Wealth Protection – David Bell

6 Was to Protect your Wealth

Increase your liability insurance. Your first line of defense in litigation should be insurance. Call your insurance broker and increase your liability limits. Make sure your personal umbrella liability coverage is for an amount at least equal to your new net-worth. For example, if you are going to receive $3 million from your Aunt Jane’s estate, tell your insurance broker that you want a $3 million umbrella liability policy. Rates are inexpensive – often $200 or $300 per $1 million of coverage.  Judge David Bell recommends a minimum of a $5,000,000 umbrella policy, and most of them opt for $10,000,000.

Tip: It’s best to make this five minute phone call before you receive the inheritance or windfall.

Consider keeping asset separate.

Depending on the state in which you live and the source of your windfall, if you deposit the money into a joint account with your spouse, this money could instantly become half theirs. For some, this isn’t an issue, but for others, this could pose a problem. For example, if you have children from a previous marriage and commingle an inheritance you receive with your new spouse, your children may get less than you expect when you pass away. This problem becomes even more damaging if you are contemplating a divorce says David Bell.

Tip: If you don’t want your spouse to have ownership of your windfall, talk to an attorney and keep the assets in a separate account.

Protect yourself from renters.

If you have rental property or expect to invest in rental property after receiving your sudden wealth, create a business entity such as an LLC or corporation to shield your other assets from a disgruntled tenant. By doing this, if your renter sues you for $5 million, they can attack the assets in the entity that holds the real estate but the rest of your personal assets are protected. Judge David Bell and David Bell and Associates recommends that you protect yourself by creating a separate entity for each investment. Let us help you to map out a plan of action for your assets.

Tip: Create a separate business entity for each rental property or consider a Nevada or Delaware Series LLC, which is designed to protect each property within a single LLC.

Review all jointly held accounts Any money you deposit into a joint account with your children, elderly parents, roommate, or business partner is at risk. David Bell and Associates says that if the joint owner files for divorce, incurs a tax lien, or lawsuit judgment, the entire account could be wiped out.

Tip: If there is a need for a joint account, keep the balances as low as possible.

Formalize informal partnerships.

Business partnerships are ticking time bombs. Why? Just like joint accounts, you are responsible for the actions of your partner. But unlike a joint account, a lawsuit against your partner can put all of your assets at risk. For example, suppose you and a friend have an informal agreement to partner and provide consulting services. If your partner is involved in an accident on the way to a client, your personal assets can be in jeopardy. If you have investment properties that are shared jointly by you and other family members, you definitely want to formalize the relationship by creating entities that protect you and any your investment. Judge David Bell and David Bell & Associates can assist you.

Tip: Avoid partnerships.

Form an entity such as an LLC or corporation to provide you with legal protection.

Create business entities to shield assets. If you have a small business or do part-time work on the side without having a formal business structure such as an LLC or a corporation, you are operating as a sole proprietorship. The “sole” means it’s just you, so unlike a partnership, you don’t have to worry about a partner’s actions . . . but all of your personal assets are at risk if you are sued. Protect yourself by allowing David Bell and Associates to evaluate your investment property risk. David Bell and Associates can help you to maximize your profitability and limit your risk exposure.

Tip: Create a business entity that shields your personal assets from lawsuits against your company.

Sudden wealth can be a life-changing experience that can improve your life and the lives of those around you, but only if you keep it. Those with more assets are bigger targets for lawsuits. Don’t let your sudden wealth suddenly get stripped from you. Protect your assets before you get the windfall and you will sleep a little easier knowing your assets are better shielded.

This article is re blogged from Robert Paglirini, Consider purchasing and reading his book: The Sudden Wealth Solution: 12 Principles to Transform Sudden Wealth into Lasting Wealth.

Goals of the Law

In our society, laws are not only designed to govern our conduct: they are also intended to give effect to social policies. For example, some laws provide for benefits when workers are injured on the job, for health care, as well as for loans to students who otherwise might not be able to go to university says David Bell & Associates.

David Bell says that another goal of the law is fairness. This means that the law should recognize and protect certain basic individual rights and freedoms, such as liberty and equality. The law also serves to ensure that strong groups and individuals do not use their powerful positions in society to take unfair advantage of weaker individuals.

However, David Bell states that despite the best intentions, laws are sometimes created that people later recognize as being unjust or unfair. In a democratic society like Canada, laws are not carved in stone, but must reflect the changing needs of society. In a democracy, anyone who feels that a particular law is flawed has the right to speak out publicly and to seek to change the law by lawful means.

David Bell says, budget for repairs on rentals!

How much should you budget for home maintenance & repairs? How much money should you budget for home maintenance and repairs? Here are the two rules of thumb that help guide this calculation, as well as a list of home-related factors you should consider as you decide how much you need to save. This is especially important dependent upon the type of property you own i.e. 2 bedrooms, 3 bedrooms or a four bedroom property.

The 1 Percent Rule

One popular rule of thumb says that one percent of the purchase price of your home should be set aside each year for ongoing maintenance. For example, if your home cost $300,000, you should budget $3,000 per year for maintenance.

That doesn’t mean you’ll literally spend $3,000 every year. It just means that, on average, over a span of a long-time period (10 years or more), you’ll spend around $3,000 annually, according to this rule of thumb. Some years you’ll spend far more; a roof replacement, for instance, will cost $4,000 – $8,000. Other years, you’ll spend far less. Of course, this popular rule of thumb isn’t totally valid. Your market timing doesn’t impact your maintenance budget. If you happened to buy your home at the peak of the housing bubble, your maintenance costs won’t skyrocket. Similarly, if you bought your home at a steep discount at the bottom of the housing market, your maintenance budget shouldn’t be affected. The underlying price of your home and its repair costs, in other words, are “independent variables.” They correlate only insofar as they’re both impacted by the cost of labor and materials in your particular geographic area as well as if you own a home with fewer than 5 or 4 bedrooms Let David Bell & Associates help you to determine average repair costs for your properties and help you to develop an overall strategy to reduce your annual costs.

The Square Foot Rule

Another rule of thumb says that you should budget $1 per square foot per year for maintenance and repair costs. If you own a 2,000-square foot home, for example, budget $2,000 a year for maintenance and repairs (again, over a long-term annualized average). This rule of thumb makes slightly more sense than the “1 percent of purchase price” rule. The more-square feet you’re managing, the more you’ll need to spend. One drawback to this rule, though, is that it doesn’t account for labor and material costs in your area. In certain parts of the nation, contractors are significantly more expensive.

What Factors Should You Consider?

Judge David Bell and David Bell & Associates believe that there are specific factors that make the biggest impact in the cost of your maintenance and repairs. Those are:

Age – The age of the property will play a huge role. New construction (a home built within the last 5 – 10 years) will need very little maintenance. Homes 10-20 years old will need slightly more. Once a home turns 20-30, though, there’s a good chance that major components, such as the roof, hot water heater, and some piping, may need to be replaced.

Weather – Homes in areas affected by freezing temperatures, ice and snow are subject to more strain than homes in areas unaffected by cold weather. Similarly, homes in areas where termites, high winds, heavy rains and other extreme weather conditions or pest infestations will experience more wear-and-tear.

Condition – Some homes are more than 100+ years old, but are in pristine condition, thanks to previous generations exercising careful maintenance. Other homes, however, have been neglected and shoddily repaired over the years. The older the home, the more impact a previous owner’s care (or lack thereof) will impact the home’s maintenance needs.

Location – Homes located at the bottom of a hill (where water drains and collects), in a flood plain, or in other areas that create environmental stresses will also impact the amount of care and maintenance it needs.

Single-Family vs. Attached – A single-family home needs a larger maintenance budget, since you need to replace your own roof, siding and gutters and maintain a yard. A condo or townhome won’t need as hefty of a maintenance budget, since the exterior is cared for by your HOA. David Bell & Associates can help you to inspect the properties you are looking to invest in so that you make the most educated choice regarding a significant investment.

How Much Should You Budget for Home Maintenance?

Given all these variables, I hope you can understand why there’s no good “rule of thumb” that governs how much you should set aside for home maintenance and repairs. The weather, age, condition, location and type of property that you own will all play a huge factor in determining the amount of money you need to save. That said, if you have no clue how much you should set aside, here’s a good way to guess:

First, take the average of the one percent rule and the square foot rule. If one percent of your purchase price equals $3,000, and the square foot rule equals $2,000, then your average is $2,500.

Then add an additional 10 percent for each factor (weather, condition, age, location, type) that adversely affects your home. If you have an older home, in a flood plain, in an area that experiences freezing temperatures, add 30 percent to $2,500. That’s an extra $750 a year.

That means that you should save about $3,250 each year, or $270.83 per month, for home maintenance. Again, this is just a generalized rule. It’s hard to predict how much your home will cost to maintain. The best you can do is make an educated guess based on your home’s unique factors.

Let Judge David Bell and David Bell & Associates help you to make prudent wise choices regarding your selection of a rental or investment property. If you already own a rental investment property, consider David Bell & Associates as a partner in reducing your annual costs related to property management.

The System of Law and Justice

The law is a set of rules for society, designed to protect basic rights and freedoms, and to treat everyone fairly. These rules can be divided into two basic categories: public law and private law.

Public Law

Public law deals with matters that affect society as a whole. It includes areas of the law that are known as criminal, constitutional and administrative law. These are the laws that deal with the relationship between the individual and the state, or among jurisdictions. For example, if someone breaks a criminal law, it is regarded as a wrong against society as a whole, and the state takes steps to prosecute the offender.

Private Law

Private law, on the other hand, deals with the relationships between individuals in society and is used primarily to settle private disputes. Private law deals with such matters as contracts, property ownership, the rights and obligations of family members, and damage to one’s person or property caused by others. When one individual sues another over some private dispute, this is a matter for private law. Private suits are also called “civil” suits.

Of course, there is more to Canada’s system of law and justice than the laws themselves. Laws must be enforced, interpreted and applied if they are to be effective, and the legal system includes a number of institutions to carry out these duties. For example, we have police forces to ensure that the law is enforced. We have courts to interpret both private and public laws in specific cases, and to impose remedies, “sanctions” or penalties. Persons found guilty by a court of a criminal act can, for example, be discharged, placed on probation, or sentenced to a fine or a period of imprisonment. Persons who violate rules of private law, such as failing to perform a contract, may be ordered to pay compensation and their property or salaries may be seized if they refuse to pay.

To understand Canada’s legal system, we need to look at the way law is applied in practice — at what happens to a person who violates a law. But first, we should examine our legal inheritance: just where did “the law” come from?

The Purpose of Law

Why Do We Need the Law?

Almost everything we do is governed by some set of rules. There are rules for games, for social clubs, for sports and for adults in the workplace. There are also rules imposed by morality and custom that play an important role in telling us what we should and should not do. However, some rules — those made by the state or the courts — are called “laws”. Laws resemble morality because they are designed to control or alter our behaviour. But unlike rules of morality, laws are enforced by the courts; if you break a law — whether you like that law or not — you may be forced to pay a fine, pay damages, or go to prison.

Why are some rules so special that they are made into laws? Why do we need rules that everyone must obey? In short, what is the purpose of law?

If we did not live in a structured society with other people, laws would not be necessary. We would simply do as we please, with little regard for others. But ever since individuals began to associate with other people — to live in society –laws have been the glue that has kept society together. For example, the law in Canada states that we must drive our cars on the right-hand side of a two-way street. If people were allowed to choose at random which side of the street to drive on, driving would be dangerous and chaotic. Laws regulating our business affairs help to ensure that people keep their promises. Laws against criminal conduct help to safeguard our personal property and our lives.

Even in a well-ordered society, people have disagreements and conflicts arise. The law must provide a way to resolve these disputes peacefully. If two people claim to own the same piece of property, we do not want the matter settled by a duel: we turn to the law and to institutions like the courts to decide who is the real owner and to make sure that the real owner’s rights are respected.

We need law, then, to ensure a safe and peaceful society in which individuals’ rights are respected. But we expect even more from our law. Some totalitarian governments have cruel and arbitrary laws, enforced by police forces free to arrest and punish people without trial. Strong-arm tactics may provide a great deal of order, but we reject this form of control. The Canadian legal system respects individual rights while, at the same time, ensuring that society operates in an orderly manner. In Canada, we also believe in the Rule of Law, which means that the law applies to every person, including members of the police and other public officials, who must carry out their public duties in accordance with the law.