Asset Protection Planning

Asset Protection Planning

Asset protection strategies are designed based upon an individual’s assets and risks. They come with varying levels of protection and complexity. An individual will have to choose a level of control that he or she is comfortable with respective to the amount privacy and protection required. In general, a strategy that provides the most protection offers the least direct control of the assets and vice versa. If a creditor challenges your assets, your level of control of the assets will likely be used to suggest ownership.

You are probably already utilizing some asset protection techniques without even realizing it. There are laws that provide creditor protections for your primary residence and for your retirement savings, such as your IRA, 401(k) and other retirement vehicles.

Asset protection begins with an evaluation of the business and personal liability risks you may face. As a starting point consider:

  • Determining all potential sources of liability. Including, professional exposure, economic risks, creditor claims, director & officer claims, divorce, existing lawsuits.
  • Managing risk through the use of insurance. Include these types of insurance: homeowners, auto, umbrella, life, disability, business risk, director & officer.
  • Maximizing allowable exemptions. Including: retirement plans, homestead exemptions, property ownership.
  • Reviewing Estate Plan & Assets with view toward creditor protection. Consider; expected inheritances and your Wills and Trusts to amend to retain assets in the Trusts; reorganizing holdings and segregating assets with liability potential.

Accumulated personal assets, including business and real estate properties and other investments should also be protected from liability risks to the greatest extent possible. Sound estate planning principles should be applied to create an integrated personal plan to minimize business risk and protect personal assets from sources of potential liability.

Asset protection strategies can provide a substantial level of financial security and control, be established quickly and setup to maximize the benefits one can expect. These protection tools can include:

  • Limited Liability Company (LLC)
  • Other Business Entities, i.e. c-corp, s-corp
  • Family Limited Partnership (FLP or FLLLP)
  • Qualified Personal Residence Trust (QPRT)
  • Irrevocable Trust (IT)
  • Special trusts
  • Installment Sales
  • Homestead
  • Insurance policies
  • Annuities (commercial and private)
  • IRAs and other retirements vehicles

With properly established and managed legal entities, appropriate funding, a real business presence and corporate compliance, a creditor will not be able to pierce its protection. However, a strategy must be properly established, funded, managed and maintained to maximize protection.

Do you have questions about protecting your assets? Contact us by sending us a message or calling us at 1-312-558-1850.

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