Asset Protection 101: Top 5 Do’s And Don’ts
There are many benefits to having assets such as properties, investments, bank accounts, businesses, and many more. These can help make you and your family financially stable through the years. Plus, these can provide financial security to your loved ones after being incapacitated, your passing, and other unfortunate situations preventing you from managing your wealth efficiently. This is one reason why estate planning is essential.
However, making plans for your estate can be a daunting process, especially when you’ll have to run into issues along the way. In that case, it’s crucial to establish an asset protection plan as soon as possible.
In the legal sense, asset protection planning refers to a legal action designed to safeguard a person’s assets against any financial threats coming from creditors, a divorce decree, lawsuits, judgments, and many others. But when making a protection plan, there are things to do and not to do to ensure a more favorable outcome.
Keep reading this post to learn what steps to take and avoid when dealing with asset protection.
The Do’s Of Asset Protection
Like other legal actions, asset protection planning can go wrong if you don’t know what to do. You need to be careful with your decisions to reduce the risks and their impact on your assets.
Below are some things you want to do in asset protection:
- Using A Reliable Lawyer
As mentioned, asset protection planning is considered legal action. It also involves the application of estate and asset protection laws to ensure it’ll work best for you. However, unless you’re a legal expert, you may need the assistance of a reliable lawyer to handle the situation for you.
Typically, an expert lawyer specializing in asset protection can make you understand the potential issues associated with asset administration and management. They have the proper knowledge and experience to guide you through the process and attain a favorable outcome.
Since the technicalities of certain laws may make it difficult for you to handle and protect your assets on your own, it’s best to work with a lawyer from the start. They can assess your situation and determine which strategies are suitable for your assets. For instance, they can help you go through all available options, including wills, trusts, forming a limited liability companies (LLCs), signing pre-marital agreements, and many more.
By hiring a lawyer, you can make sure all your assets are fully protected. They’re familiar with the strategies you can use to ensure complete coverage and avoid any holes that may expose your assets to all forms of threats. However, if you want to understand better the importance of hiring a lawyer for asset protection, you can check out online resources like blakeharrislaw.com/asset-protection for more information.
- Getting Full Coverage For All Your Assets
More often, your creditors and judgment holders will do their best to get the assets they’re seeking due to a monetary obligation. For example, when an appellant sues your business, the party suing will find other ways to make you pay if they can no longer recover from your company. In some states, creditors and judgment holders will run after your personal properties to settle your obligations, leaving you and your family with nothing.
With that in mind, it’s crucial to cover everything you own in your asset protection plan. List down all your assets to avoid missing anything that has value to someone else. Although they have ways to find your weak points and vulnerabilities, there’s nothing to worry about because you know everything you have can’t be touched by anyone.
- Making The Necessary Plans Ahead Of Time
Another thing that you should do is to make asset protection plans before a crisis strikes. Realistically speaking, you can no longer shield your assets against any risks if someone is already coming after you.
For example, you can’t prevent a judgment holder from seeking your assets after a court issues a judgment. The efforts to protect your assets should be made beforehand or long before a situation arises. That way, you can rest knowing your financial affairs are safe and in order.
The Don’ts Of Asset Protection
Asset protection planning has many aspects to consider, so it can sometimes be tricky to do the right thing. However, not doing the right thing can result in many mistakes, compromising the safety and security of all your assets. The following are some things to avoid in asset protection:
- Not Making Use Of Different Asset Protection Strategies
This is one of the common mistakes people make with their assets. As mentioned, assets consist of cash, investments, businesses, properties, and anything you own that has value. However, there are instances in which a specific strategy can’t fully cover all your assets. Some methods are effective at safeguarding particular assets, while others aren’t.
For example, you shouldn’t focus on creating offshore accounts for asset protection since there are situations wherein creditors can seize your assets if you’re in the United States. Also, you should consider forming an LLC if you want to safeguard your personal assets against business lawsuits and other financial obligations.
For these reasons, you should have many options for protecting everything you own and ensuring nothing is lost. If you need help familiarizing these options, you can work with a dedicated lawyer to get more positive outcomes.
- Failure To Update The Plan
Having an asset protection plan in place can shield your assets against creditors and other threats. However, like other legal documents, your plan should be up-to-date to avoid making them ineffective. Failure to update your plan is one thing you shouldn’t do regarding asset protection.
For example, you set up a will and never attempted to change or update. But when the time comes that your family needs it, they don’t reflect your real wishes anymore. Because of this, you should find time to review your plan to check for any changes in the laws surrounding it and the assets you’re trying to protect.
Your assets are products of your dedication and hard work. As such, they need to be protected against all types of risks with an asset protection plan. Therefore, if you want to become more confident in knowing your assets wouldn’t be taken away from you, keep these do’s and don’ts in mind. In doing so, you can make sure things wouldn’t go wrong down the road.