What You Need to Know About Asset Protection Planning

Asset protection can have different meanings depending on who you ask. For some individuals, asset protection means that you are shielding assets from creditors, but for others, the focus is more on estate planning.

Asset protection planning is a completely legitimate and legal way to protect your assets before they are threatened. Read on to determine what you need to know to start the planning process.

Why is Asset Protection Planning Important?

Everyone can benefit from asset protection planning; it is not just something that the rich do. Anyone can be sued, and America is an increasingly litigious society, so the likelihood that you will be involved in a lawsuit in the future is actually fairly high. You could be involved in a car accident that could result in a lawsuit, or you may be involved in a proceeding triggered by financial troubles like a collection matter or foreclosure. In these situations, creditors may be able to take your personal property if it is not protected. These assets can include the following examples.

  • Retirement plan savings
  • Cars or recreational vehicles
  • General savings accounts
  • Real property (including your home in some cases)
  • Personal property
  • Investments

You can plan ahead to protect these assets if the unthinkable happens. Otherwise, a creditor may be able to take assets that you have worked your whole life to obtain.

From an estate planning standpoint, protecting your assets is important in the event that you become incapacitated and can no longer manage them on your own. It also has benefits related to estate tax and also cuts down on wastefulness or risk when your heirs inherit your property.

Types of Asset Protection Planning Strategies

An asset protection plan will vary by individual. Your personal financial situation and family circumstances will have an effect on the asset protection planning strategy you use. The following are a few examples of potential asset protection vehicles. Your asset protection lawyer will be able to help you find the right tool(s) for you.

  • Trusts – You can move some of your assets into a trust to protect them from creditors and to use as an estate planning tool.
  • Insurance – One of the most traditional forms of asset protection is through an insurance plan. However, insurance does have its downfalls, so it should not be your only form of asset protection. On the other hand, the opposite is also true—asset protection planning cannot replace valid insurance coverage.
  • Create a Business Entity – Creating a business may help protect your assets as well. This method is particularly useful if you have real estate or large equipment related to self-employment.
  • Retirement Plan Contributions – In some cases, you may be able to protect your assets by contributing the maximum amount to an IRA.

There may be other options available to you as well. The estate planning team at Legacy Planning Law Group can help you set up an asset protection plan that works for you. Call 904-880-5554 to schedule an appointment or for more information.

Written by Legacy Planning Law Group

Legacy Planning Law Group is dedicated to working with individuals and families to help protect the assets they have built throughout their life, and make everything simpler for families who have lost a loved one. We help thoughtful people achieve the peace of mind that comes with planning their personal legacy and passing on family harmony.