Lawsuits and asset recovery can be expensive. Every year, billions of dollars are recovered in lawsuit settlements. For many of these settlements, the defendant lost their assets to settle the claim.
But that doesn’t have to be the case.
Asset protection is the best way to ensure your hard-earned wealth is secured from creditors and lawsuits in case you find yourself caught up in legal issues. Here’s an overview of some of the best ways to protect your assets from future claims and risks.
Why Do You Need Asset Protection?
If you lose a lawsuit, especially one filed by a creditor, you will most likely lose your assets, such as your car, home (depending on homestead protections in your state), your business, your investments, real tangible property, and the money in your savings or checking account. A lawsuit can also drain you of money in legal fees, cause stress, take up your time and energy, and damage your reputation.
Asset protection planning lets you prepare in advance for these scenarios since you can never be sure when a lawsuit may arise.
The Best Ways to Protect Your Assets
You can use several methods to ensure your most valuable assets are not at risk from creditors and lawsuits. These are some of the most effective:
Asset Protection Trusts
Asset protection trusts are some of the most affordable and effective asset protection tools. They allow you to protect your assets from future creditors, with the option of passing on your wealth to your loved ones after your death.
Roughly 17 U.S. states permit using trusts. Most APTs are set up as irrevocable trusts, meaning no one can change or revoke them once they’ve been set up. Assets you can secure in an asset protection trust include stock, cash, business property, LLCs, and real estate.
Limited Liability Business Entities
It’s crucial that you separate business assets from personal assets. Limited liability business entities are a great legal tool for asset protection, ensuring your most-prized assets are not affected in case of a business dispute or lawsuit from the business’s creditors.
Examples of limited liability business entities you can set up for asset protection include:
- Limited Liability Companies
- Limited Partnerships
- Family Limited Partnerships
- Limited Liability Limited Partnerships
Federal law offers asset protection for certain employer-sponsored retirement plans. Most of these plans are also exempt from bankruptcy, meaning you can still hold on to the assets even after filing for bankruptcy.
The level of protection differs from state to state, but it’s generally higher than ordinary personal assets.
Learn More About Asset Protection
Asset protection is the best way to keep your wealth secured for you and future generations. Find out more about asset protection and how a lawyer can help you secure your possessions.