Why We Wrote this Book

Like our own families, your family needs Wealth Protection planning.

Between the two of us, we give nearly 100 seminars per year.  Invariably, we begin each talk with a lawyer joke and a brief case study. The lawyer joke usually lightens the mood and the case study illustrates the dangers of inadequate Wealth Protection planning.  As we start this book, we have decided to share our own families' experiences.  We are not going to pull any punches or exaggerate in any way.  We don't need to.

In fact, what happened to our families motivated both of us to go into the field of Wealth Protection planning.  To say it bluntly, we entered this field - and wrote this book - to help other families avoid the financial pain and emotional suffering that our very own families endured.   

When you read this book, remember that the two of us are not only authors and well-known advisors, but we are also members of families who were deeply impacted by positive and negative Wealth Protection planning.  From our stories, you will see why Wealth Protection planning is fundamental to the long-term security of every family, including yours.  If, after you read the book, you are still left with a yearning for good lawyer jokes, visit our website www.wealthprotectioninc.com and you'll be sure to get your fill.

Chris' Story
I must preface this story with the fact that my mother, Dorothy, is a very proud woman. She doesn't like people to know about her problems and rarely asks for assistance.  Dorothy is also the kind of woman who cares deeply for everyone around her, has many friends, and will always sacrifice herself for the happiness of others.  Her sense of caring won out over her sense of pride.  When she heard about my new book, she asked me to use her story in an effort to help others help themselves.  For this, I am grateful.

My stepfather Tom was a successful attorney.  He came from a wonderful family and had a great sense of family values. More importantly, he loved my mother and treated her with the most respect and admiration I have ever witnessed in any relationship.  He also treated his children and stepchildren very well and was extremely generous in sharing his success with all of us.  He was a wonderful man, worthy of a relationship with my mother.

My mother's relationship with Tom was particularly rewarding for me because I had watched my mother struggle financially to take care of us (her three small children) for years. She tried so hard to give her children the perfect childhood.  She worked multiple jobs to try and pay the bills, but never let us know how bad things were financially or how much her divorce from our father hurt her emotionally.  It wasn't until after I saw how happy Tom made her that I realized how stressed, frustrated and unhappy she was before she met him.

Like most children, especially one in high school who still idolizes his father, I didn't know how to react to a new stepfather.  But, when Tom swept my mom off her feet and made her truly happy for the first time in over a decade, I couldn't do anything but embrace him.  I was thankful that someone was able to make my mother as happy as she made everyone around her. 

It seemed as if life was repaying my mother for all the sacrifices that she had made.  Not only was Tom the most loving and caring person she had ever met, he also made a very good living.  Instead of scraping to pay the mortgage on a small home, she and Tom bought their dream home in the suburbs - a beautiful English Tudor with a bedroom for each child and stepchild.  They also bought a summer home and some rental real estate.  They even had the ability to vacation twice per year and take the children on some of their trips.  I bet Mom felt like she was Cinderella and her life was forever changed for the better.

Unfortunately, midnight approached and the ball was ending.  Only two years after marriage, Tom was rushed to the hospital with internal bleeding.  I was away at college and my mother called me to tell me things were ok and that Tom would be in the hospital for a week or two for some tests.  Like any obedient child, I disregarded my mother's wishes and rushed home.  When I arrived, I was relieved to find Tom in good spirits and alert.  He told me to go back to school and take my exams.  He said he'd see me at Christmas. 

I returned to school focused to finish my first semester at The University of Rhode Island.  On the night before my first exam, I received a phone call. It was my mother.  Tom had some complications and he had just passed away - at the age of 39.  Mom said that she would be fine and that I should just stay at school.  I left school and drove home immediately.  This would be the worst Christmas of our lives.

As you would expect, the emotional healing process took a very long time.  Unfortunately, that would not be the only pain.  Because Tom had property in numerous states, the probating of his will took almost two years.  During that time, my mother was unable to sell the properties to interested buyers and had to use the modest insurance proceeds to pay bills and the 11% interest rate mortgage on their dream house.

To make a long story short, because of their failure to plan for the worst, within 5 years of Tom's death, the high mortgage payments on all the property and the subsequent real estate downturn destroyed Mom.  She couldn't make the payments anymore and couldn't find a buyer either.  The impact of the recession on New England in the late 80's was severe. Even though interest rates were then approximately 30% less than what she was paying, the banks denied her refinancing because she did not "qualify" for that size loan based on her income. 

In the end, Mom lost her house and all of her property and was forced to file for bankruptcy. This meant she had to leave her dream home, move to an apartment, and ask her boss to cosign on the rental agreement.  Now, her pride, as well as her heart and pocketbook, had been damaged by the tragic loss of her husband. 

Even though Tom was a successful attorney who had an estate planning division in his own law firm, he hadn't done the necessary planning.  Why?  He didn't think he would die and probably hadn't thought about the financial repercussions of the worst-case scenario.  Though there is nothing we could have done to prevent Tom's passing, a few basic planning ideas could have saved Mom's pocketbook and pride. 

David's Story
My Uncle Steve is very close to my immediate family.  Uncle Steve made it a point to participate in the lives of all his children and nephews.  In fact, I can't remember any of my basketball games or water polo matches when he wasn't in the stands cheering. 

Steve is a real estate developer who owns primarily residential properties.  Back in the late 1980's, he was involved with a residential condominium project outside of Hartford, Connecticut.  As part of the deal with the primary bank, Steve had to personally guarantee a $2.5 million loan to his company. $2.5 million was more than twice Steve's entire net worth and he had never signed that large of a guarantee before.  Nevertheless, Steve, like many entrepreneurs, had supreme confidence that his project would sell out quickly and that the loan would be paid on time without a problem.

Despite his confidence, my Aunt Karen had reservations from the outset. While Steve slept soundly, Karen always fretted about the debt.  In her mind, it hung like a dark cloud over their financial security.

Unfortunately for Karen, her worst fears came to reality.  It seemed that just when the construction crew broke ground on Steve's project, the economy began to turn sour in the New England area.   By the time the construction was complete and the condos were to be sold, the local real estate market was dead.  Buyers were few and far between.  Even though Steve and his team had brought the project in on time and within budget, the turn in the economy was too powerful to overcome.  Sales were much too slow to cover the loan payments to the bank, so with every additional week, the debt continued to build.   By the time the last condo was sold, the loan had been called.  Steve owed over $1 million personally to the bank.  It looked as though the same problem that devastated Chris' family was about to hurt mine.

By this time, the stress on Karen was taking its toll.  She had trouble thinking of anything but their financial problems and grew depressed.  She even developed a nervous habit with her hands as a result of the stress.  Our family tried to be positive and comforting, but there was little we could really do.  Even Steve, the eternal optimist, couldn't imagine a positive solution.  As close family members, we saw the fighting and increasing marital stress.  We also knew their ultimate fear: that they might lose everything in bankruptcy.

Fortunately, my family's story ended more positively than Chris'.  Before moving forward with any negotiation with the bank or with the bankruptcy process, Karen and Steve went to see an asset protection attorney.  Incidentally, this is the same attorney with whom Chris and I have worked on many cases.

The attorney advised them to follow a detailed plan which involved, among other tactics: (1) paying the loan sporadically with small payments in an effort to buy time, (2) establishing and funding a pension for Steve and the 2 other employees of his company, and (3) moving to Florida, where they would eventually file for bankruptcy protection (the move, by the way, wasn't so dramatic in their case, as they were spending much of the winter in Florida anyway).

Karen and Steve followed the advisor's plan to a "t."  While enduring the bank's pressure to pay was certainly stressful, and moving to Florida was a sacrifice, their plan proved to be successful.  When their bankruptcy hearing took place some 2 years later, the bank in Connecticut did not even participate.  The bank had written off the loan and taken it off their books.  In fact, Steve's particular loan officer was no longer with the bank.

Following their wealth protection advisor's plan, Karen and Steve were able to shield the lion's share of their savings, paying out only $30,000 to creditors and protecting nearly $1 million.  Most importantly, Karen and Steve were able to put this one major wealth threat behind them and preserve what they had worked so hard to build.  I can happily report that their family finances and marriage are now more secure than ever, although the lingering effects of their ordeal is still evident to those who know and love them.

From our two different stories, you should have learned two things: 1.) Wealth Protection solutions can turn a potentially devastating bankruptcy into a minor loss; and 2.) Lack of advanced planning can cause unnecessary financial and emotional stress.  Why did Dorothy lose so much more than Karen and Steve?  The tragedy of Tom's death was an event that could neither be reversed nor delayed while strategies could be put into place for Dorothy.  Karen and Steve were luckier, as their debt problems could be prolonged while their planning took hold.  The ability to do some Wealth Protection planning was truly the difference.

Even though Karen and Steve kept their wealth, their situation took its toll on them emotionally.  If they had implemented Wealth Protection planning in advance, however, they would have been reassured that their wealth would be safe, despite the bank loan.  This would have significantly reduced the stress on Karen and her marriage. What, do you think, Karen would have paid to have avoided that stress over those 3 long years?

Is your family like ours?
Do our stories seem familiar to you?  Could you see the lack of prior-planning hurting your family like it did Dorothy?  Would you know whom to turn to if you were in a situation like Karen and Steve's?  These are the two situations that affected our families directly.  In our law and financial planning practices, we have helped literally thousands of clients avoid many different "wealth threats."  If you can't identify with Dorothy, Karen or Steve, maybe you can identify better with one of these people:

• Dr. Bill loses what he thought was a frivolous lawsuit and had to come up with $2,000,000 in damages.

• Larry and Wendy pay over $100,000 per YEAR in income taxes.

• Dave fell off a ladder painting his house, hurt his back and couldn't work for over 9 months.

• Julie seems to get modest returns while paying significant taxes on her investments.

• Jim runs a successful business but lives frugally while he sees owners of similar businesses enjoying much better lifestyles.

• Mike and Shelley now have children and have no idea what legal documents or insurance products are right for them.

• Daniel and Andrea's son just got accepted to an Ivy League school but they can't afford to send him.

If any of these situations are of concern to you, then Wealth Protection planning (and reading this book) will help you considerably.  That's because, in this book, we will show you solutions to all of the scenarios above.   You'll learn how Dr. Bill could have shielded his $2 million from that lawsuit.  You'll also see how Larry and Wendy can reduce their income tax bill by over $100,000 (or more) per year.  From Dave's disability situation to Daniel and Andrea's educational funding challenge, comprehensive Wealth Protection planning addresses them all.

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