434: Another Perspective on Asset Protection

The Wealth Formula Podcast by Buck Joffrey Archives - Wealth Formula

This week’s episode on Wealth Formula Podcast is a primer on asset protection.

One of the things that I learned a few years back is that asset protection and estate planning are not one and the same.

Asset protection is simply protection against creditors. An offshore trust in the Cook Islands, for example, is a rock solid way to protect your assets but it is not an estate planning vehicle.

Since this week’s podcast discusses asset protection, I want to just remind you of what you MUST know about estate planning.

As of today, if you are single you can leave up to $13.61 million to your heirs without being subject to estate taxes—double that if you are a married couple.

As long as you are below that, you need two things at a bare minimum to ensure that you don’t make your loved ones even more miserable than they already will be.

You need a will AND you need a trust.

The key difference between a will and a living trust lies in how they manage and distribute your assets during your lifetime and after death.

A will is a legal document that outlines how you want your assets distributed after you pass away. It only takes effect upon your death, at which point it goes through the probate process overseen by a court.

On the other hand, a living trust is a legal arrangement where you transfer ownership of your assets into a trust during your lifetime. The trust is managed by a trustee (which can be you initially) for the benefit of your beneficiaries. Upon your death, the assets in the trust are then distributed according to your instructions, bypassing the probate process.

You want to avoid probate at all costs if you want to make it easy on your loved ones. Probate is the legal process that takes place after someone dies to distribute their assets and property to the rightful heirs or beneficiaries. It involves going through the court system, which can be time-consuming, expensive, and open to the public.

It can drag on for months or even years, especially if the estate is complex or there are disputes among heirs. A living trust allows assets to be distributed relatively quickly after death without court involvement.

Furthermore, probate fees, court costs, attorney fees, executor fees, etc. can eat up a significant portion of the estate’s value. With a living trust, you avoid most of these costly probate expenses.

So if you have not done so, PLEASE make sure you get these documents done. It’s not expensive and your family will thank you for it.

Show Notes:

05:47 A Review on Estate Planning & Asset Protection

07:56 How to Determine What You Need

12:03 Protecting Your Real Estate

13:53 When Do You Need a Trust?

16:45 Asset Protection Strategies that Mitigates Tax

19:45 Upcoming Law Changes

23:50 Beneficial Owner Information Report

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