Securing your wealth is important which is why our estate planning lawyers work with families on effective asset protection strategies. As more than one commenter has observed, getting wealth is one thing; keeping it is something else entirely. That’s true for all of us — you don’t have to be wealthy for your assets to be at risk.
How to Make the Most of Your Insurance Policies
For most of us, insurance is the only real asset protection we’ve ever known – though many people may not recognize it as such. We buy insurance to protect ourselves from liability for accidents, negligence, and other events and situations that might otherwise expose our personal assets to lawsuits. We buy homeowners’ insurance, business insurance, and professional coverage for the same reason. No homeowner wants to be sued by someone who suffers an injury on the property. No business wants to face a product liability or accident suit. Doctors and nurses want to avoid lawsuits that might impact their personal assets. We all seek to protect ourselves from the unexpected.
Discuss Your Insurance Options with our Asset Protection Attorneys
You should always review your insurance policies with your estate planning attorney to ensure that you’re covered in all the ways that you need. In some instances, you may need to add more coverage to protect against threats you failed to identify. You might even find that you have more coverage than you need in certain areas and that a reduction in that coverage could free up resources. Asset protection attorneys can help you to find balance in your insurance coverage to maximize the effectiveness of every dollar that you’re devoting to that protection.
Using Your Business Entity to Protect Your Personal Assets
If you are the sole owner of a business or in partnership with someone else, you should consider using a business entity that can better shield your personal assets from lawsuits. 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 directed at both your business and personal assets. 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 themselves in your store, they 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.
Using Irrevocable Trusts for Asset Protection
When it comes to broad asset protection, there are few options that are more effective than irrevocable trusts. Their ability to protect assets is derived from the fact that assets placed in the trust are no longer yours. Unlike a revocable trust, the irrevocable trust provides no opportunity for you 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.
More than that, though, the irrevocable trust can provide protection against estate tax liability and can even shield assets from being considered as part of your estate when you’re applying for government benefits like Medicaid. For those reasons, irrevocable trusts are an important part of many estate plans and can be used for everything from life insurance protection to special needs planning. And since your trust can be created in a way that enables you to still benefit from the income that those assets produce, there can be other upsides as well.
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).