The Legal Edge Every Investor Needs

For most investors, watching your wealth grow can be exhilarating. Yet, amidst the excitement, many investors overlook a crucial aspect of their financial journey: legal protection. Without it, even the most promising financial plans can unravel, leaving long-term goals in jeopardy.

From navigating the complexities of marital transitions to safeguarding your business ventures and ensuring your legacy, astute legal professionals offer invaluable guidance. So, whether you’re an experienced investor or just starting out, learn how putting the law on your side can help create lasting financial success.

Family Law

As family dynamics evolve, a family law attorney plays a crucial role in safeguarding both inherited and self-made wealth, while also ensuring long-term wellbeing during marital transitions.  

• Prenuptial agreements outline a couple’s plan for financing married life and clarify how each spouse’s wealth—whether brought into or generated during the marriage—will be treated. Without this agreement, changes in state laws or a move to a different state can drastically alter how assets are divided in the event of divorce or death.
• Divorce can exact a harsh financial toll, especially on women. Research shows that women aged 50 and older experience a 45% decline in their post-divorce standard of living, compared to 21% for men.¹ This lopsided outcome is likely influenced by many factors, including interrupted careers due to caregiving,² which can adversely impact retirement savings.³ Despite this, few individuals manage to secure a share of their spouse’s retirement benefits in divorce settlements. For instance, over the prior 10 years, the Pension Benefit Guaranty Corporation, which administers retirement benefits for approximately 1.6 billion participants, processed only 16,000 qualified domestic relation orders—the orders necessary to divide retirement plan benefits at divorce or separation.⁴ An experienced family law attorney can work with investors and their financial advisors to craft a strategy that achieves retirement goals while navigating the legal process.

Corporate Law

For those looking to create wealth through a business venture, partnering with a skilled corporate attorney can make all the difference. These professionals can help ensure that business risks don’t spill over into your personal portfolio and that your contributions to the company’s success are justly rewarded. 

• One of the first major decisions for any new businesses is choosing the right legal entity. Should you structure the business as a limited partnership, a limited liability company, or a corporation? Each type of entity caps the owners’ liability to the assets within the company,⁵ protecting personal assets from being seized for company debts. But they come with different tax considerations. For example, you’ll need to decide whether to recognize the company’s retained net income on your personal return—or subject it to corporate income tax prior to its distribution and then have it be taxed again as a dividend once it flows to shareholders. If you’re planning to sell the business down the line, consider whether to structure the entity as a “qualified small business” to potentially benefit from significant tax savings in the future.
• Beyond the initial setup, owners must determine how those involved will contribute to the company’s management and growth—and how they’ll be compensated for their efforts. Women leaders and employees should pay particular attention to these terms, as studies suggest female business ownership can sometimes help narrow the gender pay gap.⁶ Will each owner contribute capital, or will some provide so-called “sweat equity”? How will different contributions be rewarded in terms of profit sharing and during a future sale or dissolution? To ensure fair compensation for all parties, corporate counsel should walk business owners through these considerations—then spell out everyone’s rights and responsibilities in the company’s governing documents. 

Estate Planning Law

For many investors, building wealth is a lifelong journey. Partnering with an estate planning attorney can be invaluable in navigating this path, especially during times of illness or incapacity and in planning for loved ones.

• One recent study suggests that men are more likely than women to have an estate plan and to view estate planning as important.⁷ Yet failing to create an estate plan can have severe consequences, both during life and at death. Failure to appoint an attorney-in-fact under a power of attorney means a court will have to step in, designating someone to act on your behalf and potentially leading to excess legal fees and delays in managing your personal and professional affairs.
• While interrelated at times, the federal gift and estate tax system operates independently from the income tax system, requiring distinct planning to minimize potential tax burdens. For those with estates exceeding current exemption levels, making one or more lifetime gifts might be the best strategy—but that may involve acting earlier than anticipated. A skilled estate planning attorney can help evaluate the structure and size of a lifetime gifting strategy to support tax-mitigation goals without compromising your desired lifestyle.

To truly achieve your long-term financial goals, it’s essential to focus on both building and safeguarding your wealth. By incorporating skilled legal advisors into your broader team of trusted advisors, you can navigate each step of your investment journey with confidence and set yourself up for success.