Asset protection benefits your heirs as part of the estate planning process, but it can also benefit you now.
You can protect your liquid assets, real estate, personal property, and retirement accounts through asset protection planning.
What are examples of asset protection?
Asset protection planning can mean that when a litigious customer sues your business, your personal wealth is safe. It can ensure that in a divorce, you risk only what is reasonable.
Owners of rental property in some states, such as Florida, may face personal liability for claims arising on their property. Asset protection may prevent unfair outcomes by putting property into a limited liability company or a Florida land trust.
How does asset protection work?
Asset protection implements legal strategies meant to discourage potential claims against your assets and to help keep your property free from seizure in case of a judgment. The legal tools used are normally corporations, partnerships, and/or trusts. The exact shape of your plan depends on the types of assets you have and the types of creditors or litigants you might expect.
As the name suggests, asset protection planning must take place before creditors or litigants appear and before any contemplation of bankruptcy — the longer before, the better.
Can I still control my assets?
Asset protection may — or may not — offer you continued control of your assets in important aspects. There are many options. For instance, a spouse can use funds in a Spousal Lifetime Access Trust for the family’s benefit, out of the reach of creditors.
With asset protection in place, those who otherwise might go after your assets are likely to find you less attractive and their prospects dimmed.