Wednesday, May 24, 2017

Pirate's Bounty

Johnny Depp has made a fortune playing a variety of roles. By one account he has raked in $650 million over the last 13 years. A very talented and versatile actor playing everything from the Lone Rangers faithful sidekick Tonto,  a mascara wearing pirate, and Donald Trump when he was just a regular millionaire but not (yet) living in taxpayer subsidized housing.

By almost anyone's standards, $650 million is a lot of money. Enough to buy a dozen plus houses, estates and at least one island, plus a yacht. That's a lot of scratch but not very liquid.

And therein lies the problem.

the star could have blown $66,000 every day across that peak earnings period and still ended up with close to $100 million in the bank.
Instead, he owes the IRS money and is going to need to make tough career choices if he wants to keep the houses he’s already bought, much less buy more. - Trust Advisor
But the former Edward Scissorhands is not alone. Other famous people have had similar issues.

Nic Cage learned about 10 years ago after a similar hot streak left him upside down on about $100 million in ultra-high-end real estate and no cash to make the payments.
He put his entire net worth into a single asset class, leveraged up, and then lost it all when the market froze and he couldn’t find an exit at any price.
Now he’s living in a Las Vegas condo taking every role he’s offered in order to rebuild his fortune. Those movies are at best hit or miss, but when you’re working for volume instead of quality, your professional reputation takes a dive.
So what you may say? The average Joe isn't earning $66,000 per day and many are living paycheck to paycheck. But there are plenty of small business owners who have almost all their assets tied up in their business.

A business that probably isn't liquid.

A business that is profitable, but only while the owner is alive and actively involved in the day to day operation.

Business owners along with regular guys and gals often leave behind heirs who rely on the income to maintain their lifestyle. And most of these folks also have debt, some of which may be passed on to those who are left behind.

Financial advisors encourage clients to save for retirement. Create a nest egg so you can enjoy your later years.

Great idea as long as the egg is liquid and not subject to market fluctuations.

A solid estate plan should address not only wealth accumulation but liquidity, debts and income for heirs. Life insurance that will be in place as long as it is needed is the least expensive way of creating liquidity along with a tax-free cash inheritance.

You may not be rich and famous but you probably have some planning to do. Right now would be a good time to start. Talk to an insurance agent that specializes in estate planning concerns. You will not regret it.


#EstateLiquidity #EstatePlanning #LifeInsurance

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