Asset Protection Planning With Credit Freezes + Real Estate & Trusts

This one free action could save you thousands in an identity theft or fraud situation. Yet 90% of affluent Americans never do it. In today's world of AI-powered scams and relentless fraudsters, protecting your identity isn't just optional; it's essential. Whether you're safeguarding substantial assets, retirement funds, or helping an elderly parent navigate their financial vulnerability, the threats are real and growing. While some asset protection strategies require complex planning for those with more intricate financial situations, there's one powerful tool that's available to everyone, and that is the credit freeze. And today, we're diving into how this simple step can become your first line of defense against identity theft and fraud.

[00:01:12]
Hello and welcome to Retired-ish. I'm your host, Cameron Valadez, certified financial planner and enrolled agent. In today's show, we are going to cover a simple yet effective way to better protect yourself financially. And I have found in practice that it's actually not so obvious and really an underutilized tool. Also, towards the end of the show, I will also answer a listener question regarding putting real estate in a revocable living trust. Awesome question. I will dive into that in detail towards the end of the show.

So you're probably wondering, why are we talking about credit freezes? This is boring. Or this sounds too simple and basic, but no, actually, a credit freeze can be a very good strategy, even though it is relatively simple when it comes to the different forms of asset protection that you're deploying in your financial plan.

[00:02:10]
So picture this. You've built up substantial wealth over decades, and you're getting ever so close to the day you can begin to enjoy your life savings and do all of those things that you wanted to do. Explore new hobbies. And you know that you need to figure out ways to preserve your money and protect yourself, because you realize it's no longer about saving more, but taking care of what you have.

But there's one simple step that most successful people completely overlook during this process. And this step could save them from potential financial disaster. And it takes less than 30 minutes. This is where some asset protection planning comes in. And when it comes to asset protection, there are a whole host of things that you can do, such as using legal entities like LLCs, using certain types of trusts, implementing insurance, and much more. But one relatively simple trick that anyone can do is to simply freeze your credit. If you're already thinking, ‘Oh, I should look into this right now, I've never really heard of that.’

Hang on a second, because I'm about to explain how this works and why you might consider it. Because it's not the best strategy for everyone. So, in case you didn't know, you have the right to place or remove a security freeze, also known as a credit freeze, on your credit report. A security freeze is intended to prevent credit loans and services from being approved in your name. The freeze blocks your credit reports from being accessed. It's not the same as something like a fraud alert. A fraud alert is if anyone tries to open a new credit account, the company will typically try and verify your identity before approval. Now here's the shocking part. It's completely free, it doesn't impact your credit score, and it takes less than 30 minutes.
[00:04:01]
Pretty awesome, right? One of the most important things to know when implementing a security freeze on your credit is that you'll want to do this with each nationwide credit reporting agency. If you didn't know, there are three main credit reporting agencies. They are TransUnion, Experian and and Equifax, in no particular order.

This can be a good strategy for anyone, really, and even at any age, but especially for those of you that rarely apply for or need credit or loans. Since you won't have to constantly go back and forth freezing and unfreezing your credit. Meanwhile, you will have one more thing in place to safeguard yourself from identity theft and fraud. What I've noticed over the years, in practice and even in my personal life, and maybe you can relate to this as well, is that people out there that haven't been personally affected by identity theft or financial fraud tend to put this kind of stuff on the back burner or maybe don't even think about it at all. The sad thing is, people start to take these steps only after something happens to them.

And I'll tell you what, cause I haven't had to deal with this personally, but I have helped family members and other people through these situations where their identity was stolen. And we had to go through that process of making sure everything gets secured. I'll tell you what, it is a nightmare. Identity theft is not something to play around with, especially with the technology nowadays, and AI, it is much easier to fall victim to fraud. And you want to start doing and implementing all of those preventative measures to make sure this doesn't happen to you, or at least decrease the chances significantly. Because it is not fun. It is very stressful. And talk about something that can completely interrupt your life, and like I said, stress you out and keep you up at night, it's identity theft and fraud.

[00:06:08]
That's why I want to talk about this credit freeze today. And I think it's so important. Now, on the other hand, if you're someone that frequently opens new lines of credit or takes out loans fairly consistently, then you might want to explore something like a credit lock, which is a little bit different than a credit freeze. It is something that all of the reporting agencies offer, and it's usually done online or through their apps. It's kind of like a little button that you toggle on or off to lock it or unlock it, but it does work a little bit differently. So if you think that a credit freeze is going to cause some issues in your life, then explore the credit lock.

Now, the best way to place a security freeze on your credit report is to visit the three different agencies' websites. And you want to create an account, obviously, if you don't have one, and then you simply freeze it right there online; they usually have the option to do that right there. Another option is to call their automated telephone lines. Or you can, of course, submit a written request to each of the agencies via mail. But again, I'd say online is probably the easiest route.

Obviously, if you do call in or you're going to mail a request in or something like that, you need to be prepared with some of that basic information. So your full name, social security number, date of birth, phone number, email address, when you're doing it online, and your current address. If you're freezing it due to fraud that's already happened to you, or you're just doing this by mail, you may also need some other pieces of information ready, such as previous addresses that you've lived at for the past several years, and possibly even incident reports or complaints that you've made with law enforcement or, say, the Department of Motor Vehicles. So please understand that when you're considering using a security freeze, just know that one day it may interfere with or delay your ability to apply for a new credit card or account, or a loan, or any service that requires a credit check, if you forgot that you froze your credit.

[00:08:10]
So if you're going to need a loan or something, you'll need to remember that it's frozen and you're going to need to go unfreeze it.

Okay, so what happens when I place a security freeze, but then one day I need to apply for credit or a loan? What do I do? In that case, you have two options. You have to either temporarily lift or permanently remove the freeze each time you want to apply for new credit.

Here's how it works. You can do a temporary lift, which is basically you can unfreeze for a specific period, like 24 hours or 30 days or so, or for a specific creditor. If you're trying to get a car loan through your local credit union or something, you can do a temporary lift just for them. Or you can do a permanent removal, which completely removes the freeze until you reinstate it. Note that when you want to unfreeze your credit, you'll need a PIN or password that each of the agencies will have issued you. So when trying to lift or remove the freeze, you use that unique PIN or password that you received when you first placed the freeze. And to lift or remove the credit freeze, you can use the same methods as you did when you initially placed the freeze.

Of course, you can go online, which usually takes effect within an hour or possibly even right away. You can call the credit bureau directly, and they can do it immediately or usually within the hour or so. And then you've got mail, which is your slowest option and can take several days, but nonetheless, it's still an option. Most people temporarily lift the freeze for 24 to 48 hours when applying for credit. Then they let it automatically reactivate. Others lift it for longer periods if they're shopping for multiple loans or lines of credit, like during the home-buying or car-buying process, or maybe even for furniture and appliances when you're shopping at multiple retailers for maybe a rental property or a new home, for example.

[00:10:10]
Remember, you need to contact each credit bureau separately. Experian, Equifax, TransUnion. Since they maintain their own independent systems, the freeze completely blocks access to your credit report. So there's no “ask for confirmation option” or anything like that. When you go to get a loan or open up a new card, it's either frozen, which means it's blocked, or it's temporarily lifted and accessible. And this is what makes credit freezing highly effective against identity theft. But at the same time, it requires some proactive management when you legitimately need credit.

And one thing I'd like to recommend before you go and freeze everything is to sign up for free credit monitoring. Hopefully, you have that already, but if you don't, I would definitely put that towards the top of your to-do list. There are many companies with apps and websites that provide this, so do some research on them. Pick one, and once it's all set up, and your various credit accounts and loans are all connected, then go ahead and consider freezing through all of the agencies if it makes sense for your situation.

Here's another tip for those of you out there who are helping look after your elderly parents that are aging and need help with a lot of things, especially their finances, or anything that has to be done digitally online with certain legal documentation, such as a financial power of attorney that's currently in effect and you are the authorized agent, you can actually place a credit freeze on their behalf. Just know that if you're going to do that, you'll need to verify your identity, their identity, and your authority to act on their behalf. So make sure you have all of that important information and documentation ready ahead of time.

[00:11:59]
This can be extremely useful since, as you probably know, the elderly are particularly vulnerable and if you're not consistently watching all of their finances and accounts and behaviors and paying particularly close attention, which is pretty hard to do when you've got your own stuff to worry about, this can save everyone from potential financial disaster and headache later if something happens. You do not want to have to go through identity theft issues with your parents at that age. Trust me.

Next, I want to cover a listener question that comes from Robert. He is inquiring about what to do or what he will have to do when it comes to his home, as well as the few rental properties he owns out of state, when creating his revocable living trust.

Robert asks, I'm about to start the process of creating a revocable living trust for my spouse and I. We own our home, but we also own three rental properties out of state, two located in the same state and one located in another state.

Sounds good. So far.

From what I understand so far, this trust is going to be specific to the state in which I live. And yes, that's correct. What are the implications here for my home and my other properties? Any tips you can provide on what to do so I can make sure I understand the situation better when I consult with the attorney.

Great question, Robert, and I will say the attorney should be able to handle this and also answer this question clearly. But I'm happy to provide some general education on this, as I am not an attorney. First things first, funding your trust with real property typically requires preparing a deed, such as a quitclaim deed or a warranty deed, so that you can take it out of your personal name and put it in the name of the trust. Your attorney will advise you on which one of those deeds to use, by the way.

[00:14:00]
And possibly you might also need some associated tax forms, and then signing those documents with the required formalities, which might be something like a notary or a witness. This is typically the process that will happen with your personal residence. So, your home funding real property into your trust can vary in complexity and even cost, depending on the state and the county where the specific property is located. I didn't see any of those details in the question. And it can also vary on what kind of property you own. This could be a home, a rental property, a timeshare, you name it. One of the caveats to this deed preparation is that if you own real property through an entity such as an LLC, which a lot of people do for their rental properties when they want liability protection for their other assets outside of the LLC. We have a whole other podcast episode on that, by the way, so if you're interested, go check that out.

They might have an LLC for each specific rental property that they have, or they might have a few rental properties bundled into the same LLC, maybe the properties that are located in the same state, and or those with low equity in the same state. So you didn't mention anything about any entities, so I'm not sure if this is your situation, but if this is the first time you've heard of this, I might consider looking into an entity like an LLC for asset protection on the rentals, not your home. So you're not going to be putting your home in an LLC. Something to ask the attorney about, of course. Again, I am not an attorney.

In these cases, funding your trust with the property in an LLC usually won't require the preparation of a deed at all. It is usually a matter of having an attorney help you change the member of the LLC to your revocable living trust.

[00:15:59]
So the member is kind of like the owner of the LLC. And this is also known as assigning the LLC membership interest to the trust. However, if this is done, there may be other important nuances to be aware of, such as updating the LLC's operating agreement, etc. So definitely ask the attorney and be prepared for some additional costs, if this is your situation, at least initially. In any case, if you own real property outside of your home state, funding that property into your trust is particularly important because upon your death, your executor must manage the probate process not only in your home state, but in any state where you own real or personal property in your own name. This is typically referred to as ancillary probate.

By putting those properties in your trust, you will significantly reduce the cost and the hassle of this multi-state ancillary probate headache for your executor. Another important note that your attorney should go over with you. If you have a mortgage or other debt on the property, they may have you contact your mortgage company to confirm that retitling the real property will not trigger what's called a due on sale clause or an acceleration clause, which basically means they can call the whole mortgage note due. Single-family residential homes and multifamily residential buildings, usually with four or fewer units, are generally exempt from these acceleration clauses. But at the advice of the attorney, you may want to check prior to transferring any property into your trust. Consider insisting on written confirmation from the mortgage company.

Lastly, if real property is retitled into your trust, you must notify your insurance company for homeowner's insurance, liability insurance, and or title insurance. Make sure the insurance company documents this in writing.

[00:18:03]
This is something a lot of people miss and has been kind of the talk of the town lately in our industry. An example of this recently has been all of the fires in California, hurricanes in Florida, and major flooding in other states. If these properties are in trusts and the insurance company does not know about that and have the trust listed properly on the policy, you might have a significant gap in coverage or no coverage at all.

So the impact financially, if something were to happen, could be significant. So make sure this final step is done. This is something the attorney cannot do for you typically, and you're going to need to do this on your own after it's complete by contacting the insurance company. Thank you, Robert, for the question. I really hope this helps. I know that was probably more than you were wanting to know, but again, I hope it helps. And if you want to ask another question or a follow-up or need some more help, feel free to reach out to our office.

As a side note, if you don't currently have, and this is for everyone, the current estate plan or core estate planning documents, so a will, a trust, power of attorney, health care directives, things like that, or you do have them done, but they're fairly old and they need to be updated or reinstated, feel free to reach out to our office for a consultation. You can find a link to do so in the episode's show notes for today's episode. Our firm, Planable Wealth, offers clients access to wealth.com, a platform to help you get the core estate planning documents completed or reinstated. We provide guidance from one of our CFP professionals as you go along through the document creation process with wealth.com so that we can make sure your estate plan aligns with your overall financial plan. If you want a second opinion on your entire financial plan, including your estate plan, you can also visit our website at plannablewealth.com and schedule a discovery call to see if you're a good fit for our free Tax Optimized Retirement Playbook, which is essentially our process to show you how we can better your situation.

That's a wrap on this week's episode. If you haven't already, subscribe to and follow the show on your podcast app., and make sure to find and follow our brand new YouTube channel so you can get an alert each time we drop a new video to teach and show you important financial planning strategies and concepts. Just search for Planable Wealth. We will also put a link in the episode's show notes.

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[00:21:29] Disclosure
The opinions voiced in this podcast are for general information only and are not intended to provide specific advice or recommendations for any individual.

This information is not intended to be a substitute for specific individualized tax or legal advice. We suggest that you discuss your specific tax issues with a qualified tax or legal advisor.

Cameron Valadez is a registered representative with, and securities and advisory services are offered through LPL Financial, a Registered Investment Advisor, Member FINRA/SIPC.

Planable Wealth and LPL Financial do not provide legal advice or services. Please consult your legal advisor regarding your specific situation. Wealth.com is not affiliated with or endorsed by LPL Financial.

Tax and accounting-related services offered through Plan-It Business Services DBA Planable Wealth. Plan-It Business Services is a separate legal entity and not affiliated with LPL Financial. LPL Financial does not offer tax advice or tax and accounting-related services.