The home is usually considered to be a place of safety, comfort, and security. As a homeowner, facing the chance of foreclosure can be very stressful. Having a knowledgeable and experienced foreclosure attorney can reduce anxiety and help to save money in the long run.
On the other hand, business owners are at the risk of having a lawsuit filed against them. Did you know that 78% of lawsuit defendants never thought that the situation would happen to them? Establishing an asset protection plan preserves wealth in the case of an emergency, such as an unexpected lawsuit.
Asset protection is one way to protect a family’s financial worth and a company’s profit. While asset protection is a common solution during foreclosure, it is also an option for other emergencies.
What Is Asset Protection?
The term asset protection refers to various strategies intended to protect one’s wealth during an emergency.
The main threats include:
- Market risk
Choosing to protect assets in a legal manner is important to prevent being guilty of dubious, illegal acts of concealment such as fraud or tax evasion. Effective asset protection is done before a claim or liability occurs.
Asset protection can be done for both private and business assets. It’s in the best interest of debtors, in particular, who are at risk of losing assets over payment defaults.
Different Types of Assets
Assets don’t only refer to physical items such as property and heirlooms. There are different sorts of assets that could be at risk in the case of an emergency. For example, retirement accounts, real estate, liquid assets, and personal property.
Retirement accounts refer to the likes of IRAs and 401(k)s. Real estate includes primary residence as well as vacation homes, land, and any other form of property investment. The term ‘liquid assets’ covers the likes of checking accounts, savings accounts, and money market accounts. Then, of course, personal property can also be assets such as jewelry, boats, and life insurance policies.
Of these assets, some are considered dangerous assets that create a substantial risk of liability. For example, real estate and business assets. Safe assets present less of a risk, such as individually owned bank accounts.
Each of these types of assets could be at risk if they are not protected in advance.
When Do I Need Asset Protection?
Not everyone needs to invest in asset protection, however, there are a few key groups of people that can benefit from the process.
It’s recommended that anyone who works in a high-risk profession, such as a landlord, real estate investor, or business owner, can benefit from asset protection.
Asset protection is also advised for someone who has inherited a notable amount of unprotected property. As well as any position that suggests a high probability of a lawsuit or introduces a high degree of liability.
Strategies for Asset Protection
There is no single, cut-and-dry method of asset protection. As each case is unique, there are different strategies that will best suit individual needs. Here are just two examples.
Asset Protection Trusts (APT)
Asset protection trusts can be considered as a form of trust bank. They hold assets as determined by the individual investor in an effort to protect the assets from creditors. Opening up an APT is one of the most effective methods of asset protection.
Limited Partnerships and Limited Liability Companies
Corporate strategies such as Limited Partnerships (LP) and Limited Liability Companies (LLC) ensure that individual owners are not held accountable for the debt of an organization. In the unfortunate case of a lawsuit, the above strategies will protect an individual’s personal assets from seizure.
Legal Expertise That You Can Trust
Each of these asset protection strategies offers benefits as well as drawbacks. It’s best to hire a professional attorney to guide which strategy is most effective for your specific situation.
At Handin Law, we offer professional legal services in the areas of business law, real estate, and estate planning. Contact us at (954) 796-9600 to protect your assets today.