Why Asset Protection is an Important Consideration

Joshua Dobi |

When thinking about your financial universe it’s important not only to think about how to increase your assets, but how you can protect your assets. Asset protection strategies are important for preserving your estate for your loved ones but the only way this can be accomplished is through planning. We called upon Jonathan Padgett of Padgett Wealth Management to provide some insight into what asset protection means.


Joshua Dobi – We would like to welcome Jonathan Padgett of Padgett Wealth Management out of Huntersville, NC. Jonathan you have a lot of financial management experience. Talk a little about your history and what you focus on.


Jonathan Padgett - I got a lot of experience working with a lot of financial advisors across the country and partnering with folks like yourself (North Main Financial) to do financial plans and money management. I learned a pretty wide landscape of how advisors work with their clients. I wanted to provide an avenue and resources for clients and people like (North Main Financial) a level of expertise with protection planning. We focus on life insurance, long term care, as both traditional and hybrid, disability income insurance, and annuities.


Where a lot of people focus on accumulating assets, I want to protect the assets. So, my focus is really on the wealth protection side. People work really, really hard to accumulate their wealth and I want to make sure that when the time comes, when they need a backup plan, that it’s a sound, solid plan and make sure their wealth is protected.


Joshua - We give so much emphasis in the popular spaces, the accumulation times. 401K’s, savings for college, investments. You’re talking about the other side of it. What happens when folks pass away or when someone owns a small business and they want to transfer that business to someone else in the family or outside the family.


Jonathan - Both sides of the financial planning spectrum is absolutely necessary. We need to grow and have access to our wealth during our working years but also have a plan in place during our working years and in retirement to protect that wealth.


Joshua – Talk about some of the real-life scenarios you’ve encountered.


Jonathan – I’ve had quite a few personal experiences with people that I love in the last three to four years with different set of circumstances that have caused either an interruption in their wealth, or through lack of planning, has caused extra stress or anxiety that really didn’t have to be there if a plan was in place.


One in particular was my Mom and Dad. They have had to take care of three of my grandparents. Two out of the three did not have any sort of protection plan in place for this long-term care event. I do remember very vividly the third grandparent, the one who is still living, my Mom said thank God she has a long-term care policy because we don’t have to worry about selling the house, distributing assets that she maybe didn’t have, or it would have really taken a financial toll on my parents. Having a plan in place can definitely alleviate the financial stress, even though my Mom and Dad still had the emotional stress of taking care of the parent.


Joshua – Thanks for sharing that personal anecdote. It wouldn’t surprise me at all if listeners to the North Main Financial show have engaged or observed that kind of experience. Popular data out there right now suggests that in our lifetimes as many as one out of two are going to have some kind of experience personally with assisted living or some other nursing home or extended long term care. Because we’re living longer and have longer life expectancies there’s a longer care element. The financial impact on that, unfortunately, is very significant. It’s not only consistent and ongoing but also very, very expensive. Very often we are needing to scramble a little bit. Planning is not always done ahead of time and we’re needing to make some adjustments or shifts in thoughts and planning a little bit on the fly.


What’s another area you focus on?


Jonathan – Another area we like to focus on, and we see missed often, is simple family planning. Making sure assets are passed on to the right family members fairly. I’ve got relatives of mine, three siblings waiting on their father’s second wife to pass away to receive their inheritance. Biological children from a previous marriage and they’re waiting on their father’s assets to be passed to them. It’s really tough to see because they’re saddened this lady is blowing through the wealth that they’re supposed to inherit or they should have inherited with proper planning. We want to make sure we have an understanding of what the family dynamics are. We put a plan in place to direct wealth and not cut anyone out. (My family member) worked hard to grow his wealth and we want to make sure that all sides of the family are taken care of and protected.


Joshua – That is one of the most challenging spaces we encounter. Whether it be inside the family, marriages, remarriages, step parents, step children, then we sometimes encounter the sale or movement of a small business. Also, if there is going to be a sale or transfer to someone outside the family. That is one of the most challenging spaces that we occupy from our standpoint.


Jonathan – Having this kind of conversation is absolutely necessary. To your point, if someone has grown their business and working hard – 10-12 hour days growing their business - why would they not make sure if they were to succeed their business to someone inside or outside their family, they had clarity on what was about to happen.


Joshua – Do you have a process or a filter by which you begin the process with people?


Jonathan – We want to get an understanding of where you are at. Understand your goals and what you currently have in place, so we can offer proper advice. Once we have an understanding, we can go out and figure out what’s going to be the right thing for you. We’ll customize something and make sure we’re all on the same page. If you have a third party, or other decision makers, you really trust we’ll make sure they’re in the room or they know what’s going on so there’s a consensus. We want to make sure there’s clear information being discussed so you have confidence with the kind of plan we’re discussing. The people that have helped you accumulate your wealth over the last five, 10, 15 years, people that you trust, we want to make sure they’re on board and confident in what we are talking about. Then we want to implement the solution, monitor and maintain it to make sure that it does what it needs to do so it’s there when you need it the most.


Joshua – That’s sounds very similar to what we do at North Main Financial when you talk about implementation of broad-based financial plans. When you talk about implementing the stakeholders it’s not just the person who needs to make the decision, you need to make sure everyone who is impacted by what the significant financial decision is there, to bring them on pretty early.


Jonathan – Exactly. Whether it’s a trusted CPA, attorney, a financial advisor, whoever it is that they’ve leaned into over the years for advice. We want to make sure everyone is on the same page.


Joshua – Padgett Wealth Group looks at a number of different scenarios so that they can customize a solution, often in conjunction with folks like us, which is most pertinent to each client. Not just a matrix or product that is sold or given to everybody. Ensuring there is healthy understanding and that everyone knows where you are.


Joshua – Talk a little bit about disability planning, not many people touch on that. People may have some disability insurance through their employer, maybe some short-term disability insurance or long-term, part of that benefits package they receive. Small businesses or family offices don’t often give attention to that.


Jonathan – One of our biggest beliefs is that we need to make sure we insure somebody’s income. Whether it’s a small business owner or a high-income earner, their ability to work and generate income is their biggest asset during their working years. We want to make sure we have that conversation and make sure they are aware of the risks that are out there if they don’t insure their income.


Recently I had someone close to me who had a major cardiac event and he could not work for six to eight months. Luckily, he had a group disability policy that took care of a certain portion of his income but a lot of us don’t have access to that. Whether it’s a group disability policy or an individual policy that we purchase on our own. We need to make sure that we have a conversation and insure your income to where you’re lifestyle doesn’t get interrupted and your growth of your assets don’t get interrupted.


Interested in hearing more about this topic? You can listen to the full episode of the North Main Financial radio show on WSIC by clicking here: Padgett Wealth and Asset Protection – 1/12/19.


For questions about asset protection, you can reach Jonathan at www.padgettwealthgroup.com or call 704.315.7100.


If you have questions about how real estate fits into your financial goals, or would like to talk with us further about our services, give us a call at (704) 987-1425 or visit us at www.northmainfinancial.com. If you wish to schedule an introductory meeting, we would be happy to meet with you at no cost or obligation to you.


These Blogs are provided for informational purposes only and should not be construed as investment advice. Any opinions or forecasts contained herein reflect the subjective judgments and assumptions of the authors only and do not necessarily reflect the views of SagePoint Financial.