Winning Depends on a Good Offense
and a Good Defense

The best strategy to win any game is to have a good offense and a good defense.  In the realm of creating wealth, a good offense is essential.  Here, it is necessary to be efficient and to work smart.  Luck, too, sometimes plays a role.  In the realm of protecting and preserving your created wealth, a good defense is essential.  Here, it is necessary to identify the potential threats to your wealth.  Once you have identified the threats, you should seek to learn the solutions.

So, what are some of the main threats to your wealth? Income Taxes, Estate Taxes, Gift Taxes, Generation Skipping Taxes, Unnecessary Administrative Expenses, Disputes, Lawsuits and Divorce.

            The above list represents what may be considered general threats to your wealth.  The good news is that with proper advance planning, you can structure your affairs so that all the above threats are minimized or avoided completely. 

With the use of a revocable living trust and some care applied to the titling of assets and beneficiary designations on file with the custodian of retirement plans and life insurance, taxes can be minimized or avoided and administrative expenses can be minimized.  Also, leaving assets in trust can protect these assets from divorce and lawsuits.  With a plan, all of these benefits are possible.  Sidestepping the above problems are worthy objectives that will provide substantial benefits to your family.  All of the above problems can be minimized or avoided altogether with advance planning. 

Let’s imagine Angie has a daughter named Sandra who is a medical doctor.  If Angie leaves assets in trust for Sandra’s benefit, these funds can be protected from lawsuits Sandra may be exposed to as a medical doctor.  Leaving assets in trust can ensure that these funds will benefit Sandra and Sandra’s children.  Is that good defense?  You bet it is. 

Of course, let us imagine another scenario:  Frank has a son named Jasper who receives government benefits because Jasper has a disability.  If Frank fails to leave assets in trust for Jasper, the benefits Jasper receives from the government could be in jeopardy.  Leaving assets in trust for Jaspers benefit can help ensure these assets will be there to supplement any benefits the government provides, instead of the benfits being lost.  Is that good defense?  Yes, it is. 

The message to be had is that the law may be used to protect.  With advance planning, you can protect your loved ones from their eventual inability, disability, predators (e.g., divorce claims, alimony claims) and creditors.  When doing your estate planning, if you leave your assets in a “spendthrift trust” for your loved ones, instead of outright, you can protect them.  You can protect them from (1) their inability to manage the assets, (2) their eventual disability, (3) predatory spouses in divorce proceedings who try to get 50% of their assets, and (4) their creditors. 

This kind of planning can provide you with the peace of mind of knowing that what you leave your loved ones will not be carelessly squandered, and will not go to predatory spouses or money hungry creditors.    

            Our society is litigious and statistics indicate 50% of marriages end in divorce.  Leaving assets in trust instead of outright can provide you with the peace of mind you deserve and protect your family and your family property.   


Contributed by:

Mark F. Winn

Attorney at Law, PLLC