Wealth Protection : Build and Preserve Your Financial Fortress

WEALTH PROTECTION Build and Preserve Your Financial Fortress......Page 3
ABOUT THE AUTHORS......Page 5
Acknowledgments......Page 6
Contents......Page 7
INTRODUCTION WHY WE WROTE THIS BOOK......Page 21
PART I THE SYSTEM/THE BOOK......Page 27
CHAPTER ONE WHY THIS BOOK SHOULD COST $5,000......Page 29
THIS BOOK WILL TRANSPORT YOU TO OUR OFFICES......Page 30
YOU NEED WEALTH PROTECTION PLANNING......Page 31
YOUR ADVISORS HAVE NOT DONE ENOUGH......Page 32
CHAPTER TWO WHAT IS WEALTH PROTECTION?......Page 35
CONCEPT #1: MULTIDISCIPLINARY......Page 36
CONCEPT #2: PROCESS......Page 37
CONCEPT #4: YOUR WEALTH......Page 39
CONCEPT #5: ALL INTERNAL AND EXTERNAL THREATS......Page 41
IT’S YOUR ECONOMY THAT COUNTS......Page 43
WHICH EVENTS ARE REALLY MORE IMPORTANT TO YOUR PERSONAL FINANCIAL SITUATION?......Page 44
THE CONCEPT OF THE PERSONAL ECONOMY......Page 45
PART II CUSTOMIZING THIS BOOK FOR YOU......Page 47
CHAPTER FOUR INTRODUCING THE RISK FACTOR ANALYSIS......Page 49
SECTION A—TAX PLANNING......Page 51
SECTION B—INVESTING......Page 52
SECTION C—ASSET PROTECTION......Page 53
SECTION D—INSURANCE......Page 54
SECTION E—RETIREMENT......Page 55
SECTION F—ESTATE PLANNING......Page 56
SECTION G—BUSINESS PLANNING......Page 57
SECTION A—TAX PLANNING......Page 59
SECTION B—INVESTING......Page 62
SECTION C—ASSET PROTECTION......Page 63
SECTION D—INSURANCE......Page 65
SECTION E—RETIREMENT......Page 67
SECTION F—ESTATE PLANNING......Page 69
SECTION G—BUSINESS PLANNING......Page 72
PART III TAX PLANNING......Page 75
CHAPTER SEVEN MAKE SURE YOU DON’T GIVE AWAY MORE THAN NECESSARY......Page 77
CHAPTER EIGHT UNCLE SAM’S PIECES OF YOUR PIE......Page 79
CHAPTER NINE RETIREMENT PLANS......Page 84
BACKGROUND INFORMATION......Page 86
PLAN BENEFITS......Page 87
TWO CENTERPIECES OF WEALTH PROTECTION PLANNING......Page 88
HOW FLPS AND LLCS CAN HELP YOU REDUCE INCOME TAXES......Page 89
LAST WORD......Page 91
THE IRS GIVES YOU A BREAK......Page 92
WOULD YOU PURCHASE LONG-TERM-CARE INSURANCE IF IT WERE FREE?......Page 93
TAX BACKGROUND......Page 95
COMMON CHARITABLE GIVING SCENARIOS......Page 97
THE MOST COMMON CHARITABLE TOOL: THE CHARITABLE REMAINDER TRUST......Page 98
THE CRT’S “COUSIN”: THE CHARITABLE LEAD TRUST (CLT)......Page 100
LAST WORD......Page 101
CHAPTER FOURTEEN THE TAX-ADVANTAGED TOOL FOR COLLEGE SAVINGS—529 PLANS......Page 102
YOU, THE DONOR, CONTROL THE WITHDRAWALS......Page 103
YOU MAY CHANGE THE BENEFICIARIES......Page 106
SHORTFALL OF THE 529 PLAN......Page 107
LAST WORD......Page 108
CHAPTER FIFTEEN INCOME IN RESPECT OF A DECEDENT......Page 109
CHAPTER SIXTEEN IS YOUR TAX ADVISOR HELPING YOU OR HURTING YOU?......Page 111
OVERCONSERVATIVENESS: IF EVERYONE ISN’T DOING IT, THEN IT ISN’T WISE PLANNING......Page 113
LAST WORD......Page 114
PART IV INVESTING......Page 115
CHAPTER SEVENTEEN YOUR MONEY DOESN’T COME WITH INSTRUCTIONS......Page 117
TYPES OF RISK......Page 119
DIVERSIFICATION......Page 120
HOW DO THE CAPM AND MPT WORK FOR YOU?......Page 121
LAST WORD......Page 124
CHAPTER NINETEEN TAXES, INFLATION, AND YOUR INVESTMENTS......Page 125
WHAT IS INFLATION?......Page 126
HOW DO YOU INVEST TO PLAN FOR INFLATION?......Page 127
LAST WORD......Page 128
WHEN DO I NEED THE MONEY?......Page 129
WHAT ARE MY OPTIONS?......Page 130
LAST WORD......Page 132
WHAT IS A VARIABLE ANNUITY?......Page 133
HOW DOES A VARIABLE ANNUITY PROTECT MY INVESTMENT?......Page 134
HOW MUCH DO VARIABLE ANNUITIES COST?......Page 136
LAST WORD......Page 137
CHAPTER TWENTY-TWO LIFE INSURANCE AS AN INVESTMENT......Page 138
CHAPTER TWENTY-THREE HAVE YOU OUTGROWN MUTUAL FUNDS?......Page 139
WHAT ARE INDIVIDUALLY MANAGED ACCOUNTS?......Page 140
ARE MANAGED ACCOUNTS WORTH THE MONEY?......Page 141
SO, WHAT DO THEY REALLY COST?......Page 142
THE FINAL DECISION......Page 146
CERTIFICATES OF DEPOSIT AND MONEY MARKETS: THE NONALTERNATIVES......Page 147
PROGRESSIVE IDEAS: THREE INVESTMENT ALTERNATIVES......Page 148
STOCKS AND BONDS......Page 149
WHAT IS A CONVERTIBLE BOND?......Page 151
TIMING IS EVERYTHING: WHEN TO USE EACH VEHICLE......Page 152
LAST WORD......Page 154
PART V ASSET PROTECTION......Page 155
MORE LAWSUITS THAN EVER BEFORE......Page 157
PEOPLE ABUSE THE LEGAL SYSTEM......Page 158
ENORMOUS AWARDS FOR NEGLIGIBLE DAMAGES......Page 159
THE RULES OF ASSET PROTECTION: FRAUDULENT TRANSFER LAWS......Page 160
LAST WORD......Page 161
DO NOT HOLD ASSETS IN YOUR OWN NAME......Page 162
WHY JOINT OWNERSHIP IS SO DANGEROUS......Page 163
GENERAL PARTNERSHIPS: A LIABILITY NIGHTMARE FOR BUSINESSES......Page 166
LAST WORD......Page 169
WHAT PROPERTY AND CASUALTY INSURANCE IS......Page 170
BEST USES OF PROPERTY AND CASUALTY INSURANCE......Page 171
FIVE LIMITATIONS OF PROPERTY AND CASUALTY INSURANCE......Page 172
LAST WORD......Page 174
FEDERAL LAW GENERALLY DOES NOT SHIELD INVESTMENTS......Page 175
LIFE INSURANCE: PROTECTED EVERYWHERE......Page 176
ANNUITIES ARE SHIELDED IN MANY STATES......Page 177
LAST WORD......Page 178
CHAPTER TWENTY-NINE FAMILY LIMITED PARTNERSHIPS AND LIMITED LIABILITY COMPANIES: TWIN ASSET PROTECTION POWERHOUSES......Page 179
SIMILARITIES BETWEEN THE FLP AND THE LLC......Page 180
TWO BIG DIFFERENCES BETWEEN THE FLP AND THE LLC......Page 181
THE WEAKNESSES OF THE CHARGING ORDER......Page 182
TWO TACTICS FOR MAXIMIZING FLP/LLC PROTECTION......Page 185
LAST WORD......Page 188
DEFINITIONS......Page 189
LIVING TRUSTS: ILLUSORY ASSET PROTECTION......Page 191
IRREVOCABLE TRUSTS: THE ASSET PROTECTORS......Page 192
FIVE STRATEGIES TO CREATE AN IRONCLAD IRREVOCABLE TRUST......Page 196
OFFSHORE PLANNING: A WORLDWIDE PHENOMENON......Page 197
THE THREE REASONS AMERICANS GO OFFSHORE......Page 198
DUAL THREATS TO YOUR OFFSHORE PLAN: THE DEVIL WITHIN AND THE DEVIL WITHOUT......Page 199
THE DEVIL WITHOUT: WHY YOUR ADVISOR MAY BE YOUR WORST ENEMY......Page 202
NEVIS: AN IMPORTANT JURISDICTION FOR LIMITED LIABILITY COMPANIES......Page 206
OFFSHORE TRUSTS: THE CLASSIC OFFSHORE TOOL......Page 209
LAST WORD......Page 211
USING STATE HOMESTEAD LAWS TO SHIELD YOUR HOME......Page 212
OWNING YOUR HOME IN A LIMITED LIABILITY COMPANY......Page 216
LAST WORD......Page 218
CHAPTER THIRTY-FOUR PROTECTING WEALTH FROM DIVORCE......Page 219
WHY DIVORCE CAN BE A FINANCIAL NIGHTMARE......Page 220
CAN A “PRE-NUP” PROTECT YOU?......Page 222
REQUIREMENTS FOR A PREMARITAL AGREEMENT......Page 223
SPECIAL CONSIDERATIONS FOR FAMILY BUSINESS OWNERS......Page 224
IRREVOCABLE SPENDTHRIFT TRUSTS: IDEAL TOOLS TO KEEP ASSETS IN THE FAMILY......Page 225
PROTECT YOUR CHILDREN FROM DIVORCE......Page 226
LAST WORD......Page 227
PART VI INSURANCE PLANNING......Page 229
CHAPTER THIRTY-FIVE AVOID THE BIGGEST PITFALLS, HELP YOURSELF AND YOUR FAMILY, AND SAVE MONEY IN THE PROCESS......Page 231
WHAT IS LIFE INSURANCE?......Page 233
KEY CHARACTERISTICS THAT MAKE LIFE INSURANCE SO VALUABLE......Page 234
TYPES OF LIFE INSURANCE......Page 235
CHAPTER THIRTY-SEVEN DISABILITY INSURANCE: INADEQUATE COVERAGE CAN BE MORE COSTLY THAN DEATH, DIVORCE, OR A LAWSUIT......Page 239
EMPLOYER PROVIDED COVERAGE......Page 240
POLICY CHECKUP......Page 241
HOW DO I GET THE BEST COVERAGE FOR MY MONEY?......Page 242
LAST WORD......Page 249
CHAPTER THIRTY-EIGHT LONG-TERM CARE: PROTECT YOURSELVES, YOUR CHILDREN, AND YOUR PARENTS......Page 250
WHY DO YOU NEED LONG-TERM-CARE INSURANCE?......Page 251
WHY DON’T MOST PEOPLE HAVE LTCI?......Page 252
WHAT SHOULD YOU LOOK FOR IN AN LTCI POLICY?......Page 253
ARE YOU REALLY UNINSURABLE?......Page 255
USE A “SURROGATE INSURED”......Page 256
FOREIGN INSURANCE COMPANIES THAT INSURE THE UNINSURABLE......Page 257
LAST WORD......Page 259
CHAPTER FORTY “FREE” INSURANCE: USING OTHER PEOPLE’S MONEY TO PAY FOR YOUR ESTATE PLANNING......Page 260
IS THIS POSSIBLE?......Page 261
IS IT WORTH THE EFFORT?......Page 262
PART VII RETIREMENT PLANNING......Page 263
CHAPTER FORTY-ONE WE DON’T KNOW WHERE WE’RE GOING, BUT WE ALL WANT TO GET THERE......Page 265
WHY HAVEN’T I HEARD THE TERM DEFINED CONTRIBUTION?......Page 267
OTHER BENEFITS......Page 268
CHOOSING THE RIGHT PLAN FOR YOU......Page 269
CHAPTER FORTY-THREE DEFINED-BENEFIT PLANS: CATCH UP IN YOUR RETIREMENT PLANNING......Page 270
ARE YOU A GOOD CANDIDATE FOR A DEFINED-BENEFIT PLAN?......Page 271
BEST CANDIDATES FOR A DEFINED-BENEFIT PLAN......Page 273
THE BASICS OF DEFINED-BENEFIT PLANS......Page 274
WHY WOULD I WANT LOWER RETURNS?......Page 275
LAST WORD......Page 276
CHAPTER FORTY-FIVE VARIABLE ANNUITIES: ASSET PROTECTION, TAX DEFERRAL, AND CAPITAL PRESERVATION FOR YOUR RETIREMENT PLAN......Page 277
WILL HAVING A VARIABLE ANNUITY AFFECT MY PENSION CONTRIBUTIONS?......Page 278
LAST WORD......Page 279
CHAPTER FORTY-SIX LIFE INSURANCE AS A RETIREMENT TOOL......Page 280
WHY USE AN INSURANCE POLICY AT ALL?......Page 281
WHY USE A WHOLE LIFE POLICY?......Page 282
LAST WORD......Page 284
CHAPTER FORTY-SEVEN DON’T RUN OUT OF MONEY (OR PAY TOO MUCH IN TAXES) IN RETIREMENT: LIFE ANNUITIES......Page 285
HOW MUCH INCOME CAN I EXPECT FROM A LIFE ANNUITY?......Page 286
IS THERE A WAY TO GET TAX-FREE INCOME WITH A LIFE ANNUITY?......Page 287
LAST WORD......Page 288
CHAPTER FORTY-EIGHT AVOIDING OUTRAGEOUS TAXES ON RETIREMENT PLAN WITHDRAWALS......Page 289
CREATING TAX-FREE INCOME AND AN ESTATE TAX–FREE INHERITANCE......Page 290
LAST WORD......Page 291
CHAPTER FORTY-NINE DON’T LET MEDICAL CONDITIONS RUIN YOUR RETIREMENT: TAKE ADVANTAGE OF LONG-TERM-CARE INSURANCE......Page 292
PART VIII ESTATE PLANNING......Page 295
CHAPTER FIFTY MAKING SURE FAMILY ASSETS AREN’T LOST TO DISINHERITANCE, COURTS, OR THE IRS......Page 297
THERE IS NO ESTATE TAX REPEAL: ONLY A GRADUAL REDUCTION OF THE ESTATE TAX BITE......Page 299
WILL THERE BE ANY SO-CALLED REPEAL AT ALL?......Page 300
EVEN IF THE ESTATE TAX REPEAL MAKES IT THROUGH, THE GIFT TAX REMAINS......Page 301
ANY REPEAL MEANS A LOSS OF BASIS STEP-UP AT DEATH......Page 302
THE REPEAL LEAVES IRD ALONE......Page 303
CHAPTER FIFTY-TWO WILLS AND LIVING TRUSTS: THE BUILDING BLOCKS OF EVERY ESTATE PLAN......Page 304
THE PITFALLS OF PROBATE......Page 305
HOW A LIVING TRUST SOLVES THE PROBLEM......Page 306
YOU MAY NAME YOURSELF OR SOMEONE ELSE AS TRUSTEE......Page 307
THE SUCCESSOR TRUSTEE MUST FOLLOW YOUR TRUST INSTRUCTIONS......Page 308
LAST WORD......Page 309
THE UNIFIED ESTATE TAX CREDIT......Page 310
THE UNLIMITED MARITAL DEDUCTION......Page 311
HOW AN A-B LIVING TRUST USES BOTH GET-OUT-OF-ESTATE-TAXES-FREE CARDS......Page 312
LAST WORD......Page 314
WHY JOINT OWNERSHIP IS SO DANGEROUS......Page 315
JOINT OWNERSHIP CAN RUIN YOUR ESTATE PLAN......Page 316
LAST WORD......Page 317
CHAPTER FIFTY-FIVE KEEP THE VALUE OF YOUR LIFE INSURANCE BY USING AN IRREVOCABLE LIFE INSURANCE TRUST......Page 318
REMOVING THE INSURANCE FROM YOUR ESTATE......Page 319
THE SUPERIOR STRATEGY: USE AN IRREVOCABLE LIFE INSURANCE TRUST......Page 321
REQUIREMENTS FOR YOUR ILIT......Page 322
LAST WORD......Page 323
CHAPTER FIFTY-SIX FLPS AND LLCS: TRIPLE-PLAY TOOLS FOR ESTATE PLANNING......Page 324
FLPS/LLCS ALLOW YOU TO GET PROPERTY OUT OF YOUR ESTATE WITHOUT GIVING UP CONTROL......Page 325
FLPS/LLCS LOWER ESTATE TAXES ON ASSETS THEY HOLD......Page 326
VALUATION DISCOUNTING USING FLPS/LLCS......Page 327
LAST WORD......Page 328
CHAPTER FIFTY-SEVEN WHY YOUR PENSION, 401(K), OR IRA MAY BE AN 80 PERCENT TAX TRAP......Page 329
YOU MAY PAY TAX AT THE SAME—OR HIGHER—TAX RATES......Page 330
YOU MAY NOT NEED THE FUNDS IN RETIREMENT......Page 331
BASICS OF INCOME IN RESPECT OF A DECEDENT......Page 333
IF YOU ARE EARLY IN YOUR CAREER, MONITOR PARTICIPATION IN QUALIFIED PLANS......Page 337
OPTION 1: STRETCH IRAS......Page 338
OPTION 2: LIQUIDATE AND LEVERAGE......Page 340
OPTION 3: THE CAPITAL TRANSFORMATION STRATEGY......Page 342
LAST WORD......Page 345
CHAPTER FIFTY-NINE GETTING LIFE INSURANCE FOR HALF THE COST......Page 347
CHAPTER SIXTY LONG-TERM-CARE INSURANCE FOR ESTATE PLANNING: PROTECT YOUR ESTATE FROM RISING MEDICAL COSTS......Page 348
LAST WORD......Page 349
CHAPTER SIXTY-ONE CHARITABLE ESTATE PLANNING: HOW TO GET MORE TO YOUR FAMILY AND BENEFIT A CHARITY......Page 350
LAST WORD......Page 353
PART IX BUSINESS PLANNING......Page 355
CHAPTER SIXTY-TWO TURNING YOUR COMPANY INTO A FINANCIAL POWERHOUSE......Page 357
BRIEF HISTORY OF WELFARE BENEFIT PLANS......Page 359
HOW A WELFARE BENEFIT PLAN WORKS......Page 360
KEY BENEFITS OF WBPS......Page 361
LAST WORD......Page 363
WHAT THE CIC IS......Page 364
CIC AS A RISK MANAGEMENT TOOL......Page 366
CICS’ ANCILLARY TAX BENEFITS......Page 368
CAN YOU AFFORD A CIC?......Page 369
LAST WORD......Page 371
WHY THE BUY/SELL AGREEMENT IS SO CRUCIAL......Page 372
BUY/SELL BASICS......Page 373
FUNDING THE AGREEMENT......Page 375
LAST WORD......Page 376
CHARACTERISTICS OF A CORPORATION......Page 378
USING A CORPORATION TO PROTECT YOUR WEALTH FROM YOUR BUSINESS CREDITORS......Page 379
REQUIREMENTS FOR CORPORATE PROTECTION......Page 381
STRUCTURE YOUR BUSINESS FOR MAXIMUM WEALTH PROTECTION......Page 384
ASSETS YOUR BUSINESS SHOULD NOT OWN......Page 389
STICK TO WHAT YOU KNOW......Page 390
THE SOLUTION......Page 391
BENEFITS......Page 392
LAST WORD......Page 394
APPENDIX ONE THE 10 COMMANDMENTS OF OFFSHORE......Page 395
APPENDIX TWO PREVENTING FRAUDULENT TRANSFER......Page 398
HOW TO AVOID FRAUDULENT TRANSFER CLAIMS......Page 401
WHY AN ASSET PROTECTION EXPERT IS SO IMPORTANT......Page 402
SAMPLE INTESTACY LAW......Page 403
APPENDIX FOUR 2002 INCOME TAX TABLES......Page 406
APPENDIX FIVE ASSET QUESTIONNAIRE......Page 407
APPENDIX SIX SAMPLE EMPLOYEE CENSUS FOR RETIREMENT AND OTHER BENEFITS PLANNING......Page 409
INDEX......Page 411