The Expanded Worldwide Planning Stories Video Series – Part 2 Episode 2 – Asset Protection 2
Welcome. The goal of many entrepreneurs is to grow a successful business, then sell it and retire on the profit of the sale. Janet Johanson was such a person, but because of poor asset protection planning, her $100M from the sale of her profitable wine store business was snatched from her on the eve of her retirement.
A key element of any asset structure should be asset protection. Indeed one of the six principles of Expanded Worldwide Planning, or EWP for short, is asset protection. With EWP the key element of asset protection is embedded into the structure, and is not an additional element that must be added at additional cost and complexity.
Janice felt on top of the world in more ways than one. She was now looking at the Swiss Alps on her balcony in Spiez on the southern shore of Lake Thun. Janice was also completing the sale of her wine store chain. She would be receiving $100M for her twenty years work. She began the chain with a keen enthusiasm for wine, a small inheritance from her uncle, and a rat infested storefront on the Bowery in New York City.
Through careful sourcing of wines throughout the world, her excellent palate, and buyers hungry for good quality wine at a reasonable price, she had grown her one store into a multi-city chain. She was relaxing, as though for the first time in twenty years. Her taunt athletic frame was not built for relaxation. When she would allow herself time away from her business, relaxation took for the form of competing in Triathlons. She did allow herself the time to stay in top physical condition.
The jet streaking above the Alps reminded her of her own flight several days ago. The ad read: “Fly a Real Fighter Jet. Be a fighter pilot for a day.” When she saw the ad, she couldn’t resist. She paid $5,000 for 30 minutes with an experienced ex-military fighter pilot. She was exhilarated to the core every minute of the flight. She was transported to a new world, as the pilot navigated the high and jagged peaks of the Alps with its narrow valleys and tightly constricted airspace. She did not want the flight to end.
Her room phone rang. “Hello,” she answered.
“Janice, I have unwelcome news for you.” Janice recognized the voice of her attorney, Brian Spencer.
“Yes, Brian, what is it?”
“There has been a serious accident at a store in New York City.”
“Well, don’t we have insurance for this.”
Brian said weakly, “Maybe.”
“Why maybe? Don’t we now have our captive insurance?”
Brian said in a dull tone, “We need to talk.”
In our next video, we follow Brian Spencer, Janet’s attorney, into a hospital ward to see for himself the very unfortunate result of an accident at one of Janet’s wine shops. The promising career of a medical student, Steve De Marco, was cut short by slipping on a wet floor at the wine shop. Steve was on track to become an excellent heart surgeon, but was now lying in a coma in the hospital.
On the advice of her attorney, Janet had entered into a captive insurance arrangement, but it turned out to be just an expensive stack of papers. This poorly executed captive insurance company did not have the funds to pay for Steve’s accident, and the certain multi-million dollar settlement for damages. In Episode three, you will learn how an EWP structure is a vastly superior asset protection strategy.
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The opinions expressed in this video are for general informational purposes only and are not intended to provide specific advice or recommendations for any individual on any financial structure, investment, or insurance product.
by Michael Malloy, CLU TEP RFC.
CEO, Founder @EWP Financial