Asset protection strategies help keep your money out of the hands of nursing homes, litigators, and other financial predators. Keep reading to learn about five of the best asset protection strategies to help you keep your money right where it is.
Create an Irrevocable Trust
Experienced College Station estate planning attorneys often recommend trusts for many different reasons. When it comes to asset protection, however, your best bet is to create an irrevocable trust. These trusts help shield assets from divorce, bankruptcy, nursing homes, and litigation. This happens when you transfer ownership of your assets to an irrevocable trust, though in doing so you may end up having less control over your assets. You should speak with an experienced estate planning attorney to find out if an asset protection trust is right for you.
Create a Business Entity
Small business owners, landlords, and freelancers are often faced with personal lawsuits if something goes wrong in their business. This is why it's important to set up an LLC or corporation to shield your personal assets from lawsuits against your business. Any lawsuit that comes up will be against the business entity, which means the person suing you may only attack assets held within the business and not any of your personal assets.
Set High Liability Insurance Limits
A good rule of thumb is to set your personal liability insurance limit to match the amount of your net worth. This is important to keep in mind if you are coming into a large inheritance or settlement, as you will want to increase your liability limits accordingly. If this is the case, you should speak with an experienced estate planning attorney to accurately determine your financial situation.
Separate Your Assets
Putting money into a joint account can avoid probate, but there are things to consider for the purposes of asset protection. Keep in mind that the other person named on the joint account will automatically have ownership over that money, which makes it tricky if you think divorce may be a possibility. That account could also be opened up to the other person's creditors as a result. In addition, when you pass away, the funds held in the joint account may be passed directly to that person outside of your Last Will and Testament or Trust. You should speak with experienced College Station estate planning attorneys about the pros and cons of using jointly held bank accounts.
Start Planning Now
It is never too early to plan, but it is sometimes too late. This is never truer than if you are being sued and you try to protect assets, as courts will not allow transfers meant to reduce your financial liability during a financial crisis. Also, keep in mind that applications for any type of government benefits usually include look-back periods that may penalize asset protection transfers made within a certain timeframe.
If you have any questions about asset protection strategies or want to have your current plan reviewed, please contact us at 979-703-7014 to set up a consultation.