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AN EASY WAY NOT TO LOSE HALF OF YOUR ASSETS Update October 25, 2011 Financial advisers and investment planners have lots of stories
about how diversification and proper investments can not only grow your money but also protect it against setbacks.
Setbacks will come. It could come from Europe with a crisis about Greece will pay its debts, or it could come from a
government overthrow in Egypt and worries about oil supplies being disrupted, or it could come from the Korean peninsula over
worries about the nuclear weapons intentions of North Korea. These setbacks we, as individual investors, cannot plan
for or control. But there is another financial setback that we can control and even
prevent or stop and this financial setback could rob you of half of your assets depending where you live in the United States.
What's the setback? It's divorce. If you get divorced you could lose half of everything. Yes, you can with the help of an attorney get legal agreements between you and your spouse that can prevent the loss
of some assets so you should consult with an attorney. But if you look at history, you will find that many of the wealthiest
people didn't have a divorce to complicte their financial plans. The pros will tell
you to follow the "big D's" to protect your wealth including "diversify" and they should also tell you
don't get divorced-- the other D's.
RULE #1 FOR PROTECTING YOUR WEALTH: DIVERSIFY Update July 16, 2011 Because I've been a financial news reporter for more than thirty
years, I am frequently asked by viewers and readers for ideas about how they should handle their money. In all honesty,
I tell them I can't advise them and the reasons are easy to understand. First, I am not an investment professional,
and second I don't know everything there is to know to help these folks make an educated decision about handling their money.
But, I am a darn good reporter and over the years I've come to learn so excellent pieces of advice. The best piece of advice I ever got is really the first rule for protecting your wealth: you have to diversify.
Simply, you don't put all your eggs in one basket. You can't have all of your 401(k) invested in one stock, or in one
mutual fund. If you invest in the stock market, you have to break up your portfolio so that it is not all in energy
stocks or auto stocks or technology stocks. If all of your money is in bonds or certificates of deposit they all can't
be long term or 10 year securities or short term securities. Diversification helps
you and protects you from what you don't know. If we all knew what would happen to Stock A then we would know whether
to buy it or sell it short, and if we all knew what would happen with gold then we would know whether to put all of our money
in it or sell every piece of jewelry we have now before the prices drop. When you
diversify you spread your risk around because you don't know what will happen five years from now or one year from now or
even tomorrow. So if a financial planner or professional tells you not to diversify
you have every right to stare at him or her and demand to know why. Then ask to see their crystal ball. And Rule
#2 is also to diversify where you get your financial advice from. Bankers will tell you one thing, while stockbrokers
will tell you another, while life insurance salesmen will have their pitch, and gold dealers will have theirs. It takes work to keep the money you worked to get.
PROTECTING YOUR WEALTH, AND MISTAKES THAT CAN COST
YOU. Update July 12, 2011 Here are a few different
types of financial instruments, products and plans that professionals can use to protect your wealth. They are the variable
annuity, the equity indexed annuity, various trusts and legal arrangements, and of course life insurance. Steven Roth of Wealth Management International in Los Angeles deals
in financial services, legal, tax planning and insurance issues and told me about some cases. Roth told me
he worked with some law firms on high-profile cases and he has consulted with affluent families for how to preserve
wealth using financial products. He discussed with me some of the problems he has uncovered for clients.
It’s not what you are told, he warns, but more often it’s what you aren’t told. Here are just some
of the common major problems that he shared with me that even trusting, intelligent people unwittingly encounter: VARIABLE ANNUITY Uncovered high hidden fees and showed the client how terminating her variable annuity would improve her after-tax
retirement income from a projected $102,000 to $188,000 a year — a total estimated gain of over $1.7 million over her
lifetime. He told me he also made a claim for misrepresentation and unsuitability against the insurance company.
The insurance company compensated the client for her losses, and waived the $15,000-plus surrender penalty. EQUITY
INDEXED ANNUITY Client was promised that he
could earn 12% or more and earn no less than 3% without risk. Both promises were false. He said he obtained
a release for the client of $150,000-plus of contractual penalties, and obtained interest on his money — rescinding
the policies in the 3rd policy year, freeing up his money 11 years early. Total value to the client: over $300,000. PRIVATE
ANNUITY TRUST In one case, he said he uncovered
how the $9-million-plus projected gain a client was promised by the tax-shelter promoter was false. He assisted the
client in terminating the trust, protecting him from a certain ultimate loss of over $3 million. He then recovered
over $200,000 from the client’s past advisors, making the client whole. In another
case, he told me he uncovered that a client’s $21-million trust provided neither the income nor the estate
tax savings the client was promised by his CPA, attorney and other financial advisors; also uncovered numerous problems with
the trust, that was created and funded improperly. He assisted the client in terminating the trust, protecting
him from a certain ultimate loss of over $20 million. CHARITABLE REMAINDER TRUST By terminating the client’s trust, established by his attorney
and CPA, he said he eliminated tax inefficiencies, resulting in over $2 million more to him and his family. The
client will have more money during his lifetime, and has regained control of trust assets allowing him to immediately benefit
charity. LIFE INSURANCE The first problem he told me about he calls the Free-Life Insurance Scam. In this example, the client’s
long-time, trusted insurance agent sold him a large life policy with an oral guarantee that the policy could be sold for a
profit, without risk, after two years. That was false, he said. After his investigation he said he convinced
the insurance company to return premiums paid without the client having to sue. The second
problem involved a Premium-Financed Life Insurance Policy Penalty Recovery. In this case, Steven Roth said
he uncovered that the client’s attorney, who put him into the arrangement, made a mistake that caused over $733,000
of penalties and costs to be incurred. Neither the client’s insurance agent, nor attorney, nor CPA informed the client
of the mistake, Roth claimed. Steven reports that he fully recovered the loss for the client, which he would
never have known even existed without his analysis. Another
of Steve’s clients was sold a life insurance policy as an investment to save money for retirement. Steven
says the client’s insurance agent and “financial advisor” claimed that because the cash value would
grow tax-deferred and money could be pulled out of the policy tax-free through loans, the client would have more money than
taxable investing. Steve told me that his analysis revealed that this was false. Steven Roth's clients pay either expert fees or a fee when money is recovered for clients. If no money
is recovered or found for the client, there is no fee unless Steve is hired
on an hourly basis to testify in court or in an arbitration. And if you are looking for a professional to assist you
that is a financial arrangement you should consider.
Different attorneys and professionals are likely to have different fees and arrangements and you should shop around for these.
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