Asset Protection the AI Way

2024 Feature Nominations

Out of curiosity, I wanted to know what Artificial Intelligence would identify as the top three priorities for you or I or any of our clients if tasked with providing urgent, reliable guidance on the broad subject of Asset Protection.  I give ChatGPT a solid B. No real argument with the top three categories … however, I might toss in a sub-heading for each of them below.

Execution. Execution. And Execution.

Foundational in our approach to strategy, of course, is execution.  Knowing what to do is one thing. But having the ability to put plans into action is even more critical. I would argue that regardless of the complexity of a given strategy, not enough emphasis is ever given to pulling the trigger and setting events in motion. It’s where the rubber meets the road. Procrastination, even hesitation can be the harshest enemy of the best laid plans.

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AI’s top priorities came up as follows:

No. 1: Asset Diversification: One significant strategy for asset protection for high-net-worth families and business owners is asset diversification. This involves spreading investments across a variety of asset classes, such as stocks, bonds, real estate, and alternative investments. By diversifying their assets, individuals can reduce the risk of significant losses from any one investment. Diversification also helps protect against the volatility of specific industries or sectors, as well as the impact of economic downturns.

AI might have you believe that investment diversification could be our firm’s area of expertise. But as we’ve discussed many times in this column space, tax planning and strategies are as integral to practical planning and protection of those assets. Taxes comprise the single biggest threat to wealth preservation and succession.

No. 2: Trusts and Estate Planning: Trusts and estate planning are crucial tools for asset protection. High net worth families and business owners can establish trusts to protect their assets from potential creditors, lawsuits, or other financial risks. Trusts can provide a legal structure to transfer and manage assets while maintaining control and protecting against potential risks. Various types of trusts are available, such as revocable living trusts, irrevocable trusts, and asset protection trusts.

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Our team has substantial experience in this. But, you need to team up with the right legal advisors with the track record to tailor appropriate solutions accordingly.

No. 3: Liability Insurance: High net worth families and business owners should consider comprehensive liability insurance coverage as another key strategy for asset protection. Liability insurance provides financial protection against potential lawsuits or claims resulting from personal injury, property damage, or professional errors and omissions. By having adequate liability insurance coverage, individuals can mitigate the risk of significant financial losses and protect their assets in case of unexpected events or legal actions.

Ideally, asset protection strategies should be implemented in consultation with qualified professionals, such as financial advisors, attorneys, and insurance specialists. Collectively, as a team, they can provide personalized advice based on individual circumstances and help navigate the legal and financial complexities involved in protecting and preserving wealth.

Absent this kind of engaged team of battle-tested experts, it becomes YOU vs. The IRS, who can be overwhelming…a complete stranger, with no appreciation for the sacrifices you’ve made or the losses you incurred along the way in building your success. And who would claim an oversized stake in YOUR family legacy that could have gone to your children, grandchildren, or your preferred community causes.

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Going it alone can contribute to a lack of urgency to execute, to address immediately the tax implications of your actions (or inactions). Studies show that it takes ten times as much planning to preserve and pass on your wealth than it does to accumulate it in the first place. Experience proves that execution…taking action should not be underestimated!

If it feels like you against the world, put us in your corner and take on ALL challengers, including the IRS. We’d love to be an arrow in your quiver!

Remember, It’s not what you own, but what you control.

Bill Newton

Bill Newton is President of Sterling Newton, a registered investment advisory firm in Jacksonville. As a virtual family office with a large national network of partners we address the following five areas of our clients’ financial lives: (1) making smart decisions about their money; (2) mitigating taxes; (3) taking care of heirs; (4) protecting assets from being unjustly taken; and (5) magnifying the power of charitable gifts. www.sterlingnewton.com www.redwoodtaxspecialist-pontevedrabeach.com

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