1. Not FDIC May Lose No Bank
Insured Value Guarantee
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|1
2. Asset protection:
Preserving your net worth
• We protect our homes, cars, valuable possessions —
even household appliances
• What about our wealth?
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3. Lawsuits target “deep pockets”
“How a jury decided that a coffee spill was worth $2.9 million”
Wall Street Journal, September 1994
“Mall sued over squirrel attack”
Chicago Sun Times, August 2006
“Dry cleaners sell shop shredded by $67M lawsuit”
Washington Post, September 2007
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4. Are your assets at risk?
• Do you own a home?
• Are you in a high-risk profession?
• Do you own a business?
• Does your business have employees?
• Do you own rental property or real estate investments?
• Do you have significant personal savings or other valuable assets?
• Do you drive a car often?
• Do teenage drivers live with you?
• Do you have pets?
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5. A critical part of a financial plan
Investments
Saving for
Funding
retirement
education
Minimizing Comprehensive
taxes financial plan Insurance
Planning for Asset protection
income in
retirement
Estate planning
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6. A two part plan to protect
your assets
1 2
Minimize your Put a protection
risks now plan in place —
before something
happens
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7. What asset protection is NOT
• An excuse or vehicle for evading taxes
• A method for hiding assets
• A way to defraud creditors
Source: Asset Protection Planning Guide: A State-of-the-Art Approach to Integrated Estate Planning, Barry S. Engel, David L. Lockwood, and Marc Merric.
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8. Build your protection plan
Basic components Complex techniques
Insurance Incorporating your business
Insulating “hot” assets such as
Titling assets
real estate
Equipment leasing and
Homestead exemptions
multiple LLCs
Protecting retirement and Using trusts to protect
college savings your assets
This material is for informational purposes only. It should not be considered legal advice.
You should consult with an attorney to determine what may be best for your individual needs
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9. Start with the basics
• Identify and correct property risks
• Review your insurance coverage
• Purchase umbrella liability coverage
• Apply for a homestead exemption
• Be careful when titling assets
• Identify and correct any potential risks associated with
property and real estate
• Maintain positive personal and professional relationships
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10. Are your retirement savings
protected?
Type of retirement
account File for bankruptcy? No bankruptcy
ERISA plans:
401(k), pension, profit Full protection Full protection
sharing, ESOP
Rollover IRA, SEP IRA, Not protected at federal
SIMPLE IRA, most 403(b) Full protection level, may receive
plans, Individual 401(k) protections at state level
Not protected at federal
Traditional and Roth IRA Protected up to $1 million level, may receive
protections at state level
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11. How college savings
are protected
Federal protection in the event of Chapter 7 bankruptcy filing
Point of
contribution 1 year 720 days
Made less than a year before After 1 year, $5,000 is Made more than 720 days
filing: NOT protected from protected before filing: 100%
creditors protected
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12. Is your business putting
personal assets at risk?
Business owners may be at risk of legal claims
by patients, customers, or employees
Without a formal business structure,
your personal assets may be at risk
Select a method of ownership for your business
to make it difficult — or expensive — for
someone to access your assets
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13. Structuring your business
Business
ownership Benefits Considerations
Corporation • Business owner does not bear • May be more complex to
(C corp or S corp) personal liability for debts of establish and maintain
the corporation • Adverse legal judgment
could result in plaintiff
receiving ownership shares
LLC or LLP • Easy to establish and • Some states may allow
maintain creditors to attach
• Potentially better liability ownership interest of LLC
protection than corporations; or LLP
creditor attachment may be
limited to distributions, not
shares of ownership
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14. Insulate “hot” real estate assets
Separate LLCs can insulate risky assets from personal assets
LLC #1 LLC #2
Summer
Apartment
Personal assets rental
building
cottage
• Primary residence
• Bank accounts
• Investments LLC #3 Liability for one
• Personal belongings property won’t affect
Commercial other properties or
real estate personal assets
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15. Example: Using leasing and
multiple LLCs to protect assets
LLC#1
Equipment
Equity in these
assets is NOT
The medical practice contained in the
leases office space and
Medical equipment from the medical practice,
practice LLCs where it could be
at risk
LLC#2
Real estate
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16. Using trusts to protect
your assets
Type 0f trust Asset protection considerations
Irrevocable trusts • Typically prevent trustee from making distributions to
satisfy creditors of the trust beneficiary
Offshore or • Trustee is not subject to jurisdiction of U.S. laws and courts
foreign trusts • Creditors may find these assets more difficult/expensive to
target
• Certain court cases have exposed limitations
Domestic asset • Trustee and beneficiary are same person
protection trusts • Designed specifically to protect assets from creditors
• Relatively new, available in a few states; lack of existing
case law to provide precedent of their effectiveness
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17. Your action plan
• Meet with your financial advisor
• Review current assets and determine your net worth
• Take care of basics, such as insurance coverage
• Identify and minimize any prevalent risks
• Consult with an attorney
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18. Investors should carefully consider the investment objective, risks,
charges, and expenses of a fund before investing. For a prospectus
containing this and other information for any Putnam fund or
product, call your financial representative or call Putnam at
1-800-225-1581. Please read the prospectus carefully before investing.
This information is not meant as tax or legal advice. Please consult your legal or tax advisor before
making any decisions. Shares of mutual funds are not deposits or obligations of, or guaranteed or
endorsed by, any financial institution; are not insured by the Federal Deposit Insurance Corporation
(FDIC), the Federal Reserve Board, or any other agency; and involve risk, including the possible loss of
the principal amount invested.
Putnam Retail Management
putnam.com
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