From this board's FAQ.Us RWOLers have usually paid off all our debt including houses, are mostly living on investments/pensions and we have lots of time to spend it (leisure/volunteer work/doing nothing) as we see fit.I've been living off investments for several years, and just started receiving my bridge pension (bridge till age 62) this year. One thing that has been troubling me from the beginning is how fragile the situation seems in our tortious society. What can I do to help judgment-proof my investments, other than spend lots of money on lots of personal insurance? It goes without saying that I need to continue to have access to my investments to live. I'm 55, and living on the pension and capital appreciation, rather than on dividends. Fortunately, I'm having to dip into the till less often now that my daughter has graduated and is out on her own.Hedge
Hedge, There are trusts that can help to make it very hard to attach assets. This is the point where a very good trust attorney may be worth the investment. JK
There are trusts that can help to make it very hard to attach assets. This is the point where a very good trust attorney may be worth the investment. Jim,I hadn't thought of that. I don't have a lot of money to protect; just enough, by my calculations. Earlier in the year I had thought about talking to a "financial adviser" about this issue, but I couldn't convince myself it would be money well spent. I didn't want to get into a situation where I was trying to protect my investments and the advisor was trying to get his/her hands on them to the exclusion of solving my actual problem. I do need to update/replace my will. Maybe I can kill two birds with one lawyer. :)Any other ideas would be appreciated. I would think it would be a common issue for this group.Hedge
I've been living off investments for several years,..One thing that has been troubling me from the beginning is how fragile the situation seems in our tortious society. What can I do to help judgment-proof my investments, other than spend lots of money on lots of personal insurance? It goes without saying that I need to continue to have access to my investments to live. I'm 55, and living on the pension and capital appreciation, rather than on dividends.Welcome to the board..not that I'm a long timer; justdiscovered this board a couple weeks ago and lurking mostly. I may be misunderstanding but it seems like you're asking two questions, one on insurance (or did you mean that metaphorically?) and once on judgement proofing. Your profile indicates you are using ETFs, at least to someextent. If you stick with a basket of ETFs that is diversified, (i.e., not 100% foreign stocks, not 100% small cap, but a reasonable mix in resonable proportions) and not tinkerwith it, your risk level would be on the lower end. I'm not sure how this ties to your comment about living on capital appreciation but the traditional thinking is that taking out 4% in the first year and adjusting up for inflation in future years is reasonably safe to have one's capital last at least 30 years. You're already retired so I'm sure you'veheard of the 4% rule..so maybe I misunderstand your comment. I'm not retired but hope to be in your shoes in 5 years or so..so have been thinking a lot about living well on less. Or actually, I don't plan to ever "Retire" but to move to part time work in areas where my heart is and have the rest of the time for more rest, relaxation, volunteering, etc..Semi OT..I have some in ETFs but not a European focused one..notice you listed IEV...other than it being relativelynewer (2005) do you have thoughts on VGK,which my search turned up, and has 0.18% rather than 0.6% expensees? Not that 0.42% is life and death, but does VGK have some major drawback relative IEV that I'm not aware of? Thanks.
I may be misunderstanding but it seems like you're asking two questions, one on insurance (or did you mean that metaphorically?) and once on judgement proofing.My only interest, with this post, is with judgment proofing. The insurance comment was just a reference to holding enough insurance to protect against any likely judgments, not as an investment. I believe that there are some protections for insurance vehicles, as well, but I have no interest in them. As to the investment mix, etc, I've done the math and am satisfied with my investment mix and withdrawal rate.I was just looking around a bit on the web, and this subject seems to be the realm of survivalists and tax scofflaws. I couldn't find much about legitimate asset protection that wasn't either "bury your gold in your yard and guard it with a gun" or some offshore investment scam. Looking in my state's statutes, it seems like they have most things covered(prohibited); including a limit of $10,000 on your homestead. Retirement accounts are protected, but it looks like I have to have income to be able to contribute. It's a bit late for that for me, in any case, at age 55. At a guess, I'd say that the legislators didn't really contemplate the amount of wealth that would be tied up in protected retirement accounts, when they gave them protection. Another observation would be that there seems to be a strong prejudice against anyone having any actual wealth that can be accessed during their productive lifetime. I'm caught in that limbo where I have health problems and can't work, but have been unable to get a disability classification from the Social Security Agency.Not that 0.42% is life and death, but does VGK have some major drawback relative IEV that I'm not aware of?I'm afraid I can't help you. A fraction of a percent doesn't tempt me to pay capital gains taxes to switch, so I haven't looked into what the competition is for IEV or any of the other ETFs I have.Hedge
My only interest, with this post, is with judgment proofing. The insurance comment was just a reference to holding enough insurance to protect against any likely judgments, not as an investment. . . ++++++If you don't have thishttp://www.investorwords.com/5106/umbrella_liability_insurance.htmlyou are probably under-insured [imho].sunraya man with an umbrella since the 80s
Sorry Hedge, I read your post too fast..I thought you meant create a portfolio that will be safe/bulletproof frombad judgement (chasing the latest high return funds, etc..) oops :-) I see you're worried about someone suing you..yes researching thelaws on what's shielded and what's not, as you have been doing, seems like a good idea if you are worried about your risk of a judgement in court against you...I'm sorry to hear about your health problems...good luck..and I did read someone online recently how it can be a long wait before some fed agencies ack what you have...which sucks..but the good news is sometimes its "late" which is better than "never" as far as theymight eventually accept your situation as qualifying for disability at some future point..good luck with that.Imag
Sorry Hedge, I read your post too fast..I thought you meant create a portfolio that will be safe/bulletproof from bad judgement (chasing the latest high return funds, etc..) oops :-)No problem. I've made the same mistake with others who had just joined a board where I hang out.I see you're worried about someone suing you.Worried probably isn't the right word. It's more of a matter of checking the p's and q's, and discovering a whole paragraph missing. :) Although my portfolio is very aggressive, I am pretty conservative, when all things are considered. "sunrayman" probably has the right idea with the umbrella insurance suggestion.Hedge
This is a complex field, but you can get an idea of what's available by browsing a few books at the library or more likely a big bookstore. I have a copy of "Made E-Z" Asset Protection. The short answer is that available protections vary enormously by State (mainly to do with exempt assets if it comes to bankruptcy.) For the super-rich, some money may be stashed in other countries with more asset-friendly laws. For the average Joe, if most of your wealth is in an approved retirement vehicle (perhaps a variable annuity?) and your homestead, your assets may be all but untouchable. You can also usually get fairly cheap "umbrella" liability insurance. Read up and perhaps see a professional, to see what applies to your situation.
Here's a really good article on this subject that was published in the local paper this weekend. As has already been mentioned, the specifics of judgement proofing techniques vary from state to state. This article was written for Arizona residents. However, I think it is a good overall checklist no matter which state you live in. It provided me some ideas that I hadn't seen before. http://www.azcentral.com/business/articles/1014biz-AssetProtection1014.html
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