The importance of protecting your wealth cannot be overstated. There are many effective strategies that can be used in asset protection planning to benefit you and your family now and in the future. Irrevocable trusts are one strategy, but there are others. If you spend your life accumulating your wealth and assets, you should know your options for protecting them. Keep in mind that you don’t have to be extremely wealth for your assets to be at risk.
Using Irrevocable Trusts for Asset Protection
If you are looking for comprehensive protection, your asset protection planning must include irrevocable trusts. These specific types of trusts can protect your assets because they remove those assets from your ownership. In other words, the assets you place in an irrevocable trust are no longer yours so they are no longer within the reach of judgments or creditors. Unlike a revocable trust, the irrevocable trust eliminates your ability to simply dissolve the trust and reclaim ownership of the assets. Instead, those assets remain outside of your reach – and since you cannot access that wealth, it cannot be accessed by litigants or creditors either.
Irrevocable Trusts Protect Against Estate Tax Liability
In addition to protecting your wealth from creditors or judgments, an irrevocable trust can provide protection against estate tax liability. They can also remove those assets from being considered part of your estate when you’re applying for government benefits such as Medicaid. Considering these benefits, irrevocable trusts are an important part of asset protection planning, as well as special needs planning and insurance protection. Let our asset protection attorneys explain all the amazing benefits of irrevocable trusts.
Asset Protection Through Liability Insurance Coverage
For many clients, liability insurance is the only real asset protection they are familiar with even though they may not recognize it as such. People typically purchase insurance to protect against liability for accidents, negligence, or any other circumstances that may expose your assets to litigation. For example, clients purchase auto insurance, homeowners’ insurance, business insurance, and/or professional liability insurance to protect against lawsuits.
Discuss Your Insurance Options with our Asset Protection Planning Attorneys
It is a good idea to go over your insurance policies with your asset protection planning attorney to ensure that you’re covered in all the ways that are necessary for you and your family. Depending on the circumstances, you may need to obtain additional coverage to protect against threats you may not have identified initially. You may determine that you have more coverage than you need in certain areas and that reducing some of that coverage could free up resources to provide better protection in other areas. We can work with you to help you to find balance in your insurance coverage. That way you can take actions to maximize the effectiveness of every dollar that you have devoted to that protection.
Creating Useful Business Entities to Protect Your Personal Assets
If you are the sole owner of a business or in partnership with someone else, you should consider creating a business entity that can better guard your personal assets against legal claims. With sole proprietorships and partnerships, any liability that you have with your business can expose your personal assets to risk as well. That means that a lawsuit brought by a plaintiff who suffered an injury on your premises could be put both your business and personal assets at risk. That could leave everything that you own at risk for loss.
Consider Establishing a Limited Liability Company
There are better options, of course. When your company is organized as a limited liability company (LLC), you can enjoy much of the freedom to operate that you experienced as a sole owner or partner, but also gain incredible asset protections that help to separate your business assets from your personal wealth. Thus, if someone falls and hurts himself in your store, he could sue your business just as though you were a sole proprietor. Thanks to the protections afforded by an LLC, however, that lawsuit would not place your personal assets at risk for loss. Your liability would be limited to the money you have invested in your business enterprise.
Join us for a FREE seminar today! If you have questions regarding asset protection strategies or any other estate planning matters, please contact the experienced attorneys at The Potter Law Firm for a consultation. You can contact us either online or by calling us at (704) 944-3245 (Charlotte, NC or Huntersville, NC) or for individuals in Kentucky at (606) 324-5516 (Ashland, KY) or at (859) 372-6655 (Florence, KY).
John’s practice focuses on the use of Wills and Living Trusts in Estate Planning to help individuals protect their families and preserve their legacies after their deaths, but his practice also focuses on the critical issues of protecting individuals with dementia or other diminished capacity, assisting individuals in qualifying for Medicaid and other government benefits to offset the costs of long-term care, and providing special needs planning.
John is admitted to practice law in North Carolina, South Carolina, Kentucky, and Ohio, and he is accredited by the Department of Veterans Affairs.
- What You Need to Know about the Medicaid Look-Back Rule - January 3, 2023
- How to Pass Down Your Legacy in Your Estate Plan - October 3, 2022
- Practical Steps to Take after Receiving a Terminal Diagnosis - September 30, 2022
