The case for asset protection
Asset protection is mainly associated with various strategies for guarding people’s wealth. In the past, these strategies were primarily aimed at protecting assets from creditor claims. The goal was to limit the creditors’ access to certain types of assets, of course while operating within the boundaries of the relevant legislation.
These days, the types of threats are way more diverse than mere creditor claims. One of the threats is that the beneficiaries might not claim their rightful ownership of the assets, if a fatal event happened to the asset owner.
Simply put, if something were to happen to you, your family members might not inherit your hard-earned money. The primary reason for this problem is that people are not even aware of the existence of the assets, or they cannot identify or locate them.
As a result, billions of dollars are abandoned in bank accounts, insurance brokers’ accounts, online trading accounts and digital wallets, instead of reaching their rightful owners.
But how is that possible?
The primary reason is that the companies that hold your assets don’t have the legal obligation to inform your beneficiaries, should anything happen to you. Yes, that’s right – they might know that you’re dead, they might have the contact details of your beneficiaries, but they don’t need to tell them about your assets.
How big is the problem?
Back in 2013, CNN reported that $58B lay unclaimed in the USA. Only 5 years later, The New York Times reported that that sum had already reached close to $80B!
Again in 2019, moneyfacts.co.uk reported that the money in abandoned accounts and pensions might be as much as £77B in the UK alone.
Seeing these figures and the alarming upward trend, it’s easy to figure out that we are talking about more than a trillion dollars in unclaimed assets worldwide!
Why this problem now?
You might wonder, why do we have this problem now but did not have it 50 or 100 years ago? Why is the number of unclaimed assets increasing? These are absolutely valid questions, and they have a reasonable explanation.
Reason 1: People nowadays have complex assets
Think about the assets that the average person had 50 years ago and the assets that people possess these days. In the past, people usually had a bank account, an insurance policy, a pension fund and real estate – in the best case scenario.
These days, people possess company stocks following the democratization of online trading, company shares following the increasing number of employees who are granted stock options and RSUs, equity following the rising number of angel investors globally, digital wallets with crypto currencies, accounts in neobanks, various insurance policies and pension funds.
A pleiad of digital and financial assets, spread across multiple types of asset management systems and digital vaults.
Reason 2: The number of expats and global citizens is increasing
In only the last 10 years, according to the UN, the number of expats globally has increased by approximately 50%!
These are people whose assets are not only complex but also located in different countries. Similarly, many people who live a global lifestyle possess various types of assets in different parts of the world.
The fact that people these days have complex types of assets, often in different countries, is the primary reason that their family members are not able to identify and locate their assets if something happens to them. And in many cases, the family members are not even aware of these assets.
What about traditional estate planning and wills?
You might wonder at this stage: can’t traditional estate planning help? Unfortunately, it can’t. Here are the primary reasons:
Reason 1: People these days have dynamically changing assets
Traditional estate planning and wills assume a static picture of your assets, while people these days have a very dynamic asset catalog.
Today you decide to start trading online, tomorrow you buy cryptocurrency, the next day you decide to invest a small amount of money in a promising startup, then you start a job in a new company and receive company stocks and options residing in a new asset management platform.
Think for a minute what assets you possessed only five years ago, and compare those with your current assets. Quite different, I bet.
Of course, having such dynamic assets, it’s unfeasible to go to your attorney every several months to update your estate planning documents. Quite expensive and a time-consuming activity!
Reason 2: Your assets are in different countries
Most attorneys specialize in a specific state or country. Unfortunately, these days many of us possess assets in different countries, not to mention that people also change their countries of residence quite often.
All this invalidates your estate planning, as it was crafted for a specific state or country. We still don’t have a globally valid estate planning procedure or will.
Traditional estate planning was a good protection 50 years ago, when people had predominantly static assets, but it is not suited to protecting the digital and financial assets of people nowadays.
Planning for asset protection
Asset protection starts with planning. The most important questions for you are these –
What strategies should you employ to protect your digital and financial assets? What should you do so that your loved ones are aware of your assets? How can you share information about your assets with the beneficiaries only in the case of an unforeseen or fatal event, but not earlier?
Let’s see how this can be achieved!
Top strategies for protecting your assets
First, we must clarify that some strategies are applicable only to certain countries.
For example, if you live in the USA, you might consider establishing a trust as a first step (but not as a final solution as we’ll see below), but if you are in Germany and most of the countries in the European Union, you can’t put your private assets in a trust.
That’s simply not allowed by the local legislation.
So here is the most important goal – to implement a strategy that is universal and global, that can protect your assets irrespective of the geography, the type of asset and the local legislation.
Sounds like mission impossible, but there is an easy solution!
The newly developed digital inheritance solutions enable people around the world to easily and effectively protect their assets and secure their families financially.
This is achieved through the following steps:
- A secure catalog of assets
Cataloguing your assets is easy, and all the information is fully encrypted, so that even in the unlikely event of a malicious security breach, your data will be protected - The ability to designate beneficiaries
Usually, these are family members and close relatives. Typically, digital inheritance tools enable the user to choose whether the beneficiaries are to be informed about the assigned assets immediately or only in the case of an unforeseen event. - A mechanism for the detection of an unforeseen event happening to the user
This is a critical aspect of digital inheritance – the ability to detect whether something has happened to the user. The tools usually implement multi-step processes to ensure that such an event is detected. - The ability to notify the beneficiaries
If an unforeseen event is detected, digital inheritance services have the ability to automatically inform the designated beneficiaries.
Digital inheritance tools ensure that your loved ones will be automatically informed about your assets so they are aware of them and can identify them.
The last is a key difference between digital inheritance tools and other alternatives, such as storing the information in vaults, on paper or in a folder on your computer. Digital inheritance ensures that the notification of the assigned beneficiaries will be handled even without external intervention.
You don’t have to worry that your loved ones will forget the access details, the location of your life insurance policy, or even the very existence of this policy. The digital inheritance tools will inform your loved ones proactively about the designated digital and financial assets.
With digital inheritance, in the event of anything unforeseen happening to you, your loved ones are aware of your digital and financial assets. They can identify and locate them and can minimize the chance of unclaimed assets.
Who can be assigned as a trustee?
Digital inheritance services enable you to designate trustees to each of your assets. Trustees are people whom you know well and can trust, who are familiar with the particular asset type, and who can further support your loved ones in finding their assigned assets and claiming ownership.
This is particularly useful if your loved ones are not proficient with their assigned asset. When you designate trustees, you can indicate whether they should be proactively informed about the designated assets, in the same way as the beneficiaries are notified.
Passing your assets on to your children
It can be particularly daunting for young parents designating as beneficiaries their young children. Of course, kids are not expected to remember anything about the assigned assets or even understand what an asset is.
They have to live their childhood happily, not thinking about assets and inheritance! Digital inheritance services are very suitable for this situation. Children should not have to remember or understand anything about the assigned assets.
When they grow up, in the case of an unforeseen event happening to the parents, they are proactively notified about the designated assets and provided with all the necessary information that will enable them to identify and locate the assets.
Many digital inheritance services offer additional support such as legal support, tax advisory and financial consulting. This can be particularly helpful if the beneficiaries are elderly people or young children or simply if the assets are complex and in different countries.
In this case, inheritance processes can be quite challenging, involving complex taxation, legal, and financial considerations. Digital inheritance services provide that much-needed support for the beneficiaries when they need it the most.
