- Insurance, tax planning, legal structures, financial documents, and family matters all come into play when it comes to protecting your assets (and your family’s).
- Estate planning is not a one-and-done exercise. You need to review your plan regularly and make adjustments as your life circumstances change.
- Umbrella insurance is extra liability insurance that protects your personal assets from major claims and lawsuits above the limits of your homeowners, auto, and boat insurance.
While it’s not easy being poor, in some ways it’s simpler since you don’t have many assets to protect or worry about. All right, let’s get real for a second, because we’re not poor. We have assets and, in particular, we want to protect those assets from a variety of unfortunate things that might happen to them. Let’s walk through a few scenarios.
1. Insurance protection. You have auto insurance, homeowners insurance, and maybe boat insurance. But in case somebody comes after you personally and sues you, you want to have something called umbrella liability coverage. An umbrella policy for $1 million, $3 million, or $5 million worth of coverage is not as expensive as you think, can cover most claims, and will ensure that your personal assets are not taken from you.
2. Tax planning. Chances are you might be paying too much in taxes because you’re not planning as well as you could be. And it can be even worse after you die, because your assets could be subject to state inheritance taxes and federal estate taxes. Your estate needs to be structured properly from a tax-planning standpoint, to make sure your family is not paying an undue amount of your estate to the government’s tax coffers.
3. Legal documents, particularly in the estate arena. This relates to powers of attorney (both financial and healthcare) plus wills and trusts. It’s about making sure your wishes are funded properly and that your beneficiary designations are correct, so that all aspects of your estate plan are encapsulated and put together exactly as you want them arranged.
4. Financial structures. This is about making sure your bank accounts have FDIC (Federal Deposit Insurance Corporation) coverage and your investments are covered by the Securities Investor Protection Corporation (SIPC). It’s also about making sure that you have access to funds for a variety of contingencies.
5. Family matters. Who will be your agent(s) for your power of attorney for healthcare and property? Whomever you choose is going to make important financial and/or medical decisions on your behalf if you’re deemed mentally incapable of doing so on your own. And think carefully about who you want to be executor and trustee of your estate after you die. You want to ensure that your assets are distributed to heirs the way you planned—hopefully very simply, without a lot of difficulty or drama.
These are the five key categories of wealth protection that you should review on a regular basis to make sure all your affairs are in order.
Until next time, enjoy. Gary
Learn more about TransformingWealth™ , our proprietary approach, designed to get your arms around the big picture so you can make informed financial decisions. Ask Gary about Coyle’s TransformingWealth Preview Meeting, and schedule a complimentary consultation and start living the Good Life Managed Well™.
Gary Klaben is in our Glenview, IL office and serves our clients who are now located all over the country. He has over 30 years of experience and is the author of Changing the Conversation, The Wealth Sanctuary and co-author of The Business Battlefield. Whether advising his clients, mentoring his team, or coaching entrepreneurs, he is always simplifying complexity and motivating others to take the next action that’s right for them.
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