You’re someone who has worked hard to achieve success, and you’re seeing the rewards in the lifestyle you now lead, or you are part of a successful family responsible for its continuing legacy of success. You may be emerging in wealth or possibly part of an expected transition of wealth from a prior generation. Regardless of how you might align, you represent a segment of the population with control over significant assets. Some examples include Liquid/Investable, Accounts, Real Estate, Vehicles, Collections, Watercraft…etc. They require a well-thought-out plan to protect them, otherwise, they may be at significant risk.
Most often there is a significant focus on protecting these items from diminished value due to some type of direct physical loss, such as fire. However, many successful individual’s/families’ lifestyles include ownership of multiple properties, sitting on non-profit boards, hosting events, employing domestic staff, social media engagement, travel, and many other activities. These activities present blind spots and vulnerabilities that require additional focus in your asset protection plan.
According to Forbes, most plans incorporate three key pillars in their plans: Joint-Ownership, Trusts, and LLCs. While these are viable tools depending on the specifics of the need, Joint-Ownership and Trusts do not work or apply the same protections across all states. Also, there are limitations on the protections an LLC can afford certain personal property. In summary, one tool is not the solution; you need a comprehensive plan that considers all aspects of your assets.
Interestingly, the number one pillar identified in the Forbes article is Liability Insurance. While the article cites several strategies like those outlined, there is another clear reason for incorporating Liability Insurance into an asset protection plan. That is, the increasingly litigious environment[ Civil Filings for June 2023] we live in. Both the frequency and severity of civil suits have surged dramatically in just the past few years, and that trajectory is expected to continue. Having a higher profile as a successful individual increases the possibility of an injured party pursuing a civil suit as a means of recovery.
What then is the recourse? As with all aspects of your asset protection plan, identifying qualified professionals to assist you is critical. With the establishment of a Trust, you may need the services of an Estate Planning Attorney. There are professionals who specialize in the establishment of LLCs (CPAs, Attorneys, etc.). When you consider protecting your investible assets, there are Wealth Managers and Financial Advisors with whom you consult. However, there is a need for collaboration between these professionals as an expert team to create alignment within an asset protection plan. The purpose of this alignment is to identify the weaknesses within the plan as early as possible and take corrective steps. Successful individuals have significant assets and lifestyles that may be vulnerable to risks that may not have been considered. However, understanding that gaps potentially exist in an asset protection plan is the first step. There is an even greater hazard that increases the risk creating vulnerability to an asset protection plan. That hazard is time. Inherent in the lifestyle of successful individuals and families is that their lives change in substantial ways and often very quickly. It may be a new acquisition or liquidation of property or assets. Therefore, the more time that passes without engaging a professional to review the pillars of the plan, the more susceptible the plan is to deficiency. It is paramount that the plan incorporates regular interaction to ensure stewardship of the interests and assets in the charge of these professionals. If you’re looking for assistance with the first pillar of Liability Insurance, a Private Client Advisor can help. At CRS Insurance Brokerage, we specialize in Personal Insurance Risk Management Solutions. We work collaboratively with other professionals to provide the best protection for your tangible assets.