The title of his new book is “Driven: The Never-Give-Up Roadmap to Success” (Entrepreneur Press, Sept. 2018), and it is an apt description of author and entrepreneur Manny Khoshbin. His family emigrated from Iran when he was a child; they were nearly homeless shortly after they arrived. His first job in the United States was mopping floors at Kmart for $3.15 an hour; he is now the multi-millionaire president of the real-estate investment Khoshbin Company. Khoshbin is serious about the “never give up” part, especially when it comes to how to protect your wealth and yourself. He recently allowed Entrepreneur magazine to reprint an excerpt of his book.
“Preserving your money is all about keeping it safe,” Khoshbin writes. “This can sometimes mean minimizing your tax bills, taking precautions against those who want a piece of your money through litigation, maintaining your principle, and even profiting along the way, if possible. The goal of money preservation is to have something on which to retire and also to be able to pass something on to your children and even your grandchildren.”
How to Protect Your Wealth and Yourself
Part of the advice Khoshbin offers for entrepreneurs and investors working to preserve their wealth:
- Estate plans and trusts are critical; they help your estate avoid probate and protect your assets.
- Diversification has always been important, but it is especially so in today’s volatile investment world. Khoshbin suggests that assets should be divided between stocks (again, diversified into various products), cash, and real estate (and not all in one class of real estate).
- Find a financial adviser/CPA: Yes, you can take care of your own financial affairs, but a financial adviser has the objectivity to help you minimize your taxes and get the most out of your assets.
- Hire a lawyer. He or she should be reviewing your contracts as a matter of habit.
- Invest in real estate. “No matter how you make money, real estate is the best way to preserve it because, for one thing, it is inflation-proof, if you invest for the long haul. There are also several tax advantages with real estate, and your CPA will help you take full advantage of them.” Khoshbin even recommends educating yourself and getting a real estate license, not necessarily so you can do sales, but more because of the inside understanding you’ll have of the industry.
Asset protection is vital once you or your company has reached a certain level of wealth, no matter the source.
“If you have substantial assets or are coming into a windfall from a sudden wealth event such as an inheritance, lawsuit, stock options sale, business sale or from a sports/entertainment contract, there are several money moves you should consider to best protect your new wealth against lawsuits and from others,” writes Forbes personal finance contributor Robert Pagliarini. He also has written a book, “The Sudden Wealth Solution: 12 Principles to Transform Sudden Wealth Into Lasting Wealth” (Harbinger Press, 2015).
“Everything changes. Those are the words I’ve heard time and time again over the past two decades from my clients who became sudden wealth recipients,” Pagliarini begins in his introduction. And he sees no difference between wealth realized due to investments, a successful business or a lottery win.
“Many people who become responsible for a great deal of money overnight feel overwhelmed by the financial, legal, and tax decisions they face, confused as to what they should do, and a deep weight because of their new responsibility. They feel unprepared for the job and are unsure of who to trust.”
Wealth makes you a potential target for litigation, and Pagliarini’s first tip is to increase your liability insurance. Your personal umbrella litigation policy should equal the total of your net worth (including that inheritance or business sale). For those who invest in real estate, a business entity like an LLC can shield your personal assets in the case of a lawsuit. And if you’re in an informal business partnership, you should formalize it. Why? Because any lawsuit against your partner can put you at risk, jeopardizing your personal assets.
“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,” Pagliarini writes. “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.”