Investing Basics – Fiduciary Financial Planning to Protect Assets from Financial Predators?
Asset protection – shielding your wealth from lawsuits and other predatory attacks – can be one of the most critical parts of a sound wealth management plan. This vital area seems to be a high priority for many investors, but surprisingly seems to be overlooked in many financial plans. Lawsuits, liability, and other predatory attacks are a part of modern life for those that have accumulated some wealth. But for lack of training or other reasons, many financial planners and advisors don’t seem to focus on protecting against the many dangerous risks that insurance may not cover. But without this valuable planning, circumstances beyond your control could wipe out a lifetime’s worth of wealth, with devastating impact on you and your family. Consider – if your investment and bank accounts were taken from you, how would that change your retirement income, health care options, and your wishes for your family’s inheritance?
If you have substantial investment accounts, you may be at more risk than you realize. Many investors aren’t even aware of the simplest, most inexpensive techniques to protect their wealth. Common mistakes – like the wrong type of joint account – can needlessly create huge risks and potential losses that could be completely avoided if you had the right expertise from your advisor, broker or bank. While we try to check this as a matter of course for Camarda accounts, accounts you have elsewhere may be needlessly exposed. For instance, many couples should title their accounts as tenants by the entirety instead of joint tenants with right of survivorship if their state permits this, as Florida does. Even in states that have this, some advisors may shun asset protection planning in order to protect themselves from liability, even though it can dangerously increase your liability! Never before has technology made it so easy for predators and their attorneys to profile your wealth, target your assets, and design strategies to take what is yours. We’ve seen offshore firms set up shop that are able to very quickly and accurately model investors’ wealth and provide a report to anyone that will pay for it. Such tools can build clear treasure maps for those who would take your wealth. Probate filings, which are public record, can offer another spotlight on your wealth, one criminals and other predators can use. Living trusts are private and can easily protect against this, plus save you thousands or more in probate fees and avoid many guardianship risks, but most trusts by themselves are not very effective asset protection tools. Of course, liability insurance and umbrella policies are a must for most investors. IRAs offer strong protection in many states, but only so long as the money stays in the IRA – once you make a withdrawal, the cash can become fair game. Annuities and life insurance can offer protection too, but can be very expensive and have nasty tax surprises. Some states have very strong LLC laws that can be used as fortified family holding companies, but it can take some skill to set them up so they are likely to work if a threat appears. Camarda believes that LLC structures can offer strong asset protection when done right, which sadly is frequently not the case.