Share The Wealth Protection By Sharing Information

If your family is anything like mine, each member has certain responsibilities. For example:

• My wife typically handles running the household and keeping our social calendar.
• I take care of the finances and bills.
• And the kids? They get the easy part – their jobs are to mess up the house, try as hard as they can to stay up past their bedtimes, and generally make us laugh.

Considering that my wife doesn’t deal with the finances at all, she doesn’t know all my usernames and passwords offhand to the sites of the various accounts we hold. That includes our brokerage account, retirement, insurance providers, mortgage lender, and credit card companies.

However, while she doesn’t have all the information at her fingertips, she does know where she can find it if she needs to. This is something you should always do.

• The Job: Let your significant other, adult children, or some other trusted person know where they can find those details in case of an emergency.
• The Benefit: The death of a loved one is difficult enough as it is without having to spend hours on the phone with customer service reps, trying to prove your right to access to those accounts.

Wealth Protection: Where There’s a Way There’s a Will

So what else should you do to protect your wealth?

• The Job: You don’t need to be a gazillionaire to have a will. And while it might not be the most fun activity, it doesn’t have to be a lengthy list with a dozen beneficiaries. But everyone should have one – even if all of their assets are going to a single person.
• The Benefit: Your loved ones won’t have to go to court to claim property, money, or investments. For example, probate can take a year to settle – even in simple cases – and can easily eat up 5% to 6% of the estate. So if for no other reason, write up a will so that your survivors don’t have to go to court to claim the property.

If you’re holding out on writing your will because you think it’s going to be too complicated or take up too much time, rest assured that there are inexpensive software packages that will walk you through the process.

And whether you’ve already got it done, or you’re going to go do it as soon as you’ve finished reading this, be sure to keep up-to-date beneficiaries on assets like life insurance policies, retirement accounts, etc. If that information isn’t correct or current, it can be quite difficult to change after the account holder’s death.

And finally, my third tip…

Trusts – A Valuable Wealth Protection Shield

Simply put, trusts are a valuable wealth protection tool that shields your assets from tax collectors and creditors. So it’s important to understand some of the most common kinds and how they work…

• Irrevocable Children’s Trust: Despite the name, these can actually be revocable and quite flexible. The assets in a trust can be distributed upon your death and paid out when the child reaches a specified age (even well into adulthood), achieves a milestone (such as college graduation), etc. It can even be delegated for periodic distributions.
• Living Trusts: These allow you to control the assets while you’re alive, though won’t be able to actually use them for yourself. Many people prefer living trusts because of their privacy advantages since the assets don’t have to go through probate.
• AB Trust: This type of living trust is an excellent tool to avoid paying estate taxes. It’s generally used by married couples with assets greater than the amount subject to estate taxes. In 2009, that total is $3.5 million.

That’s just a few of the many types of trusts. If you decide to utilize their many benefits, you’ll need to work with an attorney to ensure that they’re set up properly and in the way that you want them. While that means paying legal fees to do so, money spent on lawyers now means less time and money your survivors have to spend on it later.

A Plethora of Available Wealth Protection Options

When it comes to getting your personal wealth protection and distribution affairs in order, there are a plethora of options available. This also includes setting up living wills and a durable power of attorney.

But if you want to keep it as uncomplicated as possible, the three easy steps above will keep the business simple with minimum hassle or cost.

And at the very least, they give your family the resources they need to enjoy what you leave them, rather than spending all day arguing with a customer service representative from Citigroup (NYSE: C).

Have a good week.

Marc Lichtenfeld
Smart Profits Report