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Understanding The Four Biggest Threats To Your Wealth

June 16, 2021

You’ve worked hard and gotten your financial situation under control by spending responsibly and saving money for all of your needs, including retirement. Even so, there are threats that could disrupt your careful planning. These threats are outlined below.

Poorly Invested Assets

It’s imperative that you have an investment strategy for your assets that’s in alignment with your objectives, risk tolerance, and liquidity needs. Risky investments and poor asset allocation can threaten your wealth and lead to financial problems that could easily be avoided.

It is also important to have an investment strategy that’s tax-efficient. For example, if you anticipate having large gains, consider tax loss harvesting and taking advantage of charitable or other deductions that may be available to you.

Not Having a Financial Plan

A financial plan can help you determine your short and long-term financial goals and ensure that you don’t fall short of meeting those goals. If you fail to manage your money appropriately, you may fall short of meeting your goals.

Having a plan to take control of your income, expenses and investments will also enable you to enjoy a better standard of living and ensure that you’re adequately prepared for emergencies.

Not Having Enough Insurance

Consider whether you have adequate insurance coverage in the following areas:

Life insurance can give you some peace of mind knowing that family members will have proceeds available after you’re gone. In addition, it can provide liquidity to pay estate taxes or other expenses. Long-term care insurance can help defray the costs of long-term healthcare. Long-term care costs have increased significantly over the last several years.

An umbrella policy can provide you with more comprehensive coverage to help protect against any claims that may arise, given that we’re living in a litigious society.


In addition to making sure you are adequately insured, there are additional steps you can take to protect your assets from potential creditors.
If you hold investment or rental property, consider holding such real property in a limited liability company (LLC) or other entity instead of holding it in your individual name. This will help protect your other assets in the event of a lawsuit or judgment against you.

Finally, consider creating a domestic asset protection trust (DAPT) to help provide protection from creditors. A DAPT is an irrevocable self-settled trust in which the grantor (i.e., the person creating the trust) is designated as a permissible beneficiary and allowed to access assets in the trust. When properly structured, creditors should not be able to reach the trust’s assets. Further, a DAPT may offer other benefits including state income tax savings when created in a state, such as Wyoming, with no state income tax.

Are There Any Threats to Your Wealth?

If you’re concerned about possible threats to your wealth, talk to First Western Trust Bank today. We can help you navigate the strategies that are available to you to help ensure that your assets are protected.

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