Working hard and becoming successful is an admirable accomplishment. However, in order to relax and really be able to enjoy your success, you’ll want to keep your assets safe. Unfortunately, even one lawsuit could mean that everything you’ve worked for is put at risk. It’s not just the people who are suing you that should concern you though – creditors can also pose a risk to your assets for various reasons. In order to avoid that kind of uncertainty, it’s important to look into the ways you can protect the different types of assets you might have in order to really put your mind at ease.
1. Create An Asset Protection Strategy
It’s not unusual for people to only start looking into asset protection planning after they’re already faced with a lawsuit. Better late than never does apply in most cases, however not when it comes to asset planning. Here, it’s better to hire an asset protection attorney before any problems arise and create a strategy that will work best for your specific situation. Taking a number of proactive steps such as changing the form of ownership, the location of asset ownership, and many others, is a good way to establish structures that will make it difficult for creditors or any other party to take away your assets. While there are a lot of ways to go about doing this, generally speaking, an asset protection strategy will ensure that there’s a certain kind of distinction between you and your assets, which limits the amount of liability while still enabling you to use your assets in the manner you deem fit. Talking with an experienced lawyer about the options available, as well as the technical aspects of the plans will ensure that your protection plan is as tight as possible.
2. Get Insurance
Getting the proper insurance is perhaps the easiest step you can take to protect your assets. Whether you’re a homeowner looking for ways to protect your property, or you’re an individual making investments that need to be insured, having this protection in place will help ensure that everything stays intact. There are different types of insurance specifically designed to protect your various assets, including homeowners insurance, renters insurance, and even umbrella policies that protect everything you own against anyone specific liability. Having the proper insurance in place is a smart way to make sure that not only are your assets protected but also that you’re protected from having to spend lots of unnecessary money on legal fees if something goes wrong. Different companies will offer different policies at different rates, so it’s best to shop around in order to find the plan that works best for you.
3. Diversify Assets
Having all your eggs in one basket is never a smart idea. If all your money, property, and other assets are tied together under the same entity or person, you’re setting yourself up for disaster if something should happen to that one single entity. Diversifying your various kinds of assets will ensure that they’re not only protected but also that they’re protected from the same kinds of risks. For example, putting your different kinds of real estate in separate companies or entities will ensure that even if one property is damaged, you won’t lose everything at once. Having some of the assets offshore can be especially helpful in avoiding any legal issues that might arise. There’s also an added benefit of putting some assets in the name of your spouse or family members, especially if they’re not involved with whatever you do for a living.
4. Trusts And LLCs
These two structures are perhaps the best ways to protect your various kinds of assets. Trusts allow for a certain distinction between you and your assets, which ensures that your creditors can’t take away everything at once without going through legal channels, and even then, a well-planned trust will seriously limit the damage they can do. As for the LLCs, they work in a similar way but offer an added layer of protection because they’re considered separate entities from you. When you own an LLC, your creditors are only able to go after the assets that are included in the paperwork for this particular entity. This distinction makes it much more difficult for them to establish liability and take away everything you’ve worked so hard to acquire. You can even establish a trust that owns an LLC, which is the owner of the assets.
5. Keep It Simple
You might think that the more complex your asset protection strategy is – the better it will work. However, in most cases, if even you find it hard to explain how the plan works, your strategy is more likely to fail if someone decides to take legal action against you. When testifying in a court of law, and defending yourself from allegations, you need to be able to explain exactly what happened and why it happened, which usually means you have to explain your asset protection strategy as well. If you sound dodgy and vague while doing so, the court might find that suspicious and the judge might even use it as grounds to disregard the entities you’ve created to protect your assets – which would put you back to square one before you even made any plans. In other words, you need to ensure that the plan you’ve put in place is not only factually legal and legitimate but that it looks that way as well and that you can easily explain it if the situation arises.
6. Know The Law
The best way to ensure your assets are truly protected is by knowing the law. Even if you hire an asset protection attorney, it will only be useful if you’re able to tell them exactly what information they need and how you want things handled. If they’re not able to ask the right questions or don’t know what type of entities will work best for your area of expertise, then they won’t be able to help you out that much. Additionally, there’s not really much that can be done to maintain a corporate veil if it turns out that you didn’t always use the proper contracts and procedures when gaining your assets. Knowing the law, and knowing what you’re doing, ensures that the asset protection plan will work.
When you need to protect your assets, it’s important that you have a reliable strategy that can withstand legal scrutiny. This will require the expertise of an attorney, but also knowing how to work within the confines of the law to protect yourself from any court cases or other issues down the road. Fortunately, there are many ways to protect your assets, and with these tips in mind, you’ll be able to rest easy knowing that your hard-earned money and investments are safe.
