What happens to your family if something happens to you…?
Wealth Protection, Asset Protection & Estate Planning aren’t the most thrilling of topics. Most people would rather stab their own eyeball than think about it. But imagine you did stab your eyeball, and were off work for 6 months… how would your family cope?
Forgive me for being cheeky, but I’m passionate about ensuring people are protected against things that will ‘never happen to them’… but they happen to someone.
Consider a few personal examples:
- My best friend passed away from lung cancer at the age of 33 (he never smoked a cigarette in his life).
- My dad had open heart surgery in 2005 to replace a heart valve.
- I was in a terrible car accident 5 years ago and couldn’t work for 12 months while I recovered and learned how to walk again.
- Two friends of good friends have had brain tumours and not been able to work for 12 months while they sought treatment and recovered.
- A good friend of my wife (who used to run marathons in 3hrs 30 mins without the need to train) was in a car accident 6 months ago and is now a quadriplegic.
Put simply, bad things can – and do – happen.
These areas could all be a separate topic by themselves, however they are so interwoven that I’s helpful to discuss them together. Let’s look at each in turn:
Asset Protection refers to protecting your assets in two ways:
1) in the event of being sued
2) by having adequate diversification and/or not taking on unnecessary risk to achieve your goals.
It is vital that business owners have adequate Asset Protection; but with Australia becoming an increasingly litigious society, individuals (especially property investors) also need to ensure they are adequately protected.
- How is the home mortgage going to be paid off?
- What impact will the temporary or permanent loss of income have on the family’s ability to cover expenses and have an adequate ongoing lifestyle?
- What bills would stop as a result of this event? What new bills would start arriving?
- If you are the main income earner, will your family be able to survive financially if you are no longer around?
Wealth Protection is a critical part of any financial strategy. Unfortunately most people have an aversion to insurance, or simply consider themselves bullet proof. But look around – there are plenty of sobering events to remind us how fragile – and precious – our health and life is.
As assets grow and debts reduce, the need for any Wealth Protection becomes less and less. However if you have debt or dependants, and don’t yet have an empire of assets to cover not working for an extended period, you should implement a wealth protection strategy incorporating appropriate levels of Life/TPD cover, Income Protection and Trauma insurance.
These things of course cost money. In my view it’s important to have the right mix of appropriateness and affordability – so you and your family are covered for what you want/need by an affordable strategy over the required time frame. Most of our clients allocate around 2%-4% of their income toward protecting future income, leaving the remaining 96% to cover the fun and exciting stuff such as their lifestyle now, and wealth-building activities for the future.
- Who will be your Executor?
- How do you want your assets distributed?
- If you have minor children, who will be their guardian?
Disclaimer: This is only general advice. It’s important to seek professional advice about your personal situation to ensure whatever you do is appropriate for your individual circumstances.
Book a complimentary meeting with our experts to develop a strategy to achieve your future financial and lifestyle goals: (03) 8888 4000 or firstname.lastname@example.org.