You Need Wealth Protection Planning
What is "Wealth Protection Planning?"

Key Concepts Essential to Understanding Your Plan
1. Multi-disciplinary
2. Process
3. Shielding
4. Your Wealth
5. All Internal & External Threats
Conclusion

Before we begin addressing your Wealth Protection planning needs, it is crucial that you understand exactly what Wealth Protection planning is. Without a complete understanding of the field of Wealth Protection planning, it is nearly impossible to oversee your own wealth in an effective way for the long term.  We have put together a working definition that will serve you throughout the book and in your personal planning:

Wealth Protection Planning (WPP) is a multi-disciplinary process of shielding your wealth from all internal and external threats.

While we have a fairly short definition, there is more here than meets the eye.  In fact, there are 5 distinct concepts in this definition that are important for you to grasp before continuing the book or beginning your individual Wealth Protection planning. After you truly understanding what WPP is, you will have a greater appreciation for the value of this book to your overall financial situation. 

Concept #1: Multi-disciplinary
Protecting and growing your "wealth health" is like maintaining your physical health - you need to draw upon the knowledge of many specialists with the oversight of a generalist. During your lifetime, you will undoubtedly spend more time with your primary physician than with any other doctor.  However, the average person interacts directly with at least five other specialists and possibly indirectly with dozens more. 

As a young child, you may have developed allergies and saw an allergist (ENT), broken a bone and saw an orthopedic specialist or become concerned with your acne and consulted a dermatologist.  You may have had your tonsils or appendix removed and had experience with a general surgeon and anesthesiologist. Females will eventually consult a gynecologist and, perhaps, an obstetrician.  As most of us get older, we will unfortunately have reason to consult a urologist, cardiologist, oncologist, or other specialist.

Throughout your life, you will probably consult with at least 5-10 doctors from different specialties and sub-specialties.  Different challenges require distinct expertise - and you will likely do the best you can to get the advice you need.  In this way, your physical health demands a multi-disciplinary approach.  This doesn't make us hypochondriacs - it makes us smart!  We just want the best services available to us.

The same principal of using a multi-disciplinary approach should also apply to your financial "wealth health."  Unfortunately, most of us are not as adamant about using this approach in our financial planning as we are for our healthcare.  Believe us when we tell you that very few clients have addressed their "wealth health" with a combined legal-financial approach.  Most prospective clients show the symptoms of a Wealth Protection plan that lacks a multi-disciplinary interaction.  Does yours? How would you answer these questions?

• Do you write a check for any of your life insurance policies?

• Do you have separate firms handling different portions of your investments (pensions, IRAs, brokerage accounts, etc.)?

• Did you have a lawyer friend (not a specialist) draft your will or any of your more complex estate or tax documents?

• Have you put off funding any of your trusts or other legal entities?

• Is there a chance that your accountant, lawyer, insurance advisor, broker, and financial planner don't meet together at least once annually to review your particular situation?

If the answer to any of these questions is "YES," then you are a prime candidate for WPP and you will benefit greatly from this book.

One of the reasons we have been so successful in our practices is that we coordinate the legal planning (David and his firm), the financial/insurance planning (Chris and his firm), and the accounting functions (typically, our contacts or the client's existing advisor) so that the client's plan works seamlessly.   As an example, let's start with the first bullet point above. 

If a client of ours needs life insurance, Chris will search among hundreds of products to find the right policy for the client.  Meanwhile, David will draft the irrevocable life insurance trust (ILIT) (the reason why is described in chapter XX) to make sure that it complies with the client's goals and maximizes tax and asset protection.  Then, Chris will make sure the trust purchases the policy to keep the proceeds out of the client's taxable estate and to avoid the IRS' 3-year "look back" restriction (discussed in chapter xy).  Finally, we will both will make sure the client's accountant is up to speed on what the tax filing responsibilities are.  The benefit to the client from this simple transaction could be as much as $275,000 on a $500,000 insurance policy.  Multi-disciplinary, experienced, and coordinated - that is the way superior Wealth Protection planning should be delivered.

Concept #2: Process
Wealth Protection planning is not a one-time event.  Rather, it is a process - one that continues from the beginning of one's earning years until at least one year after death.  Just as life brings a constant flow of change, so is the challenge of Wealth Protection planning a continuous one.   Why is this so?  There are a few reasons.

One important reason WPP is a continuous process is that your priorities will change over your life.  In the early stages of your career, before you have a family, wealth building may be the only focus of your plan.  When you're only supporting yourself, you have little regard for an estate plan or insurance planning (life, long term care, etc).  In the middle stages of your career, as a family enters the picture, a greater focus is shifted to providing for your family. At that time, creating a basic estate and insurance plan becomes important.

As you earn more income and build greater wealth, you begin to focus more on asset protection planning and tax reduction.  In the later stages of your financial life, retirement planning will be primary.  During retirement, most clients begin to focus on their estate planning - though you'll start earlier after reading this book.

WPP must continuously change in response to the dramatic events that always seem to invite themselves into our lives.  A birth of a child, a divorce, a windfall investment, a premature death of a spouse, a large inheritance, a failing business, a disabling disease or injury - these are just a few of a thousand events which will require a significant modification to a family's Wealth Protection Plan. In many cases, like the case of Tom's death, the events cannot be anticipated.  However, advanced planning can reduce the potential loss and subsequent modifications to the plan can help put us "back on track" to reaching our goals. The case studies throughout the book will help illustrate this fact. 

Concept #3: Shielding
The basic concept of "shielding" is simple - protecting what's yours.  In this book, we will discuss how to protect your wealth from various risks. Chapters [xx] cover "shielding" assets from lawsuits, chapters [xx] show how to protect your income from disability and death, chapter [xx] shows protecting savings against the devastating costs of nursing home care [xx].  In these examples, "shielding" means protecting.  

On the other hand, you may also think of "shielding" as "minimizing" or "reducing."  When we discuss shielding investments from market risks [xx] or shielding income and wealth from taxes [xx], "shielding" means reduction. 

From our experiences, we have found that clients neglect the areas of tax reduction and investment downturns more than any other. Often, otherwise bright and capable advisors have no idea what their options are to reduce income taxes.  While over 99% of the people we poll at our seminars would like to reduce their income tax burden, fewer than 1% have heard of opportunities such as 412i plans, welfare benefit plans, or captive insurance companies.  This book will fill that gap and introduce you to a whole new set of options to "shield" your wealth from unnecessary taxes.

Concept #4: Your Wealth
You have the best handle on your wealth, right? Not necessarily. We have had many clients walk into our offices with significant misconceptions about their wealth.  Fortunately, in most cases, they vastly undervalue what they are really worth.  When completing our asset questionnaire (appendix XX), clients often leave out certain bank accounts, fail to include a timeshare condo ("because it isn't worth anything yet"), or simply forget about various life insurance policies that were put in place years ago.

If we were to discuss your wealth in our offices, we would need to know about ALL of your assets.  We would go down an exhaustive checklist to make sure we do not overlook anything.  We would also ask you to give us the present and projected values of your assets and liabilities.  Why?  Because your wealth may be increased or diminished by foreseeable events...and we will need to consider this in our planning.  For example, your wealth may increase by a future inheritance from an elderly relative or decrease by a future debt that will come due.  If so, it must be weighed in the plan.  Further, you may have contingent assets, which may or may not come to fruition (like an option to purchase land if the value increases).  Again, this must be considered. 

When you complete the risk factor analysis (the RFA) in chapter 6(?), you will see how exhaustive our list of questions is.  We do not want you to leave out, forget, or ignore any asset, regardless of how small or elusive it may seem.  If a Wealth Protection plan is to be comprehensive, it must deal with ALL of your wealth. 

Another important point we must make here regards the concept of "wealth."  We know many of you, like thousands of people we speak to in seminars every year, may be turned off by the word "wealth."   In fact, the same is true for many new clients we meet in our offices.  Whether they be young or old, single or married, a certain percentage of people will say the same thing to us, when we bring up the concept of Wealth Protection planning:  "Wealth?" they say, "Who's wealthy? We're got some assets, but we're not wealthy."

Here, weHH have just come to the #1 Wealth Protection planning mistake most people make: They wrongly assume that they are not "wealthy enough" for Wealth Protection planning.

Wealth Protection planning is not just for the admittedly wealthy.  Not even close.  From the 24 year-old just beginning her career to the multigenerational family with hundreds of millions in assets, the variation among our clients is astounding.  Nonetheless, each, in his or her own way, needs some degree of Wealth Protection planning.  Whether it means developing a better risk/reward ratio in an investment portfolio, saving for college costs, reducing income taxes, protecting assets from liability, or simply creating an efficient estate plan, WPP impacts us all.  Whether you are truly wealthy or just starting out, in a high income tax bracket or a low one, an individual or the head of a family, WPP in general - and this book in particular - has much to offer you.  Do not get stuck in the "I am not wealthy enough" trap.  It is the first financial landmine you must avoid.

Concept #5: All Internal & External Threats
The final concept in our definition of Wealth Protection planning may be its most important.  That is because you will only value the importance of planning if you truly understand what we are planning against... those internal and external wealth threats. Before you opened this book, or read its cover, you likely had in mind certain "concerns" about your wealth (you may not have verbalized them as "threats"). If you are like most of our clients, income taxes or investment downturns may have been "top of mind." Perhaps you had others, like estate planning or college funding, as well. 

Regardless of what your specific "top of mind" threats were, it is imperative that you go beyond this initial gut feeling and realize ALL of the threats that could seriously jeopardize your wealth.  It may turn out, in fact, that the threat that eventually does the most damage to your wealth is one that now seems insignificant.  All the more reason why this factor is so crucial - systematically recognizing all of the threats to your wealth is actually the first step in protecting it.  In the arena of Wealth Protection planning, ignorance is not bliss.  It is foolish. 

Do not make Wealth Protection planning mistake #2: ignoring your wealth threats. While it will take time and money to learn about and protect against the threats that make your wealth vulnerable, this investment will reap great rewards. You've taken an important first step by buying this book... now take the time to read it, complete the RFA and implement the planning where you need it most.  You and your family will truly benefit.

You may already be convinced that you need to dig deeper and investigate where your current plan is vulnerable.  How do you know which wealth threats are lurking in your present plan?  The answer to this question will depend on your job, family situation, level of wealth and a host of other factors.  When you take the RFA and read your score, you will get a thorough sketch of the key threats that make your particular situation vulnerable.  That is still a few short chapters away, though.  Let's make sure you thoroughly understand the types of threats that exist before you move on.

In our analysis of a client's situation, we differentiate between "internal" and "external" wealth threats.  The difference, essentially, is the source of the threat.  Internal threats come from your own situation or that of your family, while external threats are created by outside forces.  Let's examine a list of common internal and external threats now (we will generalize grossly here, as the RFA will elicit specific threats particular to your situation):

Internal Threats:

• Premature death or disability

• Need for nursing home care

• Divorce

• Mismanagement of investment funds (poor allocation, speculation, etc.)

• Lack of professional guidance

• Poor choice of advisors

External Threats

• Downturns in the investment markets

• All types of taxes

• All types of lawsuits and claims

• College and other educational expenses

• Estate costs and administration fees

Divorce, disability or death of a business partner/key financial source

Conclusion
As you have learned, Wealth Protection planning involves a number of important concepts.  While our simple definition required only 2 lines, it took us over 8 pages to give you more depth to the basic definition.  At this point, you have developed an understanding of what WPP is, what our goals are for all Wealth Protection Plans, what information we need to analyze your risks, what types of expertise are required to create a plan, and what potential traps you may need to avoid.  Armed with such knowledge, you are well-equipped to continue the book and move toward the diagnosis and analysis phase.

Inserts for Chapters 1-2 (these stats aren't finalized, audited, but this is what we want to have prominently displayed to get a message across).  Perhaps in distinct boxes throughout the chapters.

There are over 2 million lawsuits filed every year

The average jury award in 2000 was up XX% up to $Xxx,000

There are over XX million bankruptcies filed each year

95% of homeowners have insurance, yet only XX% have disability insurance.  There is less than a 10% chance of a fire, but over a 33% chance of a disability

Over 45% of people will need Long Term Care, but only XX% get it

There is a 25% chance that a 30 year old will die before his/her 55th birthday

The average college tuition in 2020 will be $xxx,000

In some states, probate fees and court costs can amount to 6% of the gross estate

To preserve and build wealth, you must focus on your Personal Economy.  It's Your Economy That Counts.

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