By Rick Hellberg, ChFC®, CLU® and Michael Diaz

In Rick’s book Retire Abundantly, not only does he outline the obstacles that can get in the way of enjoying an abundant retirement, but he also talks about what can prevent you from passing your hard-earned wealth on to the next generation. 

In one of our recent articles, we discussed the wealth friction that can “TRICK” you out of your money. If you’ve managed to overcome those obstacles and live an abundant retirement, congratulations! But that is only half the battle. In fact, there are 4 wealth predators that will try to destroy the surplus of wealth you’ve worked so hard to build. In this article, we’ll discuss the 4 biggest wealth predators that can prevent you from leaving a lasting legacy behind for your loved ones. 

Details on how you can get a personalized copy of Retire Abundantly are available at the end of this article!

Estate Taxes

Estate taxes are the most aggressive and offensive wealth predator.  When U.S. Rep. Kristi Noem’s father died unexpectedly, she was left with a family farm and an estate tax bill so large that she had to take out a loan that took 10 years to pay off. Property that rightfully belonged to her family for generations was being taxed by the government just for being passed down! This is just one example of how estate taxes can turn a meaningful legacy into nothing but stress and heartache.

Some might say that the estate tax is less of a threat thanks to the rise in estate tax exemptions under the Tax Cuts and Jobs Act. Currently, the estate tax exemption is $12.06 million per person. (1) However, this increased amount is set to expire on December 31, 2025, at which point, if the TCJA is not renewed, the exemption will drop down to just $5 million per person. (2)

The newest political administration has also tried to speed up the process by moving the expiration date forward, (3) which would have drastically increased the number of families subject to expensive estate taxes. Thankfully that provision was not passed, but it illustrates how important it is to plan ahead to minimize estate taxes. You never know when the law might change to make the current system worse than it already is.

Litigation

Litigation is another major threat to your wealth and your legacy. With thousands of lawsuits filed every day, it’s certainly not a subject to be taken lightly. Whether it’s a car accident, defamation lawsuit, or a slip-and-fall at your office or home, litigation can come out of nowhere and within minutes steal the wealth you’ve spent decades building. Don’t let this happen to you and your family. Instead, utilize the kind of proactive planning that safeguards your wealth from expensive lawsuits and aggressive lawyers.

Divorce

The unfortunate fact of the matter is that divorce is a huge wealth predator that many don’t watch out for until it’s too late. Even if you’ve stayed married or protected your wealth from the threat of divorce, the likelihood that your children or grandchildren will eventually get divorced is right around 50%. With odds like that, it’s pretty likely that your accumulated wealth could face the threat of divorce on more than one occasion depending on who you pass your money to.

Can you imagine leaving your entire legacy to your grandson, only for him to lose half or more in a bitter divorce? It happens more often than you might think, and it only takes a little bit of proactive planning to ensure it doesn’t happen to you or your family. 

Bad Decisions

The final predator out to get your wealth is just plain old bad decisions, especially bad decisions around estate planning. The consequences of not having an estate plan can be severe for your surviving loved ones, resulting in unintended consequences in the form of estate and gift taxes, incorrect beneficiaries, disputes among heirs, and costly delays due to the probate process. 

Just take a look at music legend Jimi Hendrix, who died without an estate plan in 1970. The battle over his estate continues to this day (more than 50 years later!) all because he had no will. (4) Don’t let your family and legacy suffer the same fate when you could plan ahead and safeguard your wealth instead. It just takes a little strategy to identify your surplus wealth and systematically move that wealth over to your family in a tax-efficient way. This is the crux of what we do at PeterAlexander.

Are You Struggling With Wealth Predators?

If you are facing some of these obstacles, know that you don’t have to navigate them alone. At PeterAlexander, we can help you guard your wealth and leave a lasting legacy you can be proud of. To learn more and for a free personalized copy of Rick’s book Retire Abundantly, reach out to us at 610.940.1441 or info@peteralexanderinc.com

About Rick

Rick Hellberg is president and CEO of PeterAlexander, a financial planning firm founded in 1991. Rick is passionate about providing quality, objective financial solutions so his clients can pursue their financial goals and create the legacy they desire. He strives to equip his clients with comprehensive financial services and advice so they can be empowered to make sound financial decisions. The plans Rick and his team develop help their clients to reduce their taxes, educate their children, fund their retirements, pass their businesses on at fair value, and create programs to attract and retain valuable employees, all so that they can focus on what matters most to them. Rick has a Bachelor’s degree in Liberal Arts from Penn State, along with the Chartered Financial Consultant® (ChFC®) and Chartered Life Underwriter® (CLU®) certifications. He has spent over 40 years working with successful individuals and designs tailored solutions to meet his clients’ unique needs. 

Rick resides in Philadelphia with his lovely wife, Lisa, and their two Shiloh Shepherds, Bentley and Winston. He is also the very proud father of two wonderful young men, Peter and Alex. In 2010, Rick ran for Congress in the 2nd District of Pennsylvania and has stayed active in local politics. To learn more about Rick, connect with him on LinkedIn.

About Michael

Michael Diaz is a financial advisor at PeterAlexander with over 15 years of industry experience. Michael is passionate about helping people overcome financial challenges and avoid potential pitfalls so they can focus their time and energy on the most important things in their life. He spends his days working with successful business owners and families, implementing investment and tax reduction strategies to maximize their wealth. Michael’s goal is to help protect his clients’ financial security, putting them first and helping them navigate every stage in their financial journey. Michael earned his Bachelor of Science in Commerce and Engineering from Drexel University. When he’s not working, you can find Michael traveling, cheering on local sports teams, and exercising outdoors. Michael loves spending time with his wife, Abby, and their baby girl, Monroe. To learn more about Michael, connect with him on LinkedIn.

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(1) https://www.kiplinger.com/retirement/estate-planning/604534/dont-throw-away-a-1206m-estate-tax-exemption-by-accident#:~:text=The%20federal%20estate%20tax%20exemption,it%20will%20continue%20to%20rise.

(2) https://www.kiplinger.com/taxes/601639/estate-tax-exemption-2022

(3) https://www.greenbaumlaw.com/insights-alerts-Build-Back-Better-Act.html

(4) https://www.guitarplayer.com/news/the-estates-of-jimi-hendrix-and-noel-redding-and-mitch-mitchell-are-suing-each-other-heres-whats-going-on#:~:text=The%20estates%20of%20all%20three,from%20streaming%20and%20digital%20media.