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6 Biggest Wealth-Destroying Mistakes Even the Rich Make

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Costly Mistakes of the Rich and Famous

 

By Lee Bellinger

 

It's amazing to me how often the rich and famous overlook these six basic tips and manage to screw up their estates and expose their private family lives to public scrutiny. Today's email will help you avoid the same mistakes.
 

For example, I'm reading Elizabeth Edwards' will and probate application filed in North Carolina (She's the deceased ex-wife of former Senator John Edwards). I'm also looking over Senator Edward Kennedy's will...
 

  • Will and Testiment

I don't get into political personalities, but really! Who knows what Elizabeth was thinking in allowing her disgraced ex-husband to have any involvement in her estate? He lied to her, cheated on her, and had a baby out of wedlock with his mistress. Why would she trust him?
 

And why did Teddy Kennedy choose as his executor and trustee the same man (Paul G. Kirk, Jr.) who temporarily filled his Senate seat? Wasn't this too much authority to place in the hands of one person?
 

This is all described in their wills and probate application. It's also very interesting... but it's also NONE of my business!
 

I was not a friend to either Elizabeth Edwards or Edward Kennedy. Their estates haven't hired me as a consultant. Yet, I'm free to pry into their personal, family, and financial lives and tell you all about them – because it's PUBLIC RECORD!
 

How much of your private financial, family, health, and business information is wide open for snoops, nosy neighbors, government busy bodies, and frivolous lawsuit junkies?
 

Both Elizabeth Edwards and Ted Kennedy had trusts set up. However, aren't trusts supposed to protect one's privacy? So what happened? How am I, or anyone, able to easily access these intimate details?

 

Take These Steps Now to Protect Your
Legacy and Your Privacy, Too!

As with anything I read, I am always prowling for insights that will benefit my cherished readers. So please look over these six tips so you can learn from the mistakes of others, take action before it's too late and make sure you don't have any kinks in your privacy armor.
 

Get It Done. Many people, even intelligent and wealthy individuals, put off asset protection and estate planning or take too long to get it done right.
 

And this doesn't just happen to politicians or entertainers. It happens to the titans of industry as well. According to attorney Jackie Bedard of North Carolina:
 
The only way you can protect your privacy and assets through trusts is to get them started and completed. Give yourself and your family peace of mind. Get it done! Entertainer and Congressman Sonny Bono died in a skiing accident. His wife didn't have time to properly grieve because she had to jump into action and handle all the legal paperwork necessary to administer her husband's estate.
 
  • J.P. Morgan's estate suffered a 69% shrinkage.
     
  • John D. Rockefeller's estate hemorrhaged 64% due to bad planning.
     
  • And 56% of Fredrick Vanderbilt's estate went up in smoke.
     
  • Elvis Presley's estate shrunk a staggering 73% because of improper planning.
     
  • Jimi Hendrix's legacy was fought over in court for more than 30 years after he died.
     

Use Specialized Professionals. Work with professionals who have experience and specialize in the areas of asset protection and estate planning.
 

For instance, Supreme Court Chief Justice Warren Burger, no doubt a capable juris doctor, wrote his own 176-word will. But he left out key provisions that cost his family nearly $400,000.
 

Asset protection and estate planning are specialized areas of practice; make sure to work with competent professionals. 
 

Fund Your Trust. This is legal language that means title your assets to the trust. The privacy and anonymity gained from setting up your trusts only works if your assets are titled to the trust.
 

Think of it like this: The trust is a box. If you want to keep your assets and affairs private, put them inside the box.
 

Elizabeth Edwards and Senator Kennedy both had trusts set up. The fact that their wills are public record and wide open for anyone to touch is because their assets (all or part) were not titled to the trust (their trusts weren't fully funded).
 

Maybe they didn't have enough time to do it? Maybe they thought they had enough time to do it later and procrastinated? A lot of maybes; the point – Get it done and fund it .
 

Make Sure People Who Need to Know, Know about It. Olympian Florence Griffith-Joyner ("Flo Jo") didn't share her estate plan details with her family. After she passed away, her will couldn't be located and her probate estate took over 4 years to close.
 

Don't Name It after Your Name. Edward Kennedy's trust is called The Edward M. Kennedy 2006 Trust and he had a blind trust called The Edward M. Kennedy Blind Trust.
 

According to attorney Bill Rounds (who specializes in asset protection planning): a trust for holding assets has the important benefit of protecting your and your beneficiaries' privacy. But naming the trust after yourself or your family connects you to the trust assets – exposing you to frivolous lawsuits, identity theft, stalking, harassment, and punitive damage awards. A namesake trust betrays you. The easiest thing to do is to select a name that has nothing to do with you – use an owner-obscuring name. "Please, please, please do not name your trust after your own name," says Mr. Rounds. 
 

Review It with Your Advisors. Things in life change so you must review your asset protection and estate plans from time to time to make sure no cracks have formed in your shield.
 

Attorneys Andrew W. Mayoras and Danielle B. Mayoras, co-authors of Trial & Heirs: Famous Fortune Fights!, state that Heath Ledger's critical error was not updating his plan when his daughter was born, which lead to chaos and family members fighting through the press after his death.
 

Changes are not just limited to the birth of children, either. A change could be the birth or adoption of grandchildren, divorce, marriage, starting a new business, selling a business, or even a major long-term illness of a loved one.
 

There's one final issue I want to mention to you – something that I've personally witnessed on numerous occasions. It's quite possible that some of your heirs don't have the same beliefs or priorities that you do. Others may not be responsible at managing money. It's important you carefully think through these issues when you establish (or update) your estate plans. You can use the living trust document to outline your specific charitable goals, establish rules on doling out estate funds, etc.
 

The New Year is still young, so consider getting on this project now. In order to implement your goals and protect your family's peace of mind, privacy, and wealth you MUST implement estate and asset protection plans.
 

Get started now.

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