies that are being recommended to you. An educated consumer is a smart consumer.
ODGERS LAW GROUP focuses on Business and Estate Planning and can help you create a master wealth protection plan. To learn more about wealth protection, estate planning, business planning or to schedule your free consultation with and attorney from Odgers Law Group, contact us by e-mail, call us at (858) 869-1114, or schedule your appointment online here.