9/21/14: The Big Picture – Structures for Protecting, Preserving and Passing Your Wealth

Part of successful investing is good organizationMost people we know (ourselves included) would like to be more organized.

When it comes to investing and wealth management, great organization is more than just a convenience.  It’s a necessity.  Otherwise you risk losing everything you’ve worked so hard to build.

So while doing deals and chasing profits is exhilarating, there’s a bigger picture every investor should be proactive about attending to.

Because the worst time to find out your asset protection and estate planning strategies are inadequate is when you need them.

In the very organized mobile studio for this episode of The Real Estate Guys™ radio show:

  • Your very adequate host, Robert Helms
  • His inadequate and disorganized co-host, Russell Gray
  • Returning guest, new Summit at Sea faculty member and estate planning attorney extraordinaire, Jeffrey Verdon

When we were little boys, we played a now classic Hasbro board game called Chutes and Ladders.  

The premise is simple.  Your goal is to climb up the ladders to the top of the board.  You get opportunities to climb up when you land on “good decisions”.

But if you land on a “bad decision”, you slide down a chute to the bottom of the board…effectively wiping out all or part of the gains made from your good decisions.

Yes, it’s true…Chute Happens.

It reminds us a lot of real estate investing.

Because it’s easy to get excited about the thrill of climbing the ladder of investing success…finding deals, organizing funding, managing cash flows.

Heck, for hard core real estate enthusiasts, even dealing with some of the land lording hassles is actually fun.

A good entity structure and estate plan can take your portfolio from chaos to orderBut because investors and entrepreneurs tend to be optimists, we are prone to procrastinate about paying attention to protecting, preserving and passing on the wealth we work so hard to accumulate.

It’s just not as fun.

However, negatives can’t be ignored.  Because sooner or later, EVERYONE has to deal with negatives.

Real estate is the most litigious of all asset classes, but even if you’re among the fortunate few who never end up in a lawsuit…eventually everyone dies.  And it’s hard to think of anything more negative than that!

But estate planning is more than just organizing your affairs in preparation for your death.  It’s about risk mitigation, tax management and wealth preservation.

The good news is it’s a lot like constructing a building.  It takes a lot of planning and effort on the front end, but once it’s built, the maintenance is fairly manageable.

So what does that look like?

Well, it’s far too big of a topic for a simple blog or podcast.  But our guest Jeffrey Verdon gives us some important pointers.

Like designing a building, first you need to decide what you want the finished product to look like…how you want it to function.  You don’t have to know all the details.  It’s just a big picture design.

Then, you get the “engineers” (attorneys and tax advisors) involved to design it according to your big picture plan.

And just like a real life construction plan, you’ll probably have to make concessions between what you want, what is structurally sound, and what is cost effective based on your budget.

Once it’s designed and engineered, then it can be constructed.

To switch metaphors, think of it like a closet organization project in advance of a shopping spree.

First, you lay it all out.  Then you build it.  Then you put the stuff you already have in the correct places.

Now when you go shopping and come home with all your treasures, there’s a proper place for everything.

And if you are disciplined to keep up on the maintenance, you can keep it fairly organized all the time.

Coming back to real estate…

With a proper entity structure and estate plan, you know where everything goes when you come back from a shopping spreeWhen you have your structure in place, and you know how to use is, when you go out shopping for properties, signing documents, receiving checks and conducting business, you know where everything goes.

Jeff says the most common mistake most real estate investors make is either holding all their properties in their own name, or holding them all in just one entity.

Another common mistake is holding them in a corporation…even an “S’ corporation.

Remember, the time to find out your entity structure isn’t well designed to protect your wealth from creditors, predators and over-zealous taxation isn’t when the challenge is upon you.  When it comes to asset protection, tax management and estate planning, it's best to be proactive

It’s best to prepare for the inevitable storms of life before the dark clouds roll in.  And it starts with getting educated.

So listen in as we talk big picture planning with attorney Jeffrey Verdon!

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