Wealth Preservation It’s easier to obtain and harder to maintain. Many acquire wealth and fail to maintain it or to pass it to the next generation. It has always been God’s intention for wealth acquired whether through business or investments to be retained trans-generationally. In Africa we have very few trans-generational businesses but the tide is turning. Wealth preservation is about preserving wealth both within the original wealth acquirer’s generation and beyond. We have experienced in our nation many rich people who either in the lat

It ter years of their life or immediately after their decease lost most if not all their wealth. There are many enemies to your wealth. One needs to identify these enemies and create systems to protect oneself and one’s assets from these enemies. “You must structure your life to live like a millionaire but be a pauper on paper. You must create a financial fortress around your family so that nothing can penetrate it.” Robert Allen Wealth preservation does not happen by default but rather is an intentional planning process that includes consideration of: • Financial planning • Asset protection planning • Tax planning and • Estate planning In this posting I provide a brief overview and common sense guide to wealth preservation. A. Introduction to Asset Protection Planning Asset protection has been defined as: • the adoption of advanced planning techniques, which place one’s assets beyond the reach of future potential creditors. • the concept of protecting one’s assets from frivolous, illogical, ill motivated, , devastating catastrophic claims against your wealth, designed to destroy your current and future lifestyle. In short: they want what you’ve got and they want to inflict maximum pain. Sometimes it is necessary to protect your assets from the beneficiaries who might spend it off recklessly within a short period of time. Asset protection planning is the process of…structuring your assets in advance of creditor problems before insolvency for purpose of reducing your vulnerability to judgments. Asset protection planning is therefore pre-litigation and pre-bankruptcy planning that seeks to maximize the use of exemptions allowed by governments and other forms of protecting assets as recognized by established or anticipated law. You should plan to protect your assets even when you are starting to generate wealth. It is more difficult to rearrange assets after they are acquired. Purpose of Asset Protection Planning The main purpose of asset protection planning is to segregate and insulate liabilities away from valuable assets to the greatest extent allowed by law, so as to reduce the debtor’s profile and vulnerability to lawsuit, as well as to conduct a lawful “asset freeze” by shifting valuable assets to other financial structures at a time when the debtor has no existing or foreseeable claims. Asset protection planning is not meant to frustrate or cheat legitimate creditors, ex-spouses, business partners, and investors. In the Zimbabwean setting asset protection planning may also involve structuring wealth into a complex balance sheet that makes it difficult for beneficiaries to unscramble and destroy the wealth that has been acquired. This is a major consideration because I have seen so many entrepreneurs lose what they created immediately after death. I know close family members who were living in Borrowdale when the parents were alive in the 1980s but when the father and mom passed away, the children squandered the wealth and sold the family home. They ended up living in Mbare. This was clearly a failure to create a balance sheet that could not be scrambled be the beneficiaries. Untold stories hit the headlines of our newspapers of the wealth of unplanned rich people dissipating due to sibling squabbles.

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  • Reply drtaffie October 22, 2010 at 10:56 am

    Impressive article yet again ! My thoughts are that you need to play the game both offensive and defence. A great offence is knowing what type of company structure are allowed by Zim government and then buying your assests in that companies name and not your own. A family trust can also be used to buy a company and that will remove you personally from the picture. Defensively the us of trusts and the naming of beneficiaries and setting conditions of getting a monthly income once you pass will be ideal. Using an example of rockefeller. The rockefeffer foundation makes sure that non of the children can own or sale any assests. The children and grand children all have access to the money via monthly payments and all life expnases are charged to the foundation.

    In Zim based on my expereince you need to inform the famlies about your wishes before you pass on, I have seen brother push out the wife and children from the family home. I also know of a man who bought thier family home in a company name and listed the wife as the shareholder which resulted in her gaining control via the courts.

    Can anyone shed light into
    1. What type of company structure are available in zim
    2. What family trust are also available and where can one get the information to register them

    • Reply nurturingchampions October 22, 2010 at 11:22 am

      Great insights. Will discuss these in detail but for a teaser in Zim the corporate structure will include partnerships, private limited companies, public companies, co-operatives and private business corporations (-closed corporations) and Trusts. The ideal structures to use are obviously the ones which limit your liability e.g private limited companies and private business corporations. Trusts are recognised in Zim under common law. In other words there is no clear statute that controls them. They are registered through lawyers called notary publics with the Registrar of Deeds.
      Another way to handle the family in terms of assets is throu declaring teh position while alive plus being clear in the will on what exactly happens and who owns what. More details in later postings.

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