Are you afraid of facing a financial hardship that may strip you of your hard-earned possessions? Perhaps you’re working in a profession known for its high liability risk! In any case, you need to protect your assets to safeguard your financial future and your dependants.
Asset protection refers to legal strategies used to safeguard your wealth against losses resulting from the excess burden of taxation, debt collection, or foreclosure. Even if you think you won’t benefit from any type of asset protection, knowing the basics of this financial safety net can come in handy once you feel the need to shield yourself from future problems. To help you make better decisions for your future, we will share four legal aspects of asset protection with you, so let’s get right to it.
Suppose you’re a business owner whose company is growing steadily. Some first-time owners place their entire personal budget into their start-up, and once the gears turn, they may not consider separating their business assets from their home budget. The problems with that approach arise when the company bumps into a rough patch, and the worst thing may happen: you need to file for bankruptcy. If you’re not planning from the start and your insurance cannot cover all your debts, you’re at risk of losing tangible personal assets that have nothing to do with the failed enterprise. With a solid asset protection plan, creditors won’t be able to seize your family’s house or your car in case of a payment default.
We can classify assets into money and resources, both tangible and intangible, that a person owns. Think about your home, your car, any bank account to your name or even furniture, expensive jewelry, or any type of hobby collection. As you can see, anyone can benefit from planning the best way to protect their assets in the worst-case scenarios.
The most common scenario where you may need any asset protection is to ensure your family doesn’t lose their home if your business suffers any severe financial losses. Whether you live in Atlanta, Chicago, or anywhere else in the US, you can avoid foreclosure by consulting a specialized lawyer who can help with your Estate Planning, either by sharing a property claim with your spouse or placing it under another family member or trusted associate’s name. Every situation is unique and comes with its own challenges down the line. However, your best bet is to talk to a lawyer to learn about your state’s exemptions and laws to protect yourself and your family members against liability.
If you’re still unconvinced or distrustful about the benefits of looking into an asset protection plan, maybe you can understand its importance when you look at what you may avoid when taking the proper precautions. According to US federal law, if you don’t fully disclose your assets to the creditors, you may be at risk of getting accused of contempt, tax evasion, bankruptcy fraud, or other financial crimes. If the asset protection structure seems too complex or challenging to explain, it will stack the chances against you in front of the judge. The rule of thumb here is simple: never hide your assets from creditors, keep it simple, and organize your wealth before any claim arises.
You should never overlook the importance of investing in professional liability insurance when you’re planning how to go forward with protecting your assets. Some industries require you to perform your job with this safety net to protect your business. For instance, place yourself in the scenario of a doctor in need of defending themselves from a medical malpractice lawsuit.
They wouldn’t be able to pay any legal fees to defend themselves with only an asset protection plan! In any other case, a debtor will still benefit from getting insurance to survive a claim from a fraudulent transfer claim potentially.
Regardless of your occupation or financial status, you need to take care of your assets before a creditor or debt collector comes knocking on your door. Life challenges us in unexpected ways all the time, and it’s always best to be safe than sorry by implementing several safeguards to protect our wealth.
Conduct further research to learn which asset protection strategy suits your situation best, and hire a lawyer to set everything straight. The precautions you take today will prove useful when faced with financial adversity. Take active action to ensure your financial stability now, and your future self will thank you later!