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Financial Mistakes Saved by Our Red Flag Audit®


At Walsh & Associates, one of the most valuable services we offer is our Red Flag Audit® (RFA®). Just as a red flag indicates that conditions are unsafe, our Red Flag Audit® is an opportunity for us to show our clients those things in their financial environment that could be “unsafe”.

Over the years of providing this service, we’ve come across a few scenarios that could have been a hassle to downright disastrous for our clients had they not been caught – all the while our clients were none the wiser! Here are some of the things we’ve caught in our Red Flag Audits®.

Rental Properties without Their Own LLCs

We see this one often. Many times, when people have multiple rental properties, they won’t have them in separate Limited Liability Companies, or LLCs. LLCs provide pass through taxes (which provide the ability of the LLC owner to report their profit and loss on their individual tax returns), limited liability, and legal protection for their personal assets.

Our reasoning behind having a separate LLC for each rental property is for added protection. In the event of a claim in excess of your insurance limits, the maximum you’ll lose is your equity in that particular home (in theory). This leaves your other rental properties safe.

Please note, we do not offer tax or legal advice or services and suggest you consult with the appropriate advisor for assistance with these matters.

Not Having Enough Life Insurance

Life insurance is a tool used to provide for a financial obligation in case of an unforeseen death, usually of a working spouse. These financial obligations can include things such as having young children, looming debt, or impending college costs. Many times, we see that clients do not have enough coverage to continue with their current lifestyle should their spouse unexpectedly pass away. It’s already a huge change to lose a spouse, but that change will be even harder to deal with if you also must change your entire lifestyle.

Having the Wrong Beneficiaries on Retirement Accounts

Consistently reviewing the beneficiaries on your accounts is hugely important! You may think you have them listed properly, but you’d be shocked at what a difference a seemingly small mistake can make. Take, for instance, your retirement assets (such as your IRA or 401(k)) – no matter what your will or trust says about these assets, your retirement account beneficiary designations will ALWAYS take precedence! Your retirement assets are not, and will never be, in trust.

You may think you have your beneficiaries listed as intended, but it’s so important that you periodically verify that everything is correct. Our Red Flag Audit® helps you with that verification process.

The Goal of Our Red Flag Audit®

These examples are just a snippet of what we may find when we review your financial life. While the RFA® process does take some time and effort, in order to do our best as steward of your money for the benefit of you as well as your family, it is something we truly think is worth doing. The possible alternative is to hand money over to Uncle Sam or leaving potential investment returns on the table unnecessarily.

If you are interested in a review of your financial, economic, and family situation, we welcome you to contact us about our Red Flag Audit® process.

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