Why You Need Asset Protection for Your Brokerage Account

In this episode of Coffee with Carl, attorney Carl Zoellner explains how stock traders can use asset protection strategies to protect themselves against lawsuits.

Updated May 25, 2021

Before I begin, I’d encourage you to look at some of my other videos where I talk about inside and outside liability, so you know the difference between them.

When looking at a brokerage account, I want my clients NOT to focus on the inside liability factor, but the outside liability.

Of course, with inside liability, nobody’s going to get injured slipping on a share in your trading account. Additionally, there wouldn’t be some sort of tenant or contractor that’s working on your trading account. So that’s not the basis of liability here. 

The basis of liability in a trading account is going to be from the outside. For example, spouses and children can do things that can cause you to lose that brokerage account because attorneys often look at a brokerage account as the same thing as cash. 

They don’t care what your basis is in the stock. They see it as something with an asset in it that can be liquidated and sold and make their clients money. So when we start talking about brokerage accounts, we are protecting the accounts from the effect you can have on your investment versus the effect your investment can have on you. 

Throughout the years, it’s been interesting, coming across many clients who invest in many different spaces. And brokerage accounts are one of those things that, for some reason, almost tends to get forgotten in the conversation. 

Many people have had it in their investment mix for so long, they just think of it like a bank account, which it kind of is. But the same way we’d protect your bank account, we suggest making sure that we’re looking at that brokerage account from a tax and asset protection standpoint as well. 

And like I said, it’s from that outside perspective. The outside liability side of what we do here tends to be one of the overlooked areas. 

We understand that the interaction with those third parties or the general public can raise liability. But we often don’t think about the assets we hold in our own name. If I got in a car accident, someone could then go after those assets. So we want to protect those assets as well. 

So that’s it. I just want to talk a little bit about protecting your brokerage accounts. 

The Takeaway

Well, almost everybody nowadays has some sort of trading strategy. At Anderson, we’re a big fan of one of our classes called Infinity Investing, which teaches you dividend trading using conservative investing techniques to get a higher return than you would get on trading a regular savings account, which isn’t too hard to beat. Getting those consistent dividends, writing calls, and options are the strategies we use in Infinity Investing. So I would encourage you to take a look at our Infinity Investing class at Anderson. 

I am an Infinity Investing student, and I’ve enjoyed it, so that I can endorse it as well. So as far as that goes, that’s pretty much it for this blog post today. I just wanted to quickly address why we would like to protect those brokerage accounts. Please take a look at this post, Securing Your Family’s Future with Asset Protection, to learn more about protecting your assets.

So, until next time, as always, please keep taking advantage of all of our free content out there. Toby is putting out a ton of videos for “Tax Tuesday.” One of my colleagues puts out the excellent “Toni Talks.”  Clint Coons is putting out more videos on his YouTube channel. Michael Bowman recently put out a great new video. 

So like I say, keep taking advantage of all the free content, and we look forward to working with you if you’re not already a client. So if you’re not already a client, as always, please, I would encourage you to get a FREE consultation.

Resources mentioned in this video:

• Join our next Tax & Asset Protection event to learn more advanced tax minimization & entity structuring strategies
• Subscribe to our YouTube channel to make sure you never miss the latest strategies & updates

Got an idea for a future Coffee with Carl? Send it to Carl at cwc@andersonadvisors.com. 

BONUS VIDEO

https://www.youtube.com/watch?v=hf8vu4_UJHg