Asset Protection: Decoded – Jerry Fetta
Acquiring and investing in assets is a great thing. It is really the driving force behind the creation of wealth. But just because you acquired an asset doesn’t mean it is safe. You must protect and keep the assets you have obtained.
Whether it be legal battles, taxes, divorce, theft, volatility, or any other variety of culprits, people lose assets all the time.
So this article is dedicated to giving you some easy tips and ideas on how to protect your assets.
Before we really dive into it, I want to make sure we are on the same page that these strategies really only apply to those who have assets or are about to acquire them. This is not for broke people. This is not for couch jockeys who have no other goal than to hoard and collect information with intention to use it. This is or those who plan on using the information to acquire and protect assets.
The first thing you need to understand is that all assets are at risk of inflation. This is the most fundamental risk that effects everyone no matter how much they have in assets. Inflation is the devaluation of a currency leading to a reduction in purchasing power. For example, if you own $1 million in cash today it may only be worth $700,000 in 10 years. That’s a big risk. So how do you protect against this risk? You make sure you invest your money so that it grows at a rate higher than the rate your currency is being devalued. This is the key to everything I teach my clients and the focal point of all of my economic philosophies.
Next we have taxes. As soon as you decide you want to outgrow inflation by investing your money, the IRS is going to want a cut of your income and your gains from your assets. Understand, taxes are a liability. Taxes actively work against your wealth. So for someone who wants to build and protect assets, the thing to do is avoid taxes. How can you do that? Well, for one you need to understand how taxes work. You can use debt, depreciation, deductions, amortization, book-keeping strategies, and asset structuring to avoid taxes. There aren’t really many magic bullets when it comes to taxes. It simply comes down to understanding and applying the tax code.
The next point I want to bring up is volatility. Volatility is market and investment risks that can erode the values of your assets. Volatility would be like the stock market suddenly dropping in value and you losing a 3rd of your assets. How do you defend against this? Don’t speculate. Don’t put money in things that historically can be manipulated and caused to go down in value. Don’t invest in things that don’t pay you an income. Don’t invest in things that don’t have intrinsic value. Again there is on magic bullet. Just don’t buy stupid assets that can lose money.
Alright, let’s talk about legacy. You pass away and you had built up all of these assets. You’re good right? Not quite! When you die, your assets go through probate. This can cost up to 15% of your total asset value in legal costs. So if you had $1 million like we mentioned earlier and you died, the legal system would take about $150,000 out of you. That is not chump change. The best way to defend against this is to create a revocable living trust and sign your assets over to the trust. This way when you die, nothing goes through probate.
How about legal risks? Entity structuring is the way we handle this. Lawsuits, creditors, and other risks that can legally put your assets at risk are a real thing. The easiest way to handle these is honestly an LLC. As long as you treat the LLC like a separate entity and don’t commingle funds and mix things up it can be a very solid protection vehicle. Now I’m going to blow your mind real quick. If you really want to make things interesting you can put your money in a Sacred Account, which is protected from creditors, lawsuits, and the IRS. The Sacred Account will be owned by an LLC out of Nevada, Wyoming, or Maryland. These are “non-report” states which means the ownership of the LLC is not publicly posted. So if someone wanted to find out who owned your LLC so they could sue you, they wouldn’t be able to gather that information. Now the cherry on top is to have the LLC owned by a Trust. So you have a trust that owns a non-report LLC that owns a Sacred Account. In essence if someone could even find out who to sue, they’d find out you didn’t actually own any of the assets personally. Your LLC’s and trusts did and those funds would be very difficult to go after. That is if they even get past the LLC to find out who the owner is. Now, if all of that fails have a solid legal team and have insurance.
These are just a few of the very real risks that exist for investors and a few ways to counter those risks. It is great information, but I’m sure you could agree that it doesn’t replace having an actual blueprint in place.
To learn more about how you can get a financial blueprint that will customize many of these strategies for you click here.
Own Your Potential,
CEO & Founder of Wealth DynamX
Jerry Fetta helps his clients gain more financial knowledge, make more money, keep more of it, and multiply what they keep.
If you feel like one or more of these areas is costing you money and opportunity right now, then get more information about Jerry Fetta and Wealth DynamX by going to www.WealthDynamX.com/contact