DEATH AND TAXES

The intelligent investor is prepared for problems. We don’t know when disaster might strike, but eventually, the world will sling bad news in our direction. It’s doubly important to be prepared in our personal lives. That’s why I’ve already set up my estate for the inevitability that one day I will die. Death is never fun to think about. Especially our own death. But for the sake of your family and protecting your assets, it’s important to plan ahead.

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I’m always shocked by the number of people who don’t have a will. It’s not hard to make one — plenty of lawyers will help you draft a will for a small fixed fee. If you don’t have a will, then the first thing you will bequeath to your heirs is a giant migraine.

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Dying without a will means that your estate will be administered by government bureaucrats. It will almost certainly land in probate court, which is a kind of purgatory that leaves your loved ones in limbo for months or even years. Even worse, you may be inviting your family to fight over the goodies. As much as it pains me to say this, competition for inherited wealth can tear a family apart, and I don’t want to leave that legacy.

Once you have a will, there are still important steps you should take to ensure your family will benefit from your hard work. The first technique that everybody should know about is called Tenants by Entirety or Joint Tenancy. This is a legal mechanism whereby we can share ownership of assets, like real estate or bank accounts, with your family members. Assets held in this way can pass directly to other account holders without being held up in probate court.  Depending on where you live, this may also prevent significant inheritance taxes. The downside to tenancy techniques is that they require a high degree of trust. Anybody who is added to your asset ownership has equal rights to control them.

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There is an even better legal mechanism for sharing our prosperity. The irrevocable trust is the irreplaceable tool, and it’s what the pros use to protect their wealth. Putting assets into a trust means that they are no longer a part of our estates, and since the trust never dies, it never pays inheritance taxes. When we pass on, our designated heirs can simply assume the responsibilities of trustee, and then they control our assets. No probate court. No tax man.

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Irrevocable trusts also protect assets from those who would take them while we still live. A small mistake in a business deal could put you on the hook for other people’s debts. A severe health problem could exceed your insurance coverage and result in 6 or 7 figure medical bills. And doing business exposes us all to lawsuits. Court battles are brutally expensive, so unless you’re truly rich, there’s always the risk that you can lose everything. The magic of the irrevocable trust is that it can protect our assets, even in the face of debts and court judgments, because assets in trust are not strictly ours anymore. I wave my attorney’s enchanted pen, and voila, my family’s security is shielded from prying fingers.

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I’m proud of the wealth I have accumulated thus far in my life, and I’m far from finished. But I’ll be damned if I let my family down by making them argue in court about who gets what. Nor will I allow a lawsuit troll or tax official to take my hard-won nest egg. No damn way. When the time comes, I know my family will have the resources they need to thrive, without depending on courts and bureaucrats. They say that “only death and taxes are certain,” but maybe we can avoid the taxes part!

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Call me at 847-317-0077, email me at breinberg@alliancecgc.com, or tweet me at @benreinberg or @alliancecgc to submit us a property(s) for us to acquire. For further information on our approach to deals, please click here.

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If you have an interest in investing in our opportunities please give me a call. For further information on investing with Alliance, please click here.

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My Best,

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Ben

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