Legal Matters -

7 Ways to Protect Your Assets

ou’ve worked hard all your adult life. Maybe you’ve built up your savings, you’ve acquired additional properties or you’ve built a portfolio of other valuable assets. At this point in your life, you may be worried that all that hard work will be for nothing, and you’ll lose everything you’ve saved.

It’s possible; in fact, anything that you’ve built can be lost in a literal blink of an eye due to sudden bankruptcy, divorce or a lawsuit. There are many possibilities that you probably haven’t even considered. For example, if your teenage child were at fault in a car accident, your assets could be on the line. If your neighbor accidentally becomes injured on your property, your portfolio of assets could be taken to compensate your neighbor.

You don’t want this to be you.

You want to save your assets to give to your family. You want to have the opportunity to take everything you’ve worked hard to create, and you want to pass it all on to your family. In order to do this, you have to protect everything that you’ve crated.

Consider these 7 ways to protect your most valuable assets:

1. Increase your insurance

The more insurance you carry, the more protected your assets will be if there is an accident or other unexpected event. Make sure that you cover your bases and invest in several different types of insurance, depending on your lifestyle choices and living situation.

Consider each of these types:

Homeowners insurance – This is a necessity and not only to protect your valuable property if you own your home. Your homeowner’s insurance should include liability coverage in case you’re sued by someone who is injured on your property.
Commercial liability insurance – If you own you a business, you must invest in this insurance in order to protect your company and your assets in case of an employee’s injury.
Worker’s compensation insurance – If you own your business, you must also invest in this insurance which is mandatory in most states as well.
Auto insurance – Don’t be content with minimum coverage auto insurance, especially as your personal assets continue to increase. Your total liability coverage for your family’s vehicles should be at least equal to your total assets.
Umbrella coverage – This type of policy acts as a strong back-up insurance plan in the event that one of your other coverages, such as auto or homeowners, is exhausted.
Long-term care insurance – As you advance in age, this type of insurance may become more useful to you. By investing in long-term care insurance, you’re protecting your assets and those of your family from the high costs of in-home or nursing care if you would suffer from a debilitating illness or disability in your later stages of life.

2. Separate your assets

Depending on your home state and its laws, it may be advantageous for you to keep your assets separate from those of your spouse. In the event of a divorce or an accident caused by your spouse, jointly shared assets are split in half. Keeping your own savings account or separate property holdings will prevent you from losing what you’ve worked hard to achieve.

3. Formalize all informal partnerships

Working with a business partner is similar to sharing a joint account. If your partner is liable, your portion of the assets could be at risk as well. Be especially careful of making informal partnerships with friends or acquaintances. Create formal paperwork that finalizes all relationships and the sharing of assets. This isn’t being a bad friend; it’s just good business.

4. Create business entities

If you own a small business or you freelance work on the side, you should consider creating a business entity to help protect your personal assets. Whether you choose to make an LLC or a corporation from your business ventures, this entity will shield your personal assets from any lawsuits that are filed against your company.

5. Begin an asset protection trust

Rather than storing your assets in offshore accounts, several states are now allowing asset protection trusts that allow you to move a portion of your assets into a trust that will be granted to your children or other beneficiaries. In order to qualify for this protection, you must agree that the trust is irrevocable and that it will be run by an independent trustee.

6. Take advantage of retirement accounts

Under federal law, you can enjoy unlimited asset protection for many retirement plans and up to one million dollars in assets in an IRA. Some of the stipulations for retirement accounts will depend on the laws in your home state, but this option may be able to protect at least a portion of your personal assets.

7. Consider homestead exemptions

Many states now provide homestead exemptions that go into effect to protect an individual’s home equity if he or she would declare personal bankruptcy. If your state is one of those participating in this plan, you may want to consider investing more money toward your mortgage principal in order to build up a higher level of equity.

These are not the only methods to protect your personal assets, but these are a goo way for you to get started. No matter how you choose to protect your assets, you don’t want to delay your efforts. The longer you wait, the more risk you face.

10 Things to Look for When Inventorying Your Finances

hether you want to organize your life for retirement or leave your next of kin on firm financial footing, taking inventory of your finances is a smart move. Set aside a folder in your filing cabinet, and fill it with these 10 pieces of information:

1. Any and All Debts

Mortgages, car loans, your kids’ school loans, credit cards, and other forms of debt are difficult to keep track of, but you can help yourself out by filing them all in one location. You’ll never have to guess how much you owe on one account or another, and you’ll be less likely to miss payment deadlines. Should something happen to you, your estate’s executor or caretaker can continue to pay bills on time, and they won’t be hit by debt collection agencies months or years down the road.

2. Bank Accounts

Equally important are your savings and checking accounts. Insurance payouts can take weeks to finalize, which can make handling medical or funeral expenses difficult to cover. Your bank accounts can pay for small expenses until your insurance plans, investments, real estate, and other large assets are disbursed.

3. Turning Money into More Money

Unless you’ve only worked at a single job your entire life, you likely maintain a number of retirement and general investment accounts including IRAs and 401Ks. While rare, some retirement accounts go unclaimed after the account holder passes away.

Take the uncertainty out of your investments, and make sure that all of your account information is located in your financial folder. Even if you don’t include account numbers and other sensitive information, list all of the companies with which you maintain an active account.

4. Tangible Property

Everything that you own has some monetary value. Include vehicle and home titles in your folder, so your executor will know exactly what needs to be appraised, auctioned off, or given away to beneficiaries.

5. Insurance

Insurance is one of those things nobody ever wants to use. If you use auto insurance, you’ve been in an accident. If you use home insurance, a tree branch damaged your roof. However, insurance is also one of those things that everybody loves when they need it.

If you pass away, your life insurance policy can quickly give your beneficiaries hundreds of thousands of dollars, and you can rest assured that they’ll be taken care of financially. However, your life insurance policy won’t be of much use if nobody can find it. Other types of insurance like auto and health aren’t likely to make your family rich, but the estate might get a partial refund for the remainder of the policy period.

6. X Marks the Spot

This list is already pretty long, and it’s only going to get longer. Instead of jamming every document into a single folder, consider writing a list. Your executor can look at your financial inventory list and find every item on it, and if an important document is missing, your executor can still contact the bank or insurance company to request account information.

7. Contact Info

Nobody knows your life as well as you, so nobody will know who to call if you’re incapacitated. Create a list detailing phone numbers, email addresses, and mailing addresses for your executor, family members, friends, business colleagues, and any other individuals who are important to you.

8. Your Living Will

Your living will is one of the hardest documents you’ll ever have to write, but it’s important to finish while you’re still healthy. With this single document, your executor will have a road map to finalize your estate, and you’ll prevent your family from bickering over your assets.

With any luck, you’ll never need somebody with medical power of attorney over you, but if you do, make sure that it’s somebody you trust. Update your medical files with a document giving a close friend or family member medical power of attorney.

9. Cash Flow

Everyone wants to live to a ripe old age, and you can ensure that your retirement years are filled with luxury by preparing today. When it comes to getting your finances in order, sooner is infinitely better than later. Print out all of your bank statements from the previous year, and look at your cash flow over time. How much did you earn, and how much did you spend? If necessary, change your habits today to give you that much more financial freedom in retirement.

10. Shoot for the Stars

It’s never too late to find a fresh purpose in life, but life’s biggest goals are often the most expensive. A kid can cost more than $100,000 to raise. Want to go back to school? Expect to pay at least $20,000 a year. Write down all of your life goals regardless of their cost, and start saving for them today.

7 Things Men should Know after the Divorce

hen life throws you a curve ball, the sensible option is to keep on playing like the pros always do. Life-changing events such as divorce, the breakup of a long-term relationship or the death of a partner may throw you for a loop. No matter the cause of the schism, starting over can be disconcerting especially if you can’t even find the TV remote on your own.

1. Gather the Basic Paperwork

To get started on establishing your new routine as a newly-single man, you will need to have a handle on the basic papers attesting to your single-hood. Obtain copies of the divorce decree or the death certificate, whichever is applicable in your case. When applying for certified copies, make sure to include extra sets in your request as financial institutions will require copies for their files to support any changes requested on your account.

2. Where is that Checkbook?

Typically, couples would have a household account for paying and tracking bills and other household expenses. Quite often, one partner takes charge of bookeeping and household management with the other contributing financially but without major administrative input. All is well until the day the relationship is severed.

Post-divorce, the matter of checking accounts and bills would have been neatly addressed by your divorce decree. Accounts are listed, examined, adjudicated and closed according to your agreement. There is no errant checkbook to speak of – only a clean parting of ways.

However, with the death of a partner, your routine is upended especially if the event was unexpected and your partner left few clues regarding the practical details of household budgets and maintenance. Finding the checkbook and ledger pertaining to this account would be the logical first step in your financial housekeeping. Locate online files that may refer to this account and review the pattern of expenses as this will indicate the bills that should be paid regularly to ensure that your household will keep on running smoothly. In most states, survivors have 30 to 60 days to use a joint account to settle the estate. After the grace period, you will be asked to open a new account in your name.

3. Who to Pay to Keep the Lights On

Before the Internet became so prevalent, all it took to organize bill payments was to go through the mail, and line up billing statements. With online access, you may need to recover or recreate a list of accounts and regularly scheduled payments that may include include rent or mortgage, phone, cable payments and utility services covering electricity, water and sewer bills.

If your partner has been making online instead of mail-in payments, knowing the passwords would help tremendously. If you do not know the account passwords, contact the respective companies to explain your life-changing event and get them to update the account.

4. A new Budget for a new Lifestyle

Often, the partner handling the household books was doing the job so efficiently that you were never bothered with mundane matters such as keeping track of expenses, paying bills on time and avoiding costly penalties for missed or late payments. Since your life situation has changed, your expenses will vary. Create a budget reflective of your current circumstances.

5. Insurance Coverage and Payouts

If you are the beneficiary of insurance payouts, you have to contact the insurance companies and file the papers according to their guidelines. If minor children are in the equation, you will also have to take charge of filing those papers. Aside from life insurance policies, health insurance coverage will also be an issue especially if the deceased partner was the primary insured. Fortunately, most insurance policies will provide continuing coverage for survivors subject to restructured premium payments.

Insurance policies are often a major sticking point in divorce proceedings, so these issues are clarified as the divorce is finalized. Review your insurance coverage and adjust as you see fit based on your new lifestyle.

When insurance details are not clear cut after the death of a spouse or partner, examine the bank and credit card statements closely to look for payments made to insurance carriers.

6. Your Life on a Spreadsheet

After a monumental change in your life situation, it is important to have a clear idea of where you stand financially. A spreadsheet showing your assets and liabilities would be a good start. Rough out a list of what you have and what you owe, marking up items that may need further research. Refine this list as you go about finalizing the divorce or closing the estate. This spreadsheet will become the basis of making new goals, reinventing your life and planning for retirement.

7. Hire a Financial Planner

Disassociating yourself from a long term relationship is fraught with complications. You will need to close old accounts and establish new ones in your name only. You may need to change beneficiaries on existing insurance policies. Any financial recompense must be optimized for the benefit of your remaining household.

A qualified financial planner specializing in estate planning for people emerging from a divorce or recently widowed may help to redefine your goals and keep you on track. Embrace your new status, and keep on moving forward.