Maximizing Exempt Assets
In the following chapters, we will explain a number of legal entities and techniques we use to protect the assets of our Doctor clients. This chapter on maximizing exempt assets precedes the following chapters because, in our view, clients should always reasonably maximize their use of exempt assets before moving on to legal tools, legal entities, and other techniques.
Despite their superiority to other asset protection strategies, exempt assets are not adequately used by most Doctors. This chapter will explain why many advisors don’t recommend exempt assets as often as they should. Then we will discuss all of the exempt assets that can be valuable components of a comprehensive financial plan. Throughout the book, you will revisit many of these exempt assets as they provide additional benefits to asset protection. In a later Lesson, you will learn how sophisticated Doctors save time and money by leveraging exempt assets that offer additional benefits. For now, let’s begin discussing why exempt assets are considered the “best” asset protection tool and then discuss the reasons why they remain underutilized in asset protection planning.
Exempt Assets: The “Best” Asset Protection Tools
We consider exempt assets to be the “best” asset protection tool for the following reasons:
1. No legal/accounting fees
Most of the tools in subsequent chapters involve the creation of legal entities that require set up and ongoing legal fees, state fees, accounting fees, and even additional taxes. Using the exempt assets described in this chapter involve none of these significant costs and affords better protection as well.
2. No loss of ownership or control
The legal tools of the following chapters typically require giving up some level of ownership or control to family members or even third-party trustees. By using exempt assets, you can own and access the asset at any time while enjoying the highest (+5) level of protection.
3. Superior Protection
The legal tools explained later offer protection that ranges from (+1) to (+5). Exempt
assets always enjoy the top (+5) protection up to their exempt amount.
Why Exempt Assets Are Underutilized More