The past two years have been quite the rough and rocky experience for families across the world. While many of us are still doing relatively fine and can’t wait for Christmas evening, there’s no denying that everybody’s been through hell and back, making ends meet. In fact, we wouldn’t be surprised if households are a lot more financially resilient and aware of the strategies they should use to keep their families afloat, just in case the Omicron variant risks suddenly go from bad to worse.
However, we’ve seen many families share a shortcoming in their investing strategies and financial matters: failure to include long-term asset protection and future estate planning for their children’s inheritances. And while media and news outlets often portray this financial intervention measure as something limited to the top 1%, asset protection is a lot more important than you may initially realize, especially when creditors come knocking on your door or a civil lawsuit finds its way to your directory.
Don’t Mix Different Financial Concerns Together
Your family’s hard-earned assets and wealth are often put at risk when you accidentally mix in said personal assets with business-owned resources. If your startup goes under or is exposed to significant obligations, then they’ll know where to attack next. Plus, business problems barely scratch the surface of risk exposure for family assets. Given their uncertainty, a combination of asset protection strategies should secure your family finances.
- Utilize a Family-owned Limited Liability Company: Firstly, a common solution that most entrepreneurs and forward-thinking families utilize is the creation of a family-owned limited liability company. Sure, different states may operate on unique regulations to ascertain their function, but all LLCs offer asset protection and help maintain control over your assets. Plus, it’s a lot easier to plan inheritances while limiting the estate taxes your beneficiaries will incur, and it’s not just for liquid cash but also other forms of property.
- Don’t Slouch on Your Roth IRA For Tax Benefits: Of course, we don’t expect every family to need an LLC for asset protection, and if your monthly income doesn’t require as huge of an investment, then investing in your Roth IRA will do just as good. Sure, you may not be able to pull your cash out as early as you want and will need to pay fees upfront, but it does give you a nest egg of tax-free retirement income in the future. Furthermore, you can also incorporate inheritances in a distribution layout.
- Actively Invest in Quality Life Insurance: If there’s one thing we’ve learned from the global pandemic, then it’s the fact that unpleasant circumstances and external threats can swoop in and cause unimaginable pain when we least expect them. But instead of prolonging the agony for when it happens, we firmly believe that actively investing in life insurance helps lessen the blow. Yes, your family still deals with loss, but at the very least, it doesn’t sap away all your hard-earned wealth, and insurance payouts are tax-free.
- Consider Offshore Banking and Investing: Last but not least, if you’re planning to go abroad and move to a different country with your family, then another excellent asset protection vehicle to consider is offshore banking and investing. Sure, we won’t deny that these methods often get a bad reputation as shady, but they are perfectly legal and can provide tax havens for your assets. Plus, with the emerging banking technologies improving financial tech, you can expect greater security as well.
If Planning Fails, Don’t Shy Away From Professional Guidance
In contrast, there are instances when worst-case scenarios happen, and you’ll have to bear the consequences and challenges that follow the risk on your family assets. However, instead of representing yourself and trying to do things your way, reach out to professional legal guidance to navigate the case more carefully.
- Seek Legal Counsel ASAP: Whether it be contacting the family lawyer or talking to a reputable process server, seek legal counsel as soon as possible to avoid making any undue mistakes that would result in further damages on your end. Yes, it will cost you money, but it’s a lot more affordable than having to lose a large portion of your hard-earned wealth from a lawsuit. And, if you’re lucky, you could get away with advantageous settlement terms.
- Always Prepare An Emergency Fund: When seeking legal assistance, prepare an emergency fund beforehand to keep you solvent and to pay any upfront expenses on immediate obligations. At the end of the day, there’s no telling when the worst things happen, so it’s much better to be ready and prepared for when they occur instead of having empty pockets and a head full of problems.
Bringing Family Finances into the Spotlight
Overall, it’s about time that families actively included asset protection and estate planning in their family financial groundwork. While it shouldn’t prioritize urgent matters, it shouldn’t be held as an afterthought. So when you get the chance to sit down with your spouse, we recommend exploring the measures mentioned above and discerning which works best for your family.
