An asset protection plan is a system of managing your wealth in manner that protects your assets from creditor claims, limiting creditor access to valuable assets and properties in a legal fashion. Creating an asset protection plan is imperative to protect your family’s future.
Although asset protection planning might seem like something only for the extremely wealthy, the reality is that anyone can be sued. Lawsuits can arise out of car accidents, credit card debt, foreclosures, unhappy customers, etc.; the reasons one can be sued are beyond counting. Losing a legal dispute and having a judgement levied against you may deplete your finances, leaving you bankrupt.
Asset protection should ideally begin before a danger arises. It is more difficult to block creditors that already have a claim from accessing assets that putting assets beyond creditor reach before a dispute occurs. Courts can reverse the transfer of certain assets if done to avoid paying creditors.
By way of example, obtaining and customizing your home and auto insurance is a form of asset protection. However, in order to provide higher levels of protection, additional measures are necessary. For instance, the creation of a limited liability company (LLC) or corporation may be appropriate. An LLC may provide protection for rental property or other real estate. A corporation can own your business. This can be further bolstered by obtaining a life insurance policy and setting up a life insurance trust to protect the cash value of your policy. Finally, one of the most powerful, but also complex and constraining, tools is an asset protection trust. This type of trust may be located domestically, or overseas, and may require entrusting the property protected to a third party trustee.
Beginning the process of protecting your wealth early will increase the likelihood of avoiding future creditor claims. If you are interested in creating an asset protection plan, contact the experienced attorneys at Neumann Law Group for a free consultation.