Top 4 Asset Protection Strategies People Should Know About
It is common for people to undoubtedly want to protect their assets that they have toiled so hard to acquire. Employing the right asset protection strategies is vital regardless of whether you are beginning to accumulate wealth or you already have a substantial estate that you wish to protect. You need to identify potential venues for loss and take steps to protect your vulnerable assets. In that particular case, the most suitable asset protection strategies would be tailored to the specific risks you face. As everyone’s estate is unique the best way to decide which strategies are best is to retain the counsel of an experienced and competent estate planning attorney. However, some commonly used asset protection strategies that everyone should know are:
Incorporating Or Forming An LLC For Business Owners
The most threatening situation for a business owner is when their company or business establishment is sued or if it goes bankrupt causing a loss of personal assets. By incorporating or creating a Limited Liability Company businesses can be transformed into a separate legal entity thereby restricting your personal liability in case of business debts or money judgments against the business. However, if you have co-signed for debts and have not adhered to corporate formalities, then you are still at risk.
Investing In Exempt Or Protected Assets
Owning a house with a homestead exemption and different types of retirement accounts like IRAs are provided with special legal protection. If someone has to file for bankruptcy a portion of their home equity and IRAs are protected.
Employing Trusts To Protect Assets
There are different kinds of trusts that can be employed to serve different purposes pertaining to asset protection. Irrevocable trusts can be used for Medicaid planning to make sure that Medicaid pays for the cost of a nursing home if it is needed. Irrevocable trusts can also be used to allow assets to be transferred without undergoing the probate process> However it is important to note that revocable trusts don’t protect someone from estate taxes. Revocable trusts can be used as part of an incapacity plan.
Having An Appropriate Amount Of Insurance
It is imperative to have an appropriate amount of insurance whether it is automobile insurance or homeowner’s insurance or renter’s insurance. It is very important to have enough liability coverage so that the insurer will pay even larger settlements and your personal assets won’t be at risk. Having an umbrella policy would provide additional protection above-and-beyond normal insurance coverage.
Other steps such as creating a prenuptial agreement to protect assets prior to marriage or using special kinds of trusts like a spendthrift trust or special needs trust for the benefit and protection of your heirs’ inheritance or proper healthcare in case of a disability are all appreciable measures which one can take in regards to asset protection. People have uniquely different situations and uniquely specific risks that they face. For example, the risks faced by a business owner are entirely different than those faced by a homeowner or a stocks investor. No matter what your situation is if you wish to protect your assets it is advisable to be proactive in hiring a qualified and experienced California estate planning attorney today.