WealthcareAsset Protection
Threats to Your Wealth Ken Wheeler
 
You worked hard to create, save, and manage your wealth, now you want to protect it. However, forces exist in society today which could cause the loss of your wealth. Even in death there is no respite, federal and state wealth transfer taxes will take a huge bite out of your wealth before it can pass to your family. For you and your family to be assured of financial security, these hostile forces must be anticipated and planning implemented to minimize or altogether avoid these threats to your wealth. These threats can come from many different directions and have a variety of names, however, they usually fall into one of the following categories:
 
Threat No. 1 - Income Taxes
 
Tax increases under the Clinton administration have adversely impacted young and old alike. As tax rates increase, it becomes harder to live in retirement and harder yet to save for retirement. In addition to taxes, economic conditions such as inflation, corporate "downsizing," lower salaries, and higher unemployment make it increasingly difficult for your children to provide their families the same educational opportunities and standard of living which they enjoyed. Your wealth, a gift or inheritance from a senior family member, could make a significant difference in the future quality of the lives of your children and grandchildren.
 
Threat No. 2 - Divorce
 
Fifty-seven percent of marriages in America end in divorce. If you have two or more children or grandchildren, it is almost certain that a good portion of the inheritance they receive from you (your hard-earned wealth) will be lost to one of your children's (or grandchildren's) ex-spouses in a divorce. Acknowledging the reality of these statistics and how they are very likely to affect your children and grandchildren, allows you to plan to avoid this threat.
 
Threat No. 3 - Creditor's Claims
 
America is an extremely litigious society. If you or a member of your family is involved in an automobile accident, a bad business deal, or owns real property which someday is discovered to be environmentally damaged, you (they) could be sued for millions of dollars. Statistics show that people who make $50,000 a year or more in annual income will be sued on average once every 18 months by somebody for something. The legal system in the United States, encouraged by contingency fees, runaway juries and the availability of punitive damages, is often described as predatory: this system is a constant threat to your wealth. Because of your wealth, you, your children, and grandchildren are attractive targets for a lawsuit. WealthCareSM planning can protect your wealth from this threat.
 
Threat No. 4 - Loss of Retirement Plan Assets
 
Contrary to popular belief, your qualified retirement plans (pension and profit sharing plans, Keogh plans, IRA's or 401(k) plans) are not protected from the claims of judgment creditors. And a large qualified plan account balance can be your best or your worst asset, depending on how well you plan for the taxation of these funds. Without timely, competent tax planning, 80% to 90% of your qualified plan assets will be lost to income, estate, and excise taxes when you die. WealthCareSM planning can minimize if not all together avoid these threats to your financial security in retirement.
 
Threat No. 5 - Long-Term Health Care Costs
 
The good news is, we're living longer... and the bad news is, we're living longer. 
Michael A. Aun, businessman, philosopher, and nationally recognized public speaker 
Americans are living longer now than ever before, and the longer we live the greater the risk that we will become mentally or physically incapacitated. Should you or your spouse become incapacitated or suffer a lengthy illness, a significant portion of your wealth could be lost to pay healthcare and nursing-home care expenses. WealthCareSM planning can protect your wealth from this threat.
 
Threat No. 6 - Guardianship and Probate
 
If you should become physically or mentally incapacitated, a guardian will be appointed by the local probate court judge to manage your wealth. Unless you have planned for the possiblity of becoming incapacitated, you will have no voice in the selection of your guardian or how your assets are to be managed. Similarly, when you die, the settlement of your estate must be administered by your local probate court judge who will appoint a personal representative to manage your wealth during the settlement of your estate. Both guardianship and probate proceedings are expensive, frustrating, and open to public view. Most people who have experienced such probate court proceedings would just as soon avoid them in the future.
 
Threat No. 7 - Wealth Transfer Taxes
 
In addition to income taxes on your taxable income, the federal government imposes wealth transfer taxes on gifts made while you are alive and on bequests from your estate. Unlike the income tax which is imposed on your income, these wealth transfer taxes are imposed on your capital.The effective rate of the federal estate and gift tax can be as much as 60% of the value of the assets you transfer. If you try to skip a generation and pass your wealth down to your grandchildren, you face an additional generation-skipping transfer tax which could increase the effective transfer tax rate to in excess of 80%. Many states in search of tax revenues impose their own inheritance or death taxes on the capital in your estate.
 
Threat No. 8 - Procrastination
 
Wall Street observers have long recognized that people are most often motivated to act (or fail to act) by fear, and/or greed. The more powerful of these two, fear, sometimes manifests in some subtle, not so obvious ways. Some people avoid asking for things they want because they fear being refused, i.e. rejected, so they put off asking. Procrastination is one such manifestation of fear. Paradoxically, it is probably the greatest threat to your wealth and your family's financial security. Everyday all around us we see the various threats detailed above. We know we are at risk and yet we fail to take action to protect ourselves. We procrastinate, we let our excuses and our rationalizations become our reasons for not taking action, hoping such awful things will never happen to us. Take death, for example. We all know that someday we are going to die, but we won't plan for this event because for at least some of us death is too painful a subject to contemplate or talk about or plan for. Why else would almost 70% of Americans die without even a will? Most people pay excessive taxes or needlessly subject their assets to creditor's claims, divorcing spouses of family members, nursing homes, etc., out of fear and/or ignorance. This fear or ignorance usually manifests itself as procrastination--they simply fail to take action. As one of our clients recently observed, "[i]t's so easy to do nothing." Decide now to avoid procrastination--take action to protect your wealth and your family.
Procrastination is opportunity's natural assassin. 
Victor Kiam, American entrepeneur 
 
Conclusion
 
WealthCareSM planning can protect your wealth and your family against future losses due to taxes, creditors, divorce, guardianship, probate and long-term illness. WealthCareSM planning will allow you to preserve your wealth in your family for generations to come. It can also provide you with something else you richly deserve, peace of mind.
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