A lot of high net worth individuals follow the adage “Put all your eggs in one basket… and then watch that basket” when it comes to protecting assets. But protecting large sums of assets may not be as simple as it used to be. Here are some ways that the richest people in the world are doing to ensure the highest form of protection for their assets.
DEPOSIT AND SECURITIES INSURANCE
Bank accounts have deposit insurance, which can be the most basic form of protection. So if you have multiple accounts in one bank, you can seek protection for all of those accounts. For example, you have an individual account, an IRA, a trust account and a joint account. If a bank insures up to $250,000 for each depositor, per bank, per ownership category, then you are covered for the full $1 million. This means that you can structure your accounts in various ways to maximize the total coverage.
A lawsuit may be a far greater risk to your personal wealth than a bank failure. This is why you need certain types of coverage for your protection.
Business liability – the coverage you need depends greatly on the nature and size of your company. For small to medium-sized enterprises, there is a business owner policy, which includes liability, property and other types of coverage in one package.
Professional liability coverage – you will need this type of insurance no matter your profession. But some of the most vulnerable professions include architects, accountants, engineers, investment advisers, IT consultants, lawyers and real estate agents.
Liability coverage – it’s important for a business to have sufficient liability coverage to ensure you have ample protection. In most states, the minimum requirement is $25,000 or less, but you can raise the coverage if you wish to.
TRUSTS, WILLS AND OTHER LEGAL OPTIONS
Trust and wills are other ways to manage the risks when you have high net worth assets. Transferring assets to your spouse’s or children’s names will help you protect your wealth in the long run.