“The Process” for Lawyers – Part II
It’s college football season, which is my favorite time of the year. When football season rolls around I tend to make everything into a football-based metaphor – even retirement planning. In my last blog post I wrote about “the process” for lawyers to help build a strong financial future which centered on a couple of ways that lawyers can “play offense” in their financial lives. Today’s installment will focus on the other side of the ball – defense. What are some strategies that successful attorneys should employ to better protect the wealth they work so hard to create?
1. Insure Wisely
What happens if something bad happens? This is a very simple and powerful question to consider. For lawyers, making sure you are well-protected is critical on multiple fronts. First, what if you get injured or otherwise impaired such that you can’t practice law? Perhaps your firm has long-term disability insurance policies in place that will produce monthly income if you’re unable to do your job. However, it’s possible that the monthly income from those policies may not be enough to sustain your desired lifestyle. Making sure you have sufficient long-term disability insurance in place will give you greater financial peace of mind.
Next, while your firm carries professional liability insurance, how well-insured are you in terms of personal liability insurance? Let’s say you own a lake home and a boat… How well-covered are you if someone were to get hurt and you became the defendant in a law suit? This “umbrella” insurance is extremely important to make sure your assets are protected. Fortunately, umbrella insurance tends to be quite affordable, so make sure you are well covered.
Lastly, on the life insurance front, perhaps you are at the point where you have enough financial assets that you can self-insure. Congratulations, that’s great! However, if you are earlier in your career you may need life insurance to act as income replacement should the unthinkable happen. None of these are pleasant topics, to say the least, however making sure you are wisely managing these risks through proper insurance is paramount to a solid defense.
2. Estate Plan Tune Up
In my experience, lawyers are often so busy fixing other peoples’ problems they sometimes neglect to make sure their own affairs are in order. Estate planning is one of the areas that is easy to overlook or not make the time to properly address. Think of your own situation:
- Do you have a basic will and revocable living trust?
- How will the assets you’ve worked your entire career to amass be distributed if you are no longer in the picture?
Again, not exactly the most pleasant of topics, but proper estate planning can go a long way to greater peace of mind. If you have never done your estate plan or it’s been several years since you had your documents executed, you need to address this issue. Laws change over time and you must make sure your estate plan is up to date. When you pass away your assets will go to one of three recipients – your heirs, charity or the government. I have yet to meet anyone who prefers choice number three. An updated and properly implemented estate plan can help you ensure that your wealth is protected and preserved for your desired beneficiaries.
No one likes to talk about the topics I’ve covered today, which is understandable. However, as they say in football, offense sells tickets, but defense wins championships. When it comes to your financial game plan make sure you have a championship-caliber defense and you will rest easier.
Justin works closely with clients to design wealth management plans that take into account the full spectrum of their career and personal concerns with a specialization in advising law firm partners. Justin earned his MBA from Northwestern University’s J.L. Kellogg School of Business.