Asset Protection and planning refers to strategies and practices for protecting personal wealth. It happens through deliberate and involved planning processes that safeguard individuals’ assets from the potential claims of any creditors. Both businesses and individuals alike can employ these specific techniques to reduce the ability of creditors to seize personal or business property within the legal boundaries of creditor debtor law.
What makes Asset Protection so powerful is that it is able to insulate a variety of assets and all legally. It does not require any of the shady or illegal activities inherent in concealing assets, illegal money transferring, bankruptcy fraud, or tax evasion. The asset experts will warn their clients that efficient protection of assets starts in advance of a liability, incident, or claim occurring. The reason is that it is generally over late to begin arranging such protection afterward. There are a wide variety of normal means for protecting such personal or business assets. Among the most popular are family limited partnerships, accounts receivable financing, and asset protection trusts.
In the heavily litigious society of the United States, Asset Protection involves protecting property from those who might win a judgment in court. There are a variety of lawsuits that could threaten a person’s or business’ assets. Among these are car accident claims, unintentional negligent acts, and even foreclosure on property lawsuits where the mortgage is no longer paid. The ultimate goal in Asset Protection is to take any nonexempt from creditors assets and move them to a position where they become exempt assets beyond the reach of any claims of the various creditors.
Asset Protection which an individual or business does when a lawsuit is already underway or even imminent to be filed will likely be reversed by the courts. This way they can seize the hidden assets that were deliberately transferred to protect them from an imminent court case judgment. This is the ultimate reason why effective protection of assets has to start well in advance of the first hints of litigious activity or creditor claims.
Two principal goals must be combined in order to effectively construct an efficient and ironclad Asset Protection plan. These include achieving both long term and short term goals and reaching estate planning goals. The financial goals component involves clearly understanding present and future income sources, the amount of resources needed for retirement, and any resources which will remain to leave to any heirs via estate planning. This helps people to come up with highly detailed financial plans.
After this has been done, individuals will want to examine carefully any present assets to decide if they are effectively exempted from any and all sundry creditors. The ones that are not should be clearly repositioned so that they are exempt. This also involves planning to position future assets so that they are similarly effectively protected.
The next step is to come up with a complete and all inclusive estate plan. It should encompass all forms of asset protection and relevant planning via advanced techniques of estate planning. Among these are irrevocable trusts for the individuals, their children, spouses, and beneficiaries as well as family limited liability companies.
The most common mistake that people or businesses make with this Asset Protection planning is waiting until it is too late to safeguard the assets. The other mistake is assuming that such planning can be done rapidly or as a short term fix for a longer term problem. Protecting assets is ultimately longer term planning that must be done carefully and ahead of potential creditor claims on assets or pending lawsuits.