Asset protection is no longer optional. In today's litigious society, anyone can sue you for anything. Let's put together a plan to protect your hard-earned money and assets from sue-happy people and their lawyers.
You've worked hard for your assets. You need a good asset protection plan to protect them.
Here's my recommended approach
Your asset protection plan should start with good insurance policies (which should include an umbrella policy). In fact, if you've got businesses in your asset mix, I recommend that you find a good insurance advisor to help you make sure that you various liability bases are covered. Some of the risks that people may not think about include:
- Cyber-liability (including data breach)
- Employer liability
- Defamation or invasion of privacy
In addition, there is literally dozens and dozens of exclusions or policy types that may or may not cover these and other types of liabilities or even business operations. Having the advice of a good insurance advisor is truly invaluable as a first step in protecting your assets.
Business entity planning
Business entities can provide an enormous amount of liability protection if done right.
Most businesses should be operated inside a business entity (most of the time as an LLC) and the biggest reason for this is liability protection. LLCs can also be used for protecting personal assets such as homes and real estate, and can even be used to make estate planning easier.
Business entities are an important step in asset protection. For some people who don't want to take the additional step of creating an asset protection trust, the combination of good insurance and proper business entity planning is a highly effective asset protection plan.
Asset protection trust
For the ultimate in asset protection, nothing beats an asset protection trust. An asset protection trust is essentially an irrevocable trust that is protected from creditors by law.
What happens when you put assets into an asset protection trust is that the assets no longer belong you to - they belong to the trust. Therefore, as long as certain requirements are met, creditors are no longer able to access it. Meanwhile, if you are named as a beneficiary of the trust, then you will be able to ask the trustee to pay parts of the trust assets to you when you need it.
Currently, the best state in which to form an asset protection trust is the state of Nevada. Nevada asset protection trusts offer a combination of a short statute of limitations (future creditors can only access the trust if they do so within 2 years of the funding of the trust) and no creditor exceptions.
Ready to get started with your asset protection plan?
Contact me today for a free consultation