11Apr, 2023
    Worries about a recession?

    Worries about a recession? At BLS we are committed to help you both personally and professionally weather the economic storms. Here are some thoughtful tips to hedge against the economic headwinds. There are several financial strategies that individuals and businesses can consider preceding an economic recession:

    worries about a recession. emergency fund

    Personally….

    1. Build up an emergency fund: Having an emergency fund can help you weather financial storms during tough times. Aim to have three to six months’ worth of living expenses saved up in a high-yield savings account.
    2. Pay off high-interest debt: If you have high-interest debt, such as credit card balances or personal loans, prioritize paying them off before the recession hits. This will reduce your financial obligations and free up more money to cover other expenses.

    3. Diversify your investments: Don’t put all of your money in one basket. Consider diversifying your investments by spreading your money across a range of assets, including stocks, bonds, real estate, and commodities.

    4. Re-evaluate your budget: Take a close look at your budget and identify areas where you can cut back on expenses. This will help you free up more money to save or invest.

    Business….

    1. Build up cash reserves: Just like individuals, businesses should have an emergency fund in place to help them survive during tough times. Aim to have enough cash reserves to cover at least three to six months’ worth of operating expenses.
    2. Diversify your customer base: Don’t rely too heavily on one or two major customers. Instead, diversify your customer base by targeting new markets and customers. This can help you weather downturns in specific industries or regions.
    3. Reduce debt: If your business has a lot of debt, consider refinancing or consolidating your loans to reduce your monthly payments. This can free up cash flow to help you weather a recession. Consider selling under performing or non-performing assets early while there is a market for the asset. As values decrease, you may find yourself in a pinch to wholesale to the lowest bidder.
    4. Control expenses: Take a close look at your expenses and identify areas where you can cut back. Consider renegotiating contracts with suppliers, reducing staff or hours, or implementing cost-saving measures such as energy-efficient lighting or telecommuting.
    5. Maintain a strong relationship with lenders: If you need to borrow money during a recession, it will be easier if you have a strong relationship with lenders already in place. Maintain open lines of communication with your lenders and keep them updated on your business’s financial health. The rule of thumb is, lenders only lend to those who do not need it. So, apply for a loan early in a recession. It is better to have it and not use it, then to be denied on your loan request when you need it the most.
    6. Focus on customer retention: During a recession, it can be harder to attract new customers, so it’s important to focus on retaining the ones you already have. Consider offering loyalty programs, discounts, or other incentives to keep your customers coming back.

    Above all maintain a long-term perspective: Remember that recessions are temporary and that the economy will eventually recover. Avoid making rash decisions based on short-term market fluctuations and instead focus on your long-term business goals.

    By implementing these financial strategies, businesses can position themselves to weather an economic recession and emerge stronger on the other side.

    It’s also worth noting that it’s never too late to start implementing these strategies, even if you suspect a recession is already underway. By taking steps to shore up your finances, you’ll be better equipped to weather whatever economic challenges come your way.

    Let us know which steps (if any) you are taking to not only survive, but thrive in 2023!!

    22Jul, 2019
    Asset Protection Trusts

    In the realm of wealth building and protection, one strategy that individuals often employ to protect their assets is the establishment of an asset protection trust. This powerful legal tool aims to shield funds from the impact of taxation, divorce, and bankruptcy, offering a layer of security and peace of mind. In this article, we will delve into the world of asset protection trusts, exploring their purpose, structure, and benefits.

    An asset-protection trust functions by separating the beneficial ownership and legal ownership of trust assets. While the beneficiaries of the trust hold equitable interests in the assets, they do not possess legal title to them. This arrangement fulfills the objective of asset protection planning, which is to shield assets from creditor claims without resorting to concealment or tax evasion. It is important to note that a creditor’s ability to satisfy a judgment against a beneficiary’s interest in a trust is restricted to the beneficiary’s stake in that particular trust. Consequently, asset protection trusts strive to limit the interests of beneficiaries in a manner that prevents creditors from seizing trust assets.

    An asset protection trust is a type of trust that aims to safeguard funds by holding them on a discretionary basis. The primary purpose of such trusts is to minimize or reduce the impact of taxation, divorce, and bankruptcy on the beneficiary. However, governments and courts often impose restrictions or limitations on these trusts to regulate their effects.

    What is an Asset Protection Trust? An asset protection trust is a form of trust that enables individuals to hold funds on a discretionary basis, with the primary goal of mitigating potential risks to their wealth. Unlike other trusts, an asset protection trust splits the beneficial enjoyment of trust assets from their legal ownership. The beneficiaries of the trust hold equitable interests in the assets but do not possess legal title to them. This separation ensures that the assets are safeguarded from potential creditor claims, providing asset protection without resorting to concealment or tax evasion.

    Benefits of Asset Protection Trusts: Asset protection trusts offer several key advantages for individuals seeking to preserve their wealth. Firstly, they provide a robust defense against potential claims arising from creditors, divorce settlements, or bankruptcy. By limiting a creditor’s ability to satisfy a judgment against a beneficiary’s interest in the trust, the trust assets remain out of reach. Additionally, asset protection trusts can enhance privacy and confidentiality, as they are not subject to public scrutiny like other forms of asset ownership. Furthermore, these trusts can offer significant tax advantages, helping to minimize tax liabilities and optimize the distribution of assets to future generations.

    Key Features of Asset Protection Trusts: To ensure the effectiveness of an asset protection trust, certain key features must be considered. Firstly, the trust must be irrevocable, meaning it cannot be altered or revoked once established. This characteristic is crucial as a revocable trust does not provide the desired level of asset protection since the settlor retains the power to revoke it. Most asset protection trusts also incorporate a spendthrift clause, which restricts a trust beneficiary from transferring their expected interest to a creditor. However, it is important to note that there are exceptions to this clause, such as self-settled trusts, debtor-as-sole-beneficiary trusts, and support payments for former spouses or minor children.

    Legal Considerations and Jurisdictions: Asset protection trusts are subject to various legal considerations and regulations, which may vary depending on the jurisdiction. While some jurisdictions have restrictions or limitations on asset protection trusts, others offer more favorable legal environments. For example, jurisdictions like Alaska, Bermuda, and the Cayman Islands permit self-settled trusts, providing additional protection through the spendthrift clause. It is crucial to consult with legal professionals experienced in asset protection planning to navigate the legal intricacies and determine the most suitable jurisdiction for establishing an asset protection trust.

    To achieve asset protection, these trusts must be irrevocable since a revocable trust does not provide the desired level of asset protection, as it can be revoked by the settlor. Most asset protection trusts include a spendthrift clause, which prevents a trust beneficiary from transferring their expected interest to a creditor. However, there are three general exceptions to the protection offered by the spendthrift clause. The first exception applies to self-settled trusts, where the settlor of the trust is also a beneficiary. The second exception occurs when a debtor is the sole beneficiary and sole trustee of a trust. The third exception is for support payments, where a court may order the trustee to fulfill a beneficiary’s support obligation to a former spouse or minor child. It is worth noting that the first exception, which accounts for the majority of asset protection trusts, no longer applies in several jurisdictions. However, certain jurisdictions like Alaska, Bermuda, and the Cayman Islands permit self-settled trusts to provide settlors with the protection of the spendthrift clause.

    By implementing an asset protection trust, individuals can shield their assets from potential creditor claims, provided the trust is irrevocable and adheres to the relevant legal requirements. This strategy is a popular choice for those seeking to safeguard their wealth and minimize exposure to financial risks. To learn more, give us call!