Date: Oct 13TH, 2022

Financial Planning – Protecting Your Wealth in 2023

If you’ve spent most of your adult life creating wealth – not only for yourself but your family and your employees – you may be concerned with how to preserve that wealth. For many people, there is a worry about what would happen in the event of serious business losses (the current economic climate of inflation and potential recession doesn’t help) or lawsuits. In this blog, we’ll discuss some of the options for wealth preservation in 2023 and going forward. 

Stress-test your finances 

While economists have differing opinions on whether a recession is before us, most agree that 2023 is unlikely to be a strong growth year. Repeated rate hikes by central banks to control inflation could very well tip the economy into recession. Your current financial management plan may not reflect this reality, so now is the time to run some “what-if” scenarios to test how your wealth will respond to a slow-down or even a full-out recession. You may find that it’s time to rebalance your portfolio. 

Adjust your life insurance

While you may be confident about the amount you will pass on to your heirs after you die, it’s important that you remember that onerous estate, gift, and income taxes can eat away at this amount. It’s, therefore, a good idea to ensure your life insurance will cover these costs. A good life insurance policy will provide a lump sum of cash to your beneficiaries when you die. There are other forms of insurance that can also help lower your liabilities to pay these costs, such as property, casualty, and liability (which can offer protection against many types of legal challenges). 

Consider a limited liability entity

A limited liability entity is a great way to separate your personal assets from those of your business and other sources of income, such as rental properties. This way, adverse events will be limited to your business affairs and not cross into your personal finances. Should the worst happen, creditors will not be able to seize your personal assets. 

Look into a trust

By putting your assets into an irrevocable trust, you are making the trust the asset owner instead of you. For this reason, your creditors cannot access the trust in an effort to satisfy a legal judgment, even if you are the beneficiary of the trust. There is also the option of an asset protection trust, which is an irrevocable, self-settled trust and one of the strongest tools available to protect your wealth against creditors. (It’s important to note, however, that these types of trusts are not allowed in all states.)

Consult a financial expert

If your goal is wealth preservation, it’s a good idea to consult with an expert financial advisor on all the steps that are available to you to protect your legacy. Arizona-based Prime Wealth Advisors is a full-service tax, retirement planning, estate, and wealth management firm. Call 623.77.PRIME or visit our website for more information.